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HomeMy WebLinkAboutCOM 0739.020 2020-2022 P I COUNCIL 15(a CDMM. 7301 INTERNATIONAL ASSOCIATION of ASSESSING OFFICERS ©®N 314 W 10th Street Kansas City,MO 64105-1616• USA P:816-701-8100• P: 800-616-4226 • F: 816-701-8149• www.iaao.org ¶_Ci CAE••AAS••CMS•• RES•• PPS•• PPS••MAS ProfessionalDesignatlons IAAO y Valuing the World T i. November 2,2022 County Council Hawaii County, HI To whom it may concern, The Real Property Tax Administrator for the County of Hawaii recently contacted the International Association of Assessing Officers regarding an upcoming discussion regarding caps on property tax classes in the county. IAAO, along with the Lincoln Land Institute of Land Policy, has investigated the impact of caps and freezes on property tax values and previously outlined concerns that they can increase regressivity in assessments. In 2021 IAAO issued a statement that the Association and its members are committed to providing fair and equitable property valuation assessments. IAAO believes regressivity in assessment is a serious issue.Valuation disparity is an assessment, legislative, political, and educational issue. Property tax caps, credits, and freezes may contribute to disparities in valuations. Adding caps or freezes can limit growth in one area but cause issues in other areas. In a 2010 paper entitled Assessed Value Cap Overview,published in the Journal of Property Tax Assessment and Administration,the IAAO Research Committee noted that: Assessment limits protect taxpayers owning properties that have rapidly increasing market values at the expense of taxing district revenue or taxpayers owning properties with decreasing values or with more limited increases. The tax shifting that occurs tends to be invisible to those who pay more because they cannot determine what their taxes would have been without the assessment limit. As with exemptions, there is a smaller tax base, which leads to higher property tax rates, which in turn tend to lead to more pressure to reduce a major funding source for local governments. The Lincoln Land Institute reviewed caps and freezes in a 2021 book, Property Tax Relief for Homeowners, and came to similar conclusions as IAAO. Tax limitations are one of the most common responses to political pressure for property tax relief. These limits can constrain growth in property taxes, but they may also shift the revenue mix to less reliable sources,reduce the quality of local services, and impede local governments'ability to respond to local preferences and changing circumstances. Comm. No. •2� Ref.To: •Q WW1 Ref.Date: OV 2' 2022 Assessment limits shift the tax burden toward poorer eighborhoods, create large disparities in tax bills for owners of similar properties, lead to "lock-in"ej ects that discourage mobility, and introduce new complexities into the property tax system. The recent increase in valuations of properties has been chall nging for property owners,jurisdictions,and the assessment community.Adding caps or freezes might assis with existing issues for a subset of property owners but will shift tax burdens in ways that cannot be easily a ticipated.The only certainty in that scenario is the creation of inequities in the treatment of your constituent property owners. Sincerely, '' '' ',, 1C6kai Larry Clark, CAE, FIAAO Director,Strategic Initiatives References IAAO Statement on Fair and Equitable Assessments https://www.iaao.org/FairAndEquitableAssessments Assessed Value Cap Overview, IAAO,Journal of Property Tax As•essment and Administration https://library.iaao.org/fulltext/pa1001057.pdf Property Tax Relief for Homeowners, Lincoln Institute of Land Policy https://www.lincolninst.edu/publications/policy-focus-reports/property-tax-relief-homeowners e) .73atiEu}D i .'hefi r' y