Rapid City - Pennington County Director of Equalization

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The function of the office of the Director of Equalization is to annually assess all taxable real property in Pennington County for property tax purposes. This office is responsible for the accurate assessment and inventory of approximately 54,000 parcels of property with a value of near $8 billion. This property assessment is the tax base for local government funding for Pennington County, Rapid City and other towns in the county, local school districts, organized townships within the county, and various other tax districts such as fire, water, and road districts.

All property in South Dakota is assessed annually at its fair market value as defined in South Dakota codified law 10-6-1.3. The assessment date is November 1st. Property taxes applicable to this assessment will come due in the year following the assessment year.

The Director of Equalization does not determine the property tax. The local governments and taxing districts will determine the property tax based upon budgetary needs. The Director of Equalization is responsible for assessing all property at market value to ensure that the property tax burden is equally spread across all taxable property in the county.

The staff of the Pennington County Director of Equalization is very experienced and knowledgeable in property appraisal and assessment. Appraisal staff members are required to be certified as appraiser\assessors through the South Dakota Department of Revenue and Regulation. This certification requires initial coursework and a test, plus annual continuing education and regular testing. Most staff members acquire education beyond the minimum required, several are licensed or certified appraisers, and many hold professional designations and memberships in professional organizations. The average experience level for all staff is approximately 17 years.

The staff in this office is available to answer questions regarding property assessments. Any member of the public is welcome to ask questions regarding their own property, or any other property in the county. If a property assessment, or property information, appears to be inaccurate, please inform this office. Our goal is accurate property information leading to accurate property assessments on all property.

MASS APPRAISAL PROCESS

The office of the Director of Equalization utilizes mass appraisal procedures to determine the market value of property within the county. These procedures are similar to what any real estate appraiser would perform and include the appropriate consideration of the three traditional approaches to value: the cost approach, the sales comparison approach, and the income approach. The cost approach to value is a consideration of the cost to construct new and similar real property improvements, less any depreciation, plus the value of land. The sales comparison approach to value is a consideration and comparison of sales of similar properties. The income approach to value is a consideration of typically expected income from the property, less typical expenses, and capitalized by a capitalization rate indicated by the market.

Agricultural land is the notable exception to the typical market value assessment process. Land is classified as agricultural if it meets the criteria detailed in South Dakota codified law 10-6-31.3. The 2009 South Dakota legislature changed the process for assessing land classified as agricultural. Beginning with the 2010 assessment, agricultural land will be assessed using data collected relative to the earning capacity of agricultural land, and a capitalization rate set by state statute.

This office will identify and verify all sales of real estate within the county in the analysis of market value. Sales of properties that are arm’s length transactions will be considered representative of market value. Attempts will be made to verify details of sales transactions affecting sale price and the indication of market value. Other information also collected by this office includes replacement costs of various improvements, typical depreciation of improvements, typical property rents, and typical property expenses.

All property in South Dakota is assessed annually. Not all property is inspected every year. All new property in Pennington County is inspected by an appraiser from the Equalization office. Existing properties are inspected periodically depending upon scheduled reviews of neighborhoods, discovered errors in property assessments, or changes to the property. The office is always willing to inspect a property and review property information at the request of a property owner.

CHANGES IN ASSESSED VALUES

Property assessments may, but do not always, change from year to year, dependent upon a variety or combination of reasons. The most common reasons that property assessments change are:

New property is added, existing property is subtracted, or existing property is remodeled or updated.
Physical deterioration or some other form of depreciation diminishes property value.
Assessed values are adjusted up or down to reflect a changing real estate market.
An error causing the previous assessment to be inaccurate was discovered.
An adjustment is made to a property assessment to cause it to be more similar to the assessments of similar properties.

All properties do not change in value an equal amount every year. Assessed values can be adjusted county-wide, by neighborhood, by property type, or by individual property as needed. The goal of changing property assessments is to assess all property at market value, not to change property assessments an equal amount every year.

A change in a property assessment does not result in an equal change in property taxes. Too many other factors are involved in the calculation of property taxes. An increase in the budgetary needs of the local tax districts will result in an increase in property taxes, without an increase in property assessments. An equal, county-wide increase in property assessments without an increase in the budgets of tax districts will result in a reduction of the tax levy and no change to property taxes. This process is complicated by the taxable percentage of assessments determined annually by the South Dakota Department of Revenue and Regulation and the budget cap placed upon tax districts by South Dakota statute.

MEASURING ACCURACY

The office of the Director of Equalization reviews assessed values for accuracy every year. The primary measure of accuracy is a median sales ratio. The office analyzes all arms length sales of real property every year and compares the sale price of each property to its assessed value. For example, a property that is assessed at $90,000 and sells for $100,000 has a sales ratio of 90%. This property is assessed at 90% of market value, based upon the indication of one sale. All of these sales ratios are compiled, and a median ratio is calculated. This ratio analysis is performed on a county-wide basis and by individual neighborhood for each property type and will indicate the need to adjust assessed values to a changing market. A single sale of a property does not automatically result in a change to a property assessment, but that one sale might be an indication of more wide-spread changes in the market.

The median level of assessment changes every year depending upon changes in the real estate market and changes in assessments. The median ratio is a primary tool in adjusting assessments to a changing market. Other statistical measures of accuracy and uniformity are performed. These provide information relating to the uniformity of assessed values and also indicate areas in need of review or correction.

TAXABLE VALUE

The South Dakota Department of Revenue and Regulation audits each county equalization office every year for accuracy of assessed values. The county-wide median sales ratio is the primary measure of accuracy. The state assigns each county a taxable factor to equalize assessed values to 85% of market value. The taxable factor that each county receives is dependent upon their level of assessment in relation to market value as determined by the median sales ratio analysis. The value indicated on the property tax bill is taxable value and is a result of applying this factor.

Taxable value is different from assessed value. It is generally a percentage of assessed value, and the percentage changes every year.

ASSESSMENT NOTICE AND PROPERTY SEARCH

Assessment notices are mailed by the Director of Equalization on or near March 1 of every year. This notice informs the property owner of the property assessed in that ownership, the tax district that the property is located in, and the assessed value of the property. The assessed value represents the market value of the property as of the previous November 1st. Property taxes due the following year will be based upon this assessment, but are not indicated and are not determined as of this date. This notice will also detail the process for a property owner to appeal an inaccurate assessment.

Property assessments are public information. Any person may review the property assessment of any property in South Dakota. The Pennington County Director of Equalization has a website Property Search for the public to review property assessments and property information. Property owners may review the information that the county office has on file for their property and compare their assessment with similar and neighboring properties. The office staff is also available to answer questions regarding the assessment of any property.

APPEAL A PROPERTY ASSESSMENT

All property owners have the right to appeal the assessment of their property. If an owner thinks that a property is assessed greater than market value or unequal in relation to similar properties, an appeal should be filed. An assessment appeal is an argument regarding the accuracy or equality of the assessment, not a complaint about the tax amount. A complaint about taxes, or tax increases should be made to the various governing boards during budget hearings.

A notice of appeal for a property located within a city, town, or organized township must be submitted in writing to the clerk of the township no later than the Thursday preceding the third Monday in March. The appeal will then be heard by that local township at a public meeting. If the property owner is not satisfied with the decision of that board, an appeal can be submitted in writing to the County Auditor no later than the first Tuesday in April. If the property is located outside of any local municipality, this would be the first step in the appeal process. The appeal will then be heard by the County Board of Equalization at a public meeting.

If a property owner is not satisfied with the decision from the County Board of Equalization, an appeal can be made to the circuit court or to the Office of Hearing Examiners in Pierre. An appeal to the circuit court will prevent an appeal to the Office of Hearing Examiners, but an appeal to the Office of Hearing Examiners will still allow the option to further appeal to the circuit court. Notice of appeal to the Office of Hearing Examiners must be made in writing to that office no later than the third Friday in May. Appeals to the circuit court must be made within thirty days of publication of the decision from the County Board of Equalization.

The office of the Pennington County Director of Equalization is available to answer questions regarding the appeal process. However, the process and its deadlines are established by South Dakota statutes. A change in an annual assessment after March 1st can only be made by an appeal board. This office does not have the legal authority to circumvent the process or ignore the deadlines to change an assessment after March 1st.

An appeal is a formal argument to a governing board at a public meeting regarding the property assessment. The board of appeal will hear and consider the property owner’s argument regarding the inaccuracy of the assessment and the Director of Equalization’s justification and support for the assessment before making a decision to change or not to change the assessment. Property owners should be prepared to provide some evidence in support of changing the property assessment.

A property owner considering an appeal should contact the Pennington County Director of Equalization prior to the deadline for notice of appeal. Office staff members are willing to discuss the assessment and provide information supporting the assessed value. If an error in an assessment is discovered, the Director of Equalization will recommend a change in assessment to the appropriate board of equalization. If the office of the Director of Equalization does not agree that the assessment is in error, the property owner will be informed of the support for the assessment that will be presented to the board of equalization in the event of an appeal. Contacting the office prior to an appeal will better inform the property owner and the Director of Equalization.

Assessments for the year are set in South Dakota when the assessment notices are mailed in March. The appeal process finalizes those assessments. Any valuation errors discovered after the deadline for the appeal process cannot be corrected for that year. The county auditor will use the total assessment for calculation of levies for budget purposes through the remainder of the year, and taxes on the assessment will become due in January of the following year. However, staff within the office of the Director of Equalization is always available to discuss property information or valuation errors needing correction for the next assessment year.

PROPERTY TAX REDUCTIONS AND EXEMPTIONS

The office of the Director of Equalization is also responsible for administering various tax reduction or tax exemptions specified in South Dakota law. These include: owner-occupied classification, historical moratorium, paraplegic reduction of taxes, paraplegic and disabled veteran exemption, and the various exemptions for religious organizations, charities, and schools. Applications for these reductions or exemptions can be obtained from and returned to this office.

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