Assessment issues tax DOE

By Jason Ferguson

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A seemingly perfect storm of events that includes relatively new Department of Equalization (DOE) staff, unfamiliarity with the Computer-Assisted Mass Appraisal (CAMA) system the office uses and the county’s need to bring its valuations back in compliance with state law led to some property in Custer County being assessed at dramatically higher values, it was learned at the special May 8 meeting of the Custer County Commission.

The meeting was called in response to questions from some county residents about the precipitous rise in their property values when the most recent assessments were mailed by the DOE. One man who came before the county commission at its regular May 1 meeting said his property values had risen by 40 percent, even though he had done nothing to enhance the value of the property.

At the special May 8 meeting, the commission held a conference call with Bob Ehler, president of Vanguard Appraisals, Inc., which supplied the county’s CAMA software. Ehler said when he found out the county’s issues, he thought it would be good to explain to the commission how the values changed so dramatically and how it can be addressed for next year’s taxes.

For the past few years, the DOE has been limping along on a few fronts, including not having full property information in its CAMA system, being unfamiliar with all the ways the CAMA system can make property value adjustments and being out of compliance with state law in assessing property values.

DOE department head Patty Caster has been warning about the impending assessment increases since December 2017, when she told the commission many structures in the county had not been assessed at their market value for at least two years. The result is the county being noncompliant with state law and facing the possibility of state intervention.

At that time, the county’s non-agricultural median ratio was 82.4 percent, so a home that sells for $100,000 in the county on average is assessed only at $82,400 of its value.

By law, the county has to be at least 85 percent of market value on its ratio. The closer the county gets to 100 percent, the better the adjustment factor it receives. Full and true property assessments are adjusted (the adjustment can be positive or negative) to provide a taxable value for equalization. Sales of properties in the county from the previous year are used to determine the sales ratio, which in turn gives the adjustment factor.

Caster had warned the commission that big jumps were coming—whether the county imposed them or the state did—and those jumps are now being realized on residents’ assessments.

Ehler remotely controlled a computer that displayed on a screen in the commission room to show how another issue the commissioners were concerned about—how much more stick-built homes had risen in value than manufactured and mobile homes.

Using a table in the Vanguard program, Ehler showed how costs were raised — something that hadn’t been done for seven years — and how depreciation values were raised. 

These adjustments were made in the assessing process for the first time in several years, since all the county property information had been gathered and entered. 

Previously, the depreciation tables were set to 2012 levels. Because manufactured homes depreciate much more quickly than stick-built homes, the seven years of depreciation slowed the rise in those homes much more than stick-built homes.

Ehler said the analysis done by the DOE office was limited to the manual costs and depreciation tables, which only scratched the surface of the software’s capabilities and therefore caused some of the issues.

“In my opinion, they should have gone further with their analysis, with their adjustments,” he said.

Ehler said, while stick-built home valuations were not dramatically off-base, there are likely some depreciation adjustments and comparing sale prices to actual values that need to be done on those homes. Manufactured homes are likely undervalued, he said.

Ehler said, while he understands it is too late to fix the issues for the previous year’s assessment, there is an easy fix for next year. Sales can be observed and analyzed and the depreciation reset based on what sales indicate. That will increase the value of the manufactured homes so the ratios are more in line with other properties.

“The system has all the tools to fix any inconsistencies in the values,” Ehler said. “It’s just a matter of running the proper analysis, changing tables in the system. This is something we can help Patty and her office do for next year’s assessment.”

Caster said in her 22 years of working in equalization she learned a completely different approach to valuating property and it has been a hard switch to the Vanguard CAMA system. She reiterated that not everything was in the system until this year and it was the first year in seven years for some of the adjustments made.

“There is a lot this system can do if we know how to do it,” she said. “My staff and I have never been trained from the bottom up to know what the system can do.”

Ehler agreed, saying it appears the county spent many years working to get data into the system. Now, he said, it is time to analyze the data and adjust the information to arrive at market values.

“They weren’t quite aware of all the processes they needed to go through,” he said. “Now we will make sure that we help them learn how to make property adjustments in the system.”

Two training days have been scheduled and a deeper dive will be done to make sure the Vanguard system is being utilized to its potential. A full-scale analysis will be conducted.

Caster said the county’s adjustment factor is now .977, which, while still low, does put the county into compliance with the state.

“It’s not going to be an overnight fix,” Caster said, as the bugs won’t likely be completely ironed out by 2020.

When corrections are made, if it is discovered an error was made by the DOE on a property, the property owner can request an abatement for the extra money paid.

Also at the meeting, the commission approved Warnke Brothers Construction as low bidder for two parking garages to be constructed for the county’s highway department. One of the buildings will include an office for the county’s weed and pest department. Warnke Brother’s bid was  $219,000.