Property owners across the state may question their assessments from time to time and may very well not agree with the stated value of their property, which determines the annual property tax owed.
What happens when the county you live in arbitrarily institutes new assessment guidelines that substantially increase your assessed value? That is exactly what happened to some property owners in Northern Nevada and their story follows.
In September 2008, two groups of property owners in Incline Village and Crystal Bay received rebates on property taxes paid to Washoe County, plus six percent interest. After fighting their tax assessments through a maze of bureaucratic red tape and courts, their efforts finally paid off when the Supreme Court agreed the methods used to assess their parcels were unfair.
Property owners in the two small communities on Lake Tahoe were shocked when they received new property assessment valuation cards from the Washoe County Assessor in December 2002. Their property taxes had increased by an average of 49 percent in one year, and in a few cases, taxes had increased as much as 375 percent. The property owners banded together and formed the Village League to Save Incline Village Assets.
New appraisal methodologies created by the Washoe County Assessor were to blame for the enormous increases. The appraisal methods used were creative to say the least. Some lakefront properties were valued by the size of the rocks on their beach; other properties were classified according to the view they had of the lake. These methods had not been approved by the state and they were not applied to other areas of Washoe county.
The new assessments also created a disparity between lakefront parcels located in different counties. A home in Washoe County could be assessed at five times the value of a similar home in Douglas County. Maryanne Ingemanson, president of the Village League, said the owner of one parcel in Washoe County paid $70,000 in annual property taxes, while a comparable parcel in Douglas County paid only $19,000.
The Village League filed the first lawsuits in the fall of 2003. One of these, the Bakst case, involved 17 parcel owners, who protested their assessed property values for the 2003-2004 taxable year. In their first court victory in 2006, the judge indicated that Lake Tahoe property owners had been overcharged some $30 million since 2002-2003 and continued to be overcharged $7 million each year.
A second case, the Barta case, involved 37 parcels assessed for the 2004-2005 tax year. In both cases, the Supreme Court ruled that the assessments had been unfair and the court demanded a rollback to the 2002-2003 assessment levels. Although taxpayers have won two cases, seven cases are still pending, covering tax years from 2003 to the present. Some involve all the property owners in the area and others involve specific groups.
The County has made it difficult for property owners to get their assessments resolved. First, they send out the notices in mid-December when they are most likely to get lost in the rush of holiday mail. Then, they give people only a few weeks to file a protest. If taxpayers decide to protest, they have to attend hearings, hire an attorney, go to District Court and possibly even the Supreme Court. For most people, the legal fees would cost much more than the tax relief they are seeking.
Assembly Bill 489, passed by the 2005 Legislature, applies a three percent increase cap on the tax bill for an owner’s primary residence. However, if you are starting with an inaccurate assessment, property owners will still be overcharged, and the overcharges will still slowly continue to mount.
The burden of proof falls squarely on the shoulders of property owners who believe they are being inaccurately assessed. When money is plentiful and the economy is moving, most homeowners do not undertake the task of investigating their property taxes. But you can bet with the current economy, more and more property owners are paying attention. Conversely, with tightening government budgets, counties are looking for more ways to generate revenue.
It appears there is a perfect storm brewing for even more lawsuits over property taxes.
