[Spam] Re: [Vision2020] Assessment of the Property Tax

Sat Apr 9 12:03:22 PDT 2005

Semi-Professional Troublemaker.......... at least there are two of you out
there. Thanx for the clarification on which Mark. Too funny.

So - The asking price for the Trail 10 acres of $250,000.00 is what the
Trail Foundation  thinks it could become worth? Just like we think our
building/buisness is worth 1.3 mil. I understand the "asking price" could be
anything. So if we had our building appraised, it would be appraised at what
it's potential could be one day? Is an appraisal done on land different than
an appraisal done on a building?

You are very helpful Mark and I thank you for taking the time to educate me
on this.

Shelley

-------Original Message-------

From: Mark Solomon
Date: 04/09/05 11:49:39
To: Shelly
Cc: vision2020 at moscow.com
Subject: [Spam] Re: [Vision2020] Assessment of the Property Tax

Shelley,

No, I'm not an architect.. that's the other "Mark" who often contributes to
this list: Mark Seman. I'm the blacksmith and semi-professional troublemaker
who was a county commissioner back in the early 90's.

I'll guarantee you that the land will be appraised for it's development
potential, not for farmland. That's as it should be unless the Trail family
was selling it as farmland.

Mark

At 11:38 AM -0700 4/9/05, Shelly wrote:
Do you know if the Trail property will be assessed/appraised, "as is?" Or, 
what could be?"
Mark - you are an architect, right?

S

-------Original Message-------

From: Mark Solomon
Date: 04/09/05 11:33:43
To: Shelly
Cc: vision2020 at moscow.com
Subject: [Spam] Re: [Spam] Re: [Vision2020] Assessment of the Property Tax

Shelley,

I don'tt know how the value was derived. I'd assume from sale or conversion
of similar properties along Moscow's border.

m.

At 11:29 AM -0700 4/9/05, Shelly wrote: 
Thank you for Mark. I know Phil went to the assessors office with the intent
to find out how the Trail property is assessed and this brochure was given
to him.

OOOOOOPS. I previously did say city not assessors office. I think I need to
ask Phil. I will get some clarification. Sorry.

Do you know how the value was derived of $250,000.00 for these ten acres?

Shelley

-------Original Message-------

From: Mark Solomon
Date: 04/09/05 11:17:04
To: Shelly; dickschmidt at moscow.com

Cc: vision2020 at moscow.com

Subject: [Spam] Re: [Vision2020] Assessment of the Property Tax

Shelley,

the numbers you are quoting refer to forest land, not agricultural land. We
confuse the issue here in Latah County with our land use zoning designation
of Ag/Forest. The county assessor does not. Most forest land in the county
does not have the development potential any land adjacent to Moscow does,
including the Trail property.

Mark Solomon

At 11:11 AM -0700 4/9/05, Shelly wrote: 
Hi Jeff,

Yes, CJ's is for sale for 1.3 mil. The assessed value on CJ's building is
based on it's income. Similar to farmland.

Phil picked up a brochure at the city called,  "Idaho's Forestland Taxation
Law" that I think can answer your other question. Since I do have the
brochure I will quote from it.

We are in Zone 2 also known as Latah County.
Zone 2 Land Grade is as follows:

For bare land and yield:
Good: $150.00
Med. $94.00
Poor: $48.00

For productivity:
Good: $485.00
Med.: $311.00
Poor: $137.00

In a nutshell:
10 acres of the "primmest" AG/FOREST land goes for $4,850.00 per acre.
Far cry from $250,000.00.

40 acres of the "primmest" AG/FOREST land goes for $194,000.00 per acre.
Far cry from $1,000,000.00.

Now, if you valuate AG/FOREST land on it's "potential value" with added
infrastructure, not it's current value then the Trail "gifted" land is
easily worth over a million.

Phil is at the meeting and I am home sick and trying to get 2 years of
reading done for Phil on this levy issue.

Shelley/Phil's wife
Yes Phil will get his own email account shortly. I hope! :)

-------Original Message-------

From: Dick Schmidt
Date: 04/09/05 09:55:30
To: vision2020 at moscow.com; Jeff Harkins
Subject: Re: [Vision2020] Assessment of the Property Tax

Jeff,

So then for example CJ's is for sale for $1.3 million then his assessment
would be based on that amount using a formula you have worked which probably
has one formula for business and another for residential? In accordance to
the freedom of information law then someone could go in and see what they
are paying in taxes.

Dick Schmidt

----- Original Message -----
From: Jeff Harkins
To: vision2020 at moscow.com

Sent: Saturday, April 09, 2005 9:10 AM
Subject: [Vision2020] Assessment of the Property Tax

As many of you have commented, the Tax Assessment Rate may not be a good
measure of the tax burden for a particular county.  And yes, you are
absolutely correct.

The real driver for the assessment of property tax on residents of a county
is the level of budgeted expenditures for that county.  As many of you are
aware, the determination of the tax rate is derived by identifying the
amount of revenue needed to fund the budgeted expenditures for the year. 
Then, given the level of assessed valuation subject to the tax, the tax levy
rate is determined by dividing the required revenue (to be funded by
property taxes) by the total assessed valuation or:

Required revenues / Total assessed valuation = Tax levy rate

But as is obvious, while the budgeted expenditures (required revenues) are
driving the amount of taxes that will be assessed on property owners, it is
the assessed valuation that determines the amount of tax that will be paid
by each property owner.  And there are numerous and inherent problems with
the assessment process.  In Idaho, the approach is to attempt to provide 
uniformity" to achieve fairness in the assessment process.  Below is a quote
from the 2004-05 Ratio Assessment Manual ( http://tax.idaho
gov/propertytax/pt_ratiostudy.htm):

MEASURING ASSESSMENT UNIFORMITY
Uniformity determines the quality and inherent equity of property
assessments. Although both the appraisal and the market transaction
are subject to distortion on any individual property, if the
magnitude of this distortion is consistently large, taxes paid by
similar properties in the same area will differ widely. The goal of
a fair assessment program is to reduce inequity of this type.
There are two overall types of inequity that can occur:
1. Inequity between categories.
2. Inequity within a given category.
In the first case, inequity results when the assessment level is
lower in one category than another. This situation becomes apparent
when level indicators from different categories are compared.
In the second case, the distortion is entirely within one category
and is not indicated by measurements of level.

I don't really like the property tax as a vehicle for funding public
programs - not because I don't want to support public programs - but because
the property tax is an extraordinarily difficult tax to administer.  The
overhead necessary to manage an equitable property tax system is enormous. 
Without getting into a diatribe or dissertation on administering a property
tax system, consider the following elements of the system"

Must maintain an online-realtime system of all real property transactions 
Must maintain a persistent and consistent real property assessment system 
Must maintain a means of adjudicating or resolving individual property
assessment complaints 
Must maintain a system of oversight that monitors and assures that the
systems operated by taxing jurisdictions in the State is fair and equitable
The property tax is an expensive tax to manage.  For example, in Latah
County, we levied about $5.8 million in property tax for 2003.  Give or take
a few $10's of thousands, the amount spent in Latah County for management of
the Property Tax System was above  $1,000,000 for 2003.  This number is not
readily available from the County's financial statements because the system
is managed across more than one County department (Assessor's Office,
Collector's Office, etc.), but the Revaluation program (administered by the
Assessor's Office) spent $457,011 just on the revaluation program.  From my
memory (always a dubious source) the normal operating cost of the Assessor's
office, in addition to the revaluation program) was about $700,000 for 2003.
 Thus, if these numbers are at all reliable, about $.20 of every dollar
collected in property taxes was spent in administering the tax.  Of course,
this does not include any costs incurred by the tax collectors office nor,
at the state level, for their oversight responsibilities.  Also, my numbers
do not include the cost of having our elected County Commissioners serve as
the local adjudicating body for appeal of property valuations.  If you
scrutinize the agendas for last year, you may be surprised at how much time
was spent hearing tax appeals.

And, by the way, even though we spend a lot of money on trying to assure
that the property tax is fair and equitable, those that received their
property tax assessment notices for 2005 know that the system occasionally
requires significant adjustment.  Again I would refer you to the 2004-05
Ratio Assessment Manual for details about how the assessment oversight works
  Here is that link again - http://tax.idaho.gov/propertytax/pt_ratiostudy
htm.

As you dig into the details of the ratio study and the application of that
technique to properties in Latah County (as well as other counties) you
might want to refresh your statistical analysis tools - especially the
difficulties of small samples.  I noted that for 2003, in the assessment of
Rural Residential properties ( http://tax.idaho
gov/propertytax/PTpdfs/rpt_03_county_ratio_study.pdf ) that Latah stats were
generated from 11 sales for that year.  A sample this small can be
problematic.

This concludes my thoughts on property tax assessment and the tax burden on
Latah residents.  For me, the conclusion is pretty straightforward - our
property taxes are rather high and the level of tax probably influences many
potential businesses and individuals from living here.  The fact that the
Moscow - Lewiston region was the only sector of Idaho that did not report
growth for the year is some indication of that. 

My next post on taxes will address the question of property tax exemptions
and the impact of exemptions on tax receipts, fairness and equity of the tax
exemption, etc.  It will be a few days - I have some yardwork to do.

Hope this was helpful.

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