McCOOK, Nebraska -- One hundred and nineteen Red Willow County, Nebraska, taxpayers are protesting increases in the tax valuation of their residential, commercial property or agriculture land.
Sitting as a board of equalization, county commissioners listened Monday afternoon to the first round of protests from taxpayers unhappy with increases in the tax valuation of their homes and ag land.
In theory, if a governmental entity or other tax-asking jurisdiction keeps its budget stable and does not increase its tax levy, an increase in a property's tax valuation does not automatically mean that taxes on the property will go up.
It's up to taxpayers to let board members and those who set budgets know that taxpayers' budgets won't stretch much further -- if at all -- to pay for a higher tax bill.
One McCook man told commissioners Monday that he just wants his valuation -- which increased -- left the same as last year, believing that will help make up for the years that he paid for basement square footage that wasn't there until a correction was made recently.
County assessor Sandra Kotschwar told the man that sales within the past two years of McCook homes similar to his appear to justify the increase in valuation.
Kotschwar said during the first morning of protest hearings that she is required by state law to set residential values at 92-100 percent of market value.
Market value is defined as what a property would sell for under normal conditions; market value is determined by sales of similar properties.
When looking for "comparable" properties or "comps," Kotschwar said, she and her staff consider total square footage, style (one story or two story), exterior of the property, age, condition, quality, number of plumbing fixtures, proximity of the sold property to the original property's neighborhood, the ultimate sale price (not the asking price) and sale price per square foot.
"This is not an exact science," Kotschwar said. "We do mass appraisals (of houses within neighborhoods), not fee appraisal of individual homes. And no two homes are identical."
Kotschwar said her staff leaves cards on homeowners' front doors requesting information about their property -- square footage, age, number of plumbing fixtures, number of bedrooms, and basement finish. Some residents don't return the cards -- leaving the assessor's staff to judge a home's interior by its exterior.
Commissioner Earl McNutt added, "It would be nice to see the inside of all the homes -- the outside is sometimes deceptive."
The assessor's office will do an interior inspection if requested. "Not everyone is comfortable with us coming in," Kotschwar said.
One home that's a little deceptive from the outside sits on a prominent corner in Indianola. McNutt commented, looking at photographs of the house, "Get this exterior picture a little further away, and looks are very deceptive."
The property was to be sold at a last-resort foreclosure sale and there were very few takers. The Indianola couple who got it, almost by default, would like to work on it over time to get it livable again, but until then, they asked commissioners to reduce the valuation.
Siding pieces were cut too short and installed wrong. Replacement windows don't fit in the original holes; the gaps are filled with weathered boards. The falling-down garage supported a rickety second-story deck -- both have been torn down for safety's sake. There are foundation problems -- the problem is the foundation's crumbling away.
There's mold everywhere, and stray dog and cat damage everywhere.
It's all too bad -- the house is one of Indianola's oldest, and its barn was once a livery on the old DLD (Detroit-Lincoln-Denver) Highway.
Commissioners told the couple they will take into consideration the extensive damage.
McNutt said, "Doing mass appraisals, things can fall through the cracks."
A McCook woman told commissioners and Kotschwar that she's made no improvements to her home for at least eight years.
Commissioner Leigh Hoyt has said during past protest hearings that property owners often use the term "improvements" incorrectly, thinking it means remodeling, expanding, renovating, adding or removing square footage, shingling, painting, re-roofing, installing new doors and/or windows.
"An 'improvement' is anything that adds to the value of the original piece of land," Hoyt has said. In this tax-valuation context, the house itself is an "improvement," he said.
Extensive updating/remodeling and adding square footage or outbuildings will most often increase a property's valuation.
A McCook property owner told commissioners that the garden shed that added $50 to her valuation this year has been there "forever" and was never valued before. Kotschwar said there is a flat fee of $50 for small sheds that need as much repair as the homeowner's garden shed. The shed was probably added this year because it had been omitted on earlier records.
Kotschwar has said that the "quality" and "condition" of a property affect the tax valuation of improvements. She said the "quality" rating of an improvement is determined by its construction; "condition" is determined by its care, or its lack of care.
Quality is rated low to excellent and condition is rated poor to very good or excellent.
A lower rating results in a lower valuation, but allowing a home to deteriorate to a lower valuation will also affect a property's resale value. A McCook property owner told commissioners several years ago that an 11 percent valuation increase on her home was acceptable. "We wouldn't want it valued any lower," she said, "if we decide we want to sell it."
Another taxpayer, who now lives in a nursing facility, said Monday that her house has deteriorated to the point where it's uninhabitable and unsellable. She plans to have it torn down and hopes to sell the empty lot.
If the home is there January 1, it is taxed for a full year. The taxes must be paid before the property is destroyed.
Another McCook homeowner told commissioners she's just waiting for the house that she is renting-to-own to fall into the basement.
The woman said the foundation walls of her basement are bulging inward; floor jacks in the basement are supporting the entire weight of the house; her floors are settling and ceilings are cracking; her insurance won't cover damage caused by "ground movement"; the damages can't be repaired without major, major expense; there's no guarantee that repairs will work; one repair company won't even attempt rescue efforts; she can't borrow money on the repairs; and the owners won't give her her money back.
"I'm just waiting for the house to fall," she said sadly.
Kotschwar has the house valued at $32,000. The homeowner told commissioners, "If I can get it fixed, I have no problem paying taxes on $32,000."
Kotschwar told commissioners, "We definitely need to reconsider this one."
One McCook couple said they've compared their home and tax valuation to most of the neighbors' homes and tax valuations, and they think the assessor is singling out their block for valuation increases.
"Increases in the 500 block are horrendous, compared to the 400 and 600 blocks," the man said. "We're retired, we have no income, Social Security is frozen and now the city wants an increase in wages."
"The richest man in town -- his valuation only went up $1,000," the man continued. "I'm unhappy with it. It doesn't seem fair."
The state requires that residential properties be reappraised every six years; the last time all residential properties in Red Willow County were reappraised was in 2004.
"We try to compare apples to apples, or similar properties when setting valuations," Kotschwar said.
Kotschwar has explained at past protest hearings that her office does not compare the percentage of increase from one house to another within a neighborhood.
Neither does her office increase every property by the same percentage. "We can't do, as an example, a 10 percent roll-up for everyone," Kotschwar said. "We wouldn't catch the updates, or situations that need reductions."
Kotschwar said state law requires that residential values be set at 92-100 percent of market value.
She said most of Red Willow County's residential valuations fall somewhere in the middle -- about 97 percent of market value. "Our goal is to be in the middle of the percentages," Kotschwar said at a past protest hearing.
McNutt said, "If we fall below 92 percent, the state will demand we set values at 100 percent."
One property owner protested the valuation of dryland and grass in northern Red Willow County. Ag land must be valued at 69 to 75 percent of market value, Kotschwar said; Red Willow County's ag land is valued at 72 percent.
Kotschwar said that there have been many sales of dryland in Red Willow County that support her valuation of the woman's dryland. There haven't been as many grassland sales in the county, she said, so she blends Red Willow County sales with those in surrounding counties.
"There have been very few irrigated land sales," she said. "So I borrowed sales from surrounding counties to help us determine our irrigated land values."
Steve Downer, commissioner and chairman of the county's board of equalization, told property owners that commissioners and Kotschwar have until July 25 to review protest information and make decisions regarding possible changes.
The county clerk's office will then mail the results to each property owner.
A property owner who does not agree with the County Board of equalization's ruling can file a protest with the Nebraska Tax Equalization Review Commission -- TERC -- in Lincoln. "Sometimes they agree with us," McNutt said. "Sometimes they don't."