Tax Appeals and Development Land

Tax Appeals and Development Land

There is a basic land development principal that was not taught in any of my
formal education for my real estate brokers license or my appraisal license.
And I seriously doubt that assessors are taught this fact in their
schooling.

I learned this fact from years of working with Civil Engineers: "Shi_ flows
down hill".

Sewer lines don't go on forever--they operate on gravity. Sewer lines are
built to a certain capacity and then a new line needs to be constructed. Or
sometimes adjacent land is at a different elevation than then sewer line and
a lift station is needed. A lift station is essentially an elevator for
poop.

The physical ability to develop land is one of 4 main factors that
determines the value of a particular parcel. The other 3 are politics, the
local market, and the availability of financing. These factors came into
play in a recent tax appeal case I settled.

I had already settled nine cases in this particular county with reductions
ranging from 24-59%. The assessor brings up one of these settlements that
was in the adjacent city to the subject property and proposed the same
settlement amount.

I responded if the property was the same in character I would recommend the
taxpayer accept the offer. Two of the four characteristics, market
conditions and financing, were very similar. The land that was previously
settled is awaiting recovery in the housing and financial markets to
complete the subdivision but physically and politically ready to go.

Neither the political nor the physical piece are obvious on the subject
property. You can drive by the property and it looks nearly as development
ready as the one in the next town. So its easy to understand how assessors
overvalue land.

The political piece: the property that was previously settled had a
preliminary plat approved for over a hundred lots. The subject property,
while adjacent to development, has not yet been annexed into the City and
isn't scheduled to develop until 2020 in the comprehensive plan.

The physical piece: to serve the subject property with sewer requires a lift
station at an estimated cost of $1,000,000.

Once I introduced these facts into the negotiation the taxpayer got an
additional 25% reduction from the assessors first offer for an overall
reduction of 36%.

There is still time to appeal your 2010 property tax assessment. For a free
evaluation email me your property ID and the property location along with
your phone number to heresthedirt@visi.com