April tornado victims still face property tax bills on destroyed homes
10/09/2013 2:53 PM
08/06/2014 12:57 AM
When Matthew Ratlief and his family emerged from a harrowing night in a storm shelter to find their mobile home destroyed by a tornado last April, he didn’t think he’d still be paying property taxes on it in December.
But under a quirk of Kansas state law, the Ratliefs and about 145 other families who lived in and around the shattered Pinaire Mobile Home Park are on the hook for a full year of property tax, even though they lost their homes in the April 14 storm.
While it was mostly mobile homes destroyed in the tornado at the southeast end of Wichita, the same rules apply to site-built housing.
So any homeowner unlucky enough to get in the way of a devastating storm, fire, or other house-destroying incident could wind up in the same financial purgatory, paying property tax on property that no longer exists.
County officials who collect the tax say they don’t think it’s fair to continue taxing people on homes that are now taking up space in a demolition landfill.
But they say their hands are tied by state law.
State officials can’t seem to explain why the law is the way it is, in a place that sits on the center stripe of a continental tornado alley.
It’s an issue that’s come up before over the years, in bigger and better-known tornado disasters in Greensburg, Hoisington, Haysville and Andover.
But while the south Wichita tornado was a smaller disaster, change could be in the wind this time around.
A newly elected state representative, whose brother lost his home in the April tornado, said he’ll be asking some tough questions after he’s sworn in in January.
“I know a lot of them just signed their property over (for demolition and removal) and they had to pay the taxes on it through the end of the property tax year,” said Rep.-elect Joe Edwards, R-Haysville. “That’s what I’m hearing from many that lived down in that area.
“Those people that got destroyed homes and cars, the car (taxes) stopped immediately as soon as it was signed over to the salvage pool, but their houses went through the next year and some of them paid several hundred, even into the thousands of dollars, even though the property was destroyed.”
Legislative leaders from both political parties are indicating they’ll be willing to look at changing the law.
Jan. 1 appraisal
Edwards’ brother, the Rev. Doyle Edwards, said he had lived in the mobile home he lost in the tornado for about 12 years.
As he changed jobs, he’d moved it back and forth between Butler and Greenwood counties before settling in the Pinaire park in 2006.
Although it’s on the tax rolls as personal property, “It was our home,” he said.
He and his wife rode out the tornado huddled in a closet inside the mobile home. When they emerged, they immediately knew their home would be a total loss.
The tornado practically ripped the south end off the mobile home.
“The curtain rod from the master bathroom shower was driven through the wall into our bedroom,” he said.
Worse, the winds had twisted the entire structure, popping seams all along both sides. “We could see daylight out through the closet and in the front room,” he said.
About a month after the tornado, he signed ownership of the mobile home over to the park management so it could be torn down and the debris hauled away, he said.
He was able to salvage almost nothing from the disaster.
“We ended up getting an apartment and had to buy new furniture, new vehicles, everything,” he said.
Eight months later, he got a $190 property tax bill for taxes on the destroyed home.
“It’s not a lot of money, (but) that’s not right,” he said. “I don’t have a property anymore. It’s gone.”
The tax bill will bring more financial hardship for Ratlief, who works as a tattoo artist at the Body Ink & Steel studio in Newton.
Like most businesses providing discretionary services, the tattoo business has dropped off since the recession.
Add in the cost of losing their home and having to move to an apartment and the family — Ratlief, his common-law wife and their 3-year-old son — are walking the edge of their own fiscal cliff. They’ve cut just about everything they can, including home phone service, to save money, Ratlief said.
“Money’s kind of tight,” he explained. “You’ve got to prioritize and decide what bills you’re going to pay.”
When the county billed Ratlief for $189 in property tax last month, he figured it was a mistake and it would be pretty simple to get it straightened out.
“I was going to call them and tell them I lost my home in April,” he said. “I don’t mind paying for the time we lived there, (but) I lost my home, so why should I have to keep paying?”
The answer to the question lies in Kansas Statute 79-1455: “Each year all taxable and exempt real and tangible personal property shall be appraised by the county appraiser at its fair market value as of January 1.”
What that means is that the tax value assigned to a home on Jan. 1 is the value that determines the tax liability for the rest of that year, regardless of what happens to the property during the year.
“Our appraisal date is Jan. 1 each year. One day,” said county Appraiser Mike Borchard. “Whatever property is there that day, that’s what’s going to be taxed.
“Whatever the value is Jan. 1, they’ll be receiving a tax bill for that. That’s the way current law requires us to do it.”
The legislative history shows the Legislature hasn’t touched the law since passing in 1982.
Cars treated differently
The total damage from the April tornado in the southeast Wichita area was $146 million — enough to trigger federal disaster aid to help city and county governments clean up and restore services, but not enough to qualify for direct federal assistance to displaced residents.
The tornado completely destroyed 134 mobile homes and 11 houses, according to records obtained from the county appraiser’s office and the city-county office of Central Inspection.
About 62 of the damaged mobile homes have been replaced, although the Pinaire park still shows signs of the disaster, including broken trees, scattered glass and damaged utility hookups leaning at odd angles.
There’s a mix of new and old mobile homes, some patched with plywood.
The destroyed homes range from a 1968 singlewide trailer worth $1,500, with an annual tax bill of $29; to a $132,000 single-family house with a tax bill of $3,323.
The tax treatment for destroyed homes is significantly different than for motor vehicles that were parked outside them, said Sedgwick County Treasurer Linda Kizzire.
When a car is totaled, be it by traffic accident or act of nature, all the owner has to do is fill out a simple form and bring it to the tag office with the license plate and a document confirming that the vehicle’s been scrapped, Kizzire said.
Her office will then prorate the year’s taxes and apply the remaining months to the motorist’s new car, or issue a refund check if the car isn’t replaced, she said.
The residential property tax bills mailed in late November are for the entire year of 2012 and there’s no provision in law to abate the months since the homes were destroyed, she said.
The only choice that the homeowners have now is when to pay.
They can pay it all immediately, or pay half now and be billed for the rest in March of next year, Kizzire said.
“I would support a legislative change to prorate these taxes,” Kizzire said. “I think that would be fine.”
She said the easiest way to do it would be to charge taxes for only the first half of the year on homes that were destroyed during the first half of the year. The tax bill for the second half of 2012 could simply be forgiven for those who lost their homes in the first six months of the year, she said.
While the Jan.1 cutoff penalizes those who lose their homes during the year, it benefits builders.
Someone who starts and finishes a new home during a given year will be taxed only on the value of the land, until the next Jan. 1 comes around and the value of the building is added to the appraisal, officials said.
While some have complained about paying property tax on homes destroyed in past disasters, it never rose to the level of getting much legislative attention.
Sedgwick County Commission Chairman Tim Norton said he tried to get the law changed 13 years ago, when he was mayor of Haysville and a tornado ripped through his town, destroying 400 homes and devastating the city’s historic downtown business district.
“I lobbied for there to be a disaster clause for properties that had been assessed on the rolls (in January) and then in the spring they go away, yet they still get two property tax bills based on that last assessment when the building was there,” Norton said. “That came up after the tornado and it got nowhere because it’s a pretty hairy issue depending on how much is wiped out.”
Norton said the main reason he couldn’t get action is because if destroyed homes were dropped off the tax rolls, a major tornado like the one that hit Haysville could blow a giant hole in the local governments’ planned budgets.
“Unfortunately, it affects the local jurisdictions in a negative manner, but it would help the citizenry in a positive manner,” he said.
While Republicans and Democrats in the Legislature disagree on just about everything having to do with tax policy, they might be able to agree on not taxing people for property they don’t have.
Senate president-elect Susan Wagle, R-Wichita, said she will ask the Legislative Research Department to look at the issue and report back to her on the existing situation and possible ways to improve it.
Rep. Nile Dillmore, an influential Wichita voice on tax policy among Democrats, called it “an interesting question” that probably should be addressed by the Legislature.
The law was passed long before Dillmore took office and he said he doesn’t know what the original legislative intent might have been.
“It’s like a lot of things,” he said. “Until there’s a reason to look at it, you don’t look at it.”