County View: A Year in Review: Boone County’s real estate market tumultuous in 2010

by Tom Schauwecker

February 5,2010

Tom Schauwecker is the Boone County Assessor. TSchauwecker@boonecountymo.org

Trustee's Deeds Under Foreclosure

Boone County recorded 298 Trustee's Deeds Under Foreclosure in 2009. The price paid at foreclosure ranged from $11,500 to $2 million. During the past three years, 836 properties have been subject to foreclosure. Foreclosures have almost tripled since 2005.

Foreclosure is a legal procedure initiated by a creditor to repossess the collateral for a loan that is in default. A lien against the property is enforced through the taking and selling of the property.

Warranty Deeds In Lieu of Foreclosure

An analysis of Trustee's Deeds Under Foreclosure does not tell the whole story. Local financial institutions acquired 348 vacant residential lots and other tracts of land with Warranty Deeds in lieu of foreclosures during the past year. Ownership was transferred to the mortgage lender prior to foreclosure proceedings. These lots encompassed a broad spectrum of value from starter homes to estate lots.

In July 2006, a developer borrowed $4.367 million for a new residential income-producing property. This property was transferred back to the mortgage holder in May 2009 prior to foreclosure proceedings. A local financial institution resold this residential income-producing property in November for $3.335 million. The buyers paid $18,200 in closing costs and borrowed $3.335 million for the entire purchase price. Two separate fee appraisals that competed during the calendar year of 2009 valued the subject property between $3.6 and $4.025 million. What is the market value?

Tax Base Boom to Bust

New construction increased by a record-breaking amount in 2006 when the assessed valuation of Boone County increased by $129 million. Last year there was only an $11.8 million increase in the assessed valuation countywide. The valuation of real property increased by $42.3 million while personal property decreased by $30.5 million. Prior to the boom years, our tax base increased $55 to $65 million annually.

A locally assessed electrical peak generating plant valued at $70.5 million could become tax-exempt in the near future. This plant is currently owned by Ameren Services Company. A municipality, or a consortium of municipalities, would make this peak generating plant exempt from property taxation. This loss could offset any increase from new construction and result in a decrease in the assessed valuation of Boone County

Tax Increment Financing Approved

The City of Columbia approved a policy resolution adopting bids and proposals for tax increment financing projects in January 2009. Two redevelopment projects were considered for the potential use of tax increment financing. Both projects are located in the Special Business District of Columbia, the Tiger Hotel and a mixed-use development at the corner of 10th and Locust.

Trittenbach Development LLC applied for $3.3 million dollars in assistance for their $17 million mixed-use project. This application of tax-exempt financing was withdrawn given current economic conditions. Tiger Columns LLC applied for $1.785 million in assistance for its $8.9 million project. City Council gave final approval to this redevelopment project late last year.

The City of Columbia receives 6 percent of all property tax revenues. TIF legislation enables a minority stakeholder to divert future revenues from the majority of taxing jurisdictions. Jackson County has challenged Kansas City's method of granting tax breaks to developers. Jackson County contends the TIF Commission must give representatives of counties, libraries and schools full voting rights on all related issues as required by law. Public schools are most affected financially when TIF incentives are approved

Agricultural Land and Productivity Values

In December 2009 the Missouri State Tax Commission recommended the adoption of new agricultural land values to be used in the 2011 assessment cycle. The University of Missouri conducts a biennial study on the value of agricultural land based on productive capability of eight soil grades.

The commission proposes raising the land values in the four highest categories by about 30 percent ($1,270 per acre to $985 for the highest grade), and lowering the value for the four lowest grades.

Agricultural land in Missouri has one of the lowest rates of taxation in the nation. Property taxes range from $2 to $5 per acre. Nebraska, Kansas, Iowa and Illinois have a higher effective tax rate on land. The valuation of agricultural land has not changed since 1995. It is highly unlikely the General Assembly will approve this change given the current economic and political climate.