MOUNT VERNON — Does every property owner pay his or her fair share of property taxes? That seems to be the question at the heart of recent actions taken by the Mount Vernon City School District and the Knox County Board of Revisions.
The school district asked the Board of Revisions to reevaluate several properties to ensure the buyer was being charged the correct amount of property tax on the parcels. School treasurer Barb Donohue said it was an effort to make sure other taxpayers are not unfairly picking up the difference in taxes on the previous value and the true sale, or market, value. Because property values are based on an average of the neighborhood property values, if the new owner pays taxes on the actual (higher) sales value, the theory goes, taxes for other residents in the district will then go down.
Knox County Commissioner Allen Stockberger, who serves on the Board of Revisions along with Knox County Auditor Jonette Curry and Knox County Treasurer Sandra Mizer, said it’s a complex matter, and there has been confusion and miscommunication on many levels.
“In the big picture,” Stockberger explained, “Donohue’s theory is valid, but here is an example. AEP recently bought a property that was previously listed as agricultural. Since they paid a commercial/industrial price, that is more than the current assessed value. So, after the appeal by the school district, AEP will pay more for two or three years. The taxes for other district residents, however, will not go down, if at all, until the triennial update.”
Curry explained the triennial update as follows: “Every three years, county property sale prices are accumulated. For this triennial, all sales prices for 2008, ’09 and ’10 will be submitted to the state. The state will then determine what the average [assessed value] should be. The current average for Knox County is about 91 percent.”
“The cases filed by the school board in 2010, which are for tax year 2009, have been settled at 91 percent of actual sales price,” Curry added. “The owner, however, is still only taxed on 35 percent. Say we agree we are going to tax that taxpayer at 91 percent of the sale price. Whatever magic number that is, we’re going to multiply that by 35 percent to get their assessed value, which is then what their taxes are based on.”
“We’ll go to 91 percent of the sale price for the 2009 tax year,” said Stockberger. “Since 2011 is a triennial update year, that value is most likely to go back down some. It [the sale price] will figure in the (county) average and reflect the community neighborhood values.”
The board of revisions, Stockberger said, hasn’t had a lot of experience with appeals that say a property is worth more than its assessed value. “Typically, most of the complaints we handle are the other way around. People say their property is not worth as much as we say it is. We’re not accustomed to people complaining that we didn’t have it valued high enough, as the school district has done in some, mostly commercial, cases. A classic example is the Kroger case.”
Curry gave the specifics. “In the case of the Kroger purchase of Bullock’s Smoke Shop on Coshocton Avenue, we had it appraised at $269,830. The actual purchase price was $1 million. We now have it valued at $915,390, or 91 percent.”
One positive thing that has come out of this, Curry said, is that the auditor’s office is looking more closely at conveyance forms filed by the purchaser, title company or realtor.
“In one case,” she said, “the conveyance form listed the total sale price on a commercial property. That’s why the school filed the original complaint, because their indicator is the sale price. Because of this [appeals] process the schools have opted to go on the originals, it has made the parties involved aware that possibly the conveyance form wasn’t completed correctly. There’s a total price, but did the form indicate all the different things that make up the sale price? You have to separate out the cost of the real estate with other items involved in the sale. The buyer came in and gave us some additional information pertaining to tangible items that were included in the total and we adjusted the real estate value accordingly.”
“We’ve run into several situations like that,” Stockberger said, “where someone’s bought a commercial business, and, unfortunately the person filing the conveyance form for them includes everything. Not only does that skew the record for the true value of the real estate, but they’re actually paying more in conveyance fees than they really need to.”
The appeals filed in 2009, which are for tax year 2008, have not yet been resolved. Curry said those cases are sitting in Columbus with the Board of Tax Appeals. Because of a large backlog, the BTA may not be able to schedule a hearing on them for three to four years. Therefore, Curry said, the BTA has asked the county to mediate the disputes. Letters concerning the mediation process will be sent to the property owners involved, she said.
Several of the tax year 2008 cases, Curry said, involve agricultural property which is taxed on a Current Agricultural Usage Valuation. That means the tax is not based on market value or actual purchase price; it is based on the soil type found on the property. Stockberger said changing the market value on those properties, as requested by the school district, would not result in higher taxes for the property owner nor would the school district get more money for that property.