Last week we completed the Board of Equalization hearings. This was an interesting process that was misunderstood, frustrating, and maddening.
Purpose of Board of Equalization
According to Idaho Code 63-502 “The function of the board of equalization shall be confined strictly to assuring that the market value for assessment purposes of the property has been found by the assessor…”
The Board of Equalization (BOE) confirms the assessed market value of a property is in line with market conditions. Bannock County has been experiencing a very strong real estate market. Zillow estimates Bannock Counties’ property values have risen approximately 9% over 2019’s values. (https://www.zillow.com/bannock-county-id/home-values/).
In general, people didn’t understand how the property assessment process works. Idaho Statute 63-301 states, “The assessor shall complete an assessment of ALL real and personal property in his county which is subject to assessment by him on or before the fourth Monday of June.” There are a variety of ways assessments are done. One of which includes an actual walkthrough of the property.
Property Assessment Issues
As I sat in the hearings I realized the Assessor has two big problems. First, they have a limited amount of time to get their assessments done and limited manpower to do it. This means most homes will only be walked through once every four years.
The second big problem is that property values in the county have had lower than market value assessments for years. The state requires property values to fall between 90-110% of the market value. Meaning, if the total assessed values are too low or high we are out of compliance. Low, artificial assessments can lead to big jumps in property values in a strong market. This is what Bannock county has experienced in the last couple of years.
As I sat through the hearings, I struggled with what was going on. The Assessor was trying to correct historical inaccuracies and bring assessed values in line with the market. They were trying to keep the county in compliance with the law. But, this often resulted in properties seeing valuation increases of over 25%.
For the majority of people, this was the second year in a row they had experienced such large increases. There were many instances where assessed property values had increased by $80,000 over two years!
Solving The Valuation Problem
Based on experience, the Commissioners decided to make the BOE hearings as formal as possible. This was to help things move quickly and be as fair as possible to both sides (the Assessor and taxpayer). Both sides had the opportunity to submit evidence to the Commissioners office. But, each side had to provide their information to support their claim up to five days before the hearing.
Idaho Code 63-502 also states, “…the taxpayer shall have the burden of proof in seeking affirmative relief to establish that the determination of the assessor is erroneous, including any determination of assessed value. A preponderance of the evidence shall suffice to sustain the burden of proof.”
Each day I would receive a new pile of packets for the cases we would hear that day. Some taxpayers took their preparation very seriously and provided a preponderance of evidence. Others chose not to offer a preponderance of evidence but argued their case based on an emotional appeal. I struggled with the emotional appeal cases. I believed many didn’t provide a preponderance of evidence as required by law. But I also didn’t feel like increasing property values by 40% was the correct thing either. It was a challenging situation.
I went into the hearings with a strict interpretation of the law. I believed the assessor had done their job. But as I sat in the hearings and reviewed the evidence, I could understand the taxpayer’s grievances. I could see both sides of the argument and I struggled with finding a solution.
Many people were able to get an appointment with the Assessors office to get things changed. These changes included updates to condition, size, shape, and use of the property. In many instances, these updates reduced the assessed value. For those that couldn’t reach an agreement or were unable to get an appointment, the BOE was their next step.
The Simple Solution
In the end, the BOE ended up applying a 9% change to the majority of the cases we saw. Based on the information we had, a 9% increase over the previous year seemed fair. While not quite the figure the Assessor was looking for, it wasn’t always the answer the taxpayer was looking for either.
Taxes are a necessary evil. I like smooth roads, clean water, garbage collection, and a host of other services the government provides. We need taxes to pay for these things. The trick is trying to find the balance between assessments and the market.
The Assessor’s office has a very difficult job to do. They have made great strides in improving their accuracy and have identified areas they can improve. I also felt like the BOE (I came in partway through the hearings) and the Assessor’s office worked well together to find solutions. I look forward to continuing to work together to make this challenging process better.