Boise calls for commercial property tax reform

Like clockwork, it’s budget season again in the city of Boise.

On Tuesday, the Boise City Council kicked off its annual process of assessing its revenues and priorities to set the city’s budget for the coming fiscal year. The 2023 budget, which will be rolled out in parts this spring before the final draft is made available to the public in June, will cover all city operations, capital projects and staff for next year.

[Property tax on your house keeps going up. But many commercial properties see a different story]

Mayor Lauren McLean said this week she’s asked staff to study the impact of not taking the full 3% increase in property tax collections allowed by Idaho’s code. She said that at a time when property values ​​(and corresponding taxes) continue to rise and inflation eats away at the purchasing power of Boisean wages, it’s important the city finds a way to respond. to its growing needs without overburdening residents.

“I’m really impressed with the staff’s commitment to achieving these goals and not sacrificing the experience we have here for those who come, but at the same time we need to explore some relief for existing residents,” said said McLean during a strategic planning session. .

For more relief for low-income homeowners, McLean said she’s excited to take advantage of a new process the Idaho Legislature voted to create this year allowing cities to return property tax refunds. to residents, as does the state of Idaho. She said the city is considering giving rebates to Bosieans using the state’s property tax abatement program, which provides property tax abatements to low-income seniors, veterans and veterans. Disabled Idahoans.

Commercial versus residential appraisals

Not all properties are created equal under the Idaho property assessment system.

In 2016, the Idaho Legislature voted to stop indexing the homeowner’s exemption to inflation and set it at a flat rate of $100,000. This has allowed state tax relief for homeowners to remain static while home values ​​have soared, leaving an increasing tax burden for homeowners and lowering tax bills for commercial properties. . Under this system, even when local governments don’t raise property taxes, or even make multi-million dollar budget cuts, property owners will still pay a higher tax bill.

After years of asking the legislature to index the homeowner’s exemption and increase funding for the property tax reduction program, McLean and other council members focused on another piece of the puzzle: commercial real estate appraisals.

Each county has an assessor who is legally required to research the market and assess the value of residential and commercial properties to determine what their tax bill should be. Appraisal of home sales is easy in Idaho because the county can study the MLS data that realtors report to see what the properties are for. But, there is no similar system for pricing commercial properties, and landlords are not required to disclose sale prices.

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This leaves appraisers in the dark when it comes to determining the value of a property that is not a house. Due to the lack of transparency, some elected officials and others believe that this understates commercial property values, allowing them to pay less tax than landlords.

Ada County Assessor Bob McQuade made a presentation to Boise City Council on Tuesday morning, where McLean asked him several pointed questions about how he is pushing for reform in this area. He said he hoped for a disclosure requirement, but was not optimistic it would happen anytime soon. McQuade will step down at the end of 2022 after nearly thirty years in the role.

“The best thing would be to disclose where they have to disclose this (sales) information to us,” he said of commercial property owners. “We’ve been asking for it for years and years and years, but the Legislature isn’t known for it at all. It will be left to someone else to do.

“It’s not about sticking to business”

McLean and the rest of the Boise City Council were unimpressed with the status quo.

Later in the meeting, after McQuade’s departure, they aired their grievances against the Idaho Legislature and county assessors for not fighting harder for an equal commercial property assessment process. McLean has raised the possibility of finding a way to freeze residential property values ​​to provide some relief, but Budget Director Eric Bilimoria said that due to the appraiser’s legal responsibility to assess properties at less than 10% of their true value, that was probably not an option.

“If the appraiser is required to have 10% accuracy, but the information (on commercial sales) does not exist, where is the responsibility?” McLean asked. “Can residents complain that a commercial property assessment is not accurate in the same way that residents can come forward to challenge an assessment on their own property? I don’t understand this piece.

City council member Patrick Bagant said the city isn’t trying to demonize businesses, but it’s important to make sure everyone pays their fair share.

“It’s not about sticking to the companies,” Bagant said. “The reason we’re talking about this is that every dollar that a commercial owner avoids in taxes that they should pay based on actual value is a dollar that owners have to pay instead, so to a real and real way if this dynamic occurs, owners are paying taxes for businesses and that is the problem.

Pro Term City Council Speaker Holli Woodings also weighed in, adding some pointed words for the Idaho Legislature’s property tax strategy. She said state legislators listen only to business interests and ignore the satisfaction of city officials who constantly hear about their constituents crushed under the burden of rapidly rising property taxes.

“We are not respected,” she said, of the efforts of local government officials in the legislature. “We are not invited to conversations about real estate tax relief. Instead, all real solutions are abandoned by corporate lobbyists.

Penny D. Jackson