Assessed Value Of Storm Water Management Ponds

[DREA Dean]

Our county just did a county-wide reassessment. A friend developed a small subdivision, and the county applied parcel numbers and values to three stormwater management areas in the subdivision. The SWM areas are owned by the homeowners association, which is really the developer, as there are no other common area elements and no HOA dues. The developer/owner is arguing that the SWM areas have no value, and I agree, as they are dedicated to SWM and can never be developed or improved with anything. I can't foresee any potential buyers. I am being asked to provide valuation support for a tax appeal, as the county's lawyer told the property owner she needs to have valuation support from an appraiser.

Is there anything less (quicker and cheaper) than a restricted appraisal report that I can provide, given that this is really a highest and best use issue resulting in no market value? I know that anytime you provide a value, you are providing an appraisal. In this instance, there is no value. If anything, the value is negative, as the owner must maintain the SWM ponds and fences. I'm not even sure a restricted report is appropriate, but I think she can get away with it at this stage of the appeal process.

I'm looking for ideas. If I need to prepare an appraisal, I will. In reality, the tax dollars saved don't warrant spending much on an appraisal. But that, of course, is the owner's decision. I'm just trying to figure out what the cheapest option might be for her.

Any thoughts or suggestions are welcome.

 

[Gobears81]

The value of these parcels is implicit in the contributory value of the subdivision lots that benefit from improved drainage and potentially as an improved view for the adjoining lots. It doesn't really have a market value for separate sale. I looked at a county assessor's website in Central Illinois and the detention pond in the subdivision was classified as commons area, with no assessed value.

Every state has different regulations, so I don't want to steer you the wrong way. I remember doing an appraisal of the "improvement parcel" of a condemned hotel for tax appeal. The property had a ground lease, so the assessor separated the parcel between the land and the improvements (never seen the parcels separated for that before). The improvements had no contributory value, and really, negative value due to it being demolished soon after. The valuation analysis was essentially a descriptive narrative, though I still had the 11-items required under USPAP to qualify as an appraisal. If I'm not mistaken, it is the shortest appraisal that I've ever done. Those that do more tax appeal work might have more feedback, but this might be a potential avenue.

 

[DREA Dean]

The value of these parcels is implicit in the contributory value of the subdivision lots that benefit from improved drainage and potentially as an improved view for the adjoining lots. It doesn't really have a market value for separate sale.

I agree completely, and am befuddled why the assessment office sees it any other way. But the burden of proof is on the property owner to get it changed.

 

[techbiker]

I agree completely, and am befuddled why the assessment office sees it any other way. But the burden of proof is on the property owner to get it changed.

The county and city would like as much tax income as possible?

 

[JTip]

over the fence value.

 

[Terrel L. Shields]

Is there anything less (quicker and cheaper) than a restricted appraisal report that I can provide

That is a nutso system. I contested everything by dissing the methods used by the assessor to jump values up (changing the quality and effective age being most common). As for "restricted"..why? The Std 1 is going to be the heavy lifting, not the value. "Restricted" means the county isn't going to know HOW you developed your value so they are very likely to reject it. When I served on a board of equalization we expected a summary, could tell nothing about a "restricted" report.

The sensible solution long-term is to donate the retaining ponds to the city, county, or whomever would take it with the restrictions. Take it off the books entirely. Comps sound problematic as well since these never sell.

 

[Meandering]

A restricted use land parcel. Use being restricted by law to storm water retention pond until such time as municipality improves public storm water drainage in the area. Nobody buys storm water ponds.

The good news is if they have separate tax parcels.
See if the developer can donate the retention ponds to the municipality, until such time as the municipality gets around to improving the public storm water drainage system in the area.

Otherwise, they were a necessary expense of land toward the permitting of the entire development.
.

.

 

[DREA Dean]

That is a nutso system. I contested everything by dissing the methods used by the assessor to jump values up (changing the quality and effective age being most common). As for "restricted"..why? The Std 1 is going to be the heavy lifting, not the value. "Restricted" means the county isn't going to know HOW you developed your value so they are very likely to reject it. When I served on a board of equalization we expected a summary, could tell nothing about a "restricted" report.

That's what I'm afraid of. On the other hand, I think at this early stage of appeals, a restricted report might be OK. I'm not going to actually have any sales to go by. It is a highest and best use issue based on logic, with no economic use and no identifiable buyers.

The sensible solution long-term is to donate the retaining ponds to the city, county, or whomever would take it with the restrictions. Take it off the books entirely. Comps sound problematic as well since these never sell.

The township won't accept ownership, because they don't want to have to maintain the SWM ponds, nor have any liability associated with them. I told the owner to just not pay the taxes. Eventually, they would go to Sheriff's sale and nobody would buy them, and then they would become county property. She doesn't want her name or the subdivision name to appear in Sheriff's Sale notices in the paper.

 

[Terrel L. Shields]

Eventually, they would go to Sheriff's sale and nobody would buy them, and then they would become county property.

That makes sense

So for comparison I went into our GIS and found such retaining ponds are zeroed out. No tax, no valuation although still in the developer's name.

 

[Mark K]

What definition of value do they want? Use value, Market value?

In this state the assessors will often assess property value at it use value, especially ag land. The politicians consistently kiss the azz of the ag industry and assess ag land, no matter where its located, at a 'use' value of about $2,000/acre. I've seen ag land sell for $100K/acre but the farmers were paying taxes based on $2K. If you have a small, grandfathered business in a residential area, they will assess the land at commercial value and add the residence on top of the commercial ground value.

IMO, the retention areas have value and I've seen a few sell, but mostly to local municipalities. One or two were bought by an adjacent property owner so they could be enlarged and used for drainage for other land. The consensus on value from the sales I've seen seems to be that these retention/detention areas are worth about the same as the underlying, undeveloped land, the larger tract prior to development that will be served by the retention area. They also have value as required greenspace area in the development plan.

BTW, the assessed values of these areas are $0 in this state. As a matter of fact, any land owned by an HOA for the benefit of a subdivision is valued at zero.

A lot of big box and warehouse developers will parcel off the retention areas, set up an HOA on them, and get the $0 assessed values on them, usually 2-5 acres with pond. Otherwise, they will remain included in the overall assessed value of the property and valued at the same unit value as the usable land.