REAL TALK FROM THE POLK COUNTY ASSESSOR www.assess.co.polk.ia.us SPRING 2013 ASSESSMENTS, ROLLBACKS AND YOUR PROPERTY TAXES Now that you ve received your property assessment for 2013, you re likely wondering how it will affect your taxes. Your assessment is just one factor in your final tax calculation. The rollback, determined by the Iowa Department of Revenue, also plays a key role. The rollback is Iowa s assessment limitation, originally established in the 1970s. It was implemented to help minimize the effect of inflation on property taxes at a time when the country was seeing double-digit inflation. Each year, it limits the growth in the taxable value of residential and agricultural properties statewide to 4 percent. YOUR SITUATION WILL VARY DEPENDING ON YOUR PROPERTY VALUES AND HOW THEY CHANGED COMPARED TO THE STATEWIDE AVERAGE, BUT IN GENERAL, MOST PROPERTY OWNERS CAN ANTICIPATE PAYING MORE IN TAXES STARTING IN SEPTEMBER 2014. WHAT IT MEANS FOR PROPERTY OWNERS Because of the significant increases in farmland values and their assessments this year, the rollback will help limit the property tax increases that Iowa farmers will pay starting in September 2014. For example, a farmer whose assessed agricultural property value increased by 40 percent will only see a maximum of a 4 percent increase in the amount that property taxes are assessed against. In 2012, taxes on agricultural property were only paid on 60 percent of assessed value. Most residential property owners will also see an increase in taxes even though, on average, assessed values statewide are not expected to change significantly. That s because the amount of taxable value on a typical home will still increase about four percent each year. In 2012, residential property owners paid taxes on only 52.8 percent of assessed value. Residential taxable values that have been rolled back to 52.8 percent of actual value will continue to grow for all property owners until taxes are paid on 100 percent of the assessed property value. Your situation will vary depending on your property values and how they changed compared to the statewide average, but in general, most property owners can anticipate paying more in taxes starting in September 2014. Continued on page 2
ASSESSMENTS, ROLLBACKS AND YOUR PROPERTY TAXES Continued from page 1 ROLLBACK EFFECT RESIDENTIAL YEAR 2012 2013 Assessed Value 150,000 150,000 (No change in assessed value) x Rollback % 52.8 55.0 (2013 estimated) Taxable Value 79,200 82,500 x Tax Rate 40 per thousand 40 per thousand (assumes no change in tax rate) Property Tax 3,168 3,300 The chart above shows an example of how a residential property with no change in assessed value this year would be affected by the rollback. Here are some of the key steps leading up to the rollback and final tax calculations. Property assessments are distributed. Property owners who want to do so file appeals with the local Board of Review. The Board of Review determines any assessment adjustments. After the Board of Review adjourns, the assessor files an abstract with the Iowa Department of Revenue reporting the assessed values for each class of property. The Director of Revenue determines the rollback percentage for each year, applying the assessment limitation percentage uniformly to each and every assessed value in the state for a class of property. The auditor calculates the taxable values, taking into account the rollback percentage. The local taxing bodies use these figures when calculating their budgets for the coming fiscal year. See the property tax timeline on page 3 for more details about the property tax cycle. THE EFFECTS OF LOW-INCOME HOUSING PROJECTS ON NEIGHBORING HOME VALUATIONS A research effort conducted by Richard Funderburg at the University of Iowa and Heather MacDonald at the University of Western Sydney (Australia) evaluated the impact of new low-income housing projects on surrounding singlefamily homes in Polk County. The Polk County Assessor s office played an important role in the research by providing historical home valuation data used in their analysis. Results from the research suggested that new low-rise, concentrated low-income housing tax credit (LIHTC) projects are associated with a 2-4 percent slower rate of nearby single-family home valuation, And these results persisted for five or more years after the projects were approved. However, no clear valuation effect appeared when the LIHTC project was high quality and targeted to mixed-income groups. An additional finding showed that neighborhood valuation effects from new construction of LIHTC projects in Iowa that served the elderly experienced a short-lived 2-4 percent faster rate of growth in neighboring single-family home values. Funderberg and MacDonald concluded that concentrating low-income renters in subsidized housing projects causes negative consequences in surrounding properties but that this might be avoided by tenant income mixing and improved site planning and design. For his current research project, Funderberg is evaluating the impact of local development subsidies in Iowa. The Polk County Assessor s office will again play an important role in this research by providing historical valuation data for commercial properties. Funderburg, Richard and Heather I. MacDonald. 2010. Neighbourhood Valuation Effects from New Construction of Low-income Housing Tax Credit Projects in Iowa: A Natural Experiment, /Urban Studies/, 47, 1745-1771.
2013/14 PROPERTY TAX TIMELINE Property assessments were distributed in mid-april here s a look at other key property tax dates to know: Jan. 1 Property assessment (appraisal date) April 15 Deadline for taxpayer notification April 16 May 5 May July 1 Written appeals to Board of Review Board of Review in session Total valuation by class reported to Department of Revenue Aug. 15 Iowa Department of Revenue issues equalization order to adjust values of an entire class of property to statutory level of assessment (if needed) Oct. 15 Nov. 15 Nov.1 Jan. 1, 2014 Board of Review reconvenes if jurisdiction receives an equalization order Deadline for Iowa Department of Revenue to issue rollback factors County auditor certifies taxable value to levying bodies (e.g. county, school, city, assessor and area school) July 1, 2014 Auditor certifies tax list to county treasurer (taxes are due in two payments Sept. 30 and Mar. 31) 2013 ASSESSMENT CHANGES FOR POLK COUNTY CITIES Assessments for 2013 in Polk County dropped an average of 1.28 percent compared to 2012. Here s a breakdown of the changes for each city in Polk County. CITY 2012 TOTAL ASSESSMENT VALUE 2013 TOTAL ASSESSMENT VALUE % CHANGE Alleman 25,036,200 24,733,200-1.21% Altoona 712,098,960 710,427,600-0.23% Ankeny 2,675,846,130 2,650,878,100-0.93% Bondurant 184,192,700 184,395,100 0.11% Carlisle 4,503,900 4,493,000-0.24% Clive 754,895,400 745,536,700-1.24% Des Moines 7,136,792,890 6,974,966,820-2.27% Elkhart 22,599,200 22,609,400 0.05% Granger 16,120,900 16,115,100-0.04% Grimes 461,601,550 460,862,550-0.16% Johnston 1,304,931,510 1,300,280,510-0.36% Mitchellville 57,731,100 57,420,400-0.54% Pleasant Hill 463,158,290 458,091,900-1.09% Polk City 219,913,700 218,802,300-0.51% Runnells 20,011,900 19,902,900-0.54% Sheldahl 6,758,900 6,749,600-0.14% Urbandale 1,986,543,700 1,974,139,800-0.62% West Des Moines 2,597,102,900 2,577,729,500-0.75% Windsor Heights 283,550,900 282,294,390-0.44% Total Incorporated 18,933,390,730 18,690,428,870-1.28% These figures exclude parcels that have a building permit, parcels with class change, vacant parcels, new parcels for 2013 and those with a commercial section in the improvement record.
RESIDENTIAL ASSESSMENT AND SALES UPDATE The following graph shows why assessments continued on a slight downward trend for Jan. 1, 2013. It compares sale prices to assessments for the years 2011 and 2012, with an assessment date of Jan. 1, 2011. The two-year trend line consistently below the 100 percent level indicates properties, on average, have been selling below their assessed value, However, the trend line in 2012 was closer to the 100 percent level, especially through the peak selling period of May through September. 2011-2012 SALES RATIO TREND ANALYSIS 110% MEDIAN SALE PRICE/ASSESSMENT 108% 106% 104% 102% 100% 98% 96% 94% 92% 90% JAN. 2011 FEB. 2011 MAR. 2011 APR. 2011 MAY 2011 JUNE 201 1 JULY 2011 AUG. 2011 SEPT. 2011 OCT. 2011 NOV. 2011 DEC. 2011 JAN. 2012 FEB. 2012 MAR. 2012 APR. 2012 MAY 2012 JUNE 201 2 JULY 2012 AUG. 2012 SEPT. 2012 OCT. 2012 NOV. 2012 DEC. 2012 SALE MONTH/YEAR ASSESSMENT CHANGE DISTRIBUTION FOR 2013 Most assessments in 2013 saw a downward adjustment. The following charts show the percent and dollar changes in assessed valuation for 2013. Both charts exclude parcels that are vacant lots, parcels that have a permit and parcels that have a commercial section in the improvement record. PERCENT CHANGE DISTRIBUTION FOR 2013 100,000 90,000 80,000 70,000 DOLLAR CHANGE DISTRIBUTION FOR 2013 100,000 90,000 80,000 70,000 PARCEL COUNT 60,000 50,000 40,000 PARCEL COUNT 60,000 50,000 40,000 30,000 30,000 20,000 20,000 10,000 10,000 0 0-50.00% -40.00% -30.00% -20.00% -10.00% 0.00% 10.00% 20.00% 30.00% 40.00% 50.00% - 50,000-40,000-30,000-20,000-10,000 0 10,000 20,000 30,000 40,000 50,000 PERCENTAGE CHANGE DOLLAR CHANGE
RESIDENTIAL ASSESSMENT AND SALES UPDATE The following two charts show on average how much the values of homes in Polk County decreased this year based on their value group by average dollar amount and by median percent. AVERAGE DOLLAR CHANGE BY ASSESSED VALUE GROUP 3,000 2,500 2,000 1,500 AVERAGE DOLLAR CHANGE 1,000 500 0-500 -1,000-1,500-2,000-2,500-3,000-3,500-4,000 <= 70,000 70,000 90,000 90,000 110,000 110,000 120,000 120,000 135,000 135,000 150,000 150,000 170,000 170,000 200,000 200,000 250,000 >= 250,000 ASSESSED VALUE GROUP MEDIAN PERCENT CHANGE BY ASSESSED VALUE GROUP 5% 4% 3% 2% MEDIAN PERCENT CHANGE 1% 0% -1% -2% -3% -4% <= 70,000 70,000 90,000 90,000 110,000 110,000 120,000 120,000 135,000 135,000 150,000 150,000 170,000 170,000 200,000 200,000 250,000 >= 250,000 VALUE RANGE CATEGORIES
COURT DECISIONS AND DETERMINING A PROPERTY S WORTH One thing for sure is that there is always room for plenty of disagreement when it comes to determining what a property is worth. A number of court decisions have been important for both the taxpayers and the assessors in approaching hearings on specific assessment appeals.here are just a few holdings of particular interest to assessors in defending an appeal. In Deere vs. Zeiner, 78 N.W. 2 nd 527, 535 (Iowa 1956) the court said, We have pointed out several times that valuations for tax purposes are not capable of exact ascertainment and cannot be more than approximately correct. Tenant improvements should be considered in the assessed valuations, Ruan Center Corp. vs. Board of Review of the City of Des Moines, 297 N.W. 2 nd 538 (Iowa 1980) If there is insufficient comparable sales to value a property using the comparable sales method, the assessor is to use the other factors approach, meaning the assessor should consider all other factors bearing on the value of the property. Equitable Life Ins. Co. v. Board of Review of Des Moines, 281 N.W. 2 nd 821, (Iowa 1979) In Merle Hay Mall vs. City of Des Moines Board of Review, 564 N.W. 2 nd 419, 422 (Iowa 1997), the taxpayer argued the assessor failed to consider the fact that no willing buyer would offer full price for the mall property because it was subject to a very unfavorable lease to Younkers, one of the anchor tenants. The court pointed out that both the lessee s and the lessor s interests are included in the valuation and, while the lease was unfavorable to the mall owner, it was very favorable to Younkers. The court went on to conclude the combined value of the parties interest remains the same. Percentage leases may be considered to the extent they reflect current market rental rates in developing the income approach to value. Riso v. Pottawattamie Board of Review, 362 N.W. 2 nd 513, 516 (Iowa 1985) all else being equal, evidence of sales of nonfranchise restaurant properties is not as probative of the value of franchise-restaurant property as is evidence of sales of other franchise-restaurant properties. Soifer v. Floyd Co. Board of Review, 759 N.W. 2nd 775 (Iowa 2009) When an assessor considers the use being made of property, he is merely following the rule that he must consider conditions as they are. Maytag v. Partridge, 210 N.W. 2nd at 590 (Iowa 1973) POLK COUNTY ASSESSOR S WEBSITE GETS A MAKEOVER Finding information about properties, assessments and taxations just got easier thanks to a refreshed Polk County Assessor website: www.assess.co.polk.ia.us. Be sure to take a look and see how simple it is to find the information you need. And if you prefer searching like you used to, don t worry, you can still access the former site from the new homepage. QUESTIONS? We hope you ve found this issue of RealTalk to be informative. We d like to know what you think. For more information on any of these topics, please contact us. We want to be your resource for property assessment issues. Previous issues of RealTalk are archived on the Polk County Assessor s website at www.assess.co.polk.ia.us. Jim Maloney Polk County Assessor 515-286-3113 Maloney@assess.co.polk.ia.us Randy Ripperger Chief Deputy Assessor 515-286-3158 Rip@assess.co.polk.ia.us