report performed by Shaner Appraisals Inc. and commissioned by the Home Builders Association of Greater Kansas City (HBA) has reviewed Platte County’s current assessment procedure for new homes under construction.
At a meeting of area HBA members on Thursday afternoon, HBA Director of Governmental Affairs-Missouri Fred C. Buckley III presented a news release that indicated the county’s assessment policy poses a tax revenue loss.
“A review of Platte County’s partial-completion property value assessment procedure for new homes under construction shows the county may be losing tax revenue, discouraging housing production and providing some homeowners with up to a year of tax-free living,” states the study.
The report found that under the current system, home builders time their construction cycles to avoid higher taxes and discourage speculative construction in the county. It is estimated that the county receives approximately $2.1 million in property taxes from new-home construction.
Under Platte County’s current partial-completion assessment model, the county currently values all property on Jan. 1 and uses a 50 percent completion barrier for determining property taxes for the entire year. Homes less than 50 percent complete pay no property taxes on improvements while homes over 50 percent complete pay a pro-rated share of estimated taxes.
Due to this system, the study revealed that a “leakage” in the tax collection system leads to a loss in property tax revenue and also poses a significant inventory tax burden on home builders.
If Platte County would opt to move to the traditional occupancy-based system, which assesses property taxes when a new-home buyer takes possession, the study concluded the county would collect an estimated $2.64 million in tax revenue and would eliminate barriers to speculative construction by home builders.
If there was an increase of just five percent in new-home construction, it would generate the county $2.77 million in tax revenue, an addition of $130,000 for county services from just 30 additional homes.
Under the Missouri Revised Statutes, Section 137.082, it states the county assessor may consider a property residentially occupied upon personal verification of when any two of the following conditions have been met:
• An occupancy permit has been issued for the property;
• A deed transferring ownership from one party to another has been filed with the recorder of deeds’ office subsequent to the date of the first permanent utility service;
• A utility company providing service in the county has verified a transfer of service for property from one party to another;
• The person or persons occupying the newly constructed property has registered a change of address with any local, state or federal governmental office or agency.
It was reported at the meeting that in discussions with Platte County Assessor Lisa Pope, she said if the new model would be implemented her office would need to employ an additional four employees.
However, according to Clay County Eastern Commissioner Craig Porter, the change would not create a hardship on the assessor’s office.
According to Porter, if Platte County issues 600 building permits a year and 500 of those are single family permits and if the county has 200 work days a year, it would equate to a person working on 2.5 permits per day on average.
State Certified General Appraiser for Missouri, H. Laird Goldsborough said, “Lisa’s biggest concern is the addition of staff because they would have to determine occupancy. Even if the staff would need to be added, the revenue would far outweigh that.
“It’s as simple as a phone call to the recorder of deed’s office, or the utility company. It’s just a matter of picking up the phone.”
Pope, who was asked to comment on Monday said, “I don’t have any comment on it right now. I’m just kind of leaving it up to whatever happens right now.”
According to the study, the change to an occupancy-based assessment model would also shift the majority of the tax burden directly to new homebuyers who benefit from the services provided by the taxes.
Currently, a homeowner buying a home less than 50 percent complete on Jan. 1 can live in the home much of the year virtually tax free while a homeowner purchasing a home that was more than 50 percent complete on Jan. 1 will pay a higher price for the home due to taxes assessed while the home was in inventory.
“The report recommends the occupancy model as it better allocates the costs of the services to the users of those services, resulting in a more fair tax collection system,” said HBA Executive Vice President/CEO Tim Underwood.
“The change would allow the county to collect more tax revenue more quickly while eliminating what builders consider an inventory tax.”
The change, is also stated, that it would eliminate the potential errors that are possible under the partial-assessment system.
Under the partial-assessment model, county employees must determine if a home under construction will be 50 percent complete and ready for assessment by Jan. 1.
If they have not inspected the under-construction inventory for some time, their assessment can be arbitrary as to the level of the finish. The value is also based on the assumption that a home would sell in that condition on that day, meaning there may be a substantial discount for the buyer to assume ownership of an unfinished home and then finish construction.
Second District Commissioner Jim Plunkett, who was present at the HBA meeting, said he is still reviewing the information and study that was provided to the group on Thursday.
“I thought they did a nice job in the presentation of information and gave us some supporting documentation for their point,” said Plunkett. “I reviewed it but I still have questions. With as much information as they gave us, I’ll have to run through it a second time.”
Plunkett said he plans to address Presiding Commissioner Betty Knight and First District Commissioner Tom Pryor at Friday’s administrative meeting.
“My big concern is as a businessman I just want everything that we do as a county to be as efficient as possible,” he said.
State Representative Jason Brown, who also attended the meeting, said he believes if the change will benefit Platte County it should be considered.
“We need to look at the study and if we believe the study is accurate and is a benefit to the county and schools and helps us compete against Clay County, then why would we not look at a change if the change is beneficial and the study shows it will help the county, school and help build houses in Platte County?” said Brown.