Warehouse property tax appeal shows how process works and benefits landowner

Kingman residents Pat and Stephen Lee thought the tax appraisal of their warehouse building was greater than it should have been.

A call to the Mohave County Assessor's Office's and some research, tape-measure work and discussion with appraisers determined a value the Lees could live with.

"I think they were very fair, and they were very cooperative," said Pat Lee, who with husband, Stephen, is part of a group of people who own the building at the Kingman Airport and Industrial Park.

"They worked with us.

They called me up, they talked about it, they discussed it, the fact that the building had been vacant and what the income of the building was."

The Lees followed the example of 1,874 other property owners in the county by challenging the full cash value – or market value - of their land through the appeals process in the assessor's office.

The warehouse building's owners saw the value reduced by $3,800, which will save them about $120 on a $2,000 tax bill, chief county appraiser Ken Fielder said.

Fielder said he and appraiser Bret McKee work with the property owners to resolve disagreements over full cash value during the appeal process.

"We try to take this data, sort through it and make it reflective of what the market conditions are for that type of property," Fielder said.

"And in this case, we are so close" to what the property owners sought.

The assessor's office valued the 7,938-square-foot industrial park building at $68,808 for the 2004 tax year, compared with $67,667 for 2003, Fielder said.

The property owners contended the building was worth only $65,000.

Fielder said a reappraisal arrived at the figure $65,471, and he agreed to the even $65,000.

The reappraisal was based on rental income, one of three factors appraisers use to revalue property during the appeal process.

Other appraisal factors are market value compared with other properties and the cost of replacing the building minus depreciation of the existing building.

The owners of the building based their appeal on market and income factors, Fielder said.

McKee, who conducted the appraisal March 31, said he notified the owners on Monday about the new value.

However, it will not become official until the assessor's office notifies all appellants by mail July 1.

Fielder and McKee used the example of the warehouse to explain the complicated process of appraising property during appeals.

During the visit to the building on Santa Fe Drive, they demonstrated the use of tape measures and other tools of the trade.

They also explained provisions within the Arizona Revised Statutes applying to property tax appeals.

State law requires appellants using the market approach to include full cash value of at least one comparable property within a few miles, Fielder said.

Like many people filing appeals, the warehouse building's owners did not supply all required information, such as documentation of the value of a comparable property, Fielder said.

He said property owners appealing on the income approach must show three years of rental income.

Several factors weighed in favor of the Lees and their co-owners, Fielder and McKee said.

They included the age of the building (built in 1942 and remodeled in 1986) and the fact that 4,200 square feet has been vacant for longer than a year.

"It's not a science," McKee said.

"It's an opinion."

Fielder said they used new computer model that identified the building as light industrial, as opposed to an older model that classified the building for warehouse distribution.

He said warehouses typically cover at least 15,000 square feet.