Property owners make their case for lower valuations

McCOOK, Neb. — The man seemed frustrated even before he sat down. He said he’d had to take time off work. Exasperated, he stacked and straightened his pile of papers. He was ready to fight.

Everyone took a deep breath. And then the man protested — loudly and adamantly — the valuation of the house he owns in McCook. Although no one else shouted or made threats as this man did, he wasn’t the only property owner last week who asked Red Willow county commissioners and the county assessor for a change in the valuation of their residential properties.

The friendly couple next on the schedule — it was impossible not to hear the angry fellow as they waited their turn in the hallway — promised commissioners that even if their valuation didn’t change, they’d still vote for their commissioner and that they were not moving away from McCook.

Commissioners and Red Willow County Assessor Sandra Kotschwar listened politely to all those who presented their side of the valuation issue. Kotschwar explained that Nebraska law requires that residential properties be valued for tax purposes at 92-100 percent of fair market value — what the property would sell for (not the initial asking price) under normal conditions.

Kotschwar reported to commissioners in her “2017 Plan of Assessment” that the median level of value for residential properties in Red Willow County is 93 percent.

If the state finds that Red Willow County’s residential properties are not valued within the 92-100 percent range, it can demand that they be valued at 100 percent of fair market value.

Market value of residential properties is determined by the sale of similar properties within the last two years. “Comparable properties,” or “comps,” take into consideration, among other things, total square footage, age, style (one-story, two-story, etc.), garage (yes or no, attached or detached), basement (finished, partially finished or not).

“Condition” and “quality” are also part of determining the valuation of a residential property.

Kotschwar has explained that the “condition” of a property is determined by its care, or the lack of care. Condition is rated “poor” to “very good” or “excellent.”

The “quality” rating of a property is determined by its construction and is rated “low” to “excellent.”

A low rating in either or both condition or quality can result in a lower valuation. But because you’ve never gotten around to hanging a closet door or staining the trim since the house was built in the mid-1970s probably isn’t justification for requesting a valuation decrease. Remember, however, that allowing a home to deteriorate to justify a lower valuation can affect a property’s value at time of resale.

Several years ago, a McCook property owner questioned commissioners about the increased value of empty lots that she owns, but she also told them that an 11 percent valuation increase in her home was acceptable. She said, “We wouldn’t want it valued any lower,” helping them to justify their asking price at resale.

Houses are not valued on an individual basis. The county assessor’s office does mass appraisals of houses within neighborhoods, not appraisals of individual houses. Kotschwar said the appraisal process is not “an exact science.”

Kotschwar’s office completes physical inspections of residential properties every six years.

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. Every property is not increased by the same percentage because that would miss individual updates or situations of concern, she has said.

The protest process, however, does allow a property to be judged on its own merits, or demerits. After a property owner files a protest, he/she is given an opportunity to discuss concerns with commissioners. Commissioners and the assessor will do a drive-by inspection, and, if allowed by the property owner, they will view a property’s interior.

Sitting as a board of equalization for protest hearings recently, commissioner and BOE chairman Steve Downer thanked property owners for presenting their protests. Without a property owner filing a protest, the assessor and commissioners cannot consider changes to the valuation of a property.

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It’s important to remember that an increase in a property’s valuation does not mean the owner’s tax bill will increase by the same amount.

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 valuation does not automatically mean that taxes on the property will go up.

It’s taxpayers’ responsibility to keep informed about the budget processes of their cities/villages, county governments, their schools and colleges. They need to let those who set budgets for tax-payer-supported entities know that tax payers demand conservative budgets, that they do not want increased tax bills — that their own budgets are already stretched to the max.

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Houses are selling well, and quickly, in McCook, McNutt said. Kotschwar said, “As soon as a ‘For Sale’ sign goes up, a ‘Sale Pending’ sign goes up, too.”

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The angry man told Red Willow County commissioners Steve Downer, Earl McNutt and Jacque Riener that “you and your assessor” have increased the valuation of his home “every time.This is still a one-bedroom house,” he said, saying that he hasn’t made any improvements that would justify a valuation increase.

(Property owners often mistakenly think “improvements” mean remodeling, expanding, renovating, shingling, painting, installing new doors and/or windows. In a tax-valuation context, “improvement” means anything that adds to the value of the original piece of land; the house itself is an “improvement.”

Expanding a house, of course, is an increase in total square footage. The addition of an outbuilding, such as a garage, adds value to the property. Remodeling, renovating, new doors/windows, etc., is considered in the condition rating of a home.)

The man said that if he was allowed to vote on the tax increase, “then I’d have a say-so. You can’t just crunch numbers and ask for more money.”

The man didn’t want to listen when Kotschwar explained that the valuation of his house was based not only on his property but on recent sales of similar properties. McNutt told him, “The assessor doesn’t just make up numbers.” The man replied angrily, “You can make numbers say anything you want. This is a tax increase, and I didn’t have any say in it.”

Do you want to know why McCook hasn’t grown, he asked commissioners. “It’s because people can’t afford to live in it.”

The man told the board that he gives through his voluntary commitments to the community that he’s lived in for nearly 40 years. “If you follow through with this, I’m leaving. I won’t stay in a community where I’m not appreciated,” he said. He added loudly, standing and looming toward commissions seated across the table, “Mr. Downy (Downer), Mr. McNutt, I’ll see you won’t be re-elected to any position as long as I’m here. You and your elected assessor.” He grabbed his papers and, mumbling under his breath, he stalked from the room.

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The McCook couple next in line explained to commissioners that their home’s neighborhood has changed somewhat over the years, meaning ultimately that their home is not “in sync” with a similar home in a more traditional residential neighborhood. A real estate agent has told the couple it would be best not to update their home (if they were considering selling it) because they would not recoup their expenses in a sale of the property — because of the location. “Someone looking (for a home) in the $200,000 price range would not look at this, would not buy here, and a bank probably wouldn’t loan that much on it,” she said.

The couple also requested that the county reduce the valuation of a small warehouse storage building they have on the property because its condition is deteriorating.

McNutt told the couple that they would certainly review the properties. “By filing a protest, we have the opportunity to look into this,” he said.

The woman giggled as she straightened her papers, telling commissioners and Kotschwar, “We’re not moving, and we’ll vote for you.”

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Downer told the next property owner that he understands that he wants to keep his valuation down, “but, if we get too low, the state can come in and roll it all up.”

The man questioned why the addition of a carport affected his valuation so much. Kotschwar explained that it was not just the new carport, but recent changes in the market of properties similar to his. She told him, “We’re saying you wouldn’t want to sell it for less that $84,000.” His reply: “Oh, that’s for sure!”

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One property owner questioned why his home’s valuation is so much more than the surrounding neighbors, despite his having added onto the house and building a substantial garage since he bought it. He explained that there’s a nuisance property just down the street, and empty lots across the street.

His home is valued at $220,000; he’s requesting $201,000. “I’d prefer $185,000, but I don’t want to be greedy,” he said. “I pay my fair share.”

Apologizing for appearing to “throw the neighbors under the bus,” he said their homes’ values range from $127,000 to $170,000. The “big house” in the neighborhood is valued at $260,000.

Kotschwar said it would be difficult to build a new house of similar square footage for less than what his house is valued at.

Commissioners and Kotschwar said they would review the owner’s property.

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Kotschwar said that mobile homes were re-valued this year, with a new pricing guide and depreciation table. Mobile homes were last re-valued in 2005.

“It’s difficult to find comps for mobile homes,” Kotschwar said. An owner of a double wide mobile home valued at $28,250 was asked whether she would be willing to take that much for her home. “That’s our goal,” Kotschwar explained, “To get it close to market value.”

It’s also difficult to find comps for modular homes and condominiums, she said.

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One homeowner/protester told commissioners and Kotschwar, “If someone wants to give me this much, send them over.” Her home’s new valuation is $96,818; she’s requesting $73,000. “I could sell it for $73,000, realistically. It’s definitely not a $100,000 house,” she said.

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Kotschwar said she toured a home in McCook and to review the existing “good” condition rating, knowing that the property needs extensive plumbing and structural repairs. She said she may be able to remove the value for a screened-in porch that needs to be torn down.

The house is in a very desirable neighborhood, and the owner purchased it for $140,000 knowing it was “a fixer-upper.”

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An elderly woman living in her home on McCook’s “Reservation” development since 1960 would like her valuation decreased from $90,000 to $79,300. Her full, walk-out basement isn’t finished and the house has no central air conditioning. It has its original masonite siding and windows and a sinking driveway slab into a carport. Kotschwar said she may be able to adjust for no central air and the problem with the sinking concrete driveway, but “there’s not a lot we can do. Homes are selling high in McCook. She probably could get that price for it, with today’s market.”

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This elderly lady on the Reservation and an elderly, handicapped gentleman with “lots of medical bills” who also asked for a reduction in the valuation of his home may qualify for a “Homestead Exemption,” which provides relief from property taxes by exempting all or a portion of the valuation of the homestead from taxation. The state of Nebraska reimburses counties for the reduction in tax revenue as a result of approved homestead exemptions.

A homestead exemption is available to: Persons over 65; qualified disabled individuals; and qualified disabled veterans and their widow(er). The applicants must own and occupy the home. There are sliding scale income limits and homestead value requirements.

For more information, contact Kotschwar’s office at (308) 345-4388.

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Commissioners and Kotschwar will make decisions on these residential protests, and also the commercial property protests they’ve heard this morning. They’ll mail their decisions by Aug. 2.

Property owners who are dissatisfied with the decisions can appeal to the Nebraska Tax Equalization Commission (TERC) for a filing fee of $25.

The TERC is a constitutional body created by the Nebraska Legislature in 1996 to provide a simple, less expensive avenue of appeal for property owners to challenge the assessment of property in Nebraska.

A TERC appeal form is available at the county clerk’s office or by downloading and printing the form at: terc.ne.gov/appeal_process