Assessors prep for appeal season

For baseball fans, April is when every team is a World Series hopeful. For income-tax preparers, it's the home stretch. For assessors, appraisers and some property owners, early April leads off a brief busy season.

City and county assessors mail new property-value appraisals over the next few weeks. Property owners who question their assessments have from April 16 to May 5 to file an appeal with their city or county review board.

Cedar Rapids Assessor Scott Labus is bothered by a trend he's spotted over the past few years: appeals on commercial or industrial property filed but not argued before the city's Board of Review. Those appeals are dropped after Labus' staff researches each case, and the city may pay for an appraisal of the contested property, a process that costs thousands of dollars.

“I like to run my office as a business, and that's the business' money we're spending for these appraisals,” said Labus. “And it's the taxpayers' money.”

There were 78 such appeals filed last year, Labus said - a small share of the 1,420 total but about half of the appeals filed on commercial and industrial property. It was enough to prompt Labus to write a critical piece last fall in his department's newsletter.

“If the value is wrong, they should have some information to prove that,” said Labus. “It's their opinion; why aren't they submitting something to support that?”

Iowa City Assessor Dennis Baldridge said the strategy keeps a property owner's appeal rights open, but at a cost to his office.

“They appear to be appealing to the Board of Review as a formality to allow them to appeal further to the state” or District Court, Baldridge said via email. “Those higher levels of appeals are much more expensive in time and money to defend, and we would like to get them taken care of locally.”

Evidence is critical to a property owner's case, said Roger Stigers, chairman of Cedar Rapids' review board.

“When there's 1,400 (appeals), we don't physically have the time to do the research. So we need some numbers” to justify a change, said Stigers, a real estate agent. “If they don't bring us numbers, there's not much we can do.”

Appeals denied by city or county review boards may be appealed further to District Court or before the state's Property Assessment Appeal Board.

The state appeals board process can take up to 18 months, said Jessica Braunschweig-Norris, the board's general counsel. There were 1,600 appeals filed with the board last year.

Owners of multiple properties may file appeals on several at a time to keep their appeals rights open and then later decide which cases are the most likely to be successful.

Cedar Rapids attorney Douglas Oelschlaeger noted relatively few appeals ever go to trial. He's successfully argued appeals for such major property owners as PMX Industries in Cedar Rapids and Kinze Manufacturing in Iowa County.

In 2010, “everyone was unhappy with their values,” said Oelschlaeger, noting nearly 3,500 appeals were filed that year. “Of those, how many ended up going to court and there was a trial on them? Probably two or three, at the most. The reality is virtually all civil cases - and these are civil cases - settle.”

Some law firms seek out cases, filing dozens of appeals before deciding to pursue only the best prospects. That's what happened when Paradigm Tax Group of Chicago filed an appeal on behalf of Mark Zimmerman Ford- BMW-Hyundai-Mitsubishi at 5221 Council St. NE. William Miller, the dealership's financial officer, said a Paradigm attorney offered to file the appeal, which was dropped without a hearing.

“They get to a certain point, and they decide not to pursue it any farther,” said Miller.

Other local owners of commercial property and their attorneys declined to comment or to return calls seeking comment.

Labus expects fewer appeals this year because state law requires properties' assessments be reviewed and adjusted in odd-numbered years.

Cedar Rapids' review board upheld 399 of last year's appeals, 97 of the 249 for commercial and industrial property. Property owners have appealed 46 of the local denials to the state board, 22 of them for commercial/industrial property. Appeals for five properties, all commercial, are pending in court.

Iowa City's board upheld 203 of 301 appeals last year, 175 of them residential, decreasing those owners' tax bills by $3.7 million. The board denied 98 appeals.

In 2010, the Cedar Rapids Board of Review upheld $31.7 million worth of appeals, shifting that cost to the city's remaining properties. Through a quirk of timing, the record of last year's board shows a net gain of $248,259 in industrial property because of a $20 million increase in value at ADM's southwest Cedar Rapids plant.

In that case, Labus was still awaiting information from ADM on improvements to the facility at the April 15 deadline. He received that information soon after and presented it to the board, which added the $20 million to ADM's assessed value. The company didn't appeal.

Cedar Rapids' industrial base is partly responsible for the $138,380 worth of appraisals commissioned by Labus over the past three years. While thousands of residential properties change hand every year, providing a good measure of similar homes' market value, sales of commercial property and industries is much more rare. And how many corn wet-milling plants are there, anyhow?

“I have a staff that can probably handle most of the smaller commercials and all of the residentials and agricultural,” said Labus. “It's our cost, which we can handle; it's in our budget. If we get into a McDonald's, a Hy-Vee, a Westdale Mall, then we go looking for some experts.”