“…from my cold, dead hands.”
Charlton Heston’s passionate quote about gun rights could also be applied to how government seems to feel about relinquishing ANY tax or fee they’ve become accustomed to. When local government can’t wring more money from taxes directly, they institutionalize schemes so confounding and entrenched, it becomes impossible to unravel them.
This is exactly what Klamath County does with it’s primary revenue source: property tax.
It has come to our attention that Klamath County has moved beyond failing to compensate property sellers for tax overpayments based on inaccurate valuations. In a prior article, we discussed the policy they have in place that prevents anyone who has sold a property from challenging past tax overpayments. Now we have uncovered an equally devious scheme the County deploys to prevent buyers from paying taxes on the actual value of the property they just purchased when it falls below the assessed value.
The County Coup
The knee-jerk reaction to citizen backlash in the County Assessor’s office is to explain with ample condescension that the assessed value isn’t really what you are being taxed on. This is because the property tax referendums cap the annual increase of taxes on properties that existed on tax rolls nearly three decades ago. Sounds like you are being protected, and it is better than unleashing unfettered tax rate hikes, but t’s not all that great. The property tax measures only serve to limit increasing taxes no more than 3% per year, which adds up to quite a sum when applied for 20 years. The blanket assumption at the county level is that no property could possibly be worth less today than it was in the distant past. They say the tax valuation is a baseline adjusted backward. They make it more complicated than this, and that confusion works in their favor to diffuse most complaints.
The problem is the Klamath economy lags behind most everywhere else and the area took a bigger hit than most regions after the 2008 crash. Demand still hasn’t caught up with other areas and many barriers remain to the high-costs that have emerged for renovated and building new structures (which are not subject to property tax limitations). Due to all of this, there are a number of cases where the sale price of properties on the open market were actually less than the value adjusted for property tax limitation. In the distant past, such a thing never happened, but once it did, the County conveniently “forgot” or overlooked the trend and failed to adjust valuations accordingly.
From 2008 on, there were hundreds of properties in Klamath County that sold for less than their value in the 1990s, but their values were not adjusted to reflect decreasing values. Most property owners don’t fight this because the actual tax adjustment is small and they think buyers look at assessed values when deciding whether to purchase real estate. There is an illusion in play that if you allow your assessed value remain high, should you decide to sell your property it will help influence a higher purchase price. This isn’t true when markets fluctuate wildly as they have in recent decades, but it remains a general feeling that precludes many from challenging their assessment.
To place this in context, think about how property valuation worked in the simpler, more honest times. We have to roll back to the 1980s. Back then in just about any county you moved to, if you bought a property on the open market and discovered you were being taxed on a value higher than you just purchased it for, the county would adjust the value to reflect what it just sold for. That’s exactly what real market value in real estate is: the price a willing seller and willing buyer will pay for a property available for anyone to purchase on the open market (not under duress).
When you get a loan to purchase a house, the bank hires an appraiser to determine the current real market value. The bank won’t usually write a loan for more than they can sell a property for (otherwise known as “collateral”), so they care about accurate appraisals. Appraisers accomplish this mainly through comparing similar properties recently sold and adjusting the value according to differences. For example, a property that sold with a hot tub may be worth $4,000 more than a subject without. This IS the widely accepted and adopted method by which property value is determined. County tax collectors in the 80s used to use a similar method. The most recent comparable sale data carries the greatest weight, so above all, nothing is greater proof of fair market value than an actual sale on a property in question. For that reason, when you ask the County to look up the deed in THEIR records that proves what you just paid for the property, they should adjust the value to match. They SHOULD be doing this automatically, without you asking, and often do when property values are increasing.
During the real estate boom Klamath County upwardly adjusted property assessments en masse to match sales recorded at higher values than previously assessed. Why then, is is so godamned difficult to get them to do the opposite? The answer is obvious: greed.
In this recent case we reviewed, some land with a grand view of the old landfill had been on the market for five months, advertised by a real estate agent and posted in the multiple listing service. This most definitely qualities as being on the “open market.” The several acres of land was sold as one parcel, though it was comprised of three separate tax lots.
The purchase price for all three tax parcels of land was $18,000. The Klamath County Assessor recorded a sale of $18,000 for each tax lot, which is grossly inaccurate. Since real estate appraisers use County records as a basis for their valuations, posting this inaccurate sale data creates a ripple effect of unintended consequences. This, in essence, inflates the value of all land appraisals in the vicinity.
When staff at the Assessor’s office was asked about this, they said it was the only way they could represent the sale in their records. Really? What absolute bullshit! Even a 6th grader could figure out that dividing the sale price by the square feet of land in the sale would result in a price per square foot. Each parcel SHOULD have been recorded (or reflected in Assessor records) as a sale based on the price paid for each lot based on the price of each square foot of land.
It is beyond convenient to leave this practice alone. In such cases, County staff are colluding to falsely inflate property values that in turn support higher property assessments that bring more cash to their coffers. per the request, the Klamath County Assessor’s Deaprtment refused to make any adjustment in the property records to accurately reflect the sale price of the land.
The buyer of this land noticed that the price paid was actually less than the property was valued in 1996. This was a clear case where the assessment should be changed and the tax bill adjusted downward. When the request was made and the records were reviewed, Assessor staff said, “The property assessment cannot be changed to the price you paid for it. We have to review the price of other properties sold and only then if the trend is a lower value would we adjust it lower.”
It’s difficult to achieve this level of absurdity, but Klamath County has somehow done it. They rejected the actual open market price as a basis of valuation–the unequivocal ACTUAL proof of value. Their only stated acceptable alternative was to use a valuation method designed to ascertain value when one isn’t entirely sure what something would sell for. This is like one of those nightmare Twighlight Zone alternative universes where logic and rationality does not apply.
Fallacies and Folly
In a town that’s been in existence for some 80 years, on land that was platted 40 years ago, where the area is already built out, you’re not going to find enough recent land sale data to gain any clarity of land sale trends that would support what such a property just sold for. It’s a futile exercise designed to be just that: to prevent anyone from effectively challenging the dictates of the assessment gestapo.
The two cons perpetrated by Klamath County effect everyone who lives in the area and should not be allowed to continue.
These extremely boring elected positions like the county assessor rarely are controversal and seldom compel a passionate response during elections. However, the only way the assesments will be corrected is through utilizing the checks and balances inherent in the system. This must begin with questioning and replacing the County Assessor, if necessary.
The request to change County assessment policies must be initiated by the Assessor and taken to a vote of the County Commissioners. If that doesn’t work, a referendum may be in order, but it is notoriously difficult to make such a thing stick legally without the consent of elected officials in power.
Governments are supposed to be benevolent. Here we have a case of greed and contempt within government, not at an individual, but as a collective, a systemic breakdown designed to oppress landowners. It must be corrected.
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