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The taxman cometh.


He's Made His List And Checked It Twice On Property Assessments In The Millions

Real estate wags still remember a time in the not-so-distant past when getting a favorable reassessment on property taxes was a simple matter of bluff and guff. All it took was an appearance at the county assessor's office by a stranger wearing a dark suit and sunglasses, armed with a briefcase and the threat of a lawsuit.

Such tax abatement on demand was met with a friendly and fearful: "How low do you want it?"

Perhaps that running joke was indicative of the way things were in the good old days but not any more. "That is no longer the case in the state of Arkansas, and I for one feel good about it," beams Larry Crane, director of the state's assessment coordination division.

There's a new level of sophistication and confidence at assessor's offices around the state, thanks to improved education in the wake of Amendment 59. Staffers won't be browbeaten into submission by saberrattling attorneys and whatever they might be packing in those eel-skin briefcases.

These days, county bureaucrats aren't backing down from a fight and are willing to go toe-to-toe with private sector professionals. A recent skirmish resulted in Pulaski County levying $737,971 in additional property taxes on Park Plaza, University Mall and McCain Mall.

Personal property assessments are shaping up to be an even hotter area of contention for businessmen and residents all over the state. That could generate millions of dollars in overlooked areas of taxation for countries with a corresponding cost to those who have escaped scrutiny in the past.

Turfdom and Anti-Tax

Mending obvious holes in the reporting system is nice, but County assessor B.A. McIntosh would like to make further refinements in the system by expanding his staff. McIntosh is finally gaining support from school officials and other interested parties.

However, there is still resistance at the quorum court level, and that's where the decision gets made. Turfdom among county offices and a general anti-tax mood are cited as the millstones preventing justices of the peace from moving forward.

"That's fine," McIntosh sighs. "My job is to provide mandated services, but there's a lot of things we could do to provide more equity and services. The last reappraisal was in 1985, and most states have a two- or three-year cycle, even other Southern states. "That's considered a dirty word, but reappraising is a necessary evil. Our time is coming. We're already out of line with state standards."

The state assessment coordination division oversees the 75 county assessors and monitors the performance of each. An average of 20 percent is considered ideal, and if the number sinks below 18.5 percent, the state steps in with corrective measures.

Pulaski County stood at 18.71 percent as of Aug. 1, the lowest of any county not currently revamping part or all of its appraisals. At the bottom of the list is Garland County. Officials there are having to cope with the headache and expense of a full-blown reappraisal of the entire county that weighs in at $1.8 million.

Aggressive Stance

The state recommends the addition of a dozen staffers for the Pulaski County Assessors Office. That hasn't stopped the existing members in aggressively pursuing unassessed or underassessed properties such as Park Plaza, University Mall and McCain Mall.

Unable to sway the assessor's office, representatives of the three malls took their grievance to the Board of Equalization in September. It was the second time in as many years the two sides had squared off on the 7th Floor of the Wallace Building.

The mall folks won the first round, but county appraisers reloaded and came back this year with additional information on comparable projects around the country to support their claim that the properties are way undervalued.

Bob Wolford, director of appraisals for the county, posed an argument before the board that went something like this: They convinced you that McCain Mall was worth $20 million last year. Now they're telling you it's worth $32 million today. We still say its worth $50 million. Who are you going to believe, us or them?

The implied message was clear. They lied to you once, and they're doing it again.

In this go-around, the board of equalization leaned toward the assessor's office and split the difference establishing a valuation of $42.5 million for the North Little Rock mall.

If the board of equalization's ruling sticks, the annual tax bills for the three malls will increase from:

* $302,945 to $601,970 at Park Plaza.

* $293,494 to $505,395 at University Mall.

* $206,156 to $432,201 at McCain Mall.

The battlefront for University and McCain malls has moved to the third tier of the appeals process with a hearing scheduled for Wed., Nov. 28 at 9 a.m. before County Judge Rita Gruber. A hearing date hasn't been set for the Park Plaza appeal. The next step would be a formal lawsuit in Circuit Court.

Raw Land Is Cheap

Undervalued land was a large part of the tax escalation for the three malls. Raw land, on the other hand, does get a big benefit of the doubt according to state law. The appropriate passage in Amendment 59 reads:

"Commercial land and residential land that is vacant shall be valued on its typical use. The assessor must determine what the typical use of vacant commercial or residential land is by considering the primary use of adjacent lands."

Take for instance, the 329 acres in the Springhill Farm area owned by the Crestwood Co. The property, located in the northeast corner of the interchange of I-40 and U.S. 67-167, has carried an appraisal ranging from $40 million to $20 million. The call depended on whether the appraisal was in-house or not.

The market place recently fixed a value of $5 million on 30 acres of that undeveloped land, where Folmar Associates of Mobile, Ala., is leveling land for McCain Plaza.

Even after this high-dollar purchase, the property will continue to be carried on the tax rolls at a fraction of its true value. The completed improvements will change that.

Cyclical Reassessments

In a world of few constants, cyclical reassessments are a tool to monitor the ebb and flow of property values and adjust the tax rates accordingly. Hiring additional staff to handle the increased workload could uncover thousands in new tax revenue.

"I think you would at least break even, and it's worth doing even then because you get the added benefit of every taxpayer being treated as fairly as possible," Larry Crane, director of the state's assessment coordination division.

McIntosh has lobbied for such a move for several years now, and his words are beginning to fall on a friendly ears.

"I do agree with Mr. McIntosh," Rita Gruber says. "We do need to do a better job of assessing property. There's probably tax money lying out there that is not being collected."

It's an area that she would like to work with him, but Gruber is a lame duck county judge. She is an appointee selected to fill out the unexpired term of Don Venhaus, and the law doesn't permit ad hoc politicians like Gruber to succeed themselves in office.

Buddy Villines, outgoing mayor and city director for Little Rock, is running unopposed in the November general election and will be taking over the county judge post come Jan. 1. He is familiar with the county assessor's situation but hasn't formed an opinion addressing specific needs.

"We do need to be able to do a more comprehensive job," Villines points out.

"On the face, it sounds like a good idea, but we haven't been approached on it," reports Tom Dalton, Little Rock city manager.

Neither has James Smith, superintendent of the North Little Rock School District. He is sympathetic to the cause of tax equity.

"Whatever it takes to make things fair for everyone, we're in favor of," Smith states. "I'd like to see the specific proposal [regarding staff expansions], but we'd be supportive of any efforts to do a better job at the assessor's office." North Little Rock Mayor Patrick Henry Hays is more restrained in giving McIntosh the nod.

"If there's legitimate statistical evidence to demonstrate it would increase collections, I don't see why we wouldn't support that," Hays remarks. "From my perspective, an additional employee would have to more than offset the expense of hiring them."

During last year's budget hearings, McIntosh wasn't able to convince the school districts that hiring additional personnel would solve the problem.

"We suggested the assessor's office get more productivity out of its current staff, and that was a real delicate situation because we had no hard proof they weren't working their butts off already," recalls Don Stewart, assistant superintendent for business affairs at the Pulaski County School District.

Members of the board of equalization have now begun helping McIntosh carry the cyclical reassessment banner. Recently, they made their pitch to Bobby Lester, superintendent of the Pulaski County School District.

The message from Lester was do it if the board was convinced there was a need for increased staffing and the additional cost would be a break-even proposition at the worst.

The momentum is building for expanding McIntosh's staff and instituting a cyclical reassessment policy. Perhaps 1991 will be the year.

PHOTO : RETAIL REVENUE: The Pulaski County Assessor's Office values the Lakewood Village Shopping Center at more than $17.7 million, and the land alone accounts for $11.6 million of that. Total annual property tax? $180,476.

PHOTO : STEPHENS BUILDING: An annual property tax bill of $334,712 is part of the package at Doyle Rogers' former building. The county assessor says its worth $30.9 million

PHOTO : ROCKEFELLER MANOR: Winthrop Paul Rockefeller's Little Rock home is carried on the county books at $617,300 with the land appraised at $33,300. The total annual property tax runs $7,043.

PHOTO : MONEY IN THE MAKING: The North Little Rock School District will see more than $75,000 in new revenues headed its way when McCain Plaza comes on line in 1991
COPYRIGHT 1990 Journal Publishing, Inc.
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Title Annotation:County Assessor B.A. McIntosh of Pulaski County, Arkansas
Author:Waldon, George
Publication:Arkansas Business
Date:Oct 15, 1990
Previous Article:No competitive edge.
Next Article:Toning up the workplace.

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