By NICK GOSNELL
Hutch Post
HUTCHINSON, Kan. — With property taxpayers in Reno County set to receive notice of change in their valuations in the coming days, it's important that they be educated about the process.
"We try to get out on our building permits at least two times a year," said Cindy Rehlander, Real Estate Quality Control Analyst for Reno County. She's the one in charge of the residential side of the Reno County Appraiser's Office. "We prefer to do three times a year, so we can, especially on new construction, see them as they are being built. See what types of materials are going into the homes, things along those lines. We also do what's called 17%. What that is, is we remeasure and look at 17% of the county every year. It's on a six-year rolling average. In the six years, we have to look at all almost 33,000 residential parcels."
This is under the assumption that your house doesn't sell in that six-year period. The appraiser's office will always look at the sale of a house as part of the equation to determine fair market value for the home.
"We're going to measure two sides of the property to verify," Rehlander said. "Because, in mass appraisal, mistakes can be made. We want to make sure that our data is accurate. Also, a lot of times, we'll come across a shed or a deck or something that they've added to the property during that process. Once we complete that, we start doing the final review. During final review, we revalue residential property in Reno County during that time of the year. That's where the sales and the analysis come into play and we use comparable sales. We look at other homes that are similar to the properties that have sold in the last three years. We compare those homes to each other to arrive at a market value."
The state of Kansas watches closely to be sure valuations are within 10% of what a home would sell for.
"We are governed by them," Rehlander said. "We have what's called ratio studies to determine if we're hitting that the majority of the time. There's always going to be crazy sales, outliers, things like that, but I would say, about 95% of the time, we hit our sales."
The process for commercial property is mainly different in the respect that it is a whole lot more visible.
"You're driving down 30th and the old Dillon's, for example, clearly something's happening there," said Joe Pennycuff, the Commercial Real Estate Supervisor for Reno County. "Anybody can see that. If somebody lives off in a subdivision and they're doing a remodel, it's a little less likely to be seen by thousands and thousands of cars."
Commercial mass appraisal relies on the cost approach, less depreciation and the income approach, comparable sales do not figure in their valuation.
"You build something and then it just depreciates on a regular basis," Pennycuff said. "That's the cost approach, less depreciation. Sometimes properties do appreciate because the cost to build the property does go up."
A good example of that would be if steel prices increase, then a steel building might go up and be valued for more, even though it is older.
"The income approach, the best example there is apartment complexes," Pennycuff said. "The amount of income that they bring in is divided by a capitalization rate. A capitalization rate is similar to an interest rate at a bank. It may be a little bit higher. You take the two, you take the income divided by the capitalization rate and then you get a value."
Real property is classified and then assessed at a percentage of appraised value. Property class assessment percentages are set by the state constitution and cannot be adjusted by the county.
Real property used for residential purposes including apartments and condominiums is classified at 11.5%. Agricultural land is classified at 30%. Improvements on agricultural land are classified at 25%. Vacant lots are classified at 12%. Real property owned and operated by not-for-profit organizations are classified at 12%. Real property used for commercial and industrial purposes are classified at 25%. All other rural and urban real property is classified at 30%, except for property that is tax-exempt.
The equation is fairly straightforward.
"Appraised value times classification equals assessment," Pennycuff said. "That number times mill levy equals taxes."
The important point in this is that only one number in that equation is set by appraisal. Classification is set in the state constitution. Mill levy is set by governing bodies. County Appraiser Brad Wright suggests that those who receive changes in their valuation that they have questions on ask those questions early.
"If they disagree with the value that they have on it, now is the time they need to be visiting with us," Wright said. "It's called an informal meeting. There's no money on the table. There's no taxes being owed or having to be paid before we can visit with them or anything. We go ahead. We do the informal meeting. We're always looking to get our data more accurate. If they come in with anything that proves that we need to make changes or adjustments, we're going to do it. It's so much easier to do it at that time."
If you wait until later in the year when you get your actual tax statement, then you'll have to pay at least half of what it says, even if you don't agree with it, before it can be adjusted. If you have your meeting soon, before those notices are sent, then you can get it changed without writing a check first. Change of value notices will be sent on Friday, February 28.