News Coverage of the Reassessment

Laura Ginsberg, writer for The Rolla Daily News recently wrote an article about the reassessment being conducted in Phelps County. It was published on February 28, 2007.

Reassessment in Phelps County is necessary because the assessed values put on the tax rolls in recent years have not performed very well in reflecting true value in money, or market value. By the end of 2006, the residential values put on the books for January 1, 2005 were only at sixty percent (on average) of what property was actually selling for. Since the assessor's values are required to reflect true value in money, a sales ratio study should show that values are closer to one hundred percent of selling price. Reassessment, the equalization of property values and adjustment of values to reflect market value, has to be done in order for the 2007 values to be in compliance with State law and mandates.

In addition to poor sales ratio performance, the values put on the books for January 1, 2005 also did not meet State standards in regards to level of assessment. The State Tax Commission (STC) conducts ratio studies to determine whether an assessor's values reflect true value in money. Appraisals are done by the STC on randomly selected properties. These appraisals are usually based on property sales of similar properties to the selected property. The ratio study calculates an assessed value for the property sample based on the appraisal and then compares this result with the assessor's assessed value. The levels of assessment in Missouri are 19% for residential, 32% for commercial, and 12% for agricultural. In 2006 the STC conducted ratio studies on both residential and commercial properties in Phelps County. This study looked at the January 1, 2005 assessor values. The STC found that the commercial properties were actually only on the books for 24.21% of true value in money, instead of the required 32% level. The January 1, 2005 residential property values were determined to be on the books for only 15.08% of true value in money, instead of the required 19% level. These levels of assessment are significantly less than the statutorily required levels of assessment, and as a result the STC issued a compliance order in September 2006 for Phelps County to bring the assessed values into compliance with state law.

The assessor's in the state of Missouri are required by law to conduct a reassessment of real property every two years, for the odd-numbered year. The reassessment conducted in 2005 was minimal at best. The problem of low property values in Phelps County was several years in the making. Not raising the property values to be in compliance with state statutes is no longer an option. It was not dealt with in recent years and now it is time for the assessor's office to face the facts and to deal with the situation.

Reassessment in Phelps County for 2007

Notice to Real Estate Property Owners:

The intent of this posting is to inform property owners regarding the real estate property value reassessment being conducted in Phelps County. The purpose of reassessment in Missouri is “…to equalize values among taxpayers and to adjust the values to reflect current market conditions.”(1) The Assessor’s staff has been reviewing properties for value since late summer 2006.

The constitution of Missouri requires assessors in the State of Missouri to reassess, or revalue, all property every two years on the odd-numbered years. Assessors are also required to place property values on the tax assessment rolls at the percent of its true value in money as set in subsection 5 of section 137.115 of the Missouri Revised Statutes. An assessor accomplishes this when the county’s assessed values reflect fair market value. Studies conducted by the State Tax Commission (STC) have shown that the values put on the tax rolls in January 2005 did not meet the requirements of the state constitution. In fact the STC stated “These [levels of assessment] are significantly below the statutorily required levels …of market value …and falls outside accepted appraisal standards relied upon by the State Tax Commission.”(2)

In order for Phelps County to bring the levels of assessment back to the statutorily required levels as of January 1, 2007, we (the assessor’s office) are applying the appraisal methods used in mass appraisal which includes statistical analysis of sales and other market data. In addition, each property, or parcel, is reviewed for value in the field for condition, changes, and improvements. Recent assessment analysis indicates increases are substantial county-wide and will most likely bring the county’s values back to the statutorily required levels. Due to reassessment, most properties will see a large value increase as of January 1, 2007.

At the conclusion of the parcel review the Assessor’s office will send property owners, who’s property value was increased, a notice of change in assessed value as required by law. These notices, which will be sent later in April 2007, will show the property value which has been determined to accurately reflect market value for tax purposes. The mailed notice will also include instructions regarding valuation hearings as well as provide information about tax relief* which the Missouri General Assembly has made available to qualifying senior citizens or 100% disabled people.

Since tax levies are not set until September, it is not possible at this time to know the impact of the value increase in regards to property taxes. While it is the responsibility of the assessor to place accurate values on the tax rolls for 2007, it is clearly the responsibility of the schools and other political subdivisions to roll back levies to the fullest extent allowed by law to offset the valuation increase.

(1)Source: Property Reassessment and Taxation, Page 7, State Tax Commission brochure, updated February 2005.

(2)Source: Amended Compliance Order, issued by State Tax Commission to Phelps County, September 19, 2006.

*Currently Missouri offers two avenues of tax relief to qualified individuals: the Property Tax Credit (includes real estate taxes paid or personal property taxes paid on mobile homes, or rents paid to a landlord) and the Homestead Preservation Credit. For more information on these credits please visit the Department of Revenue’s web page at http://dor.mo.gov/.