Red Willow County assessor Kristi Korell and county commissioner and board of equalization chairman Steve Downer examine the valuation of a McCook home and comparable properties during tax valuation protest hearings Monday afternoon.
Connie Jo Discoe/McCook Gazette
McCOOK, Neb. â€” Red Willow County commissioners who listened Monday afternoon to property owners protest their homesâ€™ property valuation assured them that none of them are writing the rules.
â€śNo one in this room made the rules,â€ť commissioner and board of equalization chairman Steve Downer told several homeowners who are upset â€” â€śIâ€™m mad â€¦ mad,â€ť one said â€” about the property valuation that will determine their tax bills after levies are set in October.
â€śI donâ€™t know how you can keep raising our taxes,â€ť one homeowner complained. Commissioner Jacque Riener replied that, by law, the county canâ€™t not keep up with valuation changes, which may (or may not) increase taxes. County assessor Kristi Korell told the homeowner, â€śIf we donâ€™t keep up with valuations, the state will tell us where to set them.â€ť
And Downer added, â€śNo one in this room is making these rules. Weâ€™re just trying to abide by them.â€ť
Downer, Riener and Earl McNutt started annual protest hearings Monday afternoon after they met as a board of commissioners Monday morning.
The first protester was near tears, telling how sheâ€™s dealing with leaky egress windows, water in her basement and an obstinate ex-husband.
â€śThereâ€™s work that needs to be done in my house. Because of my health and disabilities, Iâ€™m not able to do anything with it,â€ť she said. â€śI donâ€™t ask for much,â€ť she said, requesting that commissioners reduce the valuation of her house from $48,700 to $38,500. She said what she called an â€śappraisalâ€ť done by a McCook real estate agent supports her request.
Korell explained that the valuation of residential properties is determined in part by market value and recent sales (within the past two years) of comparable properties. â€śComparable properties,â€ť or â€ścomps,â€ť take into consideration, among other things, location (nearness), total square footage, age, style (one-story, two-story, split level, etc.), garage (yes or no, attached or detached), basement (finished, partially finished or not).
Houses similar to the homeownerâ€™s have sold for $45,000 to $52,500, Korell said. She explained that what the homeowner called an appraisal is actually a comparative market analysis, (which is not as detailed as an appraisal done by a professional appraiser) and uses older homes as comparable properties.
Properties are also judged on â€śconditionâ€ť and â€śquality.â€ť The â€śconditionâ€ť of a property is determined by its care, or the lack of care. Condition is rated â€śpoor,â€ť â€śaverage,â€ť â€śvery goodâ€ť or â€śexcellent,â€ť and in + or – increments.
The â€śqualityâ€ť rating of a property is determined by its construction and is rated â€ślowâ€ť to â€śexcellent.â€ť
A low rating in either or both condition or quality can result in a lower valuation. Remember, however, that allowing a home to deteriorate to justify a lower valuation can affect a propertyâ€™s value at time of resale.
Korell said that Nebraska law requires that residential properties be valued for tax purposes at 92-100 percent of fair market value â€” what the property would sell for (not the initial asking price) under normal conditions.
Korell reported to commissioners in her â€ś2018 Plan of Assessmentâ€ť that the median level of value for residential properties in Red Willow County is 94 percent. It was 93 percent last year. If the state finds that Red Willow Countyâ€™s residential properties are not valued within the 92-100 percent range, it can demand that they be valued at 100 percent of fair market value.
The womanâ€™s greatest distress, however, became apparent when she cried, â€śBut I canâ€™t afford a $10,000 hike in my taxes.â€ť Hereâ€™s the thing: Itâ€™s not her taxes that are going up by $10,000. Itâ€™s the valuation of her home thatâ€™s going up by $10,000.
Korell explained that the actual amount of the homeownerâ€™s taxes will be determined after taxing entities like the county, the city, the schools and the college set their levies in October. The homeowner asked, â€śI know they need money, too. But youâ€™ll still do this, raise our taxes, even though weâ€™re hurting, ourselves?â€ť
Multiply her homeâ€™s valuation by the tax levies, and that will determine her tax bill, Korell said. McNutt said that, at the new valuation, a quick calculation shows that the countyâ€™s portion of the homeownerâ€™s tax bill would increase only by about $31.
The assessorâ€™s office completes physical inspections of residential properties every six years. Houses are not valued on an individual basis. The assessorâ€™s office does mass appraisals of houses within neighborhoods, not appraisals of individual houses.
The assessor does not compare the percentage of increase from one house to another within a neighborhood. Every property is not increased by the same percentage because that would miss individual updates or situations of concern in condition and/or quality.
The protest process, however, does allow a property to be judged on its own merits, or demerits. After a property owner files a protest, he/she is given an opportunity to discuss concerns with commissioners. Commissioners and the assessor will do a drive-by inspection, and, if allowed by the property owner, they will view a propertyâ€™s interior. Homeowner can also provide the commissioners and the assessor with photographs of the interior if they wish.
Commissioners and Korell thanked the homeowner for filing a protest, because itâ€™s the starting point at which they can review a property and its valuation. The homeowner declined to let commissioners and Korell see the interior of her home.
Downer said they would provide her with a decision in writing by July 25. If she is not satisfied, she can file a further protest with the Nebraska Tax Equalization and Review Commission (TERC) in Lincoln.
â€” An Indianola resident said, a little sheepishly, that it seems he bought the house and lot for the great black walnut tree in the backyard. â€śI bought the walnut tree in the backyard and got the house,â€ť the hobby-woodworker admitted, with a somewhat lopsided grin.
The tree is wonderful and will be great to work with in his shop, he said. He also thought he might be able to provide a bit of community improvement by taking care of the property.
This is a perfect example of how deceptive the exterior of a house can be. The pretty powder-blue siding, decent windows and somewhat historical feel of this houseâ€™s exterior are misleading about the interior. Itâ€™s been gutted, what lathe-and-plaster walls remain are cracked. There are no floor coverings, no water and no electricity. The foundation is crumbling red brick. There have been many owners, but no oneâ€™s lived in the house for years, the property owner said.
The homeowner asked that the countyâ€™s valuation of $50,136 (determined in part, yes, by the appearance of the exterior) be reduced to $5,000, which is what he paid for the property a year ago.
â€” One homeowner told commissioners and Korell that he compared his percentage of increase with all of his neighbors. â€śMy valuation increase is excessive. Iâ€™m on a fixed income and retired. A $500 increase in taxes is a pretty big bite when youâ€™re on Social Security,â€ť he said.
Korell told the man that properties like his â€” rural but still close to a major highway â€” can sell higher than similar houses in town or further off the highway.
Korell said that itâ€™s difficult to compare a 2,000-square-foot house with one thatâ€™s substantially smaller, so assessors use value per square feet to try to equalize the properties. A mobile home in the homeownerâ€™s neighborhood sold for $188 per square foot, and his is valued at $79.70 per square foot. A similar stick-built home sold for $85 per square foot, she said.
â€” Another homeowner, probably not too far away, said that her barn is about to fall down and should have zero value. â€śItâ€™s unsafe to walk in,â€ť she said. â€śThereâ€™s no value to it.â€ť
Korell said the standard practice is not to â€śno valueâ€ť something unless itâ€™s been torn down. She has placed a value on the barn of $1,358, with an 88 percent depreciation.
Korell said that the house is valued as it is, at $65,188, because comparable homes â€” although admittedly newer than the homeownerâ€™s 140-year-old house â€” are selling for $75,000 to $100,000.
McNutt said sometimes itâ€™s unfortunate that sales drive valuations. â€śPeople really like rural homes,â€ť he said, and often pay up for the location as much as for the house and/or outbuildings.
Riener said that small acreages sell very well, and often drive up the value of neighboring similar properties. The homeownerâ€™s entire property (with the land valued at $25,900) is valued at $91,088. Riener said, â€śSome people even like these older houses. We can line up a lot of people who would pay $91,088 for your acreage.â€ť
Riener said, almost thinking out-loud, that at some point, some consideration must be given to homes built in a flood plain, that they shouldnâ€™t be valued like one not in a flood plain.
â€” A rural McCook homeowner said that the property valuation of the home and land that he now owns has quadrupled in value since 2000. â€śThis is out-of-line,â€ť he said.
The property is another small acreage close to a paved road/highway.
â€śBuyers are buying small sites like this,â€ť McNutt said. â€śYou get a willing buyer and a willing seller, and some sites are selling for bizarre prices.â€ť And those sales, however exorbitant they may seem, are part of whatâ€™s driving the market, he said.
â€” Korell told a Driftwood Precinct landowner that land taken out of irrigation is still taxed as irrigated land. The landowner wants the valuation of his land slashed nearly in half because he has enrolled it in a USDA Conservation Reserve Program (CRP) cost-share payment program for the next 15 years.
Korell said she has very limited sales of CRP land to track valuation changes.
The man paid $595,000 for the 130-or-so acres in 2011. He requested that its current value of $410,470 be reduced to $220,523.
â€” Korell explained to a rural Bartley couple that their 10 1/2-acre rural residential property is valued at $18,000 for the first acre, $2,000 an acre for the next nine acres and $1,000 per acre beyond that which remains as non-income-producing home site.
The homeowner was not complaining, he said, about the value placed on his home, well and outbuildings (except that the siding was bought â€ścheapâ€ť and â€śdamagedâ€ť), but on the nine acres valued at $2,000 each. â€śItâ€™s nothing more than trashy trees, the creek, marijuana and thistles,â€ť he said. Hmmm â€¦ commissioners and Korell contemplated.
â€” Another rural resident, this one of McCook, said she was â€śmad â€¦ madâ€ť about her property valuation. â€śMy place is getting pretty run-down and the garage is leaking,â€ť she said. She said she canâ€™t keep up since her husband died.
She continued, â€śRed Willow County is the fourth poorest county in the state, and Social Security isnâ€™t giving any raises. Yet you keep raising our property taxes. My house is outdated inside and outside, and Iâ€™ve seen another outdated one thatâ€™s not getting sold. I have no idea what this place would bring now.â€ť
Korell said her office based the houseâ€™s valuation, in part, on value per square foot, with the homeownerâ€™s house estimated at $92 per square foot and comparables at $99 to $111 per square foot. The length of time on the market is not taken into consideration, she said.
Several homeowners told the board and Korell, â€śI havenâ€™t made any improvements in the house.â€ť
A misconception in property valuation is that â€śimprovementsâ€ť mean remodeling, expanding, renovating, shingling, painting, installing new doors and/or windows. In a tax-valuation context, â€śimprovementâ€ť means anything that adds to the value of the original piece of land; the house itself is an â€śimprovement.â€ť
Expanding a house, of course, is an increase in total square footage. The addition of an outbuilding, such as a garage, adds value to the property. Remodeling, renovating, new doors/windows, etc., is considered in the condition rating of a home.
Itâ€™s important to remember that an increase in a propertyâ€™s valuation does not mean the ownerâ€™s tax bill will increase by the same amount or percentage.
In theory, if a governmental entity or other tax-asking jurisdiction keeps its budget stable and does not increase its tax levy, an increase in a propertyâ€™s valuation does not automatically mean that taxes on the property will go up.
It is taxpayersâ€™ responsibility to be informed about the budget processes of their cities/villages, county governments, their schools and colleges, and anyone else who requests their money. They need to let those who set the budgets for tax-payer-supported entities know that taxpayers demand conservative-minded elected officials and penny-pinching budgets and that they do not want increased tax bills.
Some homeowners qualify for â€śHomestead Exemptions,â€ť which provides relief from property taxes by exempting all or a portion of the valuation of the homestead from taxation. The state of Nebraska reimburses counties for the reduction in tax revenue as a result of approved homestead exemptions.
A homestead exemption is available to: Persons over 65; qualified disabled individuals; and qualified disabled veterans and/or their widow(er). The applicants must own and occupy the home. There are sliding-scale income limits and homestead value requirements. The filing date is Feb. 1 through June 30 every year.
For more information, contact Korellâ€™s office at (308) 345-4388.
Commissioners and Korell have a couple more days of protest hearings before the July 25 deadline for their decisions.
Property owners who are dissatisfied with the decisions can appeal to the Nebraska Tax Equalization Commission (TERC) for a filing fee of $25.
The TERC is a constitutional body created by the Nebraska Legislature in 1996 to provide a simple, inexpensive avenue of appeal for property owners to challenge the assessment of property in Nebraska.
A TERC appeal form is available at Korellâ€™s office or by downloading and printing the form at: terc.ne.gov/appeal_process