Tuesday, May 23, 2006

Taxing bodies unite to preserve funding aka Doing every thing we can to grab as much money as we can.

Nothing more than money grubbing. The following article appeared in the Illinois School Board Journal.

llinois School Board Journal
May/June 2006

Taxing bodies unite to preserve funding
by Robert Madonia
Robert Madonia is superintendent of schools for Frankfort CCSD 157-C in Will County.

One problem facing school districts, as well as other taxing bodies, is the constant requests by corporate and commercial properties for a reduction in their assessments. Compounding this concern is that these requests are filed after taxes have been collected.

Thus, if approved, these requests carry the potential of large rebates that can deplete fiscal resources. As this occurs, it also starts to shift the burden of taxation from commercial properties to homeowners.

That's why Frankfort School District 157-C has taken the initiative to organize and chair a "taxing body coalition" to help protect property tax revenue at the lowest possible cost. An additional goal is to make certain taxation is fair.

In addition to District 157-C, taxing body members include: the village of Frankfort, Lincoln-Way High School District 210, the Frankfort Fire Department, Frankfort Library, Frankfort Park District and Joliet Junior College.

"It is only through the Frankfort Area Property Tax Appeal Coalition that an institution our size can work for the fair taxation of commercial property within the library district," said Detlev Pansch, administrator at the Frankfort Public Library. "Fair taxation will result in an equitable distribution of support for the library and prevent an undue share from being born by the homeowners."

How does it work?

The process begins when the taxing bodies receive a legal notification of assessment reduction requests of $100,000 or more. The county board of review is the first group to review the commercial owner's request. Typically, the board of review supports the township assessor's valuation of the property.

A representative of the coalition attends all public meetings of the board of review where assessment reduction requests are heard. This puts the public and commercial property owners on notice that the taxing bodies are aware of the assessment reduction requests and of their involvement to make sure that taxation is fair. This simple meeting attendance actually has caused many assessment challenges to be withdrawn.

If the taxing bodies are not going to be involved, sometimes the commercial owners will take a chance to get a refund without a challenge. The fact that some assessment reduction requests are withdrawn at this level makes us believe that, in these cases, the property was not unfairly assessed.

Once the county board of review rules on a case, a commercial property owner can appeal to the state-level Property Tax Appeal Board (PTAB). Again, it is a legal requirement for taxing bodies to receive notice of any appeal to PTAB that is $100,000 or more.

After the taxing body receives this notice, it has 30 days to intervene. The coalition assesses the merits of intervening and will do so when it is financially appropriate. An intervention on a PTAB appeal means the coalition must engage the services of an attorney and secure an independent appraisal of the property in question.

Typically, in our experience, the independent appraisal supports the original township assessor's valuation of the property. Once an independent appraisal has been submitted to the commercial property owner, negotiations usually begin between the coalition and the appealing property owner.

Sometimes a deal can be struck for an assessment somewhere in the middle (below the assessor's level but above the property owner's request) or in some cases it goes all the way to the Property Tax Appeal Board for a decision. If PTAB rules and the property owner is not satisfied, the only other avenue is to appeal PTAB's decision through litigation. In our experience, this rarely occurs.

What has it meant?

As a rapidly growing community, Frankfort has new businesses move in annually. In 2004, we received a PTAB challenge that could have potentially cost District 157-C a $20,000 rebate. In 2005, a department store request potentially could have cost a $30,000 rebate, and the district anticipates a 2006 request from a large national chain of hardware and home supply stores for an assessment reduction that could cost us more than $50,000.

For District 157-C, chairing the coalition has been a proactive measure to preserve fiscal resources, support fair taxation and prevent the burden of taxation from shifting to homeowners. While all taxing bodies must be good stewards of taxpayer dollars, we cannot let our fiscal base erode.

As a coalition, we hope that being proactive instead of reactive will earn the community's respect.

"Since the tax cap and limited tax rates, this coalition of taxing bodies has provided a viable source to fight tax reductions," said Jeff Boubelik, director of the Frankfort Park District. "As part of a fast growing community, the Frankfort Park District relies heavily on the tax dollars we receive to operate and develop new parks, facilities and programming. We only want to collect on the fair assessments of properties in our district. We would be remiss if we did nothing to protect our tax base."

Important facts

If you also are in a growth area, before encouraging you to rush out and create your own taxing body coalition, we would be remiss if we did not share additional important facts about the process.

You must believe in the importance of being proactive rather than reactive and be able to form a working relationship with some ground rules. One of the ground rules is agreeing that the individual taxing bodies in the coalition pay the percentage of all costs at the same percentage level that their tax rate is of the total rate.

This process takes oversight and intervention, and you're never assured of success. The coalition never totally wins these challenges. The goal is just to control our losses.

Property assessments are made by a township assessor. This person is an elected official who is considered the expert in the area of valuing property. Property valuations are based on many factors that are reviewed by the assessor for accuracy. Because of the assessor's expertise, the coalition believes those assessment numbers should be upheld.

The county officials designated to fight these challenges have too many challenges to address and no funds to be effective. Little support is realized at the county level.

In some cases corporate and commercial property owners file automatically every year without any basis to justify that their assessment is accurate. The hope is that they will get money back without experiencing any cost to make the challenge. Some appellants have attorneys on retainer who handle this on an annual basis.

That's why it is so important that taxing bodies intervene in these challenges to preserve their revenue. This process is part of good fiscal stewardship.

Taxing bodies also owe it to their community to prevent the burden of taxation from being shifted from commercial properties to the homeowner.
Top of Page |IASB HOME |2006 Journals |Table of Contents

No comments: