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HomeMy WebLinkAboutM051903 1820 Jefferson Street P.O. Box 1220 Port Townsend, WA 98368 James A. DeLeo William S. Marlow Richard A. Broders MINUTES MAY 19, 2003 William S~Mar w Richard A. Br ers James A. 0 Chairman Vice-Chairman Member Chairman William S. Marlow called the meeting to order at 9:30 a.m. in the presence of Vice-Chairman Richard A. Broders and Member James A. DeLeo. The 2002 Board of Equalization reconvened on their own authority to hear the following appeals. HEARINGS Three (3) "Requests for Reconvening" were received by the Board of Equalization for the 2002 season. All were submitted on the basis that the taxpayers met the specific requirement outlined in WAC 458-14-127 RECONVENED BOARDS-AUTHORlTY (l)(c) which states that Boards of Equalization may reconvene on their own authority to hear requests or appeals concerning the current assessment year when the request or appeal is filed with the Board by April 30 of the tax year immediately following the Board's regularly convened session and when a bona fide purchaser or contract buyer of record has acquired an interest in real property subsequent to the first day of July and on or before December 31 of the assessment year and the sale price was less than ninety percent of the assessed value. Having met this requirement, the three (3) taxpayers' petitions were accepted and the following hearings were held: James W. Hainer 2307 Paulwynn Road Wilmington, DE 19810 BOE: 02-68-LO PN: 701195014 Mr. Hainer was not present. Appraiser Robert Shold represented the Assessor's office and was sworn in by Chairman Marlow. The property under appeal consists of approximately 4.23 acres of unimproved land located in Quilcrest View Tracts, Quilcene. The appellant stated on his petition that "Assessed value as of 10/31/2002 exceeds purchase price (8/9/02) by $14,535.00 (38.8%)." The property is currently assessed at $52,035. The appellant believes the purchase price of$37,500 represents the true market value of the property. Mr. Shold explained that this property was revalued in 2002 by a former employee (peter Schuck). In reviewing the sales which were used in valuing the property it appears as though the parcels in this area have sold for varying amounts over the years which indicates to him that each parcel is unique as far as the topography and usability due to their location on a hillside. There does not seem to be an issue with equity in property valuations in this area and there is no reason to believe that this sale is not legitimate. Phone (360)385-9100 Fax (360)385-9382 jeffbocc@co.jefferson.wa.us Board of Equalization Minutes - May 19, 2003 Pa2e: 2 With no further testimony, Chairman Marlow closed the hearing. The Board will decide whether or not it is necessary to conduct a physical inspection ofthe property and make a determination on this appeal later this afternoon. Stanley & Kristyne Messer 46 Village Way #183 Port Ludlow, W A 98365 BOE: 02-70-LO PN: 955 000 011 Mr. and Mrs. Messer were present. Appraiser Robert Shold represented the Assessor's office. After explaining the hearing process, Chairman Marlow swore them in. The property under appeal consists of approximately y, an acre of undeveloped land (Lot 11) located off of West Go Ollila Road on the Coyle Peninsula. Mrs. Messer stated that they purchased this property in November 2002 for $5,000. To provide some background in how the sale came about she explained that she and her husband also own property across the street from this parcel and during a visit to that property they noticed a Real Estate company "for sale" sign on the subject parcel. Some time later when visiting the area again they noticed a small handmade "for sale" sign had replaced the Real Estate company "for sale" sign on the property. They decided to call the owner to inquire about the price of the property and discovered that the property had been on the market for several years. It was first listed for $12,000 and then was reduced to $10,000, then $8,000 and finally $6,000. He said that he was currently asking $6,000 or best offer. Later, after giving it some thought, they called the owner back and offered $5,000 which he gladly accepted. Currently the property is assessed at $10,000. The appellants estimate the property value to be the purchase price of $5,000. Mr. Messer added that most ofthe lots on that street are difficult to sell because there are no utilities. Mrs. Messer stated that they paid $10,000 for all four (4) of the lots they own across the street which breaks down to $2,500 per lot. Mr. Shold stated that he has not personally been to the property as it was inspected by a former employee (Peter Schuck). The Assessor's records indicate Mr. Schuck visited the property in September 2001. While that was quite awhile before the purchase of the property took place, in looking at the sales which have occurred in the area, there is no information which would support a value higher than what the appellants paid for the property. Given the evidence that the parcel was exposed to the market for a length of time, he feels a value of $5,000 is fair. With no further testimony, Chairman Marlow closed the hearing. The Board will decide whether or not it is necessary to conduct a physical inspection of the property and make a determination on this appeal later this afternoon. Renee Brown P.O. Box 34 Chimacum, W A 98325 BOE: 02-71-C PN: 956300310 Ms. Brown was not present. Appraiser Robert Shold represented the Assessor's office and was previously sworn in by Chairman Marlow. The property under appeal is an industrial hangar located at Jefferson County International Airport. The appellant stated on her petition that the property was "Purchased for less than 90% of Board of Equalization Minutes - May 19, 2003 Pa2e: 3 the assessed value." Currently the property is assessed at $41,950. The appellant estimates the property value to be $32,000. Mr. Shold stated that these hangars/units are valued strictly on a market approach based on their sale price. The appellant's purchase price of this property is less than the current assessment. While this hangar is one of the larger units, it will still only house one plane, similar to the smaller units. The extra square footage it contains may not warrant such a significant higher valuation compared to the smaller units. In his opinion, this particular unit was overvalued. Discussion ensued regarding sales of various hangars/units. With no further testimony, Chairman Marlow closed the hearing. The Board will decide whether or not it is necessary to conduct a physical inspection of the property and make a determination on this appeal later this afternoon. In addition to the above appeals, two (2) more petitions were timely filed and accepted from two (2) different taxpayers. One (1) taxpayer is appealing a senior citizen exemption denial and the other is appealing a change of value notice for personal property. Hearings follow. Phyllis E. Patch 145 Engel Road Port Townsend, W A 98368 BOE: 02-69-E PN: 001 294 026 001 294 030 Ms. Patch was present along with her daughter, Judy Skogen and another representative, David Pratt. Lead Property Technician Sherrie Shold represented the Assessor's office. Both parties were sworn in by Chairman Marlow after he explained the hearing process. The appellant is appealing the Assessor's denial of senior citizen exemption status and subsequent removal from the Senior Citizen Exemption program for 2003. Ms. Patch explained that her other daughter, son-in-law and grand-daughter have moved into her house while they are trying to sell their house. When their house sells, they plan to purchase her house. Ms. Patch has a trailer on the property where she can go to have some privacy while her family is staying with her. The trailer is not a permanent fixture on the property as she plans to travel with it this summer visiting other family members. The Assessor's office has taken away her senior citizen exemption because this trailer is located on the property. She noted that she pays for the licensing ofthe trailer when it is due and has no intention of making it a permanent residence on the property. For clarification purposes, Ms. Shold explained that the reason this property has two (2) parcel numbers is that by law the senior citizen exemption can only be applied to the residence and one (1) acre of land. Any residual acreage must be value at highest and best use. Ms. Patch owns over one (1) acres ofland, therefore, a parcel number was assigned to the house and one (1) acre receiving the exemption, and another parcel number was assigned to the residual acreage. The property is still one (1) piece ofland, the second parcel number is assigned for record purposes only. Ms. Shold continued with her testimony stating that the exemption was not removed because she moved a travel trailer onto the property, but rather, it was removed because Ms. Patch stated she was living in the travel trailer and her daughter and her daughter's family were living in the home. In order to qualify for the exemption, not only does a person need to own the property, but, they also must occupy the house. The basis for denial of the exemption is that Ms. Patch does not reside in the house for which she Board of Equalization Minutes - May 19, 2003 Pa2e: 4 was receiving the exemption. Ms. Shold stated that if Ms. Patch occupied the home with her daughter and her daughter's family, then she could reapply for the exemption, however, she would need to report the amount of income her daughter's family contributes to the home, as all household income has to be considered in determining whether or not a taxpayer qualifies for an exemption. Ms. Patch stated that the house is still her home and all of her belongings are still in the house. There has been no change in that regard. She is at her house a lot, but chooses to live in the trailer because she likes her pnvacy. Ms. Skogen (Ms. Patch's daughter) stated that her mother is in the house the majority of the time. She added that her sister and brother-in-law who reside in the house do not contribute monetarily to the household. Her mother (Ms. Patch) pays for everything. They are not contributing a cent. Ms. Skogen asked what percentage of her mothers time must be spent in the house to qualifY for the exemption? If she spends most of her time in the house, but sleeps in the trailer, does that mean she's not living there? Ms. Shold replied yes. Ms. Skogen asked if her mother would qualify for the exemption if she moved back into the house? Ms. Shold confirmed that Ms. Patch does not qualify for the exemption for 2003 taxes payable, however, if she moves back into the house she can reapply to receive the exemption for future tax relief. Ms. Skogen asked if the taxes would be prorated for this year ifher mother moved back into the house now? Ms. Shold replied that if Ms. Patch moves back into the house by December 31, 2003 then she could qualifY for 2004 taxes payable. The taxes are not prorated, she just loses the exemption for 2003. Mr. Pratt asked if it is likely that she will qualifY for the exemption next year? Ms. Shold explained that Ms. Patch will need to reapply for the exemption and include a signed statement that her daughter's family does not pay for any expenses or in any way contribute monetarily to the household (ie. rent, utilities, groceries, etc.) With no further testimony, Chairman Marlow closed the hearing. A physical inspection of the property is not necessary for this appeal, as the issue was the denial of a Senior Citizen Exemption. The Board will make a determination later this afternoon. Kala Point Utility Company Bill Lindeman 260 Kala Point Drive Port Townsend, W A 98368 BOE: 02-67-P PN: 10-51072 David Gooding was present on behalf of Kala Point Utility Company. Assessor Jack Westerman and Kathy Guzman, Lead Property Technician II, represented the Assessor's office. After explaining the hearing process, Chairman Marlow swore them in. Kala Point Utility Company is appealing the assessed valuation of their Board of Equalization Minutes - May 19, 2003 Pa2e: 5 personal property. Mr. Gooding explained that he is filling in for Bill Lindeman who could not be here today. He stated that the Kala Point Utility Company is a private utility company which is regulated by the State. Because it is regulated, it is limited as far as what it can charge its customers. Currently the charge to hook up a water tap is $180. The actual cost to Kala Point Utility Company to hook up a water tap significantly exceeds that amount, but, the company is not allowed to charge for the excess costs. They must incorporate the excess costs into their water rates. The State does not allow private utility companies to bill customers based on market conditions, but rather, the rates are based on the capital amount of the improvements that have been made by the utility company, allowing for a 12% increase in rates based on actual expenses. The utility company is not allowed to have any reserves. Basically, the company's assets are equipment to produce water. This equipment has a fair market value based upon an amount agreed to by a willing buyer and a willing seller. In valuing the property the Assessor used sales oftwo (2) other utility companies which are not comparable to the Kala Point Utility Company Those sales included more than just the equipment. Those utility companies sold with the right to produce income and have a positive cash flow. Accounting records through December 31, 2002 show that Kala Point Utility Company has yet to generate a taxable profit. It has been in existence since approximately 1975. Mr. Gooding moved into the Kala Point community in 1976 and served as the President of the homeowners' association in 1982. One of the concerns of the homeowners at that time, and probably still today, is nobody knows who controls the water. The homeowners' association looked into acquiring the utility company for a nominal amount in 1982. The association's concern at that time was that they did not have any reserves in which to support the water system. During a discussion he had with Mr. Westerman, he was told that Mr. Lindeman had communicated to the Assessor's office that the market value of a utility company may range somewhere between $800 to $1,200 per tap. While Mr. Gooding does not have the specific numbers, he was informed by Mr. Westerman that there are approximately 450 taps available in the Kala Point Community, which would provide for a fair market value of$450,000. Currently the property is assessed at $449,750. The net assets of the equipment used at Kala Point, including sales tax and after depreciation, is closer to $200,000. In fact, Mr. Lindeman estimates the value to be $242,968. He noted that Mr. Lindeman estimated the depreciation for 2002 to be $16,000, when in actuality they were able to claim an additional $24,000 in depreciation for 2002. Commenting further on the sales of property considered comparable by the Assessor, he noted that the other utility companies differ in that they are "turnkey" operations and have the ability to generate a cash flow. The utility company in Port Ludlow has the ability to charge $8,000 per hook-up and the PUD No. 1 charges $3,600 per hook-up. That's quite a difference compared to Kala Point Utility Company's charge of $180. Mr. Gooding stated that Mr. Westerman asked him ifhe knew how much the PUD would pay for the Kala Point Utility Company, to which Mr. Gooding answered he does not know. However, as an observer he can say that the PUD and other goverrunental agencies have purchased assets that fold into their entire program, so they are willing to pay more than the private sector would pay. While he's not sure what the PUD would be willing to pay, he does know that the PUD controls the water on all the adjoining properties around the Kala Point community. In closing he stated that he feels the value should reflect the price they would get for the equipment if placed on the open market. They would get pennies on the dollar, unless they had a positive cash flow and a willing buyer, which is not the case at this time. Mr. Westerman stated that he and his office staff do not claim to be experts on utility valuations. There are only three (3) private utilities for profit in Jefferson County. Two (2) of them sold in 2001 and were used as comparable sales during the 2002 revaluation of Kala Point Utility Company Mr. Westerman acknowledged that the degree to which the State Utility and Transportation Commission regulates sewers, such as the utility company in Port Ludlow, is much more liberal versus their regulation of water. This is why the utility company in Port Ludlow can charge $8,000 for sewer and water hook-ups, plus bill for a monthly fee which is in excess of what would typically be collected from a water standpoint. He believes that all three (3) of the utility companies are limited with regard to their water. The point the appellants are trying to make is that the income Board of Equalization Minutes - May 19, 2003 Pa2e: 6 which can be generated from the sewer is not as regulated as the water, sales of sewer/water utility companies are not as comparable as they might be to strictly water utility companies. However, given the fact that there only three (3) utility companies in Jefferson County, comparable sales are fairly limited. For equity purposes all three (3) utility companies were valued using the same methodology. In reviewing Mr. Gooding's tax preparations it lists salaries and wages as $62,722 for 2001 and a management fee of$48,000. When you look at capitalizing the net income, of which there hasn't been any recently, he asked if the $48,000 management fee is part ofthe $62,722 for salaries and wages or is it separate? Mr. Gooding explained that $48,000 was paid to Mr. Lindeman to manage the utility company. The $62,722 reflects the costs of the employees dealing with repairs, maintenance and installation. Mr. Westerman stated that there is actually $110,000 in total salaries and wages. He could argue that for a utility company that doesn't do much, a $48,000 management fee could be capitalized by someone who might purchase the property as an income source, but, he trusts both Mr. Gooding and Mr. Lindeman and if they are willing to make it clear that they believe this property is not worth any more than what they have claimed on the petition and that it would not sell for more than that amount if placed on the open market, then he would go along with that. Mr. Gooding stated that he feels a bit awkward because he does not know what the fair market value is for the property and Mr. Westerman is saying that he would trust his judgement. He stated that he does not a have a judgement. rfhe was a willing buyer he would be looking at the cash flow. The water rights have value and there is a cashflow, but, ifhe doesn't operate the company himself, he is going to have to find someone to be the general manager. It would be nice to be able to capitalize on the $48,000, however, someone has to work for that. This appeal focuses on the personal property component. It seems most appropriate to value this property based on historic costs. He noted that the County has also benefitted in a small way, as the costs listed on the depreciation schedule include a sales tax component which was paid as part ofthe acquisition price. Mr. Gooding stated he would like to present a copy of the company's 2002 tax return and depreciation schedule which was just completed last week and was not available prior to the deadline for submitting their appeal. Chairman Marlow asked Mr. Westerman ifhe objected to the Board accepting the additional information, since it was not presented seven (7) business days prior to the hearing? Mr. Westerman replied he did not object and requested a copy of the additional information be provided to the Assessor's office for their records. The Board agreed to Mr. Westerman's request and reviewed the additional information. In response to a question posed by Vice-Chairman Broders about the utility company in Gardiner, Mr. Westerman stated that there does seem to be a market for private utility companies, although it is somewhat limited and probably depends on the unique characteristics of each utility company. Discussion ensued regarding Kala Point Utility Company's ability to increase their rates by 12%. Chairman Marlow asked if the rates can be increased on an annual basis? Mr. Gooding explained that the utility company is allowed to generate 12% in profits which is already built into their pricing. Prices do not change until it is approved by the State Utility and Transportation Commission. . . Board of Equalization Minutes - May 19, 2003 Pa2e:7 Chairman Marlow asked if the utility company holds any profits or if they are required to maintain a net profit of zero ($O)? Mr. Westerman explained that Kala Point Utility Company is restricted from increasing their rates until they can prove that their costs have increased. With no further testimony, Chairman Marlow closed the hearing. A physical inspection ofthe property is not necessary for this appeal as the issue relates to personal property. The Board will make a determination later this afternoon. Another "Request for Reconvening" was received by the Board of Equalization for the 2002 season. It was submitted on the basis that the taxpayer met the specific requirement outline in WAC 458-14-127 RECONVENED BOARDS-AUTHORlTY (1)(a) which states that Boards of Equalization may reconvene on their own authority to hear requests or appeals concerning the current assessment year when the request or appeal is filed with the Board by April 30 of the year immediately following the Board's regularly convened session and when a taxpayer requests and submits to the Clerk of the Board, a sworn affidavit stating the notice of change of value for the assessment year was not received at least 15 days prior to the deadline for filing the petition and can show proof that the value was actually changed. Having met this requirement, the taxpayer's petition was accepted and the following hearing was held: Bruce and Wanda Anderson 186 Bywater Way N. Port Ludlow, W A 98365 BOE: 02-72-R PN: 821265036 Mrs. Anderson was present. Appraiser Robert Kingsley represented the Assessor's office. After explaining the hearing process, Chairman Marlow swore them in. The property under appeal consists of a house located on approximately 5.61 acres at 186 Bywater Way N., Port Ludlow. Mrs. Anderson stated that they just recently built their home which they paid for using a construction loan in the amount of $286,000. They are delighted that the value placed on their home by the Assessor is more than their loan amount, because they also put a lot of "sweat equity" into it. However, they feel that the assessed value does not reflect fair market value. The assessed value is even higher than their bank's appraisal of the property. They realize that the County assesses "sweat equity" and that it is an advantage to them if they ever sell the property, but, they do not believe that they could sell the property for the current assessed value. The property is currently assessed at $607,140 ($69,660 for the land and $537,480 for the improvements). The appellant's estimate the value to be $560,000 (a breakdown between land and improvements was not provided). She compared the home located across the street to their home, stating that their neighbor's house has a lot more amenities, fronts the water with an unobstructed view, yet only has a slightly higher assessment. Mr. Kingsley stated that he has not personally been to the property as it was inspected by a former employee (Peter Schuck). He noted that in reviewing the records he needed to correct some of the square footage figures, adjust the quality and grade factors and modify the number of plumbing fixtures. After making these adjustments he calculated a lower assessment which is closer to the appellant's estimate of value. This property is in the 2003 revaluation area and needed to be revalued anyway, so he made the necessary changes which will go into effect this year. Board of Equalization Minutes - May 19,2003 Pa2e: 8 Mrs. Anderson added that after they built the house, an adjacent property owner built five (5) sheds less than three (3) feet away from their property line. This same property owner burns his trash right on the property line. She stated that they would not have purchased their property had they known that these things were going to occur with the neighbor's property. With no further testimony, Chairman Marlow closed the hearing. The Board will conduct a physical inspection of the property and make a determination later this afternoon. The meeting was recessed at approximately 12:15 p.m. The Board reconvened at 2:30 p.m. with all members present. DETERMINATIONS James W. Hainer 2307 Paulwynn Road Wilmington, DE 19810 BOE: 02-68-LO PN: 701195014 The Board reviewed all the information presented by both parties. It was agreed that the purchase price of the property represents true and fair market value. Vice-Chairman Broders moved to overrule the Assessor and reduce the land value from $52,035 to $37,500 (no improvements currently exist on this parcel). Member DeLeo seconded the motion which carried by a unanimous vote. (See hearing above) Stanley & Kristyne Messer 46 Village Way #183 Port Ludlow, W A 98365 BOE: 02-70-LO PN: 955 000 011 The Board reviewed all the information presented by both parties. It was agreed that the purchase price of the property represents true and fair market value. Vice-Chairman Broders moved to overrule the Assessor and reduce the land value from $10,000 to $5,000 (no improvements currently exist on this parcel). Member DeLeo seconded the motion which carried by a unanimous vote. (See hearing above) Renee Brown P.O. Box 34 Chimacum, W A 98325 BOE: 02-71-C PN: 956300310 After reviewing all the information presented by both parties, the Board determined that the Appellant's estimate of value best reflects true and fair market value ofthe property. Vice-Chairman Broders moved to overrule the Assessor and reduce the improvement value from $41,950 to $32,000 (the land on which the improvements are located is leased and is not under appeal). Member DeLeo seconded the motion which carried by a unanimous vote. (See hearing above) . . . Board of Equalization Minutes - May 19, 2003 Phyllis E. Patch 145 Engel Road Port Townsend, W A 98368 BOE: 02-69-E Pa2e: 9 PN: 001 294 026 001 294 030 After reviewing all the information presented by both parties, the Board determined that the law clearly states that the home subject to the exemption must be occupied by the person receiving the exemption. Since the appellant currently does not reside in the home receiving the exemption the Board is compelled to uphold the decision ofthe Assessor to remove the exemption for the year 2003. Vice-Chairman Broders moved to sustain the Assessor. Member DeLeo seconded the motion which carried by a unanimous vote. (See hearing above) Kala Point Utility Company BiD Lindeman 260 Kala Point Drive Port Townsend, W A 98368 BOE: 02-67-P PN: 10-51072 After reviewing all the information presented by both parties, the Board determined that this property is substantially different from other private utilities that have recently sold, and the estimated valuation presented by the appellant represents true and fair market value. Vice-Chairman Broders moved to overrule the Assessor and reduce the personal property value from $449,750 to $242,968. Member DeLeo seconded the motion which carried by a unanimous vote. (See hearing above) Bruce & Wanda Anderson 186 Bywater Way N. Port Ludlow, W A 98365 BOE: 02-72-R PN: 821265036 The Board reviewed all the information presented by both parties and conducted a physical inspection of the property. It was agreed that the value of the improvements should be reduced to reflect the true and fair market value. Vice-Chairman Broders moved to overrule the Assessor and reduce only the improvement value from $537,480 to $500,340. The land value remains the same at $69,660 for a new total valuation $570,000. Member DeLeo seconded the motion which carried by a unanimous vote. (See hearing above) APPROVAL OF MINUTES The Board approved the actions taken on this date (May 19, 2003), upon the completion, review and signing of the minutes. With no further business before the Board of Equalization for the 2002 season, the meeting was adjourned. /' " I I AVest; i I ~ Ii ~ ' , ~ " , . , " .,C,',\." LkC" Jt9n i. Lun grell, , ~ fthe ,~~ , ) JEFFERSON COUNTY BOARD OF EQUALIZATION I _ ^-., ~ 10w,Chairm tZ /f2t c<> J s A. DeLeo, Member