Nevada Supreme Court Rules Against Washoe County in Long-Standing Incline Village Property Tax Case

Washoe County received notification today from the Nevada Supreme Court that it denied the County’s appeal of the October 6, 2009 decision by District Court Judge Brent Adams ordering the Washoe County Treasurer to issue refunds to 8,700 north shore property owners located in the Washoe County portion of the Lake Tahoe basin. The Supreme Court’s decision was written by Supreme Court Justice James Hardesty. The decision supports the Nevada State Board of Equalization’s 2009 decision to roll back the 2006-07 property values for some 8,700 residential parcels in the Incline Village area to 2002-03 levels. This is the decision supported by Judge Adams who further directed refunds with interest to those property owners. All decisions were based on certain appraisal methods used by the Washoe County Assessor’s Office such as definition of view value of lake property for assessment purposes and the equalization of Incline Village properties to other properties in Washoe County for valuation purposes. All court decisions stopped short of applying the same principles to property values outside of the Incline Village/Crystal Bay area. “At this time we are reviewing the written Supreme Court’s decision to evaluate its impact upon all Washoe County taxpayers,” stated Washoe County Assistant Deputy District Attorney David Creekman who has represented county taxpayers in multiple long-standing court cases involving the Lake Tahoe property owners. Creekman further added that the District Attorney’s office will be prepared to brief the Washoe County Commission next week on the issue, as well as present options to them at that time. During their attorney-client meeting, the Board could provide legal counsel with direction on this matter. However, any final action by the Board, including a refund process and/or amount, would be considered by the Board in a public meeting. At this time, Washoe County Treasurer Tammi Davis estimates the refunds with interest could be in excess of $40 million, and is the total amount received by all public entities receiving property tax revenues from the Incline Village area. Davis stressed that this is an initial estimate which will be further refined as the county works through the court’s written decision and the actual parcel by parcel calculations. In its evaluation of the court decision, the District Attorney’s office will also be evaluating the liability of other entities who share in the property tax revenues; those entities are the Washoe County School District, the North Lake Tahoe Fire Protection District, the State of Nevada, the Incline Village General Improvement District and, of course, Washoe County. The County previously made $6.1 million worth of refunds to Lake Tahoe property taxpayers as ordered in four separate cases. Refund Process Complex and Time-Intensive. Davis also explained the complexity of determining who a refund should go to. “At first look of the court order, the refunds are to be made to the person who paid the property taxes,” according to Davis. “That could be different from the person who the tax bill was sent to and/or the person who currently owns the property and each of these taxpayers, many of whom are not residents, must be found. We have a lot of work to do based on the guidance we receive from both the County Commission and the District Attorney’s office on how we would actually implement the court-ordered refunds.” Davis said once a process and timeline have been determined, information would be shared with the public. She discouraged Lake Tahoe property taxpayers from calling her office since there is no information to share at this time. She also advised that interest paid on these refunds is required to be reported to the Internal Revenue Services as it may qualify as a taxable event for the individual taxpayer.” Refund Source. Washoe County Finance Director John Sherman stated that whatever the final refund amount is determined to be, Washoe County does not have available resources to make those refunds based on the county’s budget situation which has been severely impacted by on-going property and sales tax revenue declines due to a prolonged recession and collapse of the housing market. Washoe County has reduced its budget by $154 million in the last five years and eliminated 20% of its staff. The budget deficit for the current 2011-12 fiscal year which started July 1st is $33.8 million of which approximately $20 million is still being identified through employee wage and benefit concessions and the on-going elimination of programs and/or services. Under certain circumstances, state law does allow for a county to assess a tax on unaffected property owners to pay for a court-ordered refund if general funds are unavailable to do so.