ASSESSMENT LITIGATION: How to Build a Defensible Record 2017 LWM Assessor Institute, Lake Lawn Resort, Delevan Presented by Amy Seibel & Shannon Krause
What type of valuation year? Revaluation Year Maintenance Year
Revaluation Year Maintain good records and charts for the basis of your valuations: Land Sales create database/spreadsheets by class, neighborhood, use-zoning Lease Data Accumulate Income and Expense Data mass mailing to all commercial properties Organize I&E info by type, ie. Office (Class A, B, C), retail, apartments, hotels, etc.. Use lease data from the personal property returns Improved Sales Analyze sales to create sale price per square foot of properties sold Use sales to determine cap rates and vacancy percentages Investigate sales by use type outside of your municipality if you have limited activity. Use DOR website, Loopnet, CRexi, call neighboring assessors, etc.
Maintenance Year No change in value or permit activity Review prior year documents or revaluation data Check for any new activity on property Google it, any recent advertising; for sale or lease? Recent permit activity? Applied for conditional use permits or variances? Redevelopment of site? Check with planning/economic department. Request Income and Expense data Typically a 3-year history is best Check Register of Deeds office for a recent mortgage If a recent mortgage is recorded typically an appraisal has be done
Currently in Litigation Perform a write-up on subject property to show that you reviewed any new or pertinent information that may affect its value. Review prior years work file Any new activity on subject property Google it, any recent advertising; for sale or lease? Recent permit activity? Applied for conditional use permits or variances? Redevelopment of site? Check with planning/economic department Send letter asking if anything new T/P wants assessor to consider Check Register of Deeds office for a recent mortgage If a recent mortgage is recorded typically an appraisal has be done
Create a work file Documenting items that you used and or considered when making valuation decisions should be kept in the parcel file. Sold property listings Listed for sale Advertised for lease flyers or info on internet Conditional use permit on subject property (if applicable) Developers Agreements, Leases Plan Commission submissions / determinations Copies of any recorded documents; deeds, mortgages, assignments of leases.. Real Estate Transfer Return Form Excerpts from WPAM, Case Law, Articles/Publications, Treatises.relied upon If property is being actively advertised for lease of sale obtain information from listing broker Any personal contact should be noted and kept in parcel work file (name of contact, date of contact, content of discussion, if email contact keep copy of email or archive in an email folder) Remember, any information in the work file including notes and hand written comments can be, and most likely be used by the plaintiff in defense of the case.
Investigating the Sales Sale of the Subject & Comparables Markarian Hierarchy Tier 1 Sale of the Subject Property Sales Validation Send sales questionnaire to buyer/seller Contact Brokers or Buyer/Sellers directly (use eretr for contact information) Any public information you are able to obtain, i.e.. Offering flyers, MLS data Tier 2 Sales of Comparables To further validate your subject s sale, investigating comparable sales may be necessary Look for similar properties in your jurisdiction, if not validated be sure to vet the sale Check the internet, MLS, commercial sale websites to locate like properties Contact neighboring assessment offices/firms It is extremely important to document all points of contact when adding this information to your work file in support of your value determination.
Investigating Sale cont d Tier 3 All Other Information Income Approach Request 3-year I&E data or whatever income info they have available Full Copy of Lease(s) Cost Approach Actual construction costs Request and/or subpoena G702 AIA Tenant Improvements Balance Sheets
Investigating Sale cont d All Other Information eretr Title Insurance Policy Assignment of Leases Mortgage Documents Appraisals Sales questionnaires Document all requests/contact Keep inspection notes; dates, time, person(s) you met/conversed with Archive email correspondence Be aware that any part or all of your documentation and emails may be required to be produced if an appeal is pursued.
Standards on Verification and Adjustments of Sales - IAAO
Standards on Verification and Adjustments of Sales - IAAO
Standards on Verification and Adjustments of Sales - IAAO
Standards on Verification and Adjustments of Sales - IAAO
New Construction Request of pertinent data (best if request is via certified mail) Types of information to request AIA construction budgets Fixed assets financial records Balance sheet Tenant Improvements
Open Book Contact from taxpayer or a representative for the property owner Require agent authorization if not working directly with the property owner (state form PA-105) Document all communications with taxpayer or representative Create a form to document contact and requests Maintain hard copy and electronic copies If conversing via email create an inbox folder of all contact Request in writing any data you feel is evidence of the value
Board of Review Process Objection form to be filled out completely. If not clerk should notify If being appealed by someone other than the property owner agent authorization form should be completed and filled out in its entirety. There is very useful data on this form Wis DOR form PA-105 Board of Review subpoena May be necessary if taxpayer/agent did not provide any information during open book Board of Review Waiver requests - lack of information from taxpayers. After receipt of subpoena documents can acquiesce to waiver. If subpoenaed documents show an adjustment is appropriate - need to ask the board to make the adjustment.
Litigation Process Complaint Filed Claim of Excessive Assessment is filed with circuit court - 74.37 Complaint filed within 60 days after BOR waiver is approved If BOR valuation hearing held follow old procedures in court 1 year later Complaint served on municipality have 20 days to file an answer Answer denies the allegation asserted in the Complaint Amount of excess taxes alleged in complaint is a guess on part of taxpayer because is filed before appraisal completed
Litigation Process Scheduling Conference First step is scheduling conference where timeline for litigation is made Deadline for expert reports plaintiff goes first Request workfile at time of expert appraisal report Municipality is second can use assessor or outside independent appraiser Review appraisals common in big cases Surrebuttal report the last word Discovery period determined Final pre-trial and/or trial dates determined
Litigation Process Discovery Process Depositions of experts, appraisers and assessor Interrogatories written interrogatories, request for admissions and production of documents Interrogatory written responses provided and signed off by the assessor. Production of documents -usually assessor property records and workfile of outside appraiser.
Litigation Process - Mediation Courts will order the parties to mediate Mediation is different than binding arbitration Must mediate in good faith Mediator is jointly selected or appointed by court
Litigation Process Pre-Trial Motions Motion In Limine Relevance - Example other assessments not relevant Hearsay example - newspaper articles Exception to hearsay documents relied upon by appraiser and are of a type normally relied upon by similar experts Other Evidence calling Municipalities adversely Daubert Motions Novel untested theories
Litigation Process - Trial A 74.37 action for excessive assessment is a de novo review by the court where the court can hear new evidence submitted by both parties. Bloomer Hous. Ltd. P'ship v. City of Bloomer, 2002 WI App 252, 11, 257 Wis. 2d 883, 653 N.W.2d 309; citing, Nankin v. Village of Shorewood, 2001 WI 92 at 25, 245 Wis.2d 86, 630 N.W.2d 141. Thus neither party should be bound by any evidence submitted at the board of review, as a 74.37 action is de novo for both parties. However, testimony of the assessor at the Board of Review will be used by the taxpayer in an attempt to overcome the presumption. Minimum trial length 3 days Plaintiff s case calls assessor adversely to cross examine how the assessment was set plaintiff tries to show the assessment was not made in compliance with the law. This is where documentation in support of the assessment is important. Plaintiff calls its experts to to show the assessment is excessive because their expert s valuation is a smaller value.
Litigation Process Presumption of Correctness Assessments are entitled to a statutory presumption of correctness pursuant to Wis. Stats. 70.49(2). If by any reasonable view of the evidence the assessment is valid, it must be upheld. Clear Channel Outdoor, Inc. v. City of Milwaukee, 2017 WI App 15, 4, 374 Wis.2d 348, 893 N.W.2d 24 (emphasis added); citing, Bonstores Realty One, LLC v. City of Wauwatosa, 2013 WI App 131, 5, 351 Wis2d 439, 839 N.W.2d 893. The Clear Channel court makes it clear that the presumption sets a high bar to invalidate an assessment. If there is any evidence that the assessment is valid, the assessment must be upheld. Id.
Litigation Process Rebutting Presumption To overcome the presumption the taxpayer must present significant contrary evidence or a challenge will be rejected. Adams Outdoor Advertising Ltd. v. City of Madison, 2006 WI 104, 25, 294 Wis. 2d 441, 717 N.W.2d 803. The taxpayer has the burden of presenting evidence to overcome this burden. Its evidence must compel the conclusion that the assessor's valuation was incorrect. Xerox Corp. v. Wisconsin Dep't of Revenue, 114 Wis. 2d 522, 528, 339 N.W.2d 357 (Ct. App. 1983) (citations omitted).
Litigation Process Trial Court Finder of Fact Applied To The Law Taxation and assessment of property is governed by statute, and the sweep is expansive. Clear Channel Outdoor, Inc. v. City of Milwaukee, 2011 WI App 117, 15, 336 Wis.2d 707, 805 N.W.2d 582. The power to determine the appropriate methodology for valuing property for taxation purposes lies with the legislature. Regency West Apartments LLC v. City of Racine, 2016 WI 99, 23; citing, Walgreen Co. v. City of Madison, 2008 WI 80, 19, 311 Wis.2d 158, 752 N.W.2d 687. It is, of course, a solemn obligation of the judiciary to faithfully give effect to the laws enacted by the legislature,. State ex rel. Kalal v. Circuit Court for Dane County, 2004 WI 58, 44, 271 Wis.2d 633, 681 N.W.2d 110.
Litigation Process Types of Facts the Circuit Court Decides If contract rent is at market If sale is an arms length sale If comparable sales used are similar enough to the subject to be considered truly comparable Credibility of expert witnesses is a factual determination
Resources Sales Data IPAS (DOR sales database MLS (Multiple Listing Service) Xceligent Loopnet SDS (Sales Data Service) Network with Assessors eretr (Electronic Real Estate Return Form) GOOGLE it
Resources Income and Expense Data Xceligent CoStar cap rate studies, vacancies PWC (Price Waterhouse Cooper) Green Street Crexi Network with Assessors Listing broker websites; Anderson, NAI MLG, CRE.
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