The Ada County Assessor’s office in Idaho has raised concerns over a proposed property tax bill that it claims would grant a “backdoor” tax cut to the owners of special-use property, including storage units, gas stations, and nursing homes. The bill, known as HB 100, would reportedly force assessors to evaluate the value of these properties at a lower value than what they could be sold for, thereby exacerbating the existing tax burden on homeowners.
Ada County Assessor Rebecca Arnold and her staff have analyzed three high-profile property tax bills currently under consideration in the House, and determined that a bill indexing the homeowner’s exemption as prices rise would result in the largest tax cut for most Ada County homeowners. Although it would shift taxes to renters and commercial property. Meanwhile, a bill from Senator C. Scott Grow to use sales tax funds to offer homeowners a tax discount would have a smaller impact on homeowners. But, it would not involve a shift in taxes, while a proposal from House Majority Leader Mike Moyle would have little to no impact in Ada County. This is a hard fight from different approaches in real estate property taxes bills, and everyone has a different impact.
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The proposed legislation has been introduced in the House Revenue and Taxation Committee, at Ada County, Idaho, but has not yet been heard. The bill, impacting real estate investments, would require any special use commercial property with a “unique physical design” to be assessed based on the land value and the cost of replacing the building. Furthermore, will require the homeowners to remove the value of a property’s money-making potential when determining its value. This would give a tax cut to a whole class of commercial property, which the assessor’s office believes to be unconstitutional.
One of the concerns of the assessor’s office is the inclusion of the phrase “include but not limited to” in the bill, which they claim would leave the door open for other types of properties to be exempted from taxes. Staffers are reportedly concerned that the bill could result in the Metadata center in Kuna being completely tax-exempt. However, Manwaring, who co-sponsored the bill, refuted these concerns, stating that the bill only calls out real estate property types that cannot be easily converted overnight. When questioned about the Metadata center, he said that once the computer banks were removed, it would simply be a large warehouse that anyone could use.
HB 100 also contains a provision that requires all property taxpayers to receive a breakdown of what is exempted from their tax bill. While this may sound simple, it is reportedly difficult to implement because there are dozens of tax exemptions for all types of property, ranging from government property like the airport to household items. According to Brad Smith, Ada County’s Chief Deputy Assessor, the real estate tax bill would require assessors across the state to value all exempted properties and items that have been exempted for many years, including clothing and household items. However, he argues that this is unrealistic and unworkable, saying that “I don’t think anybody wants us coming to their house and inventorying their master closet.”
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The bill’s co-sponsor, Dustin Manwaring, has refuted Arnold’s assertions about the bill, stating that its aim is to address problems where storage unit owners say they are being assessed unfairly compared to other commercial properties. Also, he wants to add other specialized commercial property after the bill was vetoed by the governor last year for being too narrow.
Manwaring stated that the bill’s goal is not to create a tax shift or to create a new exemption, but rather to ensure that the law is being followed, and that he is willing to work with assessors to find a compromise that works for everyone. He says that specialized commercial property owners feel they are being unfairly assessed for “intangible property” that should be exempted, and that the bill will require assessors to show the parts of the assessment that have been exempted, so that the value of intangibles not included in the assessment can be reviewed and examined to determine if they proceed and are correct.