Like most Johnson County homeowners, Stephanie Berland hopes for the best when she sees the annual appraisal letter in her mailbox. After two years of fighting – and winning – a reduction in the amount she’d pay property taxes on, she thought perhaps this would be the year the county would value her home where she thought it should be, $370,000.
But when March rolled around and it was envelope opening time again, there it was: $410,000.
“It’s a broken record. I just keep coming back to this amount,” said Berland, who lives in Olathe.
Frustration with ever-increasing property values has become a common bond for many Johnson Countians, especially those who live in places like Prairie Village, where increases above 10 percent were not uncommon this year.
County commissioners say they get an earful about appraisals but have never been able to do much about them because elected officials cannot directly intervene in value setting. Some of them sent a message two years ago, though, by voting against the reappointment of Appraiser Paul Welcome.
Welcome survived that 4-3 vote, but announced that he will retire June 15, before his four-year term is up. In naming his replacement, commissioners will have a rare chance to have more clout in the process.
And they’re beginning to ask some questions. Commissioner Becky Fast, whose district includes northeast cities where values jumped the most this year, has been researching how value setting can be fairer to middle- and lower- range neighborhoods.
Steve Klika wants to take another look at how commercial values are set. A state official’s visit to talk about the process was an eye-opener, he said. “We do enjoy some more flexibility than probably what we as commissioners thought we had.”
The appraiser is one of the most powerful non-elected positions in county government. The values influence how high a tax rate should be and how much of a budget the county is capable of raising.
Getting it wrong can have consequences. In Jackson County, for instance, schools missed out on a hefty revenue increase when the value of the Country Club Plaza was set too low in 2017. But a lot is riding on the Johnson County appraiser’s performance as well. A pending tax appeal on how the values of big box stores are set could set off an explosion in local budgets if the corporate owners get the lower valuation they want.
Commissioners see opportunity to improve customer service
In Johnson County, the complaint is often that values are too high and that appealing is frustrating.
Although things have cooled down a bit this year, the high value increases of the previous couple of years have brought howls of protest from homeowners. Last year some 6,691 appealed their appraisals – more than twice as many as the number who did so in 2015. This year the appeals are down but still high at 5,939. About half of the appeals typically result in a downward adjustment.
While Berland felt comfortable handling her appeal – she is a certified public accountant and her husband is a mathematician – appealing can be daunting for many people. Fast is concerned that the value spikes are disproportionally felt by people on fixed incomes and others who don’t have the resources and confidence to appeal. The appraiser’s office determines fair market value through computer analysis of other sales. To counter that, homeowners need evidence of what they consider a comparable sale, and perhaps some pictures of deterioration or damage that could bring the value down.
Berland argued there were no good comparables for her home. But she said that even for her, the appeals process seems opaque and the county doesn’t provide enough evidence to back up its rulings.
Making the appraiser’s office more customer friendly is one of Klika’s hopes in hiring a new appraiser. The office has had a reputation for being rude and unresponsive to citizens, he said. “I realize a tax collector is never a popular person but we’re supposed to be very much engaged with our citizens and we need to respond to them in a better way.”
“We have to be a little bit more accommodating here, give folks the benefit of the doubt,” he said. “If they’re wrong, fine. If we’re wrong, fine, let’s change it.”
Fast said she’d like the next appraiser to also look closely at how the appraisal process can work against people with less-expensive homes. Someone living in a neighborhood of mansions might have a lower valuation increase because homes there are infrequently sold and there aren’t enough comparables, she said.
Meanwhile living near newer homes with a lot of sales produces more to base a value on, Fast said. “So if you bought recently and a lot of homes have sold recently they can compare more easily than if you’re in a home that’s been there 20 or 30 years and they haven’t seen the inside and they have no idea what the repairs or upgrades are,” she said, adding that new homes also may have interior pictures to help set the value.
In fact the appraiser’s map this year shows Mission Hills, with some of the lowest value increases, side-by-side with Prairie Village’s high increases.
Research on regressive value-setting systems has been done in Cook County, Ill., and Fast hopes the appraisal candidates will be up to date. “To me it’s a science just like going to a doctor,” she said. “You want the doctor to know about the best technology and I think we want our appraiser to know about the best research and application of mathematical models to have an appraisal system that is fair.”
Commercial property valuations under scrutiny as well
It’s not just residential property owners who have been unhappy of late. Commercial property values also have been increasing.
Charlotte O’Hara, a former state representative and former candidate for mayor of Overland Park, told commissioners recently that they should reconsider how commercial property is valued.
O’Hara said her three commercial buildings increased in value from 61-64 percent last year, even though they are 40 years old and have maintenance issues. But since they are commercial properties, she said, they were appraised based on how much income they should bring rather than on comparable sales.
That figure is based on an assumption of what the lease rate should be, rather than the reality, she said, offering an analogy. “Basically, if I were employed as an accountant and make $150,000 a year and the IRS assumption was with my credentials and my experience I should make $225,000 a year, I’m going to be taxed at $225,000 a year. It doesn’t matter what I actually make. This is exactly what’s happening in our county.”
O’Hara said the whole system needs to be examined. “Our appraisal system is horribly broken. It needs to be addressed at the state level. You need to take an active role in revising the methodology in obtaining equalization.”
Klika said he’s open to the idea of basing commercial value on market rates. “I think she raises a very good point there,” he said. Commissioners, who have in the past thought their hands were tied in the appraisal methods, are going to have to find out how much flexibility they have, he said.
“I don’t know if the process that they’ve been using is broken, but who says the rules of the game can’t change a bit?” Klika said. “Why can’t we be a little bit more transparent and customer friendly?”
The commission won’t have the luxury of time to study up, though. Once they hire an interim appraiser, they have only six months to find a more permanent replacement who meets the state’s education and experience qualifications. That person would fill out the remainder of Welcome’s term and be up for reappointment in June of 2021. The commission has just begun interviewing candidates for the search firm.
“I think we need an appraiser who’s actually going to take a look at the whole program, what the state law says, how are we responding to the state law and ok, commission, what flexibility do you have in the process?” Klika said.
“It’s something we’ve got to deal with because this problem isn’t going to go away. It hasn’t gone away in the six years I’ve been on the commission.”