An order that will change tax assessing procedures on new residential construction in Platte County is being met with a mixed response from parties on either side of the tax assessment divide.
Though they voted the idea down in 2006, on Monday Platte County commissioners approved the order to implement Section 137.082 of the Missouri Revised Statutes, which specifies that taxes for new homes shall be assessed upon owner-occupancy rather than by the current system in which the builder pays taxes on a new home until it is purchased.
The new system will go into effect on Jan. 1, 2011 after which newly occupied homes are to be added to the tax rolls in the month immediately following occupancy. By the current system, newly occupied homes are added to the tax rolls at the beginning of the next year.
The move is a welcome one for the Kansas City Home Builder’s Association, said attorney Chris Byrd, who represents the association and said that they have been working for a long time to get occupancy-based assessments passed in the county.
Byrd said that because the current system requires that home builders pay taxes on unsold homes, they were increasingly likely to eschew building in Platte County in favor of other nearby countiesClay, Cass and Jacksonthat utilize occupancy-based assessments instead.
“There are builders in Clay County that have chosen not to come to Platte County because the risk is too great,” said Byrd. “They don’t want to be stuck with what has been dubbed an inventory tax.”
Byrd also said that some builders felt the law was unfair because they were having to pay taxes on the property but, since the homes were unoccupied, no one was actually utilizing the services for which the taxes pay.
First district commissioner Kathy Dusenbery said the new policy will give builders the opportunity to increase the number of spec homes available to prospective home owners in Platte County.
“Our Platte County Economic Development Council is working 24-seven to bring in new companies,” said Dusenbery. “We need to have an inventory of spec homes so that when companies relocate, there are homes available for their employees.”
The numbers of building permits have plummeted since 2006, said second district commissioner, Jim Plunkett. Building permits in 2005 numbered 792, Plunkett said, but was between 135 and 138 in 2010.
“The market right now is 15% of what it was,” he said, adding that he believes the new policy will help open the market a bit for new construction in Platte County.
The new law will also help solve the problem of half-constructed homes in the county.
As Plunkett and Dusenbery explained, home builders are taxed different amounts at different phases of construction. Putting up the sheet rock in a home, said Dusenbery, is a big jump in the taxing scheme for builders. To evade the higher rate on unoccupied homes, she said, the builder may construct the home up to the point of installing the sheet rock and then abandon it.
“(We have) spec homes sitting there without sheet rock because the builder doesn’t want to go that next level,” said Dusenbery. “Better that we just assess with occupancy.”
What gets the builders off the hook, however, may pose a problem for the school districts. In a letter to the commissioners signed by the superintendents of the Platte County R-3, North Platte, West Platte, Park Hill and Smithville school districts, administrators presented their concerns regarding a statement made by the assessor’s office in 2006 that, due to insufficient staffing, it may be unable to provide enough personnel to keep up with a monthly demand for new home assessments. While the superintendents specifically stated in the letter that their concerns “are not intended to provide commentary on the performance or ability of staff members or elected officials,” they wrote that unless the assessments were able to be conducted in a timely and accurate fashion, it could jeopardize needed revenues for the school districts. The concern for administrators is that the changes could leave the school districts having to wait for the taxes that are, by the current system, being paid by the builders. Furthermore, because new construction is not subject to the Hancock Amendment, it generates more revenue for the school district, said Platte County R-3 Superintendent Mike Reik, emphasizing that it could be detrimental to the schools if new construction is not assessed quickly and placed on the tax books. There is a “potential for this to be a wash” though, he said. “There are going to be some times that we don’t get revenue because of lack of occupancy, other times will get additional revenue because of occupancy before the first of the year,” Reik said. As reflected in Plunkett’s building permit numbers above, Reik also added that because of the slower housing market, the districts aren’t as concerned over the change now as they were in 2006. “In 2006 we had all kinds of spec homes sitting all over this district. That type of inventory isn’t out there right now,” said Reik. “Frankly I would have been very nervous about doing this in 2006 when there was still a lot of unoccupied inventory. A lot of spec homes were built in 2006. It’s a different environment now.” Dusenbery said that she is confident that the assessor’s office will be able to keep up with the demand for new home assessments. “The economy is now slower but we still have same amount of people in assessor’s office, so there are people to make this transition,” she said. Both Reik and Dusenbery indicated that discussions of concerns have been amicable and solutions-oriented. “We’re looking forward to working with the county to try to make this work effectively. Our concerns were just intended to provide information,” said Reik.