Wednesday, March 31, 2010

Property Tax Appeals and Income

Property Tax Appeals and Income

When you file a property tax appeal on property that has income you may be
subject to the "60 day rule" which states:

"Information, including income and expense figures, verified net rentable
areas, and anticipated income and expenses, for income- producing property
must be provided to the county assessor within 60 days after the petition
has been filed"

This is clearly applies for office, industrial, retail and apartment
buildings. But what about vacant land?

To be on the safe side, when I file a property tax appeal that includes land
rental for farming I do ask for this information from the property owners.
But I hit an interesting one this week.

The assessor inspected the property, saw sand mining activity, and looked to
be attempting to invoke the 60 day rule to have the petition tossed out.
There were two issues at play here in the taxpayers favor:

1) No income was coming to the developer who owned the land. He had a deal
with the excavator extracting the dirt that the excavator could sell the
excess dirt and keep the proceeds.

2) A prior tax court case, Menards vs Sherburne County from 1998. Sherburne
County filed a motion to compel discovery of sales and income information.

The court ruled: "The central question in this matter is whether
owner-occupied property which has no rental income falls within the data
production requirements of Minn. Stat. § 278.05, subd. 6. We find that it
does not"

It was a nice try by the assessor. Keeps me on my toes.


Monday, March 22, 2010

Skip the Board of Review

Skip the Board of Review

I spoke with a developer last week about his property taxes. While he agreed
the assessments were way too high, he had given up fighting them. The local
assessor wouldn't change the values. Then the developer went to the local
board of review which also resulted in no change.

Last year I attended a local board of review to represent 6 taxpayers.
Granted, many who protest their assessment in this venue, or any venue,
whine! I haven't found whining to be an effective strategy for ANYTHING. I
came to the meeting armed with well documented valuation reports. Results?
No changes to any of the properties at the Board of Review.

So the taxespayers filed Tax Appeals in Hennepin County. Hennepin County is
different than most of the other counties. There are 8 "super cities" where
there is a City assessor and Hennepin County is not involved in the appeals:
Bloomington, Brooklyn Park, Eden Prairie, Maple Grove, Minneapolis,
Minnetonka, Plymouth and Richfield. Many of the cities in Hennepin County
have hired Hennepin County to be their assessor. And some cities have hired
private individuals to be their assessors but Hennepin County handles the
appeals. And this is the category these 6 appeals fit into.

Hennepin County was great to work with. The assessor spent nearly a whole
day with me visiting the properties that the private assessor had valued. He
did very thorough research and these are the results of these 6 appeals:

1. House reduced $38,000

2. 5 Lots. No change, which is rare for me because I only accept appeals
that I believe I can get a reduction. The assessor and I used different
comps. And, while I still think his values are too high, he can support
them. All we can ask from the assessor is that they have solid data to
support their opinion of value. Its rare to find 2 appraisers arrive at the
exact same value.

3. Land reduced $373,000 or 49%.

4. Land reduced $95,000.

5. Land reduced $80,000

6. The big one: land reduced $817,000 or 65%!

And recall the Board of Review gave NO reductions on these properties.

Skip the board of review for your Pay 2011 values. And you only have until
April 30th to file a tax appeal for your 2010 taxes.

Tuesday, March 9, 2010

A Different kind of Bus System

A Different Kind of Bus System

When I was in San Francisco a couple years ago we waited a ½ hour to get on
a bus, only to have the driver pull over after a mile, order everyone off
the bus, and he took his lunch break!

In Grand Cayman not only will the buses pick you up and drop you off
anywhere along their route - they actually chase you down if you're walking
and beep their horn and ask if you want to ride!

Curious at why these drivers are so solicitous I asked one how the system
works. He said he owns the 15 seat van and pays all of his maintenance,
insurance and gas. And pays the government $285 a year for his route, which
includes his medical exam. Fares are $2.50 - $5.00 U.S depending on the
route and 100% goes to the bus owner-with no taxes. So drivers have a profit
motive to keep their buses full of paying customers. I saw a driver let off
a rider at the Texaco station with an ATM so she could get her bus fare then
get back on the bus. And another driver sat for a while on the side of the
road, waiting for a lady that took his bus to work every day.

The government provides a parking lot as the "downtown depot" with a shack
and guy to direct people to the right buses. And a sticker with the bus
route number for the vans, which were really clean. It helps if you like the
driver's taste in music. I was glad I brought my MP3 player-which also
helped drown out a passenger singing loudly on the bus.

Government finance in the Caymans is vastly different from Minnesota. No
income tax. No obvious sales tax. Caymanians and Cayman Islands companies
are not subject to any form of direct taxation. However, the Cayman Islands
Government's primary source of income an import duty of 20% levied against
goods imported into the islands plus various licensing fees. The main source
of government revenue are tourist fees and a 10% government tax added to all

For real estate there is a one time 6-7.5% deed tax at purchase.