WATERLOO, Iowa --- Many Black Hawk County businesses are winning the fight against higher property assessments.
But cities and school districts may face large budget deficits this year --- or even have to fork over refunds --- as the resulting property tax collections could fall well short of what they expected to receive.
County Assessor Tami McFarland called a special meeting of her conference board last week to warn local government officials about the number of property owners successfully appealing their assessed values in Black Hawk County District Court or through the Iowa Property Assessment Appeal Board.
Appeals were filed on a record 380 parcels of property after a countywide reappraisal boosted many 2011 values.
So far, 119 property owners have won or settled those appeals for a combined $25.7 million reduction in value, while the county successfully defended 50 appeals. Officials estimate the overall reduction in value could top $40 million before the pending cases are litigated or resolved.
"We have 73,608 parcels so this is a very small percentage of the county, but it does have an impact," McFarland said. "We wanted to make sure that everyone is aware of what's going on."
Assistant County Attorney Dave Mason said the time it's taking to resolve appeals puts the county in uncharted waters.
Many property owners have already paid the first half of their annual tax bills based on the higher values. Some will have paid a full year of taxes before their appeals are resolved.
"This may be the first time where I've had taxpayers ask for refunds," Mason said. "Then we have the question of how we give this money back. That's something that's on the horizon."
City and school officials aren't happy with the situation, which means they likely will get less property tax revenue than anticipated when they adopted budgets last spring.
"We're disappointed with how the system is working right now," said Michelle Weidner, chief financial officer for the city of Waterloo. "It's not just about the decisions themselves; it's the timing of the situations."
If tax collections don't meet expectations, the city will need to absorb the losses in operating budgets or tap its cash reserves to make up the difference.
Waterloo Mayor Buck Clark expressed disbelief over how far some of the assessed values were reduced.
"There are some dramatic differences here," Clark said. "Why are some of them so huge? Either the assessment is totally flawed or the PAAB board is making some bad decisions."
The Dillard's department store in Crossroads Center, for example, was successful in getting its value dropped from $10.1 million to $5.7 million. That valuation drop alone will sap $81,000 from city coffers.
Vanguard Appraisals of Cedar Rapids was hired to review the value of all commercial and industrial buildings and lots, while McFarland's staff looked at all residential and agricultural parcels.
McFarland said there was any number of reasons the initial assessment was wrong. In one case, Vanguard used a past hotel sale as a comparable which turned out to be flawed. That wound up impacting most of the area hotel values, and many of those were successful in lowering their assessments.
The Clarion Inn University Plaza cut its assessment from $4.3 million to $2.4 million; Candlewood Suites in Waterloo appealed its $4.1 million value down to $2.7 million; the Suburban Extended Stay Hotel on Viking Road in Cedar Falls dropped from $3.5 million to $2.2 million. A dozen other motels saw their values cut by $1 million or more through appeals.
But assessor's record show not every appeal was successful.
VGM Sunnyside Office Complex dropped its $11.8 million appeal, while Lost Island Water Park dropped an appeal of its $4.3 million value. The Hobby Lobby building at 2705 Crossroads Blvd. lost an appeal on its $7.3 million value. Many local nursing homes --- Parkview Nursing and Rehab, La Porte City Nursing and Rehabilitation, Ravenwood Healthcare Center, for example --- lost their appeals.
But appeals on several high-dollar properties that could make or break local government budgets are still pending.
The Isle Hotel Casino Waterloo is trying to cut is $64.8 million assessed value to $44.9 million in a case scheduled for a PAAB hearing in May. The $43.8 million Target Distribution Center, $32.5 million Target Perishable Food Center, $18.4 million Bertch Cabinet Manufacturing and most of the local Hy-Vee grocery store buildings are also awaiting resolution.