The Sarpy County assessor took a beating July 23 when the Sarpy County Board sided with an independent appraiser on 50 disputed property valuations.
Of approximately 450 valuation protests, appraiser Kenneth Bickstrom and County Assessor Dan Pittman agreed on all but those 50. In a single vote, commissioners overruled Pittman in every case, granting residents the lower valuations recommended by Bickstrom.
The 4-1 vote was a dramatic reversal of a decades-long practice in which the County Board, acting as the Board of Equalization, usually accepted the assessor's rulings over independent appraisers, or “referees.” That left protesters no choice but to appeal to the Nebraska Tax Equalization and Review Commission in Lincoln.
Commissioner Tom Richards, whose District III seat encompasses Bellevue east of 36th Street, was the lone vote against approving Bickstrom's assessments. He said commissioners permitted an unelected appraiser to set county tax policy instead of an assessor who is answerable to voters.
Richards said a referee should present only new information previously unavailable or unknown to the assessor. It is not enough to have a different opinion, he said.
“It is not the referee's job to decide what the tax rate in Sarpy County will be,” Richards said. “The assessor is the duly elected person to do that.”
A focal point of the debate was Pittman's longstanding insistence on valuing the acreage on which a farmer's house sits as though it were residential land instead of agricultural land. Farmers have insisted that that “first acre” is just another agricultural acre that should be valued at about one-tenth the value of residential land.
Commissioner Don Kelly, whose District I seat extends across south Sarpy County from Bellevue to Springfield and encompasses much farmland, agreed. He said his Bellevue house sits on about one-third of an acre, along a lake, and is served by a paved road, sewers and all utilities.
That is often not the case for isolated rural properties, he said.
“It strikes me as a fairness issue,” Kelly said. “I think we've been doing an injustice to our rural landowners, and the Board of Equalization has a chance to correct that.”
Other protesters complained Pittman failed to assess low-income housing developments — which restrict their rents — lower than developments that operate in the free market where profit potential is higher.
Shaun James, an attorney representing Walnut Creek and The Orchards senior housing developments, said the income restrictions imposed on such developments reduce their market value.
“Nobody's going to buy a property that has a 40-year restriction on how much you can charge,” she said. “It's inconceivable to think that you're going to pay four or five million dollars for a property you have no control over what the rents are going to be.”
Bill Truax, developer of the properties, said Sarpy County's high valuations caused him to move two new developments valued at a combined $46 million, just north of the Sarpy County line into Douglas County.
“I think for our investor base, sensitivity to property tax assessment is a very real consideration,” Truax said. “The economics just don't pencil.”
Rich John, senior commercial appraiser for the assessor's office, said property is assessed according to state law, which grants tax credits to companies providing low-income housing, but does not grant property tax relief.
He said the assessor's office has addressed that issue before the state equalization and review commission “several” times and has always won.
“They don't get special assessment by law,” John said.
Richards said the board made a mistake in setting a precedent that will impact the tax revenues of every political subdivision in the county because cities use the assessor's valuations to set their tax levies.
The fiscal challenges posed by the lower valuations will be modest this year, but are likely to grow next year when word spreads that challenges can result in tax breaks, he said.
Jerald Vinduska, who owns property at the western edge of Sarpy County acknowledges that could happen, but believes the county should not increase its revenue by over-assessing.
Vinduska's was one of the 50 protests approved by the board.
He said the range of tax savings for those whose protests were successful is between $800 and $1,200 a year.
He personally expects to save $1,000 on a valuation reduction of about $55,000.
“It's pretty substantial,” Vinduska said. “The assessment is six to 10 times more than it should be, and that is costly.”
Pittman said he has not decided whether to appeal the board's action to TERC.
He said he is reluctant to challenge his own County Board, which would require him to hire an outside attorney at taxpayer expense. On the other hand, he said, he believes the board incorrectly approved the protests, which next year will lead to significant revenue losses for governments across the county.
Pittman said he is confident he would prevail on appeal.
“I'm still trying to get my mind around what the goal of the board was,” he said. “I think they were aware of the fact that the assessor had been successful at defending these appeals concerning the rule-valuation model.”