SUMMARY:

            This resolution proposes a referendum for a Constitutional amendment to provide for property tax exemptions on the difference between the current assessed value and the original purchase price of the property, or if the original price cannot be determined, between the current assessed value and the 2002 assessed value of the property.

REQUIREMENTS:

• A list of definitions of terms in the resolution is included.
• The exemptions would not apply to improvements or additional land after January 1 of the base year [original price or 2002 assessed value], and that property would be subject to taxation.
• County tax commissioners would provide forms for application, and taxpayers would have to file for exemptions with documentation of purchase prices.
• The taxing jurisdiction would have to provide written appraisal reports documenting fair market values subject to:
• • A taxpayer would be able to appeal with a separate appraisal within 45 days.
  • If the taxpayer’s appraisal varies by 20% or less, then the taxpayer’s appraisal would stand.
  • If the appraisal varies by greater than 20%, the dispute would go to arbitration.
  • The cost of the application would be borne by the local taxing jurisdiction, not to exceed $50.
  • The cost of any arbitration would be borne equally by the taxpayer and the taxing jurisdiction.
• If a taxpayer wants a new determination of values, the taxpayer could get an appraisal and then go through the same process outlined above, but in the reverse with the taxing jurisdiction providing its appraisal.
• Purchases of property would have to be a “bona fide, arm’s length transaction, subject to challenge if:
• • The purchase was made by someone with a 20% or greater interest in the purchasing entity, or by an immediate family member of the seller;
  • The purchase was made for less than 75% of fair market value; or
  • The property was obtained through foreclosure.
• If the property is inherited, a gift, foreclosure, or in-kind transfer, the taxpayer would get an appraisal to submit, subject to appeal as outlined above.
• If a taxpayer borrows on the property an amount greater than its base value, the amount borrowed would become the value to be taxed
• Homestead exemptions still would apply, and the exemptions in this proposal would be above and beyond those and any other ad valorem tax exemption allowed.
• To go into effect, there would have to be a local referendum as outlined in the resolution.
• If 50% or more were to approve, exemptions would go into effect on January 1, 2013.
• If rejected, local law could call for re-submission.
• Mill limitations for operation of public schools in effect on January 1, 2011 can be changed  (up or down) only by a majority of voters in a local referendum.

NOTES:

•        Varying assessment values of property could result in confusion, misapplication of the regulations, and could greatly increase bureaucratic procedures, possibly resulting in increasing the size and staff of the bureaucracy.

•        The time required to hold a referendum to change the millage rate cap could cause financial difficulties resulting in budget shortfalls in school systems, especially those with fast growth.

•        The cost of potential arbitration cases could be substantial to the local taxing jurisdiction, even to the point that local taxing jurisdictions would blindly accept private assessments that are substantially lower than the county’s assessment to avoid that cost.  The result could be a slow seepage of revenue over time.