Agenda - 09-07-2005-5e - Laserfiche WebLink

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2 It is a reasonable question to ask how a decrease in living space square footage can lead to an increase in overall property value. The schedule of values recognizes that the cost to construct single-floor square footage is greater per square foot than the cost to construct multi-floor square footage, since the foundation and roofing costs much less when building up as opposed to building out. For example, if one builds a 2000 square foot single floor dwelling the foundation and roof must both cover 2000 square feet. However, when building a 2000 square foot multi- floor dwelling (1000 square feet per floor) the foundation and roof must cover only 1000 square feet, half as many square feet as in the first instance. In addition, the schedule of values recognizes the theory that the cost to build a structure is less per square foot as the size increases. It is therefore reasonable that the larger the component of the structure is the lower the cost will be. This is also evident in marketing. The price of a 12-pack of sodas is less per soda than to purchase 12 sodas individually. In this particular property, the square footage was reduced slightly therefore the rate charged per square foot increased. Initially the value of the 2448 square feet was $109.48 per square foot and after reducing the size to 1920 square feet, the rate increased to $117.65 per square foot. In addition to this change, and area coded "AA" (single story attached addition) was changed from 408 square feet to 720 square feet. There are also design factors that the schedule of values recognizes. It is for these reasons, and in accord with the adopted schedule of values, that the total value of the property increased even though the total square footage decreased, After receiving notice of the higher value and its explanation, the taxpayer decided to appeal the increased valuation to the 2005 Orange County Board of Equalization and Review.. The E&R Board decided to uphold the valuation determined by the Assessor and to make no further adjustments to the value. It is the Tax Assessor's recommendation that the requested refund be denied. This recommendation is being made for several statutory reasons. First, measurement adjustments do not constitute an illegal tax. The Assessor has worked closely with the County Attorney in defining what can and what cannot be considered an illegal tax. By definition, an illegal tax is a duplication of taxation, a situation where one is taxed twice for the same property, An example of this would be where the same house is taxed on two different tracts of land, when it only existed on one tract.. An illegal tax could also occur when the county appraiser mistakenly appraises the home as having two floors when only one floor exists. Second, measurement adjustments do not constitute a clerical error. Again, the Assessor has worked closely with the County Attorney in defining what can and cannot be considered a clerical error. By definition, a clerical error is an error of transposition. For example, a clerical error would result when the clerk is keying from the appraiser's property record card and the clerk keys two stories, when the appraiser indicated on the property record card that the house is a single story, Another example might be when the appraiser indicates that the house was built in the year 2000 but the clerk keys 2000 into the data entry area for fireplaces. By statute, a difference in square footage is not an illegal tax and it is not a clerical error. It is an adjustment that should be corrected for the current tax year and carried forward. Finally, the value of the taxpayer's home actually increased when the property characteristics were properly keyed into the appraisal system. Therefore, no harm has been done to the property owner and there has been no overage of taxes charged or paid. FINANCIAL IMPACT: Denial of this application for refund will result in no reduction in monies from the County, municipalities, and special districts.