latte County Commissioners on a split vote turned down a proposal to adopt an occupancy tax method for assessing taxes on new homes in the county.
The proposal would have called for new homes to be taxed at the vacant lot rate–rather than the higher residential rate–until the home is sold.
The occupancy system would call for the tax rate on the home to rise to the full residential tax assessment on the first day of the month after a buyer purchases the home.
Voting for the switch to occupancy was first district commissioner Tom Pryor. Opposed were presiding commissioner Betty Knight and second district commissioner Jim Plunkett.
Currently, a home under construction must be at least 50% completed before it goes on the tax rolls.
Homebuilders Association of Greater Kansas City has been slowly pushing for Platte County to make the change to the occupancy tax system. The homebuilders consider the county’s current system as a tax on their inventory (vacant homes).
The homebuilders say the county’s assessment/taxation method prevents them from building spec homes, unoccupied homes that builders can show to potential buyers.
“It’s a financial risk people can’t afford to do,” said Chris Byrd, an attorney who spoke on behalf of the homebuilders at Thursday’s meeting of the county commission.
In other counties that have the occupancy tax, the spec homes are taxed only at the lot rate until sold and occupied by the homeowner.
Representatives from every school district in the county were on hand to show opposition to the proposal.
Dr. Mark Harpst, Platte County R-3 superintendent, said schools are worried about loss of tax revenue from homes that are not occupied.
Harpst also pointed out that if a home is not assessed at its true value, it causes a negative effect on a school district’s total assessed valuation, which in turn negatively affects a school district’s bonding capacity. A school district’s ability to generate bonding is capped according to its total assessed valuation.
Harpst said the Liberty, Smithville and Kearney school districts have reported that occupancy taxation has not been financially beneficial to their districts.
Homebuilders argue the occupancy tax will actually increase tax revenue because full taxation will occur as soon as the home is occupied.
“If this is so great for the schools, why isn’t it addressed at the state level, making all counties the same?” Knight asked rhetorically.
It was reported that Clay, Jackson and Cass counties use the occupancy method in the greater Kansas City area.
Under the system Platte County currently uses, a home at less than 50% completion as of Jan. 1 would be taxed at only the lot value. If the home is fully completed by April 1 for example, the property is still only assessed at that lot value for the first year, not reassessed at its actual value until the first of the following year.
Assessor Lisa Pope said she opposes the change to the occupancy system.
“I don’t have a computer system that will handle it. I’m in the middle of a conversion that will take at least a year,” she told the commission on Thursday.
In a later interview, Pope told The Landmark that a change to the occupancy system would mean she would also have to hire a another appraiser for her staff.
In addition, she has a philosophical disagreement with the occupancy system.
“If the house is there, it needs to be taxed (regardless of whether it is occupied),” she said.
The commission session lasted approximately two hours and was held in front of a packed meeting room.