By Joshua J. Malancuk, CPA, CMI, Certified General Appraiser, Level II Assessor-Appraiser – President JM Tax Advocates LLC, firstname.lastname@example.org, 317.674.8390 x 100
and Lawrence W. Mitchell, MAI, Certified General Appraiser, Level II Assessor-Appraiser – Senior Managing Director, Valbridge Property Advisors, email@example.com, 317.687.2747 x 11
Introduction and Forward
In this two-part article, we discuss Indiana property tax assessment education and credentialing and then highlight inherent problems that are triggered through Indiana’s unbalanced licensure statute and its inconsistent wording with existing administrative code. As a forward note, Indiana County Assessors and Professional Appraisers (as third-party consulting entities who serve counties) are referenced in multiple parts of this article. We believe that these individuals are not responsible for systemic issues that are described in subsequent sections. In fact, we believe that most County Assessors and their “professional appraisers” have been doing their best to fulfill their assessment duties under the confines of an unbalanced system that requires near-term fixes, starting with addressing the crux of this article.
Indiana’s real property tax assessment system is unique with respect to its value premise standard (“market value-in-use”), annual reassessment practices (via annual trending), and the Department of Local Government Finance (DLGF) definition of a “professional appraiser” (per IC 6-1.1-31.7). The same system is wrought with inconsistencies, subjectivity, and bias which helps to explain systemic errors that have formed the basis for thousands of Indiana property tax appeals since the market value-in-use system was first implemented with March 1, 2002 assessments.
It is not a commonly known fact that Indiana licensure statute (per IC 25-34.1-3-8(h)) fully exempts County Assessors, their employees, and “professional appraisers” from state real estate appraiser licensure along with all Uniform Standards of Professional Appraisal Practice (“USPAP”), the same guidelines that promote and maintain a high level of trust in appraisal practice. By contrast, 50 IAC 27-1-3(5)) requires USPAP compliance when Indiana County Assessors complete their annual trended assessments. Therefore, it is apparent that the annual trending administrative code directly contradicts the current Indiana licensure statute. The inherent bi-product of the current statutory loophole includes: permitting role conflicts with county consultants who are simultaneously acting as appraisers and advocates, allowing appraisal reviews by unqualified parties, and perpetuating assessment quality challenges for more complex property assessments.
The heart of the matter is that allowing County Assessing Officials and their third-party mass assessment consultants (“professional appraisers”) to operate outside of USPAP triggers significant barriers to resolving many property tax appeals and also creates extra costs to taxpayers and county governments alike that could otherwise be reduced by implementing simple changes within Indiana statute. Therefore, clarity is needed through future legislation.
Assessor and Appraiser Education and Certification Comparisons
We have observed that, in some ways, Indiana’s USPAP exception erroneously places Indiana’s County Assessors on equal footing with certified real estate appraisers for their function of creating appraised values for property tax assessments. Indiana appraiser and assessor credentialing requirements are compared in the following section to help the reader with additional background surrounding the current licensure loophole.
A “certified assessor-appraiser” and/or “professional appraiser” (an individual or firm that contracts with county assessors to assess property) as defined by the DLGF, should not be confused with an Indiana Certified General Appraiser – which is the same individual who can render real estate value opinions as a basis for lending, eminent domain, and other federal and state-regulated transactions. A certified “assessor-appraiser” and/or “professional appraiser” is an individual who has been credentialed through a series of DLGF approved courses and tests for up to three levels of credentialing. A certified Indiana assessor-appraiser is generally qualified to understand Indiana assessment principles, the assessment manual (Regulation 17), and mass appraisal assessment concepts. However, attaining the assessor-appraiser credential does not make this same individual qualified to appraise real property for anything other than for mass appraisal assessment purposes. For this reason, this credential should not be viewed in the same light as the Indiana “Certified General Appraiser” or real estate appraisal professional designation.
Completion of Level III assessor-appraiser education is onerous due to set schedules and successful testing completion requirements for each course, but completion of Indiana real estate appraiser requirements is much more rigorous and time-consuming. The following summary compares the requirements of attaining both credentials:
Due to the significant time investment to complete necessary Certified General Appraiser experience and education requirements, it would be unrealistic to require all Indiana County Assessors to attain their Indiana real estate appraiser licenses. However, there is an easier solution available to Indiana. Therefore, in the next part of this article, we will highlight additional details about this significant jurisdictional exception along with major Indiana property taxpayer ramifications that are caused by Indiana’s unbalanced licensure statute.