Friday, June 20, 2014

A bad rap on appraisals?

Written by on March 26, 2014

The website for Miami-Dade’s property appraiser now reports more detailed information about the interior and exterior of properties, which might come as a surprise to anyone researching or buying industrial real estate.

It was certainly puzzling for Barry Sharpe, who said it wasn’t until he began the process of purchasing a warehouse that he discovered its square footage listed on the Miami-Dade website was substantially different from prior years.

“In January, a broker offered to sell us a building with about 21,000 square feet,” said Mr. Sharpe, a broker and president of Barry Sharpe Property Tax Appeal Group. “In March, ready to have the property appraised, we find – to our surprise – that it now measures about 24,000 square feet.”
When Mr. Sharpe noticed the difference on the county appraiser’s website, he said that raised his concern over how the change might impact the market value of his property.

He said such a discrepancy might cause a number of problems because so much is based on square feet, including a tenant’s rent, an insurance company’s estimate of building replacement cost, and real estate agents’ comparable values.

“As an equation, price per square foot is simply the assessed price divided by the adjustable square foot,” he said. “Won’t this price per square foot create valuation problems?”

But Miami-Dade Property Appraiser Lazaro Solis said the valuation of Mr. Sharpe’s warehouse won’t change.

In fact, he said, very little has changed, because what appears as a different number of square feet on the website has always been what was listed in the appraiser’s internal system.

At the request in part of insurance companies and realtors who wanted to see more information, particularly for residential properties, the appraiser’s office launched a new version on the webpage for property searches on March 3.

“Our calculations and how we arrive at value did not change,” Mr. Solis said. “In our effort to put more information on the website, information appears new but it’s what we’ve always used.”
Prior to the launch of the appraiser’s newest version of the property search, the application didn’t report the square footage of office space within warehouse properties.

“This does not impact the assessed value of the property calculated by our office,” said Mr. Solis. “The search now breaks down the square footage of the entire building, including the interior office space, and shows what was never seen on the website before.”

With the new version for a property search, the website reports “Sub Area 1,” which is the outside or “shell” of the structure, and “Sub Area 2,” which includes the build-out.

The aggregate – or adjusted, in the parlance of the website – square footage is being shown on the summary and detailed reports, as well as in the “Property Information” section of the “Property Search” page. The breakdown of the square footage is shown under the “Building Information” section, in the main property search window.

“The outside is valued with a different cost,” Mr. Solis said. “The interior is valued higher because there are more costs associated with the inside.”

The new version of the property search has affected only a few properties – mainly warehouses, he said. “There are over 700,000 buildings in this county. This new information affects about 5,000 properties.”

That’s about seven-tenths of one percent of all properties in Miami-Dade.

Mr. Solis said his office has been trying to let people know about the additional information on the property search.

It’s been less than a month since it was launched, he said, but a button icon next to “Building Information” on each folio will soon thoroughly explain properties.

“We will be updating the site with more detailed information on what the [new numbers] mean,” said Mr. Solis.

Mr. Sharpe is not entirely sanguine about the new website information, particularly the adjusted square footage.

“Most people do not survey their property,” he said. “They look at the square feet listed on the MLS.”

Details: Property Tax Appeal Group: -  Miami-Dade Property Appraiser, (305) 375-3746 or
Miami Today

Thursday, June 19, 2014

Property tax appeals process rigged, audit finds

Boards that consider property tax appeals from the public lack independence and are stacked against property owners, an audit has found.

A state performance audit of county boards that hear property tax appeals by unhappy homeowners and businesses says appeals appear to have been rigged by local government officials who are more interested in safeguarding tax revenues than fairly valuing real estate.

Value Adjustment Boards (VABs) are ostensibly independent decision-making authorities where taxpayers can appeal a property appraiser’s assessment. Yet county and school board interests dominate them.

“Independence in the appeal process at the local level may have been compromised due to local officials involved in the process who may not have been impartial and whose operations are funded with the same property tax revenue at stake in the appeal process,” states the audit released this month by Florida Auditor General David W. Martin.

“Rigged is the very word that a lot of people are using,” said Tallahassee attorney Benjamin K. Phipps, a veteran expert on property tax matters. “They rig it by making sure that the taxpayers don’t get a fair shot, though not in Miami-Dade because they have the only system in the state that’s really fair.”

In Broward County, the audit says the county’s Value Adjustment Board compiled “tracking reports” on special magistrates who recommended large reductions in property assessments to the board and used them to get rid of six magistrates who had given the highest assessment reductions to taxpayers.

“These reports identified and tracked, by special magistrate, those special magistrates who recommended property assessment reductions that either exceeded 50 percent of the original property assessment or exceeded $200,000,” the audit states. The VAB used the information “when considering continuing the special magistrate’s service in the subsequent year.”

In October 2012, an unidentified former special magistrate filed a complaint with the Florida Department of Revenue, which oversees county VABs, exposing Broward’s practice. Asked about it by the state, VAB lawyer Monroe Kiar responded that the practice was legal, “but did not address the issues of transparency and influence on the special magistrates,” the audit states.

Broward County Commissioner Stacy Ritter chairs the county’s VAB. In an April 30 response letter to the auditor general, Ritter defended the VAB and noted that last year it discontinued the practice of targeting special magistrates.

“It should be noted that at all times the Broward County VAB has been transparent and has never unduly influenced the decision of any special magistrate,” Ritter wrote in her response.
“We all really believe they stopped that, of course,” Phipps said with sarcasm. “So how come the same guys [special magistrates] are still there?”

Property taxes in Florida make up about 50 percent of public-education funding and 30 percent of local government revenues, according to the 20-page audit. In 2011, the most recent year for which statistics are available, more than 140,000 tax-adjustment petitions were filed in Florida.

The audit, however, does not say how many taxpayers in South Florida and elsewhere were apparently overcharged, or how much in taxes was improperly collected by cities, counties, school boards and special districts, including the South Florida Water Management District. Likewise, the audit did not address whether tax refunds could or should be made.

As an example of the mindset of VAB officials who place an “inappropriate emphasis on preserving property tax revenues,” the audit quotes remarks by Hillsborough County Commissioner and VAB Chairwoman Sandra Murman at a July 21, 2011, county VAB meeting.

“What you need to look at is the endgame because every review costs us money [and] it affects the tax roll. We allow . . . millions of dollars to be taken off the tax rolls through additional review, the whole VAB process,” Murman said. “I think you have to kind of keep that in mind because as you know and I know where you are educating children, and I’m trying to take care of the needs in the county.”

The audit recommended that the Legislature consider a VAB shakeup to promote fairness for taxpayers who disagree with a property appraiser’s decisions regarding exemptions, classifications and value assessments. Its key recommendations:

• To promote integrity, establish “rules of conduct or ethical codes, with appropriate sanctions” for VAB members and staff, including clerks, attorneys and special magistrates.
 • Create a new process to appeal decisions by the VAB at the regional or state level.
• Require that the majority of VAB board members not be government officials from the county or school board. Today, county VABs have five members: two from the county commission; one from the school board and two citizens appointed by the county commission and the school board.
The audit, conducted between September 2012 and September 2013, examined 15 VABs across the state that it said were representative of small, medium and large counties. Broward, Miami-Dade and Palm Beach counties were included in the audit.

In 2011, Miami-Dade’s VAB saw, by far, the most taxpayer petitions filed — 91,519 — and granted 49 percent of them. In contrast, Broward’s VAB saw about 25,000 petitions and granted 18 percent of them. Palm Beach, with about 8,400 petitions, granted 21 percent.

A central theme of the audit findings is that VABs often do not scrupulously follow state law or rules prescribed by the Department of Revenue, the state entity that oversees VABs.

For example, a VAB is not supposed to hold hearings until its lawyers verify that it has met all legal requirements. Yet VABs in Miami-Dade, Palm Beach and nine other counties could not document for auditors that they had made those verifications. Similarly, the Miami-Dade and Palm Beach VABs could produce no records showing they had verified information supplied by their citizen members in written applications or oral statements.

Moreover, the audit found that VABs in Miami-Dade, Broward and Palm Beach had on multiple occasions issued written decisions that failed to include information required by law, such as findings of fact, conclusions of law and/or the reasons for upholding or overturning the property appraiser’s determination.

Broward Commissioner Ritter took issue in her response letter with some of auditor general’s recommended fixes, including the need for ethics rules.

“The Broward County VAB asserts that at all times its VAB members, special magistrates, members of staff, clerk and attorney have always conducted themselves in a high ethical manner,” Ritter’s response states.

“Broward County has concerns regarding the creation of a regional or state level appeal process,” Ritter wrote. She expressed a similar concern about altering the composition of the board to reduce the clout of government officials on VAB decisions.

Property tax appeal assistance:
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