In assessment shock? Don’t panic just yet. Take action to avoid that big tax hit
Owners of Kansas City’s iconic Country Club Plaza caught a huge break on their property tax bill after the last county-wide reassessment by complaining that they were treated unfairly.
But their good luck may have run out this cycle.
“Their argument that they were not being treated equitably will not work this time,” assessment director Gail McCann Beatty said.
When property values were set for tax values across Jackson County two years ago, the Plaza argued that it had been singled out for a big increase, while the values of adjacent properties went largely unchanged. The county caved when the shopping district filed a formal protest and slashed the Plaza’s estimated $375 million market value by more than half.
But this year, not only has the Plaza’s valuation spiked from about $147 million to now more than $420 million, the owners of neighboring buildings like the Plaza Steppes are also seeing enormous increases. More than double in some cases.
All across Jackson County, it’s the same. Commercial property values range from up to way, way up. On average, commercial real estate’s assessed market values rose 36 percent, compared with an average 16 percent on single-family homes and 18 percent on all residential properties.
And just as some homeowners’ jaws dropped when they saw their values soar above the average, many commercial property owners are experiencing sticker shock and are either rushing to meet Monday’s deadline for filing informal appeals or hiring lawyers to argue their case before the Board of Equalization in July and August.
“They messed it up with such huge changes in one year,” said Ken Block, managing principal at Block Realty Services LLC, one of the largest commercial real estate brokers and developers in the metro area. “You can’t reassess properties and raise taxes that much all at once. They’re trying to change the whole system all at once.”
The system isn’t changing, but the focus of the every-other-year reassessment process has tightened in Jackson County. Not since bi-annual reassessments were first required in the 1980s has county government tried this hard to strictly comply with a state requirement that the market values on the tax rolls accurately reflect what a piece of property is actually worth, rather than some fraction of it.
In hiring Beatty a year ago to head the assessment department, County Executive Frank White chose someone who believes it is her duty to follow the law without regard to the consequences. It’s up to school board members, city council members and other elected officials to adjust their levies downward to help cushion the blow on taxpayers, she says.
“I understand that some people have been hit hard,” she said in a recent interview. “But I have an obligation that they meet market value.”
Beatty was not the lone architect of the 2019 reassessment.
Last year, in a cooperative effort between White’s administration and then-legislative chairman Scott Burnett, the county sought help from school districts and other local governments that get property tax revenue and have often complained about inaccurate assessments.
If those critics wanted to help better ensure the accuracy of the information used to set values on the 300,000 parcels of real estate in Jackson County, then maybe they could help pay an expert to assist the county’s underfunded and understaffed assessment department.
The Hickman Mills, Independence and Raytown school districts were among those who stood forward and contributed $285,000 toward the $450,000 that consultant John Q. Ebert and Associates charged to try to assure more accurate appraisals of properties that have been undervalued for many years.
Beatty acknowledges that many of this year’s individual assessments missed the mark. That always happens, which is why there’s an appeal process, she says.
But all in all, she thinks the process was fair and that most of the values her office set reflect the reality of today’s real estate market. As of Thursday, 8,151 informal appeals applications had been filed by people challenging the accuracy of their assessment notices, representing 2.7 percent of all residential parcels and 2.9 percent of all commercial properties
“I was shocked at how low our values are from market (value),” Beatty said last week while fielding questions from county legislators, whose constituents have been “freaking out,” one said, since assessment notices hit mail boxes early this month.
“It’s all about being equalized,” Beatty said. “We’re closer than we’ve ever been in years.”
A former banker who now runs the property tax-supported Kansas City Library, Crosby Kemper III has been one of the leading critics of Jackson County’s past efforts to set values. In an interview, he said he’s pleased with the county’s attempt to instill greater equity in the tax system, where properties of equal value are listed on the tax rolls that way.
“What’s happening right now is a legacy of a community that paid no attention to the fairness of its tax system for the last couple of decades,” he said.
But Kemper admits to being uneasy about how such a steep bump in values will ultimately affect residential and commercial taxpayers when their taxes are set this fall based on those assessments.
“I’m really worried because we are doing this in one fell swoop,” he said. “Their goal is admirable. I just hope they got this right.”
He and others point across the state line to Johnson County as an example of a local government jurisdiction that appraises property correctly.
It helps that JoCo sets values every year instead of every two. And Johnson County has the staff and technology to do it right, whereas Jackson County is shorthanded because the state of Missouri reneged on a promise it made years ago to pay half of most reassessment costs.
“Jackson County is trying to get the ball rolling on valuations,” said Brian Reardon, president of the Kansas City-based real estate valuation company Bliss Associates. “Johnson County has probably been where Jackson wants to be for several years, maybe longer than a decade.’’
As a result, each year’s reassessment creates far less hullabaloo than the frantic phone calls and high blood pressure that’s animating this year’s process on the eastern side of State Line Road.
Wayne Tenenbaum agrees that the Jackson County assessment department, which he ran back in the late 1970s, is moving in the right direction, yet he also understands taxpayers’ frustrations.
“I think the problem is catching up all at once,” said Tenenbaum, who now handles assessment appeals for property owners. “They are trying to catch up all at once after 20 years of neglect.”
County legislators approved the funding for this year’s reassessment but say they had no hand in planning it. Now they’re hearing anguished and angry complaints from taxpayers and considering what policy options they have.
“I get that JoCo pays appropriately valued taxes,” at-large legislator Crystal Williams said. “But if your valuation went up 300% in one year, wouldn’t you find it disturbing?”
When her aide answers the office phone, it’s often from constituents worried that higher taxes are going to force them out of their homes. Some get angry. Others cry. Williams wishes White’s administration had taken a more gradual approach in raising values.
“At the end of the day, I think we need to bring valuations up,” she said, “but we need a plan.”
Until one materializes, taxpayers can try to get relief through the informal appeals process and try to prove that their house or place of business is worth less than the assessment department says it is.
“Some of it’s not right,” Burnett said.
More than one taxpayer has complained that the county’s computer models erred by inflating land values beyond what they should be in Hyde Park, Beacon Hill and other close-in neighborhoods.
“I have seen land values skyrocket anywhere from 300% to 3500%,” real estate investor and Hyde Park resident Slawik Pech wrote county legislators on Friday. “These valuations will be driving (out) homeowners who have owned their houses for many years and didn’t anticipate redevelopment.”
Beatty has vowed to fix the mistakes, but said she has found no instance where entire neighborhoods were valued incorrectly. Errors are prone to occur when setting values in parts of town where there are a wide range of houses, she said. The more expensive properties unfairly inflate the taxable values of their neighbors.
“When things don’t turn out the way they should, taxpayers have recourse,” Beatty said.
After Monday’s deadline to ask for an informal review, taxpayers seeking a reduction have until July 8 to file a protest with the Board of Equalization, which is where many big commercial property owners plead their cases.
The Plaza’s owners declined to comment on whether they will once again attempt to get their values changed.
Whether or not they are successful in appealing their assessment or decide to sit tight, taxpayers will most likely not pay as much in taxes as the worst-case number printed on their assessment notice.
Except for the Kansas City School District, every other taxing authority is forbidden from reaping a huge windfall from this year’s reassessment process. Something called the Hancock Amendment sets a 5 percent limit on the overall amount they can receive in revenues from increases on existing properties, minus any improvements.
And they can choose to take even less. So could the school district, if it wants to lessen the blow.
Beatty’s boss, chief administrative officer Ed Stoll, reminded county legislators of that last Monday to take some of the heat off of her.
“Her job is set the tax values, not the tax levels,” he said. “She’s doing a very good job.”