Q & A’s About Assessments

Why do we have an assessed value? We have an assessed value because we have a levy from taxing districts.

Again, why do we create the assessed values? To apportion the burden of the property tax over the residents of Lake County.

Is the assessed value intended to reflect current market value? NO! The “market value” estimated by an assessor is very different from the approach of fee appraisers.

Definitions of Fair Cash Value Sec. 1 ‑ 50. Fair cash value. The amount for which a property can be sold in the due course of business and trade, not under duress, between a willing buyer and a willing seller. Sec. 1 ‑ /3%. One ‑ third of the fair cash value of property, as determined by the Department's sales ratio studies for the 3 most recent years preceding the assessment year, adjusted to take into account any changes in assessment levels implemented since the data for the studies were collected.

Vacant homes Distress sales Properties marketed and pulled off the market…not willing to sell in this market…believe that their homes’ values are not reflective of the distressed sales. The real problem is the very high tax rate which leads to high property tax bills.

Township and State Equalization Things tend to flow downhill… The state has an equalization responsibility, county to county burden. The CCAO has responsibility within a county, township to township burden. The approaches used in these processes are very similar. Both use the median ratios of the three years prior to the assessment date. The assessors deal with equity within their jurisdiction. Their approach is not quite as rigid. Yet, the changes assessors make affect how the county equalization process impacts taxpayers. Here in our county assessment officials try to alter valuations with the state’s view of things in mind.

More on Equalization Equalization is a measure of assessment quality. It is based upon hundreds of sales ratio studies in a township. It is a great sample (generally) of where assessments are versus recent sales. It is a direct result of assessors’ decisions, both past ( ) and present (current valuations). It really is not “the county did it!”

Sales Included in Sales Ratio Studies Typical market transactions. No duress. Willing buyer and seller. Properties need to have a prior year assessed value. Some foreclosures and most short sales do end up in the state’s analysis of our jurisdictions. For 2009, we are using 2006, 2007 and In 2007, assessments of sold properties lagged by 10%. In 2008, they are right at 33.33% generally.

What will happen if an assessor reduced values in their jurisdiction by...say 5% this year? Simply, they will get a township multiplier that is 5% higher than what we projected. This will not be due to a county related decision, but rather one that was made at the township level.

Who can change the property tax system in place today? State legislators are the only ones that have the authority to change statutes. DOR (Department of Revenue) does have a role in how they view equalization policy. Yet, the system in place is a rather good one…believe it or not. But, the tax rate issue in our area is a significant difference from other areas of our county and does impact taxpayers.

What are our roles? We, as property tax professionals, carry out state statutes. Treasurer and County Clerk are ministerial roles. Valuation professionals determine estimates of value according to state statutes (1-50 and 1-55).

Where might assessments go in 2010? If we assume that 2008 sales levels, assessments, and resulting sales ratio medians are similar – all townships will see values drop in 2010 (2-4%). With using limited 2009 sales data, the result could be that values drop will 4-9% next year. Yet, this will not mean lower property tax bills! Using a three-year timeframe does mean valuations lag on the way up, and also when things flatten or decline.

The Consumer Price Index For 2008 property taxes, the CPI statistic used was from December 2007 (compared to December 2006). That statistic reflected a 4.1% increase in CPI over the period. That statistic allowed taxing districts to get 4.1% more funds than they received in the 2007 tax year. For 2009, the CPI will be.1%. This reality makes Board of Review cases more important to taxing districts v. PTAB decisions later. For property taxes, the CPI going “negative” does not adversely affect taxing districts.

2009 and 2010 Property Tax Bills We will finally see the case where values stay flat or fall and taxes stay flat or may rise (2010). This validates that it is not an assessed value that makes taxes go up.

Taxpayer Questions Attempt to have taxpayers understand the process, the reason for the assessed value (and methodology), and difference in valuation from the first mortgage appraisal. Well...“What can I do?”…that’s a tough question. Suggest the website, and/or talking to the assessor’s office (not the assessor). There will not be an answer for everyone. Emphasis is on evaluation and fairness, with the valuation approach in mind. If it is fair, in the context of the system, there may not be much for the taxpayer to do.

Other Topics New Assessment Notice - more info related to exemptions and taxing districts. Appeals this year and use of appraisals. Valuation date for appraisals. Encourage taxpayers to read Board of Review rules and information at: Comparable searches on county website…not a substitute for some “footwork” by a taxpayer to confirm the results.