Note: A list of others present and a copy of materials can be found at http://image.le.utah.gov/imaging/history.asp or by contacting the committee secretary at 538-1032.

1. Committee Business

Chair Bramble called the meeting to order at 9:17 a.m.

MOTION: Rep. Snow moved to approve the minutes of the May 22, 2002 meeting. The motion passed unanimously with Sen. Hillyard, Rep. Harper, and Rep. McCartney absent for the vote.

2. Taxation of Telecommunications Services

Mr. Roger Tew, ULCT (Utah League of Cities and Towns), provided a brief overview of the ULCT Telecommunications Committee (Utah League of Cities and Towns Telecommunications Committee). He explained that the ULCT Telecommunications Committee is comprised of representatives of municipalities and the telecommunications industry and that the ULCT Telecommunications Committee's goal is to simplify taxes and other charges imposed on telecommunications products or services. Mr. Tew discussed options the ULCT Telecommunications Committee is considering to promote simplification. He concluded by saying that all parties are working in good faith and are committed to finding a consensus solution to this issue.

Mr. Chris Bleak, Qwest Communications, stated that Qwest is an active participant in the ULCT Telecommunications Committee. He believes there is a lot of interest in working toward a solution and that the last ULCT Telecommunications Committee meeting was very productive.

Mr. Reed Searle, representing AT&T Wireless, said that the proposal submitted by ULCT at the last ULCT Telecommunications Committee meeting merits further consideration. He stated that it is important to continue working to simplify the tax system for both carriers and customers.

Sen. Bramble thanked the witnesses for their appearance. He noted that the Legislature has been encouraging both ULCT and the telecommunications industry to find a consensus solution to this problem.

3. Establishing Market Value by County Assessors: Appeal Processes and Standards

Mr. Howe distributed and reviewed "Establishing Market Value by County Assessors: Appeal Processes and Standards." He indicated that two issues for the Committee to consider are: (1) whether the market value established by a county assessor should be presumed to be a correct value; and (2) whether persons who are not licensed appraisers should be allowed, for a fee, to assist taxpayers in property tax appeal proceedings, including giving opinions regarding fair market value.

Sen. Stephenson stated that there are people who fear that if they testify before the Committee that they would be retaliated against and that their property taxes would go up. He explained that while many people are not comfortable representing themselves in a valuation appeal proceeding, hiring a licensed appraiser costs more than the amount of tax they are appealing. Sen. Stephenson stated that in some counties if documentation is not included with an appeal, the appeal is denied.

Mr. Art Partridge, Washington County Assessor, representing the Utah Association of County Assessors, stated that he has seen many changes by the Legislature to improve appraisal process standards. He indicated that any person involved in appraisals should be required to meet certain standards. He stated that appraisers should not be allowed to make appraisals on a contingent fee basis. Mr. Partridge also commented that the quality of assessments in the state by county assessors is the highest that he has seen in many years. He felt it would be a step backwards to allow appraisals to be made by people who are not held to the same standard. He explained that there are federal standards that appraisers are required to follow. Mr. Partridge concluded by noting that one way to improve the accuracy of valuations by county assessors would be to allow county assessors to access information on actual sales prices.

Mr. Lee Gardner, Salt Lake County Assessor, stated that there are low-cost alternatives to a formal market value appeal process and that all counties help the elderly with the appeals process. He indicated that his office works hard to ensure that each property is initially given a correct market value, which hopefully reduces the number of appeals.

Mr. Brent Gardner, Executive Director, Utah Association of Counties, commented that shifting the burden of proof in appeal proceedings would create two problems. First, if the property's market value, as determined by the county assessor, is not presumed to be correct, taxpayers would file many frivolous appeals. He cautioned that market values would ultimately be determined by the courts and this would pose serious administrative problems in the property tax system. Second, if a taxing entity's property tax base is not presumed to be correct, bond rating agencies would change a taxing entity's rating status.

Rep. Snow asked why it is so important to counties for the assessor's determination of market value to be presumed to be correct. Mr. Lee Gardner responded that a few taxpayers present fraudulent written information in the appeals process. It would cause significant administrative problems for assessors if assessors were required to verify every item of information submitted by taxpayers at appeal hearings. Rep. Snow responded that county boards of equalization could simply discount any information believed to be incorrect.

Rep. Mascaro stated that in his experience in assisting elderly taxpayers with property tax appeals help is not provided and that the elderly taxpayers are often intimidated by the process.

Rep. Shurtliff asked for more information about real estate transaction disclosures. Mr. Partridge replied that in some states the sales price for all real property transactions is required to be reported to property tax authorities. County assessors would use this sales price information to more accurately establish market value. He stated that there are concerns about the confidentiality and the use of this information.

Rep. Harper asked whether homeowners realize increased values in homes. Mr. Gardner replied that county assessors are required to establish a fair market value. Rep. Harper replied that homeowners are faced with increasing home values and property tax obligations but that they do not have the increased income to pay these taxes.

Mr. Partridge noted that the "truth in taxation" process requires the property tax rate to decrease if a property's value increases. The only way for a taxing entity to collect the additional revenue generated by inflationary increases in property values is to advertise and hold a public hearing.

Mr. John Christensen, small business owner, stated that his property taxes went up 315 percent last year. He indicated that qualifications of those who provide comparable values need to be examined. He stated that a taxpayer should not have the burden of proving the value of a property unless the taxpayer can provide information on comparable values without paying an expensive fee to provide such information.

Mr. Rick Lifferth, Vice President, Utah Association of Appraisers, stated that licensed appraisers are not opposed to improving the property tax valuation appeals process and that some improvements are needed.

Mr. Maxwell Miller, Attorney, Parsons Behle and Latimer, stated that a taxpayer does not know the basis upon which a county assessor determines market value. He explained that there are three layers to the appeals process and a taxpayer must go through two layers before the appeal is considered by a court. Mr. Miller commented that an independent adjudicator who is not affiliated with the assessing authority needs to be involved early in the appeals process. He also noted that simply because a person has a license to appraise property does not necessarily make that person more qualified than a person without a license.

Mr. Steve Young, Attorney, Holme Roberts and Owen, stated that he has not heard a legitimate argument as to why it is bad policy to allow tax representatives who are not licensed appraisers to represent taxpayers in appeal proceedings. He commented that these tax representatives are the only check and balance for county assessors. Mr. Young said he supports the Legislature adopting 2002 General Session S.B. 84 "Real Estate Appraiser Amendments." He stated that it is difficult to get an assessor to provide information on how the assessor derives a property tax assessment and assessors should be required to document how property tax assessments are determined.

Ms. Margaret Miller, taxpayer, stated that she has been through many property tax appeals and that it is difficult to obtain a physical inspection of her home or comparable sales information upon which the county assessor establishes market value.

Mr. Lee Gardner stated that he provides comparable sales information to the Salt Lake County Board of Equalization and to the public upon request.

Mr. Marc Johnson, Commissioner, Utah State Tax Commission, stated that some states are more restrictive than Utah regarding who may represent a taxpayer in a property tax appeal, while other states will allow almost anyone to represent a taxpayer. He indicated that there is a segment of society for which a tax representative is the only source of help for property tax appeals.

Mr. Steve Krest, Tax Representative, commended Salt Lake County on its practice of informing property owners in advance if their property had a 10 percent or more increase in market value. He also commended Utah County on the use of independent appraisers as hearing officers. He stated that the time frame for appeals needs to be longer and perhaps staggered throughout the year.

Ms. Murleen Fillmore, Tax Representative, Data Tax, said that she supports 2002 General Session S.B. 84. She stated that one problem with the property tax system is that there are different appraisers assigned to an area each year and no data is kept on issues with those areas.

Mr. Steve Klemm, Tax Representative, told the Committee that he works mainly with corporate clients and appeals for his clients are a costly and time-consuming process.

Mr. Allen Payne, Licensed Appraiser, stated that the Legislature should not change the current licensing law for appraisers but rather focus on changing the valuation appeals process.

Ms. Mary Ellen Pugsley, homeowner, showed the Committee a book with information on changes in property tax valuations and other property tax information.

Rep. Clark asked whether assessor office employees involved in assessments are state certified. Mr. Lee Gardner stated that most are state certified. He noted that the certification process takes 2 years and some of his appraisers are not yet fully certified. Rep. Clark noted that in his business he sees many appraisal documents and that they vary widely in quality and accuracy.

Sen. Stephenson asked to have staff revise 2002 General Session S.B. 84 and return with draft legislation at a later meeting. Chair Bramble stated that this legislation will be considered later this year.

4. Extending the Residential Exemption to Secondary Residences

Sen. Ed Mayne distributed and reviewed the handouts "We support Senate Bill 63 to keep our family's cabin!" and 2001 General Session S.B. 63 (2001 General Session S.B. 63 "Residential Property Tax Exemption - Secondary Residences"). He explained that 2001 General Session S.B. 63 provides a residential exemption equal to 25 percent of the first $100,000 of the fair market value of certain secondary residences. To be eligible for this residential exemption, a secondary residence must meet certain eligibility criteria, including that the secondary residence may not be connected to a sewer or water system operated by a county, municipality, special district, or interlocal cooperation entity.

Rep. Karen Morgan stated that she has also sponsored legislation on this issue. She commented that this issue will likely be before the Legislature every year until it is addressed. She noted that this is an issue of basic fairness. Rep. Morgan explained that because of the 45-percent residential exemption given to primary residences, there is a shift in the property tax burden to other classes of property.

Rep. Chad Bennion stated that secondary residences have become "cash cows" for some counties and that some owners must sell these residences, including mountain cabins, because of high property taxes.

Mr. Kenneth Wright, AARP (American Association of Retired Persons), asserted that taxes on a secondary residence should be prorated if access to that residence is restricted and that taxes should be levied on the basis of the services actually provided to the secondary residence.

Ms. Mary Ellen Pugsley distributed and reviewed a written memorandum to the Committee. She spoke in favor of granting a residential exemption to secondary residences.

Mr. Keith Hall, President, Upper Weber Canyon Property Owners Association, spoke in favor of extending a residential exemption to secondary residences. He noted that mountain cabins are often the only form of recreation that many families have available to them, and that many of these cabins have been in one family for generations. He commented that because of high property taxes owners can no longer afford to maintain these cabins.

Chair Bramble relinquished the chair to Rep. Harper.

The following persons provided public testimony in support of extending a residential exemption to secondary residences: Mr. Roger Allen, Mr. L. Holley Fryer, Mr. Theo Dunham, Mr. Spencer Ball, Ms. Tamera Lanonette, Mr. Lee Watkins, Ms. Murleen Fillmore, and Ms. Phyllis Turner.

5. Relieving the Burden of the Property Tax on the Elderly

Chair Harper noted that due to a lack of time this item would be placed on the agenda of the next Committee meeting in September.

6. Other Items/Adjourn

Chair Harper adjourned the meeting at 12:46 p.m.