Board explains its role in tax reassessments on local properties
Published 11:07 pm Friday, October 17, 2008
Editor’s note: In the wake of criticism from property owners at a recent City Council meeting, The Tidewater News invited the Franklin Board of Equalization to write a guest column that explains its role in the city’s biannual property reassessment.
The following information is taken substantially from the “Manual For Local Boards of Equalization,” published by the Virginia Department of Taxation in November 2005.
“The Constitution of Virginia, in Article X, mandates that all property shall be taxed.” The law requires periodic reassessments of real estate in every taxing jurisdiction with no more than six years between reassessments in a county and four years in a city. Some localities have assessors on staff, while others contract with mass appraisal firms.
In 1975, the General Assembly amended the Code of Virginia to require that assessments be at 100 percent of “fair market value.” Virginia does not have a statutory definition of fair market value. Rather the definition has been provided by a long series of court cases and is “… the price which it will bring when offered for sale by one who desires, but is not obliged, to sell it, and is bought by one who is under no necessity of having it.”
Generally this indicates that in order to reflect fair market value a sale must occur between informed parties. “Market value is a hypothetical concept, not an established fact. It is the estimated probable selling price of a property as of a given point in time. It is the point around which market prices will cluster. While market value is hypothetical, “market price … is a fact.”
The appraiser makes an estimate of market value considering such things as general economic conditions, planning and zoning regulations, and sales and cost data since the last reassessment. These result in what is called a “Sales Study.” Having considered these facts, the appraiser applies his best judgment along with appropriate appraisal methods to develop an estimate of market value.
Once assessed values have been established, citizens are given an opportunity to discuss their individual assessments with the appraisal firm. Should that meeting not result in a resolution satisfactory to an individual, a second opportunity is provided in Board of Equalization hearings. A final step in the appeals process is for individuals to seek relief from the Circuit Court.
The Board of Equalization is made up of “local citizen freeholders” appointed by the Circuit Court. “At least 30 percent of the board must be comprised of … professionals in the real estate, construction, financial or legal fields.” “The equalization board may increase or decrease any assessment so that the ends of justice will be served in that the burden of taxation will rest equally upon all the citizens of the locality.”
Of particular note are the things a board cannot do in exercising its duties: “void a general reassessment; order a new reassessment; make overall (blanket) increases or decreases in assessments …; increase any assessment without first notifying the property owner …; make assessment changes that are either retroactive … or prospective …; exempt property; and change the method of valuing a class of property.”
“In all cases brought before the Board of Equalization, the valuation determined by the assessor is presumed to be correct.” The board does not have the authority to change the rate schedules developed by the assessor.
The taxpayer has the responsibility of providing evidence that the property is valued at more than its fair value, that the assessment is not uniformly applied, or that it is not equalized. When considering assessment appeals, the board looks for such things as: factual errors in the property description, improvements to the property since the last assessment that impact on value, other properties in the neighborhood to assure equal application of rates, appropriateness of depreciation and other schedules (building size, construction materials, etc.), factors that might impair the economic usefulness of the property, general property condition, quality of structures, and any other factors that might be appropriate to a particular property.
Bob Petty, Mary Lilley and Leroy Frazier comprise the Franklin Board of Equalization. Their e-mail addresses are email@example.com, firstname.lastname@example.org and email@example.com, respectively.