Battered real estate owners plead: Cut my bill

By Joe Schoenmann

Monday, March 9, 2009 | 2 a.m.

Lawyers in black suits representing corporate property owners sat in the back. Casually dressed homeowners took seats in the middle, while business owners and their attorneys, perhaps hoping for quicker attention, glared and fidgeted in the front rows.

On each of 10 long days, they converged on the county Equalization Board, the venue for those who contend the assessor overestimated the taxable value of their properties.

These were the ones who were fighting to the end.

They had started among of a field of about 6,000 appeals to the assessor, but most of those had been whittled away before the hearings began.

By the time they ended, 1,240 property owners had shown up, 504 hammering out last-minute agreements with county staff to avoid a hearing before the board. To hash through the last of the remaining 736 cases, the board extended its deadline past the end of February for the first time in decades.

Whether it was a condo-hotel unit owner seeking a few hundred thousand dollars slashed, a Summerlin homeowner wanting the value of the home she had owned for two months lowered by $100,000 or the owner of a photovoltaic solar array at Nellis Air Force Base who thought his property was worth $10, all had one goal: a lower property tax bill.

In most cases, the board, a group of sometimes funny, seldom angry but necessarily impatient and knowledgeable appraisers, refused to give the property owners everything they wanted.

But in dozens of other cases they did, and victorious homeowners and business people walked away smiling. Not smug, just feeling that, by God, for once they had fought the government and won.

“There’s a real feeling of being part of the process, which makes everyone feel a little better, I think,” said Richard Stewart, the Clark County senior assessment analyst who sat through more than his share of the hearings.

But what most people don’t understand is that although the value of just about all property is down this year, most property tax bills will be higher.

The hearings had enough tension running through them as it was. The sticker shock of the higher bills was gasoline on a fire even when the board members explained the cause of the higher bills had worked in their favor in the past several years.

At the Feb. 28 hearing, for example, a homeowner began her presentation by complaining that she and her husband had paid tax bills that were too high in the past. In this case, the woman figured her 1,300-square-foot, two-bed, two-bath home built in the early 1990s on Ogee Drive in the northwest valley was worth about $104,000. The assessor figured closer to $132,000. In tax payments on the difference between the two amounts amounted to about $300 a year.

County Equalization Board member Kathleen M. Nylen first tried to calm down the woman, then told her: “One thing for you to understand, and it’s very difficult for anyone to understand because of the way our Legislature set this up: If your house was built before 2004, then the 2004-05 assessed value is what your taxes are based on. And your taxes go up 3 percent a year at most.”

That law — capping property tax increases for homes at 3 percent and businesses at 8 percent — was meant to protect property owners as values throughout the state exploded.

So, a home sold in 2004 for $300,000 saw only a 3 percent property tax increase, even if the home’s value shot up to $600,000 in 2005. The doubling of home values was not unusual back then, before the real estate market imploded, before Nevada became The Foreclosure State.

And after hearing nightly and reading daily about the dismal state of the real estate market, and seeing the value of their own property plummet — or fighting to get it lowered — the last thing most valley homeowners expect is a higher property tax bill.

But most of them will get one.

That’s because, thanks to the cap, taxes on that home purchased for $300,000 in 2004 went up by only 3 percent when its value went up 100 percent. So even if value now has dropped from $600,000 to $400,000, the homeowner will still be paying a higher tax bill than last year.

“Just assume your taxes are going to go up 3 percent more next year,” Stewart said. “I’ve explained this seven, eight times to some people, and they still don’t get it.”

The woman from the northwest valley didn’t get it. She received a reduction in the assessed value of her house, but not as much as she wanted, and was still facing a higher tax bill. She interrupted Nylen and accused the board of trying to force her into foreclosure, then gathered her documents and stormed off.

Many other property owners went away just as angry for the same reason.

Not Shilpa Ghia, though. In her case, the 3 percent property tax cap played no part. Newer homes such as Ghia’s are more likely to see their property taxes decrease if the value falls, because they never experienced the inflated values of the mid-2000s — no “bubble” of value has to be “eaten through” to get down to the cap level. New property owners never benefited from the bubble, nor will they suffer from its collapse.

Like an estimated 200,000 Clark County property owners, a little less than a third of the number on the rolls, Ghia will get a tax bill that is lower than last year — just not as low as she wanted.

Ghia purchased a 2,742-square-foot home in Summerlin in December 2007 for $382,000. The assessor lowered the value from $452,000 to that sale price. Ghia thought it should be closer to $355,000.

She pleaded her case to the board members at their final hearing, in Henderson on Wednesday, but they agreed with the assessor.

She estimated that if her arguments had carried the day, her taxes would have fallen $300 more. “Is $300 a lot of money?” she asked. “Think about going out for a $300 dinner. Would you think it’s a lot of money then?”

And so she picked up documents at the back of the hearing room to file an appeal to the state Equalization Board.

About 10 percent of all the cases heard by the county board — which works out to about 70 — are expected to be appealed to the state board. Most of those appeals will be filed by dissatisfied property owners like Ghia, but the county assessor’s office will appeal “a couple dozen” as well, to try to get the values raised back up, Stewart said.

Some of those cases involve disputes over millions of dollars, at large commercial properties, hotels and high rises. Palms Place, for instance, persuaded the county board to reduce the value of its hotel from $73 million to $4.4 million. Some of the condo owners in Palms Place also won hefty reductions.

Rulings from the state board could come as late as September.

When the dust settles, those who are getting lower tax bills could take out such a large chunk of revenue that the county could wind up taking in less property tax revenue this year. For that to happen, the taxable value of enough homes and businesses would have to fall below 2004 values.

Asked whether that is possible, Stewart shrugs.

“I honestly can’t say until the calculations are finished,” he said. “There’s just no way of knowing.”

The cases that made it to the county Equalization Board tell only one chapter of the valuation story. Property owners filed 5,987 appeals with the county assessor. That office reduced values on 3,485 at the front of the process.

The county board later reduced values on 316 properties but refused to change the values on 420. Another 800 appeals were withdrawn with no change, 103 were deemed invalid, 357 are pending and the board took no action on one.

Stewart wouldn’t guess how many more thousands of homes unknowingly benefit as a result of the appeals brought to the county. Those successful appeals have the potential to reduce the value of the neighboring properties.

“It’s an issue, and if we saw reductions in neighborhoods, we will want to go in and equalize those,” he said.

Some single reductions can result in “equalizations” of nearby parcels. So one home seeing a 30 percent drop in value could mean a block of homes, or two blocks, will also see lowered values.

The big ticket reductions on high-rises are a major concern for the county too. Based on some of those declines, R. Scott Dugan, the most vocal member of the county Equalization Board and an appraiser in the valley for about 40 years, guessed tax revenues will fall because of “all the high-rises that have come online in the last few years where they’re going down more than 50 percent in value.”

County Manager Virginia Valentine, though, isn’t so sure that will result in the county’s total take coming in lower than that of the prior year. Offsetting the declines, she said, are new commercial properties that have come online or are about to. She figures it will wind up being a wash and the county will have roughly the same property tax revenue it did last year.

She won’t have to wait much longer to find out; the assessor’s office is expected to have its calculations finished by Tuesday.