January
28, 2010
Property-tax conflict enters Nevada governor’s
race
Amid record number of appeals, Montandon calls for system overhaul
LAS VEGAS — Republican gubernatorial candidate Mike Montandon on Wednesday called for broad-based reform of Nevada's property-tax system by returning to market-based assessments and scrapping property-tax caps enacted in 2005.
The three-term former mayor of North Las Vegas made the comments in the wake of a record number of property-tax appeals filed in Clark County that could impact more than 130,000 parcels and indications of a widening property-tax revolt in Washoe County.
The surging number of property-tax appeals, up 33 percent in Clark County over last year's record number, is a clear signal that Nevada's taxable-value system is failing to keep pace with rapidly changing economic conditions, Montandon said.
Trained as a commercial real estate appraiser, Montandon said the state should abandon the taxable-value system that has been the basis for determining property taxes in Nevada since 1981.
"There's not a chance that it is constitutional," Montandon said during an interview at his campaign headquarters. "Let's go to a market-based system."
Nevada is the only state in the country that uses the taxable-value methodology to determine assessed values. Indiana was the last state to use a similar system and abandoned it more than 10 years ago after its Supreme Court ruled it was unworkable.
The basic problem with the taxable-value system is that it is not based on market values, critics say. Taxable value is the sum of the full cash value of land plus the replacement cost of improvements less 1.5 percent depreciation based on the age of the structure. Replacement cost is determined by using a private construction costing service — Marshal & Swift.
The system has become increasingly cumbersome in markets where undeveloped land sales are becoming increasingly scarce, such as many parts of Clark County. The lack of data requires assessors to use complicated appraisal methodologies to estimate the value of land.
The methods used by assessors vary across the state, leading to the likelihood that similar properties are not assessed equally, which would violate Article 10 of the state constitution. [more]
January
19, 2010
Chief Justice highlights state’s failures on
property taxes
Cites ‘confusion’ over
how to assess equally
LAS VEGAS — Nevada Supreme Court Chief Justice James W. Hardesty is voicing serious concern over the failure of the Nevada Legislature and state regulators to develop coherent laws and regulations ensuring that property owners are taxed equally across the state. Justice Hardesty's comments provide further evidence that Nevada's property-tax system may be violating Article 10 of the Nevada Constitution, which requires uniform and equal assessment and taxation of property.
In statements during a recent court hearing, the chief justice focused on the state's failure to pass adequate statutes and regulations for the state Board of Equalization to use. The board's mission is to ensure that Nevada's 17 elected county assessors are assessing property equally across the state.
Unlike the taxable-value system that values land and improvements separately, a market-based system would allow assessors to use readily available data on the sales of residential property to set assessed values for property taxes, Montandon said.
Montandon said property-tax reforms should be an issue for the 2011 Legislative Session and are too complicated and far-reaching to be broached during an upcoming special session.
Republican Governor Jim Gibbons is expected to announce in early February that he will call the Nevada Legislature into a special session to find ways to close a $900 million shortfall in this year's budget.
Montandon and former U.S. District Court Judge Brian Sandoval are challenging Gibbons in the Republican primary. Clark County Commissioner Rory Reid is the lone Democrat in the race.
Sandoval, Gibbons and Reid declined to comment on the surging number of property-tax appeals.
Montandon said the state should also abandon the property-tax caps that the legislature put in place in 2005. The property-tax caps have been widely criticized because they impose a 3 percent cap on the increase in property taxes on owner-occupied residential homes while most rental properties and commercial properties have an 8 percent cap.
The different property-tax caps, property-tax experts and some legislators say, appear to violate the state constitution's requirement of fair and equitable assessment and taxation. No one, however, has challenged the provision in court.
Welcomed at first during a period of rapidly rising real estate prices in the mid-2000s, the tax caps have become a source of bitterness for tens of thousands of property owners who have seen their property taxes go up even as their property values have declined dramatically. Assessed values of property must fall below 2005 levels for property taxes to fall.
Approximately 661,000 of Clark County's 730,000 parcels have fallen below the 2005 benchmark for the 2010-11 tax year, according to the county treasurer's office. The number of Clark County property owners seeing a reduction in property taxes is up from 470,000 in 2009 and 55,000 in 2008. [more]


