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HomeMy WebLinkAboutE&R 1994-05-19 I I I 101 ~ MINUTES OF THE BOARD OF EQUALIZATION AND REVIEW MEETING MAY 19, 1994 ASSEMBLY The 1994 Board of Equalization and Review met on Thursday, May 19, 1994, at 9:00 a.m. in the Assembly Room of the New Hanover County Administration Building, 320 Chestnut street, Wilmington, North Carolina. The purpose of the meeting was to hear appeals filed by property owners regarding their tax value assessments. Appellants were informed the Board would make decisions following the hearings and notification of each decision would be mailed within a week. Members present were: Commissioners Sandra Barone; William A. Caster; William E. Sisson, Jr.; Vice-Chairman E. L. Mathews, Jr.; Chairman Robert G. Greer; Tax Administrator Roland Register; Tax Appraisal Supervisor Jim Bethune; Assistant County Attorney Kemp Burpeau; and Deputy Clerk Teresa P. Elmore. Chairman Greer called the meeting to order and welcomed everyone present. He stated any person wishing to testify must be sworn in by the Deputy Clerk to the Board. The following persons were sworn in: Roland Register, Tax Administrator Jim Bethune, Tax Appraisal Supervisor Steve Mills, R. E. McElroy, Inc. Mildred M. Lentz Assistant County Attorney Burpeau explained the tax appeal law and the guidelines to be used by the Board of Equalization and Review. He stated the appeals must be based on the valuation as of January 1991. TAX APPEAL - GOVERNOURS SQUARE FUND XXI, LTD., PARCEL R06610-002- 014-000, 3314 WICKSLOW ROAD Mr. Steve Mills, of R. E. McElroy, Inc. and representing the owner of Governours Square Apartments, reported the appeal was filed by Mr. James Walker with R. E. McElroy; however, he was unable to attend the hearing due to a conflict in his schedule. He explained the MAl appraisal of $5,150,000 was based on the income approach. In using the sales 'approach the value was appraised at $5,300,000. He presented a cash flow analysis based on the income over a number of years, number of units, size of units, actual rent achieved using a 95% occupancy, and appreciations of income and expenses. He reasoned a discounted cash flow is the most appropriate way, to value this property because the business is stabilized and has been stabilized for a number of years. Although the original appeal had an estimated value of $4,500,000, he requested the value to be adjusted to $5,150,000, which is roughly $366,000 apart. Previously, Mr. Walker had amortized capital expenses over a longer period of time; however, in reality the expenses should be used for a 10 year period. He stated the 1974 ~ 1. O~) MINUTES OF BOARD OF EQUALIZATION AND REVIEW, MAY 19, 1994 ....wtI<t; apartment complex is in great condition due to the amount of money spent on maintenance and repair. Mr. Bethune asked Mr. Mills for his credentials as a certified appraiser. Mr. Mills stated he is an appraiser, certified in the state of Texas and employed by R. E. McElroy, Inc. Mr. Bethune stated he had not received the cash flow analysis prior to the hearing, but the tax appraisal is assumed correct unless Mr. Mills gives an exception to the County's approach to value. Mr. Mills stated he was informed by Mr. Walker that the County does not look at the income approach to value but only at the cost approach to value. He argued the cost always sets the upper limits to a value and properties are bought and sold based on the cost approach or on the type of income expected from the property. Mr. Bethune replied mass appraisals are based on universal property by the cost approach to value to assure that all properties are appraised the same way. Appraisals are also supported by income and marketing approaches. He contended the information submitted by Mr. Mills supports the County's assessed value. It is recognized that assessments are not exact, but as long as the assessment is reasonable and not excessive or unjust, it is assumed to be correct. commissioner sisson asked supports the method of appraisal value of property and if this authorities in the state. if the Property Tax commission used by the County in deriving the method was used by other taxing Mr. Bethune replied General statutes require that an appraisal must consider the market, income, and cost in determining the assessed value. The actual assessed value is based on the cost approach method in order for all apartment complexes to be treated equally. He explained larger jurisdictions have the assessed value of income producing property determined by the income approach to value; but generally 95% of the counties are appraised by the cost approach. commissioner Barone asked the basic difference between the County's assessed value and Mr. Mills's estimated value. Mr. Bethune explained the different approaches to value are never the same but correlate with the final estimation of value. The actual value of a property can only be determined when a property is sold to a willing buyer by a willing seller. Mr. Register explained in 1990 the board adopted a schedule of values for the Tax Department to use for the cost approach. I I I 100 ~ MINUTES OF BOARD OF EQUALIZATION AND REVIEW, MAY 19, 1994 Whenever there is an appeal, the income approach is used to determine any significant difference between cost, market and income approaches. Mr. Bethune is an expert witness for the Property Tax Commission and he felt there is no significant difference in the value presented by Mr. Mills and the assessed value. In equity to other apartment complexes in North Carolina and New Hanover County, the cost approach reasonably states the value as of January 1991. At the conclusion of the hearings on this date, discussion was held regarding the income approach to value. It was felt rental income was not a fixed amount and could increase at anytime. Also, with the price of housing going up and the average household income not able to support purchasing a house, rental property will become increasingly valuable. Mr. Bethune reminded the Board that Mr. Mills is a tax representative and will receive a fee based on the contingent. The $160,000 deferred for maintenance in the cash flow analysis should be omitted since this money can be used for whatever the owner desires. Commissioner Barone stated these apartments are 21 years old and require major maintenance and repair to keep in good condition. Motion: Vice-Chairman Mathews MOVED, Barone, to split the difference between appellant's value for a reduction of MOTION CARRIED UNANIMOUSLY. SECONDED by Commissioner the assessed value and the $183,000. Upon vote the TAX APPEAL - EUNICE M. AND WILLIAM G. BENTON, PARCEL R04606-002- 003-000, 247 BEACH ROAD Ms. Mildred M. Lentz, representing the owners, reported a recent appraisal performed on the property placed the value at $485,000. The Tax Office agreed the land was over valued and is recommending a reduction. She presented information on two lots in the area that are currently for sale. A vacant lot on Beach Road North is on the market for $260,000, and another lot at 13 Salters Court, located behind the beach front property, is on the market for $240,000. Ms. Lentz requested the value of the land to be adjusted between $240,000 and $260,000. She reported the house at 301 Beach Road North sold for $475,000 and currently three comparable homes are on the market and appraised at $475,000, $369,000 and $469,000. The Benton's home is an older home without some of the amenities of the newer ridge homes and does not have a view of the ocean. Mr. Bethune replied the house at 301 Beach Road North is at a lower elevation than the Benton's property, and the comparable properties used in the appraisal by Mr. DesChamps are not at the same level of values as the subject property. A few of the lots on ~ 104 MINUTES OF BOARD OF EQUALIZATION AND REVIEW, MAY 19, 1994 the ocean side have beach erosion problems with expensive maintenance. Ridge lots similar to the Benton's property sell from $240,000 to $300,000 and are considered the prime lots on Figure Eight Island. The ridge lots are on high ground with vegetation and no erosion problem. He recommended adjusting the value of the land to $259,000 saying the assessed value of $309,000 was overstated when compared to similar lots on the ridge. The total assessed value for the property should be $522,005. Motion: At the conclusion of the hearings on this date, Commissioner Caster MOVED, SECONDED by Commissioner Barone, to adjust the assessed value to $522,005 as recommended by the Tax Appraisal Supervisor. Upon vote, the MOTION CARRIED UNANIMOUSLY. TAX APPEAL - BRUCE B. CAMERON, TRUSTEE, PARCEL R01200-002-001-000 R01200-002-004-000, SOUTH SIDE OF HOLLY SHELTER ROAD Mr. Jabe Hardee, representing the Cameron Companies, was sworn in to give testimony. He stated the price paid for the property is the appropriate value of the land. The small tract of 83 acres was purchased in May 1991 at $800 per acre. The large tract of 600 acres was purchased in August 1991 at $300 per acre. The Tax Office was given copies of the deeds with the documentary stamps and closing statements. Both properties are timberland and zoned Industrial. The small tract has less bay land area than the 600 acre tract. Mr. Bethune replied the Tax Department does not question the prices paid by the owners but felt the definition of market value is an arm's length transaction based on having a willing buyer and a willing seller, both knowing the full uses of the property and all the users not having a compulsion to sale. He felt Ideal Cement was under compulsion to sell the land because the plant site was sold and Ideal Cement had moved away from this area. The 1991 revaluation was based on sales at the time which were approximately $1,080 per acre. Mr. Hardee stated timber roads have been built and some drainage improvements made. A use value application has been filed, but there is a four-year waiting period. He claimed the sellers were not under any duress to sell the property and were capable of holding on to the property for a better price. Commissioner Barone asked how much of the land could be considered as 404 Wetland Classification and could this classification reduce the value of the property. Mr. Bethune answered the 404 Wetland Classification could decrease the value of the property to $150/acre; however, none of the property has been determined as 404 Wetlands. Mr. Hardee replied the EPA did not want to allow the timber I I I ."105 ~ MINUTES OF BOARD OF EQUALIZATION AND REVIEW, MAY 19, 1994 roads because of the wetland areas. The saleable timber on the property will be removed and the land will be reseeded. All other property in this area owned by the Camerons is under the best management plan for the forestry exemption. Commissioner Sisson asked if there are plans to downzone the property to conform to the farming use or if their intent is to sell the 1-2 Industrial property. Mr. Hardee answered the property would remain zoned as 1-2 Industrial and hopefully sold for that use. Mr. Bethune reported the federal government has a program that pays $700/acre for easements to prevent land development. At the conclusion of the hearings on this date, discussion was held regarding the quantity of wetlands on the larger tract of land. It was determined unless documented proof of wetlands is received from the environmental specialist, no reduction in value can be made for the wetlands. Mr. Register stated the Tax Office asked the Attorney General's Office if the owner of qualifying property purchased additional property, would the additional property qualify for the use value. The Attorney General ruled the property would not qualify because the prior owner did not have the use value. However, the court of appeals' decision would allow the Cameron's property to qualify. Based on that decision, they could get the use value for 1994 if the County should change the value in anyway. The assessed value on the property could be reduced to $213/acre. Mr. Bethune reported there are thousands of acres in this area appraised at the same market value as the Cameron's property. Most of the property is owned by the Camerons and has the use value. The Camerons paid $700-800/acre for other property purchased from Ideal Cement; however, it was under the use value. Nine acres of this tract was resold for over $50,000/acre. Mr. Register explained when Ideal Cement closed the manufacturing plant site, equipment was sold or moved to Alabama with the intent of abandoning the property. He felt they wanted to sell the land for anything reasonable and would not mind taking a loss. commissioner sisson stated if the Camerons want to use the wetlands as part of the argument to reduce the value, they should request the Corps to determine the classification. commissioner Barone stated Mr. Hardee did not bring the wetland argument into discussion and that she asked about it because it was mentioned in the summation by the Tax Department. ~ 106 MINUTES OF BOARD OF EQUALIZATION AND REVIEW, MAY 19, 1994 ~. Mr. Bethune replied Mr. Hardee reported purchasing the property at $300/acre because they suspected wetlands. Improvements made to the property will avoid the wetlands classification as well as allow tree farming. commissioner Sisson stated if the land is zoned Industrial and is being land banked for that use than it should have that value. Eventually an industry will pay more than the $213/acre. The use law is an old law to encourage forestry production. Chairman Greer asked if the value of the property is reduced to $300jacre, would all other property in the area be reduced? Mr. Bethune answered the County would be compelled to reduce the value in order to be equitable to the other land owners. He reported the Cameron's property will be eligible for that use value in 1995. Mr. Register reported none of the landowners appealed the land value in 1991 and Ideal Cement has paid the taxes ever since abandoning the property in the early 1980's. Mr. Bethune stated Ideal Cement did appeal the value of their plant prior to selling. They felt the equipment was obsolete and the value was reduced to $4 million. The plant, a major facility, was on the market for $15 million; however, it sold for approximately $1 million. He felt Ideal Cement did have a compulsion to sale. Chairman Greer felt the Board could reduce the value this year since the property will qualify for reduction next year. Mr. Bethune pointed out Exhibit 3 shows the sale of 339 acres to Hilda Cameron of the Cameron family for $1,628/acre for basically the same type property in the same area. Motion: commissioner sisson MOVED, SECONDED by Vice-Chairman Mathews, to uphold the assessed value on both properties. Upon vote, the MOTION CARRIED AS FOLLOWS: Voting Aye: commissioner Caster commissioner sisson Vice-Chairman Mathews Chairman Greer Voting Nay: Commissioner Barone TAX APPEAL - RIGGINS HOMEOWNERS ASSOCIATION, INC., PARCEL R09320- 001-002-01A, US HIGHWAY 421, FT. FISHER Mr. Larry Fussell, representing the Homeowners Association of I I I 10, ~ MINUTES OF BOARD OF EQUALIZATION AND REVIEW, MAY 19, 1994 the Riggins, was sworn in to give testimony. He explained the 48 units of the Riggins was built several years ago when there was no apparent erosion problem in the area. Once the erosion problem surfaced in 1985-86, the resale value of the Riggins started to decline. One unit has been sold during the last year for $30,000. The Tax Office does not consider the sale an arm's length transaction or non-distressed transaction because the owner was in the middle of a divorce when the property was sold. Originally, the units sold for $80,000 - $90,000. Currently, one unit is listed at $49,600. Mr. Fussell stated the Coastal Resources Commission is proposing to suspend the use of sandbags. If approved the Riggins Homeowners Association will be required to remove the temporary sandbag structure in front of the Riggins. The sandbags are the only protection in retaining the ocean front section of the Riggins. One of the decks is completely underpinned by sandbags. The Corps has stated the front two building of the Riggins will be completely washed away by the year 2005. The star News has reported the proposed CRC rule changes. Since value is established by a knowledgeable and willing buyer, Mr. Fussell felt the facts and evidence will preclude a buyer to pay $50,000 or more for a unit at the Riggins. The association has tried to move the property; however, the cost to move the units will be $18,000 per unit. Most of the owners already have $70,000 to $100,000 invested in these units. To move the structures across the street would decrease the value to approximately $60,000. Under the Jones Act, the federal flood insurance program will pay $30,000 to have the units moved. Two local bank representatives from BB&T and NationsBank have said they do not have a specific policy for loans on the Riggins, or any other property; however, standard banking criteria for loans require collateral and the Riggins are not considered as collateral. No one has had a loan on the property for the past several years. Based on the salability of the units, the association is asking the tax value be reduced to $32,000.00 per unit. commissioner Barone asked if the proposed beach renourishment project at Kure Beach will include the beach in front of the Riggins. Mr. Fussell replied the renourishment project will stop at 700 Ocean Dunes which is 14 buildings before the Riggins. The Corps has stated revetment will stabilize the beach; however, the Riggins will not be there when that happens. The profuse stone base in the cove area causes a washout effect on the Riggins. Mr. Bethune has stated when the Riggins are washed away, the value will be changed to zero. On behalf of the Association, Mr. Fussell requested the Board to consider the erosion problem in determining the value of the units. ~ 108 MINUTES OF BOARD OF EQUALIZATION AND REVIEW, MAY 19, 1994 .~, Commissioner Sisson asked if the units are permanently occupied or used as rental units or weekend units? Mr. Fussell answered approximately 30% are year-round residents. commissioner sisson asked if the danger of erosion was apparent when the buildings were built or first purchased. He stated erosion in that part of the County has been legendary and rocks have been used to fortify the Fort Fisher Museum area for a very long time. Mr. Fussell replied Ms. Olive Brewer purchased a unit in the building that is most endangered. She was completely unaware that sandbags were used to make the grass covered dunes. Originally in 1984, the site had 300 feet of beach front. Most of the units were sold to people from other areas that had no long term knowledge of the area. Mr. Bethune stated although the Tax Department sympathizes with the owners dilemma, the owners are currently enjoying the amenities of their units. Some consideration was given as shown in the assessed value in Exhibit 4. The erosion problem became apparent in the sales of the property in 1986. The units were selling from $60,000 to the upper $80,000. Sales beginning in 1988 support the 1991 revaluation. When there is basic damage, adjustments will be made. Reducing the value across the board by several hundred thousand dollars is not justified at this time. At the conclusion of the hearings on this date, discussion was held on values of the property. It was felt the same value could not be placed fairly on all the units because some will be affected earlier than others. Mr. Bethune stated the current assessed value is $2,366,664. If the value of all 48 units were reduced to $32,000, the total assessed value would be $1,536,000. Mr. Register stated the ocean side unit on the southern end is very vulnerable. Sandbags are under the upper deck. The other units have not been significantly impaired; however, next January the situation could change. Chairman Greer felt the value should be reduced on the two units bordering the ocean. Commissioner Sisson agreed and felt regulations are needed to prevent structures from being built in vulnerable areas. Mr. Bethune stated under the present circumstances, the market value of the units on the ocean front would be affected because of I I I 109 ~ MINUTES OF BOARD OF EQUALIZATION AND REVIEW, MAY 19, 1994 the erosion problem. MOTION: Chairman Greer MOVED, SECONDED by Commissioner Barone, to reduce the value on the units in the first two structures by 20%. Upon vote, the MOTION CARRIED UNANIMOUSLY. TAX APPEAL - M. D. NEWTON AND COMPANY, PARCEL ROS006-002-017-000, ELM GROVE FARM #9, 6017 MARKET STREET Mr. Bethune reported Mr. and Mrs. Newton were unable to attend the hearing due to health problems. The appeal is on a 3.7 acre parcel, north of the railroad tracks behind the Cross Seed building on the west side of Market Street. Although Mr. Newton owns the land on Market Street in front of this property, he contends the property is landlocked and assessed at a higher value than neighboring property. Mr. Bethune explained the Newton's property is assessed at a higher value because the neighboring property has two home sites on the land. Chairman Greer asked if the road leading to the property is public or private and how is the property accessed? Mr. Bethune answered the road is private, and the property is accessed by a road on the adjacent property. He pointed out the railroad tracks have been abandoned and will eventually be a part of his property when the tax office combines the parcels. Commissioner Sisson asked if it is legal to landlock a piece of property. He stated property cannot be subdivided if access is not provided. Mr. Bethune stated property can be landlocked if the owner conveying property does not give access. As long as the first owner conveys property, the following owners must give access. The Newton's property is contiguous and very accessible. Illegal trash dumps are found on the site. Based on the present market, the assessed value may be too low. At the conclusion of the hearings on this date, the Board sympathized with the appellant, but was unable to justify any adjustment. MOTION: Commissioner Caster MOVED, SECONDED by Commissioner Sisson, to uphold the assessed value of $85,470 as recommended by the Tax Appraisal Supervisor. Upon vote, the MOTION CARRIED UNANIMOUSLY. TAX APPEAL - MARGARET M. COOK, PARCEL R07016-002-013-000 122 SILVA TERRA DRIVE Mr. Bethune reported Ms. Cook was unable to attend the hearing due to her employment. Her complaint is based on the fact that she purchased her home on Silva Terra Drive for $62,000 and found some ~ 1. 1 0 MINUTES OF BOARD OF EQUALIZATION AND REVIEW, MAY 19, 1994 serious damage to the property. The furnace broke down almost immediately and was replaced with a heat pump at a cost of several thousand dollars. The value of a house does not usually increase when making repairs; however, replacing the heating system increased the assessed value from $52,470 to $54,567. Ms. Cook objected to the increase in value. Mr. Bethune explained normal repairs or replacement does not warrant a tax appraisal; but major renovations are evaluated. An adjustment was made on the appreciation of the property which was based on the removal of some of the depreciation. commissioner Barone stated the cost of installing a new heating and air-conditioning system would be more than $2,000. Mr. Bethune responded Ms. Cook spent several thousand dollars on the renovation. She may have paid too much for the property and the assessment of January 1, 1991, may have been a little low. He stated the house was assessed $2,000-3,000 less than the typical house in the neighborhood and showed some signs of depreciation. The house is located on the main drive into the subdivision, which makes it a less desirable location. The adjusted assessment is fair and justified due to the major renovations and repair. He recommended confirming the value. MOTION: At the conclusion of the hearings on this date, commissioner Barone MOVED, SECONDED by Vice-Chairman Mathews, to uphold the assessed value of $54,567.00, as recommended by the Tax Appraisal supervisor. Upon vote, the MOTION CARRIED UNANIMOUSLY. TAX APPEAL - STEPHEN P. SHEFFIELD, PARCEL R04917-004-016-000, 44 DARLINGTON AVENUE Mr. Stephen P. Sheffield was sworn in to give testimony. He requested an explanation on how the value of his property was determined. He had talked with the Tax Department several times, but still did not clearly understand the procedure used to establish values. He felt there should be some correlation between the market value and the assessed tax value. He purchased the property based on the information he received from realtors, but felt he paid too much. Chairman Greer asked Mr. Sheffield if he had a problem with the value or how the assessed value was determined. He stated the Board would be glad to hear his appeal on the value, but the Tax Department will need to explain the schedule of values used in determining his property value at a later time. Mr. Sheffield answered he felt the tax value was too high. His property is currently listed for sale at a price he is told it is worth, but he has not received any activity at that price. I I I -.., 111 MINUTES OF BOARD OF EQUALIZATION AND REVIEW, MAY 19, 1994 Mr. Register explained the assessed tax value is the value of the property as of January 1, 1991. The schedule of values was adopted in 1990 and Mr. Sheffield has been offered the opportunity to read the schedule of values and the procedure manual used to determine the value of his property. A property record card correlates to the adopted schedules in the manual showing the value of the land and the building based on the size, condition, architectural codes, age of building, assumed appreciation, and the effective age group. A value is calculated less the depreciation for the type structure and construction. If Mr. Sheffield is questioning the method of mass appraisal, the statutes of limitation does not allow the method used to be challenged. If there is an error in the value of the property, the Board will need to hear his appeal. Mr. Sheffield assumed since he is unable to sell his property, the assessed value or the appraisal is not the same as the market value. Commissioner Sisson explained the market could have changed since 1991 but would not affect the valuation. The schedule of values adopted in 1990 set the value. Chairman Greer explained the Board of County Commissioners decides the method of valuation used. An approach is adopted to assure that all properties are treated the same. A document in the Tax Department verifies the value of his property. At the conclusion of the hearings on this date, Mr. Register explained the value of the property should be based on the value as of 1991. He felt Mr. Sheffield's concern may be more related to whether mass appraisal is appropriate which is beyond the hearing of the Board of Equalization and Review. MOTION: Commissioner Caster MOVED, SECONDED by Vice-Chairman Mathews, to uphold the assessed value of $103,857 as recommended by the Tax Appraisal Supervisor. Upon vote, the MOTION CARRIED UNANIMOUSLY. TAX APPEAL - GLEN DALE AND RHONDA L. OTTAWAY, PARCEL R04917-004- 016-000 6505 STRAWFIELD DRIVE Mr. Register reported Mr. Ottaway withdrew his appeal. TAX APPEAL - CONTINENTAL LEASING, INC. - 1993 LINCOLN TOWN CAR Mr. Jim Travers, representing Continental Leasing, Inc., was sworn in to give testimony. He stated that Continental Leasing, Inc. is the leasing agency for National Car Rental at New Hanover County International Airport. He reported the company has 23% of the car rental business in New Hanover County and has paid $144,000 in rental fees last year to the Airport Authority and collected $122,000 in sales taxes. He disputed the evaluation of two 1993 ~ 1 1 r) J_ _ L MINUTES OF BOARD OF EQUALIZATION AND REVIEW, MAY 19, 1994 ~. Lincoln Town cars assessed at $31,490. The company actually paid $28,351. The assessed value is almost the same as the retail sticker price. Mr. Register explained the values are established as of January 1 under a mass appraisal process and state law does not allow an adjustment for short term leasing companies. The County contracts with a company that provides listing values for 87 counties in North Carolina. He contacted four major counties and all agree that a fleet purchase does not set the value and does not determine the market value. The counties agreed the manufacturers' suggested retail price normally sets some level of expectation and is considered. The value of the 1993 Lincoln Town Car, as determined by our contractor, is based upon information received from the manufacturer, dealers, and consumer reports. NADA published the manufacturer's suggested retail price in July 1993 at $34,190. The earliest NADA publication showing a used value was in September at $26,075. Mr. Register felt the value of $31,490 as established by the contractor and uniformly used by 87 counties in North Carolina was a fair value. He stated the value should not be based on auction sales where dealers are able to get discounted prices. Fleet buyers are different from retail buyers and those purchases do not determine the market value. Mr. Register explained leasing companies list inventories as of January 1. The difference between G.S. 105-330 and the original listing requirements of G.S. 105-285 is that cars purchased during the year under the staggered system are taxed on the value as of the beginning of the year. The fleet owners are required to list the vehicles in their possession as of January 1; however, they are not required to list the purchases during the year. The valuation base is the same for everybody and the value is determined as of January 1. The County has adopted the same uniform guide as the other 87 counties. Mr. Register reported eleven counties are actually higher than the base valuation because of their being in a metropolitan area. Wake, Forsyth, Mecklenburg, and Guilford counties adopted higher retail values based on their decision of the market value for their area. Mr. Travers stated if he paid $31,000 for the car, he would have to rent it for more than $41.95/day. He expressed concern that other rental car companies may be listing vehicles in surrounding states to avoid the property tax. Commissioner Sisson explained the assessed value is based on retail value and not the cheapest value that somebody is able to buy a car. There has to be some standardized factor in order for everyone to be treated fairly. Unless a clerical error was made or the tax was illegally assessed, the County is locked into the I I I 113 -.., MINUTES OF BOARD OF EQUALIZATION AND REVIEW, MAY 19, 1994 Lincoln Town cars assessed at $31,490. The company actually paid $28,351. The assessed value is almost the same as the retail sticker price. Mr. Register explained the values are established as of January 1 under a mass appraisal process and state law does not allow an adjustment for short term leasing companies. The County contracts with a company that provides listing values for 87 counties in North Carolina. He contacted four major counties and all agree that a fleet purchase does not set the value and does not determine the market value. The counties agreed the manufacturers' suggested retail price normally sets some level of expectation and is considered. The value of the 1993 Lincoln Town Car, as determined by our contractor, is based upon information received from the manufacturer, dealers, and consumer reports. NADA published the manufacturer's suggested retail price in July 1993 at $34,190. The earliest NADA publication showing a used value was in September at $26,075. Mr. Register felt the value of $31,490 as established by the contractor and uniformly used by 87 counties in North Carolina was a fair value. He stated the value should not be based on auction sales where dealers are able to get discounted prices. Fleet buyers are different from retail buyers and those purchases do not determine the market value. Mr. Register explained leasing companies list inventories as of January 1. The difference between G.S. 105-330 and the original listing requirements of G.S. 105-285 is that cars purchased during the year under the staggered system are taxed on the value as of the beginning of the year. The fleet owners are required to list the vehicles in their possession as of January 1; however, they are not required to list the purchases during the year. The valuation base is the same for everybody and the value is determined as of January 1. The County has adopted the same uniform guide as the other 87 counties. Mr. Register reported eleven counties are actually higher than the base valuation because of their being in a metropolitan area. Wake, Forsyth, Mecklenburg, and Guilford counties adopted higher retail values based on their decision of the market value for their area. Mr. Travers stated if he paid $31,000 for the car, he would have to rent it for more than $41.95/day. He expressed concern that other rental car companies may be listing vehicles in surrounding states to avoid the property tax. commissioner Sisson explained the assessed value is based on retail value and not the cheapest value that somebody is able to buy a car. There has to be some standardized factor in order for everyone to be treated fairly. Unless a clerical error was made or the tax was illegally assessed, the County is locked into the ~ 114 MINUTES OF BOARD OF EQUALIZATION AND REVIEW, MAY 19, 1994 values that have been adopted. The same value should apply to everyone across the board. The fairest way may be an averaged value. Chairman Greer agreed but felt the state is singling out the car rental business because they are paying on a yearly basis and individuals are paying when their licenses are due. It would be unfeasible to investigate every car sale and adjust the value, but there is a need to get something more fair. It can amount to a large tax bill for businesses who purchase many vehicles. If we change our tax laws, more dealers probably would register their vehicles in New Hanover County. Mr. Register challenged Mr. Travers's opinion that vehicles assigned to a business location are not properly listed. If any business distorts records in order to reduce the taxes of New Hanover County, they will be challenged and taken to the Property Tax Commission and/or the supreme court. There is a penalty when someone tries to avoid taxes or to defeat tax purposes. Mr. Travers explained that some businesses register vehicles out of state when the vehicles are not assigned to a certain location. Vehicles can be fleet shipped back and forth depending on the current need of an area. They may not avoid taxes, but they may register the vehicles in the county or the state that has less applicable taxes. commissioner Sisson replied if that were true then there would not be vehicles listed in the eleven counties that have higher valuations. Mr. Register stated the Greensboro, High Point, Winston-Salem Airport surely have rental vehicles listed in Guilford County. He pointed out the State requires a county-wide tax rate that applies to everybody. We are not allowed to give Mr. Travers a special tax rate from anyone else in the county. Mr. Travers cannot appeal the value because he did not do so by the end of the calendar year. He can appeal if a clerical error or an illegal tax has been made. At the conclusion of the hearings on this date, discussion was held on the inequity of the law on this type of business. Mr. Register explained when the County was taxing inventory, the State guidelines gave a level of trade. If inventory was supplied to someone else, the value of the inventory was adjustable. There is no legal way to compensate for Mr. Travers complaint although he understands his argument. commissioner Sisson suggested the County contact the legislators to provide some relief for leasing companies. I I I '115 ~ MINUTES OF BOARD OF EQUALIZATION AND REVIEW, MAY 19, 1994 Commissioner Burpeau draft a discussion at the 23, 1994. Barone requested Assistant County Attorney proposal to present to the legislators for Legislative Coordinating Council meeting on May Mr. Register stated new regulations could cause the County to check sales agreements. The purchase price on vehicles is based on the quantity of vehicles purchased, buying power, and friendship with the dealer. Chairman Greer suggested an adjustment, such as 10% off the regular book price, could be given for this type of business. MOTION: Commissioner Sisson MOVED, SECONDED by Commissioner Caster, to uphold the assessed value of $31,490 as recommended by the Tax Administrator. Upon vote, the MOTION CARRIED AS FOLLOWS: Voting Aye: Commissioner Caster Commissioner Sisson Vice Chairman Mathews Chairman Greer Voting Nay: Commissioner Barone TAX APPEAL - ELBERT T. TOWNSEND - 1993 THUNDERBIRD VALUE Mr. Register explained a correction was made to the value on the 1993 Thunderbird LX by TEC, Inc. An adjustment from $18,140.00 to $14,730.00 will be applied to all owners of this model vehicle. A refund, along with a letter explaining the clerical error, will be sent to the owners automatically. Mr. Register reported Mr. Townsend was unable to attend the hearing; however, he has accepted the adjusted value of $14,730 for the 1993 Thunderbird LX. ADJOURNMENT There being no additional appeals, Chairman Greer adjourned the Board of Equalization and Review meeting at 12:15 p.m. Respectfully submitted, ~~{J~ Teresa P. Elmore Deputy Clerk ~