JoCo appraisal disparities lead to thousands of appeals. Here's how many could win.

Ron Fugate of Overland Park opened his Johnson County property tax statement late last year and just about fell out of his chair.

His Stoneybrook town home was valued at $263,000, a big jump from the previous year. But he was even more distressed after he checked the county’s property data website and discovered similar townhouses in his block had much lower values.

“The place next door to us, which is a larger property, had an appraisal of about $210,300. How can that be?” he asked.

Fugate is among more than 6,500 Johnson County residents who have appealed the county’s 2018 values for their homes, which are the basis for their assessments and property tax bills.

The reason for most of those appeals: Residents wonder why their appraisals are higher than those of their neighbors. Some differences, such as finished basements, can result in big property tax differences for people living in what appear to be comparable properties.

The number of appeals is up 27 percent over last year as Johnson County property valuations have spiked by double digits this year, especially in Prairie Village, Fairway, Merriam, Mission and parts of Overland Park and Olathe.

Some homeowners, especially those with properties valued between $250,000 and $350,000, have seen their appraisals rise more than $30,000 over the past two years, adding hundreds of dollars to their annual property tax bill.

Fugate got his value adjusted down to $249,000 early this year and has filed an appeal to bring it down more. County appraisal officials say they will likely adjust his valuation downward, as can happen with many appeals. Most appeal hearings will be finished this month, and decisions are expected by May 20.

“We want to have a conversation about the person’s property,” Johnson County Appraiser Paul Welcome said, adding that often homeowners provide information that causes the county to adjust the value. “It’s bringing factual information for us to make factual decisions.”

He has said in the past that as many as half of the appeals may result in an adjustment downward if homeowners provide persuasive and pertinent information.

Appeals increased from about 3,000 in 2016 to about 5,000 last year and total 6,526 this year. The deadline to file an appeal was March 28, and most appeals came from the same cities with the highest valuation increases.

Welcome was actually surprised more people didn’t appeal; about 190,000 residential appraisal notices went out.

He is confident his staff can work through all the appeals by the May deadline.

Welcome and others say there are many reasons why appraisals have risen this year and why those appraisals may vary even within similar neighborhoods.

They say they are estimating the fair market value, or what homes could sell for in this market. Johnson County, particularly northern Johnson County, is a hot real estate market right now, with some homes selling above list price.

"In the northeast part of the county in February, the average closing price was 11 percent greater than the list price," Welcome said. "It's hard to say our values are too high sometimes when (sales prices) are listed higher than we are."

Welcome noted that the state evaluates the county’s appraisal process each year and has given it a good score for accuracy.

County appraisal officials say there are often valid reasons for appraisal disparities within neighborhoods, especially when one homeowner makes interior improvements that would distinguish it from a neighboring property. Officials check building permits and home sales records to try to get accurate information.

The appraiser’s office takes into account not just location and square footage but factors such as finished versus unfinished basements, lot size, age of home, the number of bathrooms, and hot tubs and other specialty features.

“That’s one of the dangers of just looking at a square-foot comparison,” said Jeffrey Ramsey, residential real estate valuation manager for the county. “There are immeasurables as far as condition and upgrades” that also affect the value, he said.

Appraisal disparities

Fugate commends the county for its transparency. Johnson County’s property data website allows the public to see residential property values throughout the county, including surrounding homes that could be considered comparable.

When he started studying the county’s values in his Stoneybrook block, he thought he would find more similarity, since the homes were all built in 1988 and many had nearly identical square footage, floor plans and designs.

But for similar townhomes, he found 2018 values ranging from less than $220,000 to $271,000.

County officials said their information for the higher-value homes was that more interior improvements had been done.

Fugate is appealing the revised valuation of $249,000 for his property and had a hearing last month. The county had listed him as having a 600-square-foot finished basement, but he says it's actually less than 450 square feet.

Lonnie Thompson, one of Fugate’s neighbors with a similar-style home, is also appealing his valuation of $261,000 and is awaiting his hearing date.

“I have the same house as Ron,” Thompson said. “It might vary a little bit, but it’s the same description he has.”

Like Fugate and Thompson, Terry Mykins of Olathe had questions about appraisal disparities.

Mykins has appealed his 2012 home’s valuation of $390,900 as too high. His comparison was a similar house a few blocks away, also built in 2012. That home sold in June 2017 for $361,000 yet was valued by the county at $340,000 for 2018.

Meanwhile, that neighbor’s appraisal report didn’t reflect that it had a finished basement, which Mykins said the county should have known.

"They're not very consistent," Mykins said of the county's valuations.

Ramsey said Mykins’ home has a larger lot size, which partially accounts for its higher valuation. But he acknowledged that the county didn’t accurately account for the nearby home’s finished basement.

“Part of the problem is that home has a basement finish that we didn’t know about,” he said. “We will certainly make that correction for the 2019 valuation.”

The struggle to pay

Welcome said the state routinely evaluates the county’s appraisals and has accepted its valuations.

The Kansas Department of Revenue reviews and evaluates county residential appraisals compared to actual sales, including Johnson County’s. The most recent study available, from 2016, found Johnson County had a score of 92.7 percent on its residential appraisals. That is within the state’s acceptable range of getting to between 90 percent and 110 percent of market value.

“That's confirmation that we’re following the market,” Welcome said.

Even as thousands of residents challenge their residential property valuations, many others worry that the increased appraisals will make it harder for them to pay their taxes.

A legislative proposal seeks to help, but it will have to wait until next year.

Kansas State Rep. Tom Cox — who represents Shawnee, Lenexa and Lake Quivira — said Friday that he has heard from concerned constituents, and he is working on legislation to try to provide some tax relief.

Cox said he’s heard particularly from elderly residents on fixed incomes who have seen their appraisals rise by tens of thousands of dollars, which also increases their property taxes.

“They say, ‘We’re close to being priced out of our homes,’” Cox said.

Some states cap a home’s value based on the owner’s age. But Cox said that can’t happen in Kansas without a constitutional amendment, which is a heavy lift.

Instead, he introduced legislation that would establish a "baseline" property tax owed by struggling Kansans age 65 or older. If their appraisals increase, and the property taxes are $2,500 or lower, the homeowner could defer payment until the home sells or the estate transfers the property in the event of a death.

Because of the crush of other legislative business, Cox said the bill won’t get a vote this session.

“I will be introducing it again at the beginning of next session,” he said. “And I’ll be giving it a real good push.”

This story was originally published April 10, 2018 at 5:30 AM with the headline "JoCo appraisal disparities lead to thousands of appeals. Here's how many could win.."