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HomeMy WebLinkAboutBOR Minutes 3.21.11 COUNTY OF KAUAI Minutes of Meeting OPEN SESSION APPROVED 6/13/11 Board/Committee: BOARD OF REVIEW Meeting Date March 21, 2011 Location Meeting Room 2, Moikeha Building Start of Session: 1:03 p.m. End of Session: 3:23 p.m. Present Chair Craig De Costa, Vice Chair Cayetano Gerardo, Lisa Wilson Boyle, Jose Diogo, Russell Kyono Staff: Deputy Director of Finance Sally Motta, Deputy County Attorney Jennifer Winn, Kris Nakamura. Audience: Kim Hester, Steve Hunt, Curtis Bedwell Excused Absent SUBJECT DISCUSSION ACTION Oath of Office County Clerk Peter Nakamura administered the Oath of Office to Jose Diogo prior to the meetina beina called to order. I. Call To Order Chair De Costa called the meeting to order at 1:03 p.m. II. Approval of Mr. Gerardo made a motion to approve the Agenda agenda. Mr. Kyono seconded the motion. Motion carried 5:0. III.Approval of December 6, 2010 Mr. Gerardo made a motion to approve the Minutes minutes. Ms.Wilson Boyle seconded the motion. Motion carried 5:0. IV. Election of Craig De Costa—Chair Mr. Gerardo made a motion to nominate Craig De Chair&Vice Cayetano Gerardo—Vice Chair Costa as Chair. Mr. Kyono seconded the motion. Chair for 2011 Ms.Wilson Boyle made a motion to close the nominations. Mr. Kyono seconded the motion. Motion carried unanimously. Mr. Kyono nominated Cayetano Gerardo as Vice Chair. Ms. Wilson Boyle seconded the nomination. Mr. Gerardo made a motion to nominate Lisa Wilson Boyle as Vice Chair. There was no second to the motion. The motion dies. The motion for Cayetano Gerardo for Vice Chair was carried 4:1 (Gerardo). V. Board of Chair De Costa said that if the Board looks at the packets that they were given when they first got on the Board, the Kaua'i County Code Review Annual Chapter 5A deals with this Board, and among their responsibilities in Section 12 is to not only hear tax appeals, but to do an annual report, Report and specifically it's 5A-12.7, subsection D on page 108. The Board hasn't done one, the last one staff was able to pull was dated May 28, 1993 and addressed to Mayor Yukimura. If they look at what they're supposed to do to get the report done, there's a lot that they haven't been doing and haven't had time to do with regard to after hearing all the assessments, then have people testify that didn't appeal but have something to say about the assessments for the succeeding year, and that part he would propose at this point it's just too late to take care of from last year, but he would propose if the Board would go along with it is—to take care the first part which is to complete and submit to the Board of Review Open Session March 21, 2011 Page 2 SUBJECT DISCUSSION ACTION Mayor and file with the assessor for the use of the public a copy—a report that in the opinion of the Board will be useful for obtaining objectives set forth in this Chapter. Mainly the items they had seen and he had discussed with some members at previous meetings as well as some appraisers were 1) the fee currently is basically a change in the statute governing our appeals—the current fee is$10. The four of them who have been doing this for a while know that the assessors just to defend one of these appeals put a heck a lot more than $10 work in there, so one of the things he thinks—he would like to see—is a higher fee to appeal. You will note that—this is under 5A-12.10 and 5A- 12.11 —you'll note that 12.11 does say that if they win their appeal, or they are able to settle it, they get that money back, so he doesn't think that would discourage rightful or valid appeals, to raise it something—probably$100, maybe have two tiers- $50 for properties valued less than half million dollars and $100 for properties valued over half million dollars. Ms. Wilson Boyle said that she thinks that is fair or maybe something different for commercial versus residential or something where you can do owner occupied versus investment property. And if they are—she knows that the concern is if people can't afford the higher fees, but if they can prove they're in a certain economic bracket, maybe they can get a discounted fee. She said they don't want to deter people who have a legitimate claim. Chair De Costa asked if they looked at the rules that they were passed out—because another agenda item is to do the rules—at the time they covered fees in the rules and then they changed that to have it in the statute—but what they do have is the language that they have changed—and it had been $3 in the 1980's. And now he doesn't think it's gone up in awhile from the $10. That's one thing—he's not going to ask for a motion at this point—he's just going to go through his concerns and see if any of the other Board members have things they'd like to add or actually come up with a motion. Chair De Costa said the other item is that they know from training with the County tax assessors that they are going through this computer program in inputting certain information and the one value for property—one value for both land and building is the way they are moving towards—they'll have that capability and that's their emphasis. Rather than coming up with a value for the land, coming up with a value for the building—and of course it's going to take the Council going along with it—because they are going to have to change the rates with the one value, but he thinks it would make this Board's job easier if they were just dealing with one value. He thinks they sometimes get an appeal because someone's land value went down but building value went up and that just reflects a difference in how the County might be addressing the situation. Chair De Costa said another point is that they could go to a lower threshold for an appeal, especially if they are going to be raising the fee. Right now he said it's 20% and he thinks they would be in line with other Counties if it would be reduced to 10%. The trade-off would be going to the one value and the higher fees—he thinks that would discourage, that would mean that the number of appeals wouldn't all of sudden go up that just because it's now come down from 20% to 10%. He also thinks that with the computer and with the experienced assessors that they have with the County, coming within 10% shouldn't be a problem, whereas maybe in the past because with the market fluctuating and all that, maybe the 20% cushion was necessary at that time, but he thinks they've moved on to a point where if you're off by 20%, you're pretty off. Ms. Wilson Boyle agreed. Chair De Costa said the other thing is which is eluded to before, is amending the language regarding having to have all of these hearings that they really haven't been having—that aren't appeals but just taking testimony. He thinks all of their meetings have an item on there that Board of Review Open Session March 21, 2011 Page 3 SUBJECT DISCUSSION ACTION says public comment—if anyone wanted to comment that would be helpful to their report, they could—so if they just take out that work that they are not already doing —and just recognize that they are not doing it—because time doesn't permit—they go through appeals until December. He asked if any other member has any comments or concerns or suggestions on who or when a report should be put together that says those things and other things. Ms. Wilson Boyle said that on all of these she agrees with him, she thinks the one value because she remembers a lot of appeals she remembers last year hearing was people were appealing their house because they said their house was$100,000 and last year it was $80,000 and their land went up but they don't look at the total amount—they don't combine the land and building and see that it went down or stayed the same. She thinks a lot of that needs to, and she had that conversation with John (Herring)—they've gone over that the appraisers need to call these people before they show up. She thinks it's important that there's dialogue between the assessor and when someone turns in an appeal —she realizes that last year they had 833 appeals, she realizes that's a lot—but she thinks a lot of things could've been eliminated had there been dialogue, had someone from the County contacted the person that was appealing to say—hey, why do you feel that your house is x amount and this is how we got it—because there was a lot that was stipulated right here. She said to the appraisers in the audience that they do a great job, she's not complaining. Kim Hester, Supervising Appraiser said that she just wants to reiterate that was not the assignment, they went against the assignment in that case, she apologizes—they weren't supposed to do that. Ms. Wilson Boyle asked if they weren't supposed to contact. Ms. Hester replied no—they are supposed to contact, they are not supposed to be bringing stipulations in to the Board at the time of the hearing. Chair De Costa said they are supposed to take care of that before. Ms. Hester noted that would be a waste of the Board's time. Ms. Wilson Boyle said that was her feeling on it—but for the most part they did a great job, there were just instances where that happened and she thinks a lot of that could have been eliminated. Chair De Costa asked if anyone else has anything to say. Mr. Kyono said that he thinks that all the things that Chair De Costa brought up was what they had discussed last year—valid points. Mr. Diogo thinks it makes sense what they are discussing and he agrees. Chair De Costa asked if there is public comment. Ms. Hester said that technically the other Counties have a 20% rule in place by law already, 10% is something agree that they are willing to go to. Steve Hunt, Real Property Officer added with the exception of the City & County of Honolulu, which has moved to a single value and has gone down to 10% - he noted that Ms. Hester missed the first part of the discussion. Mr. Hunt explained to Ms. Hester that Chair De Costa suggested that they go to single value as well and in concert with that, dropping it to 10% on the threshold. Ms. Hester said that's their goal anyway. Mr. Hunt continued - and possibly having a bifurcated appeal fee where someone who's an owner occupant versus an investor would have 2 fee structures for appeals. Ms. Hester said that was great. Mr. Hunt said that it's mirroring a lot of what they recommended and it's great to have another voice. Chair De Costa asked if there's an amount that the County recommended with regard to the 2 fees. Mr. Hunt replied that hard cost dollars—the actual mail outs alone cost them about $12, so just in certified mail for notice of hearing, decision without any preparation, appraiser's time—obviously the $10 doesn't cut anything—so they are thinking maybe $25 to $50 range. He'd like to keep it as low as possible for the owner occupant, but having a much higher one, maybe $50-$75, even as much as$100 for an investor type. Ms. Wilson Boyle thinks the investor type should be higher because they get to write that off in their Schedule E, they get to write that off as costs. Ms. Hester noted that Maui increased their fees but they did it drastically, very quickly, so she doesn't really want to repeat that. Chair De Costa asked so maybe $25-$75 -$25 for owner Board of Review Open Session March 21, 2011 Page 4 SUBJECT DISCUSSION ACTION occupant and rather than go by value, just do owner occupant versus investor or just say non-owner occupant. Ms. Hester said that owner occupant would include people with an exemption—they may not necessarily have that low tax rate—but they still have the exemption, just to clarify that. Mr. Hunt noted that is not a homestead, but owner occupant. Mr. Gerardo asked if changing the rate will require a public hearing. Chair De Costa said that the Council will take care of that because it would be an amendment of an Ordinance that they are basically going to send a report, which they are allowed to send a report to the Director of Finance and the Mayor and he's sure they will share it with the Council—saying here's what the Board thinks would make their job easier, here's where they see some deficiencies or some needs for changes in the law, and then the Council takes care of the public hearing part. And they may or may not want to actually want to have the Board show up and testify to say yes, this is why they said that. Chair De Costa said he thinks a short letter at this point would be best because he believes that the Council is in the process of deciding on legislation that is going to affect the budget now. Mr. Hunt said that they are working now towards the next fiscal year. Chair De Costa said they are looking for next year and so he would say if there's a motion for it and there's support for it, even a one page, page and a half letter that hits those bullet points saying we suggest a change in the law that would make our job easier that would also be fair to the appellants, as well as the County. He said basically what they went over; changing the amounts that he suggested to $25 owner occupant and $75 all other appeals and then also encourage the Council to kind of look at the rates in future years. Mr. Gerardo suggested that he would like to also include rentals. Ms. Wilson Boyle said that is included in investment properties—any property that is not owner occupied. Chair De Costa agreed—he would think it would include vacant land, because you're not owner occupant on vacant land too. He said that 5A-12.11 says if the appellant wins by 50% or more the difference between them and the County, that they get that money back—he asked is it less what is spent on postage or is it the whole thing that goes back? Ms. Wilson Boyle asked if it's stipulated, if they get their money back too. Chair De Costa said it's part of the Ordinance now. Mr. Hunt replied that if they stipulate to their value, that's correct—if it's somewhere in between, if it's a settlement, then it's not. Ms. Hester said that is the purpose as Ms. Wilson Boyle pointed out, for them contacting the taxpayer at the onset when they first get the form, the assessor is instructed to contact the taxpayer before they spend the money. Ms. Wilson Boyle said that for her it was a lot of people—they didn't understand because they sustained 110 and a lot of it was because they didn't understand how they got to the value and when they sat here and explained it to them, they understood. Mr. Hunt said that Ms. Hester is doing a good job this year of filtering all the residential stuff that comes through—it goes through her first, she looks at the comp screen, looks at what the comps were, looks at the subject and makes a decision whether we want to fight it or stip out immediately so the appraisers don't have to wait that long. Ms. Hester added that she did do it last year too but not everything got done the way she instructed it to be done. Chair De Costa said that the exact language in 5A-12.11 is"in the event of an appeal by the owner to the Board of Review, if the appeal is compromised or is sustained as to 50% or more of the valuation in dispute". He said if the taxpayer said there was a $50,000 difference and they settled it for$25,000. Ms. Hester said that they keep the fee but if it is stipulated to the taxpayer's value, they get the fee back. Ms. Wilson Boyle added that either way they are still saving money on their property taxes. Chair De Costa asked if they have a motion, although he doesn't have a letter ready to approve—but asked if there was a motion saying that's where they want to go. Ms. Wilson Boyle made a motion to recommend in the Board of Review's annual report the following: 1) increase the appeal fee to $25 for owner occupant and $75 for investment property; 2) change the value system to one value versus separate for building and land; 3) lower the threshold for appeals from 20%to 10%; and 4) eliminate the language in 5A-12.7(d) indicating that the Board needs to have separate hearings to take input before they file their annual report. Mr. Kyono seconded the motion. Motion carried unanimously. Board of Review Open Session March 21, 2011 Page 5 SUBJECT DISCUSSION ACTION Chair De Costa asked if any of the Board members would like include the statistics as an addendum to the report, as past reports had that information included. He asked if they needed a motion or if unanimous consent was sufficient. The Board concluded that unanimous consent was sufficient. Mr. Hunt pointed out that in Ms. Wilson Boyle's motion she referred to $75 for investment property while in the Board's discussions they defined it as non-owner occupant. Chair De Costa indicated that he will clarify in the report that investment property is non-owner occupant if the Board has no objections. There were no objections. Mr. Gerardo asked that for the motion to be read back. Chair De Costa read the motion. Mr. Gerardo said that he asked for that because the first part of the motion does not reference the section of Chapter 5A, and suggested reference be added to make the motion clearer. He asked if an amendment to the motion is required. Chair De Costa asked if Mr. Gerardo is moving for a reconsideration of the motion to clarify. Mr. Gerardo said that only the person that made the original motion can make a reconsideration. Chair De Costa said that anyone that voted for it can. Mr. Gerardo made a motion to reconsider the original motion. Mr. Kyono seconded the motion. Motion carried 5:0. Chair De Costa said Mr. Gerardo made a motion to reconsider to add the specific subsections that they are recommending changing. Mr. Gerardo said that he would like to add to the first part of the motion, amending Section 5A-12.10 of the Kauai County Code. Chair De Costa asked if was also moving to include the language specific to sections of the Kaua'i County Code as to the value as well as the threshold. Mr. Gerardo replied that it included all of that. Mr. Kyono seconded the motion. Motion carried 5:0. VI. Review and Chair De Costa said that these rules have not been amended since 1988 and he is not sure if the Board feels that there is a need for Amendment of amendment. He noted that this particular process is governed by HRS Chapter 91 and requires once they have language proposed, they Board of Review have to give at least 30 days notice for public hearing and then vote on it after the public hearing. He is not sure if the Board feels that there Rules is a need for it, but what he did have Board Secretary Kris Nakamura copy, and Deputy County Attorney Jennifer Winn was kind enough to provide him with is copies of other Board's rules that they may want to take some ideas from or not. He said one of the concerns that he has and he is not sure if the Board even wants to touch it—but that with regard to—his question is if it is possible to make the rules clearer so that someone who appeals knows what to expect at the hearing, in other words what kind of things—besides reading through the statutes, what kind of things. Just as an example, when they first started this or at least his and Sonny's first term—he remembers people bringing in newspaper articles with statistics, just general statistics island wide and they had to keep telling each appellant one by one, hearing by hearing—that's not something that they legitimately consider. He's not sure if the rules take care of that or not, but that's just one thing that he was thinking of. He said the other thing is sometimes the assessor sits there prepared to defend their assessment which is prima facie, that they did it correctly but the appellant brings up this comp that as a Board member he'd like to know more about—but because the appellant never provided it to the assessor ahead of time, the assessor can't say I'm familiar with this property and this is why it's not really a comp for this particular appeal. And if they require them, if they wanted the Board to consider comps, have it at least 2 working days to the County beforehand—that might make it a more beneficial hearing. He's not sure if that's practical or not. Ms. Wilson Boyle asked the staff resent how they deal when they talk to the appellants—she asked if they talk about their evidence. Mr. Hunt replied that normally at the Board of Review Open Session March 21, 2011 Page 6 SUBJECT DISCUSSION ACTION point of appeal, some of the appellants already have in their mind what the comps were in the neighborhood, what the sales were and they provide that—sometimes it will be an MLS printout, or a realtor's information of what the comps were in the neighborhood, and they'll attach it. He said sometimes they just don't like it because the value trends are going down but the assessment is going up—and a lot of times the fact that the value may have been under assessed in the prior year doesn't come into play—it's relative. He said it depends, it's case by case—and by the time it's been filtered and Kim has reviewed it, and they decided they want to continue, typically they are prepared but they may not have all the comps from the appellant. He said they should know where the comps are even if—they should dismiss that—that was an REO, that sold 2 days on market or this was a short sale but it was exposed for a year therefore it was invalid—they should know that information in advance just from their study of the market. Ms. Wilson Boyle noticed that was the big thing last year, the comps they were bringing in were REO and short sales to the couple of the appellants she was telling them the County doesn't use that. Mr. Hunt said the challenge and that's generally an accurate statement—but because the market has become to the point now where a lot of the REO's and short sales have become part of the market, it's now analyzing was it exposed long enough, was financing available, what were the conditions of that particular sale. He said some of the REO's are still so far distressed and Jose would probably know as a practical standpoint—it's not considered an indication of market value, whereas others that have been exposed for a long time and have had incremental price dropping to the point where it finally did sell are probably more representative of the market. He said when they were screening comps and selecting them as to whether they would be included in the comparables set—sort of did the same analysis—they did use some REO's and some short sales this year, but not all of them and you'll probably find the appellant who will find all the lowest ones and say just go to the lowest common denominator—it can't be more than this. Whereas on a typical REO and what he's found at least from his analysis with the condo market—they were within 15% of market value when you have a market sale that's was the market a lot longer but one that was distressed sale that was exposed— be lower but it wasn't 50% lower—and the one that were 50% lower were clearly liquidation value, it wasn't market value and that was the big challenge for them—they have to determine what market value is. He said this year even within their own analysis—REO's and short sales in the mix of the comparables. Mr. Diogo agrees with that—he thinks that to be fair to both sides, they should be given time to at least review it, you can decide what is, what are truly comparables or can be used as comparables—he thinks that is excellent. He said it would probably save them a lot of time too. Ms. Wilson Boyle asked if they tell the appellants to bring their evidence. Mr. Hunt replied that is part of the appeal, part of the form that says they are supposed to provide the information—your value, you opinion of value, what is it and it is based on what resources you have, what's your evidence. He noted that in lieu of no evidence, the County is correct, so they have to provide evidence to show that the County is incorrect. Ms. Wilson Boyle noted that many cases were scheduled and the appellant did not show up for the hearing and they provided no evidence, so they sustained the County's assessment. Chair De Costa said that he doesn't know what the solution is, but he just thought that 1988 might have been too long ago to account for what's going on now with regard to the rules and if there's something that can make it easier for all of us who participate in these hearings, as well as the appellant—then he thinks they should look at it. He doesn't have any specific rule changes in mind, but if they want to go through them, he can tell them that Rule 2.2 persons who may appear as a representative capacity before a Board, it includes attorneys but also allows appraisers and real estate brokers, partners, employees, immediate family members, etc. Then Rule 2.3 says all persons appearing before the Board in a representative capacity shall conform to standards of ethical conduct required of attorneys before the courts. He doesn't know whether they would want a family member or even necessarily an appraiser to have to make themselves familiar with the ethical codes of an attorney in order to appear before this Board. He Board of Review Open Session March 21, 2011 Page 7 SUBJECT DISCUSSION ACTION said for attorneys they should definitely be following the rules of professional conduct, but that's something that jumped out at him that as something that should be looked at. He is not sure if Rule 2.4 is the current law or not with regard to former employees of the Department of Finance or Office of the County Attorney not appearing for 6 months, he's not certain there was a change in the law to a year. Deputy County Attorney Winn noted that the Charter was amended to a year. Chair De Costa said that maybe their rules should reflect the current Charter. Ms. Winn said that the Charter is a little bit different also because it has to be something that they had previously worked on. Chair De Costa said whereas somebody that worked in the Department of Finance that never handled assessments would still be by their rules banned from it. Ms. Winn said possibly even if you go to a specific case or a specific property, it could be different. Chair De Costa said that Rule 3 Filing of Papers—that's where it jumped out at him that are they getting—every appellant is different, some of them put their appraisal in at the time they appeal, some of them give it to the County while they are going through the discussion with the appraisers, and some of them wait to bring it with them the day of the hearing—and he doesn't know if they want to make that uniform or just leave the current practice in place—he leaves it up to the Board members. He's not sure if the other notice of hearing, computation of time— if that needs to be changed at all. He said Rule 10 Subpoenas—he actually hasn't seen a subpoena so he's not sure if that—he thinks they should leave that in just in case there comes a time when they want to, when they may need it to get their evidence here. He said Forms refers to the appendix but he thinks this form has already been changed so they might have to, if nothing else update that to reflect the current form. He asked if they are using any other forms that maybe should be put in the appendix. Board Secretary Nakamura replied that the Board of Review brochure is an informational piece that can be added. Chair De Costa asked when they appeal, they are automatically sent that brochure. Ms. Nakamura replied that she sends a copy of that brochure that has been updated this year with the appellant's copy of their appeal form, and again with their hearing notice. Chair De Costa asked for a copy of the brochure. Ms. Nakamura will email a copy to the Board members. Chair De Costa asked if any members have any comments. Mr. Gerardo would like to recommend that at their next meeting each member consider amendments and submit it in writing so that they can put all of it together and go as fast as they can. Chair De Costa added that it's an ongoing process throughout the year but they will be starting with the next meeting. Mr. Gerardo asked that the Board members submit as many amendments as they can think of. Chair De Costa asked that item be placed on the next agenda. VII. Public This item will be placed at the top of the agenda for future meetings. Comment on Agenda Items There were no public comments. VIII. Next meeting is scheduled for Monday, April 18. Announcements The meeting was adjourned at 1:55 p.m. Submitted by: Reviewed and Approved by: Kris Nakamura, Secretary Craig De Costa, Chair (X) Approved as is. ( ) Approved with amendments. See minutes of meeting.