Taxing local people out of their homes?

B  By Jason Ferguson

 

On Sept. 18, 11.7 acres of Custer County land sold  to a couple from Corona Del Mar, Calif., for $189,905. That property had been assessed by the Custer County Department of Equalization at $46,800.

That is just one example, said department of equalization head Leah Vissia, of an ongoing problem in the county: property is selling for much more than it is assessed for, which drives up those values and subsequently, taxes. Arms-lengths transactions must be used to determine property values. An arms length transaction is one with a willing and knowledgeable buyer and a willing, knowledgeable seller, as well as one not done under duress (such as a foreclosure) and in a timely manner.

What’s more, Vissia said, is that it constantly puts the county on the wrong side of South Dakota codified law, which says property in South Dakota is required to be assessed at what it is selling for, otherwise known as “full and true” in tax parlance.

Vissia addressed the issue at the Oct. 22 meeting of the Custer County Commission while discussing her department’s intentions for assessed values for 2021 assessments payable in 2022.

A statistical report presented by Vissia showed that for July and August, county property was being assessed at only around 75 percent of market value. She did not have statistics for September or October sales, but cautioned they could make the situation even worse.

Some county property such as rural commercial land with buildings is being assessed at close to its market value, while others, such as agriculture land with buildings, is being assessed at much less. The median assessed ratio of agricultural land with buildings is only 36.2 percent of what it is selling for.

Vissia said what it all boils down to is that assessments should be raised about 20 percent—while that wouldn’t be across the board—in order to fall in line with state law.

“I just don’t know where,” she said.

Property taxes are paid at 85 percent of the county’s level of assessment and property that is under assessed doesn’t pay less in taxes. Rather, a factor is added in by the state that brings that percentage—such as the 36.2—up to 85 percent, which technically means a landowner is paying more in taxes than what the property is valued at.

There’s no way around the law, Vissia said, so people should expect to see their tax bill increase as the county pushes to meet state requirements.

“I can’t help what people are paying for things,” Vissia said. “Until we figure something out with legislation, I don’t know what to do.”

The Black Hills feels the brunt of the problem, as people from other states move here and pay what many here consider outrageous prices for homes and land, well above what is assessed. In many cases it becomes a bidding war for a home and property is sold before the ink is even dry on a listing. One quarter to a half of the sales are cash sales. The COVID-19 pandemic has exacerbated the issue, as people flee states with more restrictions.

“This is mostly out-of-state people coming here with more money than South Dakota has,” Vissia said.

She then added a stark warning, saying, short of state intervention of some sort (such as a previous law that property sold for over 150 percent of value is not to  be used in sales analysis) or state or federal dollars to help with the county budget, it’s only going to get worse ... potentially much worse. Custer County could become a Jackson Hole, Wyo., or Aspen, Colo.

“It is going to possibly tax local people out of their homes,” she said.

Also discussed at the commission’s Oct. 22 meeting were the results of a county employee survey regarding concealed carry of guns at the courthouse and other county property.

County attorney Susan Anderson said 62 responses were received in the anonymous survey. Sixty-two percent said they were OK with a county employee having a concealed firearm, while 38 percent were uncomfortable with  it.

When it came to allowing the public to carry in the courthouse or another county building, 55 percent of the respondents said they were against allowing it, while 39 percent said they were in favor of it and 4 percent had no opinion.

The survey was conducted as part of the county’s investigation on whether to allow employees and the public to carry firearms into the courthouse and/or other county buildings, which is prohibited at this time. However, a law that took effect in July allows courthouse employees to carry to work, although county policy currently forbids such. 

Some commissioners have championed allowing people to carry, saying declaring buildings a gun-free zone only welcomes bad actors to try to harm people in places they know they will encounter no resistance. 

Further complicating the issue for the county is the Seventh Judicial Circuit Court’s stance that it may balk at holding court here if guns are allowed, and that guns aren’t allowed where circuit court operates, which is most of the courthouse’s first floor.

Some survey respondents said there are certain county buildings—such as the library—where they are more uncomfortable with guns being allowed in general, and that it is paramount background checks are conducted for those who want to carry.

A basic gun permit (which is not required in South Dakota due to it being a constitutional carry state) does include a background check, while an enhanced carry permit requires a background check and proof of some proficiency with a gun.

Anderson said the county doesn’t have liability insurance to cover guns in the building, and suggested, if the county moves forward, it require whoever carries to sign a waiver of liability for whatever is put in place. She also wondered if a reckless discharge or accident would be covered under Workman’s Compen-sation.

“I would hope so, but I bet we would have a fight going all the way up to the state supreme court,” she said.

Anderson asked the commission that no matter how it proceeds, it allows her time to work on it so it will go into effect next year rather than immediately.

“I feel people (who answered the survey) were honest and forthright,” she said. “I even got a comment there are too many lawyers involved.”

Custer County Search and Rescue director Rick March was in the audience at the meeting and said he felt any employee who carries in the courthouse should be required to have an enhanced carry permit.

“There is knowledge in that process that really helps them if they are confronted with something,” he said, adding it’s important they understand the use of lethal force and the liabilities associated with it.

Commissioner Mark Hartman suggested they table any action on the issue until after some legal questions were discussed in executive session. After the executive session, the commission directed Anderson to draft a resolution to allow employees to carry in county buildings. That resolution is set to be approved at the commission’s Nov. 5 meeting.

In other news from the Oct. 22 meeting, the commission:

• Discussed county employee health insurance for 2021, which led to commissioner Jesse Sorenson to make a motion to remove commissioners from being covered by county insurance. Sorenson, who will leave the commission in the new year, has not taken the county health insurance for any of the four years he has been in office and said he has made a push to remove commissioners from the county insurance since he was elected to the commission.

County auditor Terri Cornelison said after the meeting health insurance for commissioners typically costs around $650 per month, or $7,800 per year, per commissioner. That means the county spends around $39,000 a year on health insurance premiums for the commission if all five commissioners choose to take the county’s health insurance.