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The Times
  • Dear Monty: Challenging real estate tax assessment for non-delivery of service

  • Reader question: I live in an over-55 community. We do not receive full services from the city. For example, in the winter no street plowing, no regular police patrols. Can I successfully challenge the real estate taxing rate from the city because of reduced services? John T.


     

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  • Reader question: I live in an over-55 community. We do not receive full services from the city. For example, in the winter no street plowing, no regular police patrols. Can I successfully challenge the real estate taxing rate from the city because of reduced services? John T.
    Monty's answer: Hello John, and thanks for your intriguing question. The basic answer is that you would not prevail. When the assessor considered the assessment of property values in your development, they looked at the condo docs and then at the marketplace. What a fully informed buyer is paying for the units, knowing that the street plowing, police patrols, trash pickup and more, are paid by the homeowners association (HOA)? They base the assessment on market value.
    To challenge the assessment means having to establish the assessor made an error. If the assessor did not make an error, then consider the possibility of deeding the roads to the city and making them public. You are worried about snowplowing. What will you do when the sewers need replacing? Before undertaking this project, it would be prudent to do research:
    1. In your declaration of condominium documents, does an individual unit owner’s action create a liability? Asking as an individual unit owner, or an officer of the HOA association makes a difference. As you continue reading, the potential downside of challenging the assessment as an individual unit owner will become clear.
    2. The history of the association at formation and the recording of the condominium plat required approval from the city. This was a function of the original developers negotiating with the municipality. The developer made choices on a range of issues in the development, including who owns the roads. Privacy is a consideration in keeping the roadway. Understanding the history of those negotiations is relevant in considering a change. The roads are now private, or the city would be plowing them.
    3. What are the details of the plat? Age and number of units are crucial. If the plat is 20 units versus 300 units, size will be a consideration as each unit is a voter in that city. If doing this as an individual, you may be asked, "Where are the rest of your neighbors tonight," at the appeals panel meeting. Age of the project can be a factor for two reasons: 1. Municipal codes change over time, which could have an impact, and, 2. Condo documents have evolved over the years, getting more sophisticated with time.
    4. Have you researched the public records in other condominium developments in the city? Are other comparable units with public streets and police patrols paying a similar amount of tax? Consider whether other unit owners are willing to pay higher real estate taxes for privacy.
    Today, many cities are squeezed for cash. Their retirement plans are underfunded, benefits are rising, and expenses keep growing. They seek opportunities for more income. You may unwittingly turn a savings appeal into a tax increase for yourself and all your neighbors if the city determines the property is worth more.
    Page 2 of 2 - If you are convinced a tax inequity exists, discuss it with the association board to see if you can persuade them with your findings. Have the answers to the questions above before going to them. Completing this exercise could change your perception. If not, convincing the board will afford a better chance to succeed and remove potential personal liability.
    There are private companies that provide a "tax reduction" service. They earn a "success only" fee based on sharing the tax savings with the property owner when they prevail in an assessment appeal. Most often their client base has large tax bills. On your own, the tax savings involved with one unit is not enough compensation for the work involved. If your HOA endorsed the idea and there are 300 unit owners, I suspect a tax reduction service will talk to them. They do the kind of research discussed earlier before deciding to represent the association. If they agreed to take the job, there is an increased chance of success than by going it on your own.
    I hope this information is helpful, John. Ask me other questions. Good luck resolving your tax issues.
    Monty 
    Richard Montgomery gives no-nonsense real estate advice to readers’ most pressing questions. He is a real estate industry veteran who has championed industry reform for more than a quarter century. You can ask him your questions at DearMonty.com by clicking the "Ask Monty" button."

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