A GOP-authored bill aimed at curbing what information assessors could use when determining the value of property would mean significantly higher property taxes for Madison homeowners, according to the Madison city assessor.
The proposed bill, which will come before the state Assembly Tuesday, is part of an eight-bill package unveiled earlier this month by legislative Republicans who say it will cut bureaucratic regulations, reform outdated practices and increase affordable housing in the state.
Madison City Assessor Michelle Drea contended one of the bills, which would prohibit assessors from using what is known as the income approach to determine a property’s fair market value, would actually do the opposite for homeowners across the state by shifting taxes paid by commercial property owners onto residential property owners.
“This bill is ostensibly supposed to provide more affordable housing; what it really does is make home ownership less attainable,” Drea said. “That to me is the crux of this.”
In order to determine their local property tax levies, cities rely on several classes of taxable property: residential, commercial, manufacturing, agricultural, undeveloped, agricultural forest, forest, personal property and other. Any reduction in the assessed value of a class of taxable property automatically increases the taxes paid by the others.
Assessors use a wide variety of data to determine the value of a parcel of property. The three traditional approaches to assessment are based on comparable sales, cost and income. Homes are typically assessed through the sales approach and income is used for business-related properties.
“The foundation of the income approach is the concept of anticipation, assigning a current value to anticipated future benefits — how much income will this property reasonably produce,” Drea said in an email. “AB 610 would prohibit the use of future or anticipated benefits, thus outlawing the income approach to assessment.”
Drea, who formerly worked as the state Department of Revenue’s Wisconsin Property Assessment Manual and Guides editor, said the proposal would artificially deflate commercial values and shift that burden to residential property owners by eliminating an assessor’s ability to use a consistently reliable approach to valuing commercial properties.
In Madison, Drea estimated the bill could reduce the commercial assessments by about 50%. Commercial property accounts for more than a third of property value in the city and includes four-unit and larger apartment buildings. Residential property includes single family homes, duplexes and triplexes.
Drea said lowering commercial assessments would increase property taxes by an average of $2,000 per residential property, though the exact increase on any given property would vary depending on its assessed value. Drea did not provide an estimate for the specific impact on an average single-family home, which last year was valued at $315,200 and paid $7,082 in property taxes.
Drea said the 50% loss of the city’s commercial value was a “conservative estimate” and would be a direct result of having to artificially deflate commercial assessments as she would have to support those assessments using less reliable data before the Board of Assessor, Board of Review or circuit courts.
“With the loss of the income approach that has typically reliable data, the commercial values will need to go down in order to make them easier to defend with less reliable data,” she said.
Bill co-author and real estate broker Rep. Robert Brooks said during an Oct. 12 hearing on the bill that appraisals should be focused on the actual value of a parcel based on current market conditions, rather than rent listings or other forward-looking measurements.
“An assessment is based on the actual value at that time, not on anticipated values — not on things that may happen in the future,” said Brooks, R-Saukville.
The office of bill co-author Sen. Dan Feyen, R-Fond du Lac, said in an email the bill aims to prohibit assessors from using speculative and hypothetical benefits to determine a parcel’s fair market value.
“The asking or list price of a home does not represent the actual fair market value and thus should not be considered in determining the fair market value,” according to Feyen’s office. “Only the actual sales price should be considered.”
While amendments to the bill remove plans to also prohibit assessors from using bank or mortgage appraisals and price trends, Brenda Wood, a lobbyist for the city of Milwaukee, said on Monday the core of the legislation still maintains language that would bar the use of the income approach by prohibiting the use of future anticipated benefits.
“It would likely still shift the property tax burden from commercial properties to residential,” she said.
Fave 5: State government reporter Mitchell Schmidt shares his top stories of 2020
Choosing my five favorite stories of 2020 seems almost paradoxical.
This year has felt like one exhausting slog of pandemic stories, state Legislature updates and, oh yeah, a presidential election thrown in for good measure. Thanks to a split government, there's been no shortage of politically-charged stories here in Wisconsin and the partisan divide has, maybe unsurprisingly, felt as wide as ever throughout the COVID-19 pandemic.
I don't know if "favorite" is the best way to describe them, but here are a few stories from 2020 that stood out to me:
Back in March, Gov. Tony Evers issued the state's first public health emergency in response to the then-emerging pandemic. At the time, Wisconsin had reported eight total cases of COVID-19.
As the pandemic progressed, positive cases and deaths climbed and state lawmakers battled over the appropriate response. In May, the Wisconsin Supreme Court struck down Evers' stay-at-home order, a decision that still resonates today with the state's coronavirus-related measures.
One story I was particularly excited about before I officially started working for the State Journal was the 2020 Democratic National Convention in Milwaukee. However, like most things this year, the pandemic drastically altered that plan.
In non-pandemic news, the state in October formally denied billions of dollars in state tax credits to Foxconn Technology Group — a story we managed to get before any other outlet in the state through records requests and sourcing.
Lastly, in November I worked on a story about how GOP-drawn legislative maps once again disproportionately benefited Republicans in state elections. Wisconsin is headed toward another legal battle next year when the next batch of 10-year maps are drawn.
Feel free to read my top stories below, or check out my other state government articles from this year, (by my count, there have been more than 300 so far).
Also, thanks to all the subscribers out there. This year has been challenging on so many people, so your support is so much appreciated.
Gov. Tony Evers declared a public health emergency in response to the growing number of COVID-19 coronavirus cases in Wisconsin, hours before …
In a 4-3 decision, the Wisconsin Supreme Court on Wednesday struck down the state’s stay-at-home order, handing Democratic Gov. Tony Evers a d…
With the nation continuing to deal with the COVID-19 pandemic, the DNC Committee announced first that delegates and then that most convention …
Wisconsin is denying Foxconn Technology Group billions of dollars in state tax credits until officials with the company come to the table to d…
Continuing a decade-long trend in Wisconsin due in part to GOP-drawn legislative maps, Democratic candidates on Tuesday secured fewer legislat…