Property Tax Fairness and the Future of Further Reform Ryan Kamrowski, Director of Tax Equalization, Ward County Senator Dwight Cook, Mandan (Dist. 34) Donnell Preskey Hushka, Government Affairs Specialist, NDACo
Ryan Kamrowski Phone: 701-857-6430 Email: ryan.kamrowski@wardnd.com Professional Experience: 2015-present Director of Tax Equalization, Ward County 2013-2015 Property Appraiser, Ward County Education: Bachelor of Science, Business Management, 2011 Bachelor of Science, International Business, 2011 Minot State University, Minot, ND Certification: Class I Assessor, State of ND, Office of State Tax Commissioner Professional Memberships: International Association of Assessing Officers (IAAO) 2014-Present North Dakota Association of Assessing Officers (NDAAO) 2013-Present
Topics of Discussion 2015 House Bill No. 1059 Established new assessor education requirements Amended NDCC 11-10.1-01 and 11-10.1-05, Requirements for assessors based on jurisdictional size Amended NDCC 57-02-33, assessments of unorganized Twp s Created NDCC 57-02-01.1, certificate classifications, education and trasition by July 31, 2017 Exemption & Credit Applications Types of Exemptions Available Types of Credits Available Impact on Local Jurisdictions Ward County s Approach to Verification and Auditing Applications.
Who Are Assessor/Appraisers (Video)
Requirements prior to 2015 House Bill No. 1059 Three classifications of Assessors Tax Director Required 240 hrs of State regulated education to receive certifications Required 40 hrs of continuing education every 4 years to renew City Assessor (Jurisdiction larger than 5000 in Population) Required 200 hrs of State regulated education to receive certifications Required 40 hrs of continuing education every 4 years to renew Township/City Assessor (Jurisdictions with population less than 5000) Required 28 hrs of State Regulated Edcuation or passing grade on self-study exam Required annual attendance to minimum of 4hr class taught by County Tax Director each year.
Requirements to Assess Property in North Dakota Under Current Law (Post HB 1059) Pursuant to N.D.C.C. 11-10.1-01 & 11-10.1-05: The board of county commissioners of each county shall appoint a county director of tax equalization who must be experienced in assessment and equalization procedures and techniques, and who holds a current certification as a class I assessor issued by the state supervisor of assessments. Any city with a population of under 5000 or township may, by resolution of its governing body, retain an assessor who is certified or eligible to be certified as a Class II Assessor who shall retain the powers, duties, and responsibilities of the office. Any city with a population of 5000 or greater may, by resolution of its governing body, retain an assessor who is certified or eligible to be certified as a Class I Assessor who shall retain the powers, duties, and responsibilities of the office. A person may not serve as an assessor for longer than twenty-four months before being certified by the state supervisor of assessments as having met the minimum requirements. The expenses of the city or township assessors must be paid by the city or township exercising this option.
Requirements to Assess Property in North Dakota Under Current Law Class 1 Assessor Class II Assessor Have a High School Diploma or its Equivalent Have a High School Diploma or its Equivalent 180 hrs of State Approved Ed. 80 hrs of State Approved Ed. An assessor certificate is valid for a term of two years An assessor certificate is valid for a term of two years Renewed if holder has completed 20 hrs of approved classroom inst. or seminars during the term of certificate. 20 hrs in 2yrs Renewed if holder has completed 10 hrs of approved classroom inst. or seminars during the term of certificate. 10hrs in 2 yrs
Jurisdictional Cost for Certification Class I Assessor 180 hrs of Education ~$2800 Salary (at median of $45,000/yr) ~$5400 Lodging and Per Diem ~$1800 Total Estimated Cost: $10,000 Cost for Recertification: $800- $2000 every 2 years Class II Assessor 80 hrs of Education ~$1500 Salary (at median of 45,000/yr) ~$1700 Lodging and Per Diem ~$450 Total Estimated Cost: $3,650 Cost for Recertification: $400- $1000 every 2 years
Pros & Cons Pros Cons Uniform Education Cost Higher Quality of Education $3,600 to $10,000 per assessor More Educational Opportunities On site Lack of local jurisdiction involvement Online Resource and Networking Capabilities
What is the Role of Assessors/Appraisers Video)
State Wide Implications Decrease in local assessment official Increase in county and city assessor staff IAAO (International Association of Assessing Officers) parcel count guideline for number of staff: 2500 improved parcels per certified assessor. Ex. County w/ 10,000 improved parcels should have 4 certified assessors dedicated to annual reviews and reassessments of parcels to maintain a fair and equitable valuations Increased cost to local jurisdictions that wish to retain township or city assessor, rather than revert assessments to County
Ward County Implications Number of Cert. Assessors in Ward County (Including City of Minot) 2013 Ward County Tax Equalization: 4 City of Minot: 4 Township & Cities under 5,000 pop.: 22 2018 Ward County Tax Equalization: 6 City of Minot: 5 Township & Cities under 5,000 pop.: 3
Ward County s Solution Increase in Certified Assessors 2 FTE added, one in 2015 & one in 2016 Evolution of Assessment Process Increased efficiency through CAMA program (Computer Aided Mass Appraisal) Utilization of Aerial Imagery Implementation and Integration of GIS software with Assessment Data
1308 Organized Townships (2018) 1000 900 800 How Assessing Requirements Impacted Responsibilities Statewide 999 832 700 600 500 479 511 357 ND Cities 400 300 200 100 147 237 309 210 120 84 137 71 0 Jurisdictions Assessed by the County Jurisdictions assessed by 'local' Assessors Total Number of 'local' Assessors 2013 Townships 2018 Townships 2013 Cities 2018 Cities *2018 NDACo Study
Township Assessing 2013 2018 County 37% Local 63% County 76% Local 24%
City Assessing 2013 2018 County 41% Local 59% County 66% Local 34%
700 600 500 Local (Non-County) Assessors 648 City 400 300 Township 200 100 0 155 City Township 2013 2018
700 648 TOTAL NUMBER OF LOCAL ASSESSORS 600 500 400 300 493 Fewer Assessors 76% Decrease 200 155 100 2013 0 2018 0
Summary of NDACo Statewide Survey Results 76% Decrease in Total Assessors (-493) 84% Decrease in Township Assessors (-427) 48% Decrease in City Assessors (-66) 109% Increase in assessors to County Tax Equalization Offices (+520) Statistics indicate that many County Tax Equalization Offices are currently understaffed to perform fair and equitable assessments
Video
Property Tax Exemption of a Farm Residence
What is the Farm Residence Exemption Exempts, from Ad Valorem Property Taxation, the Residence of an applicant that qualifies for the exemption Applicants apply under one of six categories: Active Farmer, Retired Farmer, Beginning Farmer, Vacant, Farm Laborer, or Surviving Spouse. "Farmer" means an individual who normally devotes the major portion of time to the activities of producing products of the soil, with the exception of marijuana grown under chapter 19-24.1; poultry; livestock; or dairy farming in such products unmanufactured state and has received annual net income from farming activities which is fifty percent or more of annual net income, including net income of a spouse if married, during any of the three preceding calendar years. NDCC 57-02-08(15b.2) In addition to any of the provisions of this subsection or any other provision of law, a residence situated on agricultural land is not exempt for the year if it is occupied by an individual engaged in farming who had nonfarm income, including that of a spouse if married, of more than forty thousand dollars during each of the three preceding calendar years. This paragraph does not apply to a retired farmer or a beginning farmer as defined in paragraph 2. NDCC 57-02-08(15b.5)
Why did Ward County Decide to Preform Audits Had several township boards and many qualifying applicants express concerns about abuse of the exemption. Every other exemption or credit required applicants to furnish income, medical, or financial documents to qualify for exemption Homestead Credit: Medical, Financial, & Income Blind and Wheelchair Exemption: Medical Disabled Veterans Credit: Medical PILOT: Financial & Income Tax Exemption: Financial & Income Farm Residence Exemption: NONE It was determined that Ward County should not show bias for one exemption over another.
Implementation of Audit With the Approval of the Ward County Commission, all applications were audited. Included financial audit for Active, Retired, Beginning, & Laborer categories Included physical inspection to validate vacancy for the Vacant category. Included reviewing death certificated in the recorders office for Surviving Spouse category. (only done to determine the 5 year extension of exemption for those who were active at time of passing.)
Implementation of Audit Mailed all applicants (both county assessed and locally assessed) a copy of the application, letter outlining the audit requirements, the state provided 3 page income verification worksheet, & affidavit to sign if prepared by individual other than applicant. ie: Accountant Requested that all applications and income verification worksheets be return prior to Feb. 1 st as noted on the top of the Exemption Application.
State Tax Dept. Worksheet
So What Happened? Responses from Applicants Several irate and angry phone calls, letters, & emails Concerns from applicants pertaining to return date of application Response from Ward County Commissioners Unsettled by the amount of contacts pertaining to the audit process Unease on the complexity of the State Tax Dept. 3 page Worksheet Ward County Commission Suspended the Audit after 3 weeks Commission requested simplification of the audit process be done before proceeding with the audit
Audit Version 2.0 New and revised Income Verification Worksheet was generated Expanded off of a version that was created by Donald Flaherty, Dickey County Dir. of Tax Equalization 1 page, easy to read, fill in the blank format Extended Deadline for Application and Income Worksheet to township or city equalization meeting
Results of Audit Tax Year 2016 590 Applicants Estimated Market Value Exempt $103,250,000 Estimated Taxable Value Exempt $4,646,250 Estimated Tax Revenue Exempt Tax Year 2017 495 Applicants 95 applicants no longer qualified 16% Market Value Added to Tax Roll $16,474,000 Estimated Tax Revenue $1,022,000 (based on average mill levy in county of 220 mills) $163,100(based on average mill levy in county of 220 mills)
Moving Forward Active Farmer applicants are required to complete income verification worksheet every 3 years Example: qualified 2017 using 2016 income, will need to requalify again for 2020 using 2019 income Retired Farmers will not be audited again unless evidence is present to support otherwise. All applicants changing from Active Farmer to Retired Farmer are require to furnish proof of category reclassification Applicants of Laborer, Vacant, Beginning, & Surviving Spouse categories are reviewed yearly based off of application criteria.
Farm Residence Exemption NDACo Survey 11,400 Approved Farm- Residence Exemptions Reported (40/53 counties) Most Counties determine eligibility: 1-3 years 29 Counties require income verification for farm-residence exemption
Frequency of Utilizing Third Party Appraiser Never 10 Annually 9 Counties Using Annual Third Party Appraisers located in Western ND Once 3 On Request 20 43/53 Counties Responded
14 Cost to Counties for Outside Industrial Appraisal Services 13 12 10 8 7 6 4 3 3 2 1 0 $1-25,000 $25,000-50,000 $50,000-75,000 $75,000-100,000 $100,000+
Counties lack expertise in industrial assessments Very expensive to outsource at taxpayer expense Counties mixed on who should handle industrial appraisals 3 rd party State Appointed Shared County Assessor Industrial Appraisals in ND NDACo Survey
Reflection on Property Tax Changes & Future of Property Tax Reform Senator Dwight Cook, Mandan
Property Tax Reform - Legislative Changes Numerous changes to increase understanding, fairness and transparency in last two sessions Major Tax Reform of Levies (2015) Repealed & Consolidated Levies Enhanced Assessor Training Requirements (2015) Uniform Property Tax Statement Reference in $ not mills Preliminary Consolidated Budget Notice (2017)
Preliminary Budget Notice New in 2018 Replaces current Truth in Taxation Notices Changes Dates for Centrally Assessed Properties & Reporting Requirements Shifts dates approximately 1 month earlier Penalties for late reporting
Preliminary Budget Notice NEW in 2018 Single, consolidated Notice- Includes budget hearing dates & locations for all taxing districts Costs to be shared
Preliminary Budget Notice A taxing district that fails to provide the information required under this subsection on or before August tenth may not impose a property tax levy in a greater amount of dollars than was imposed by the taxing district in the prior year. (N.D.C.C. 57-15- 02.2(1)) Century Code requires taxing jurisdictions to submit Preliminary Budget to County by 8/10 Failure to submit: Held at previous years budget in DOLLARS
Uniform Property Tax Statement
Typical Ward County Assessment!!! (Video)
QUESTIONS/COMMENTS