Appraiser defends department's performance; senator says help for seniors, veterans on the way

As Linn County property owners deal with recent notices of tax increases, County Appraiser Lisa Kellstadt has the task of defending her department's operations. (Journal file photo)

By Roger Sims, rsims@linncountyjournal.com

MOUND CITY – A hearing on whether the budget for Linn County should stay at revenue neutral or not focused more on soaring property valuations and the difficulty many people, especially seniors living on a fixed income, were having in paying real estate taxes.

However, it also provided the opportunity for a state senator to promote Homestead 2, a program that will go into effect in January that will freeze property taxes for disabled veterans and homeowners 55 years and older who own homes less than $350,000 in value. It is a program that could eventually apply to all state residents.

The hearing on Monday, Aug. 25, shown a light once again on why property values were inflated and how that resulted in tax bills that many people simply couldn’t pay.

The migration to Linn County from the Kansas City metro area that blossomed in the 1960s and early ‘70s cooled during the Arab Oil Embargo when the Organization of Petroleum Exporting Countries, dominated by those in the Middle East, imposed an embargo on oil normally destined to the United States because of the U.S. support to Israel during the Yom Kipper War. Gasoline became scarce and gas prices began to soar, making the commute to jobs in the city more costly.

The repercussions of that embargo were costly for decades, however, it did keep real estate prices in Linn County – and the resulting property taxes – affordable even though they fluctuated. While gasoline eventually became more affordable, commuters became more accustomed to high prices, and inflation led to modest increases in real estate prices, a more dramatic change was coming.

According to a study titled “Historical Kansas County-Level Land Values to Help Determine Tax Basis” performed by the Kansas State University Department of Agricultural Economics, the price of farmland in Linn County has seen increases and dips but overall has been steadily rising.

Per acre prices for Linn County farmland:

1970 – $ 184

1975 – $  297

1980 – $  614

1985 – $  456

1990 – $  443

1995 – $  570

2000 – $  725

2005 – $1,183

2010 – $1,561

2015 – $2,211

2020 – $2,515

2023 – $3,345

In late 2019 and early 2020, COVID landed in the U.S. In addition to becoming prevalent in China, where it apparently began, it reached epidemic levels in countries such as Italy, where death rates mushroomed.

Officials with the Centers of Disease Control urged U.S. residents to seek isolation and wear masks, schools shut down in-person classes, and many businesses shifted to allowing employees to work from home.

The rural nature of Linn County land became attractive to buyers from the Kansas City area as well as those living outside the region. One area realtor reported that properties were being purchased from buyers from as far away as California and the East Coast. Those properties were being purchased sight-unseen, often with the relatively wealthy buyers paying more than the asking price.

Almost overnight, the going price of land was more than 40% above the market price a year earlier. Although it is now to a lesser degree, that trend is continuing across the state, according to Scot Loyd of Loyd Group, an accounting company that assists the Linn County Clerk’s office on budget matters.

At the budget hearing on Monday, he recounted a story about the sister of one of his employees that was in the process of purchasing a home for $300,000 when a bidder outside the area offered the seller $80,000 over the asking price and the original deal fell through.

The continuing rates of inflation have become a major headache for County Appraiser Lisa Kellstadt and her crew as residents charge that inspectors are inflating the value of property to keep taxes high.

“This year, land is going for $5,000 to $7,000 (per acre) on big tracts of land,” Kellstadt said at the hearing.

A number of residents, mostly older residents on fixed incomes, stepped forward to complain about the rise in property taxes, including state Sen. Caryn Tyson.

Tyson called the property tax system broken, adding that the process for a property owner to appeal their taxes was a burden for taxpayers. She also said that there were three ways that a property could be appraised, and by choosing to use the market value approach the county appraiser’s office gave too much emphasis on what it would cost to purchase the property.

“You’re being taxed on unrealized gains, and that’s not fair,” Tyson said.

She also suggested that there were counties across the state that were ignoring the rule to list property valuations within 10% of market value. She also said that other counties didn’t have appraisers but used appraisal councils to determine value.

Tyson explained more about the Homestead 2 program that will ramp up in January. She said she has been trying to get the word out in her columns in the local newspapers, but people are still not aware of the program.

Hamilton said she thought that program had not been enacted, but Tyson said it would definitely begin in January.

County Counselor Jacklyn Paletta, who essentially acted as moderator during the hearing, told those in attendance that the commission wanted Kellstadt to have the opportunity to defend her department’s actions. Kellstadt has worked for the office for 37 years and assumed control of the department when Kathy Bridges resigned her post in November 2023.

She worked under longtime appraiser Steven Thompson, who retired in 2019 just before the COVID pandemic affected real estate market values. Bridges was hired, and under her direction the county began hitting land values that were within 10% of the market value of the property as is required by state statute. However, Bridges weathered considerable criticism for bringing the county’s valuations closer to market value.

According to the Appraiser’s Office webpage on the county website, she and her workers answer to the Kansas Department of Revenue’s Property Valuation Division (PVD). 

“PVD provides the rules, regulations, appraisal methods, and educational standards for our work. In addition, they monitor, audit, and test our work throughout the year,” the statement says.

“The market values we utilize on real estate are the result of an annual appraisal cycle consisting of on-site property reviews, analysis of property sales, collection of market data, market studies, and statistical analysis. 

“When valuing personal property, the County follows the guidelines and procedures that are issued by PVD annually. However, PVD is responsible for the annual valuation of public utility property and issues the agricultural use values to the County for land that is classified as agricultural.”

In direct response to Tyson’s charges that her department wasn’t doing enough to ease the tax burden for county residents, Kellstadt said, “I’ve taken an oath of office that I will appraise property at market value.”

According to state statute, county appraisers “must follow the policies, procedures and guidelines of the director of property valuation in the performance of the duties of the office of county appraiser.”

And in a 2019 directive from the state director of property valuation, “In valuing real and personal property, the county appraiser shall interpret appraisal and valuation

guides in a manner consistent with statutes. 

“To be valid, rules or regulations of an administrative agency must be within the agency's statutory authority. Rules or regulations that go beyond that authority, violate the statute, or are inconsistent with the agency's statutory powers are void. Further, administrative rules and regulations must be appropriate, reasonable, and consistent with the law.”

The state does allow valuation councils where two counties join together to create such a group. However, the councils much operate under the direction of a certified appraiser, who is in turn required to follow state statutes.

Kellstadt said that while she wished property was still selling for $200 an acre, the reality was that people outside of the county think nothing of paying $10,000 to $15,000 per acre.

“We see everything that’s for sale,” Kellstadt said, adding that her staff conduct interviews to get an accurate picture of each sale.

Her staff also tries to reappraise about a third of the county properties every year, and with nearly 19,300 different parcels in Linn County that can be a challenge.

She told those attending the hearing that property owners can file an appeal on their values and taxes. A person has 30 days to appeal an appraisal once they have received the valuation statement.

Kellstadt said her department will hold about 300 informal hearings this year. Those who are not satisfied with the results of the informal hearing can appeal the decision to small claims court. Four appeals will go to court this year, and property owners can appeal their valuations and resulting taxes once a year.

She said that one problem the department is facing is that this year houses are selling for more than their appraisal value. That means those sales will push appraisals up as well.

“I wish you didn’t have to pay as much taxes,” she said adding that the appraisal process is a constantly moving thing that depends on loan interest rates and supply and demand for housing.

For the last few years, Linn County has been experiencing a housing shortage. That has become apparent for administrators in the Prairie View school district. Many of their new hires are forced to live in the Louisburg or Spring Hill areas because of that shortage.

At the close of Kellstadt’s presentation, the county counselor asked if the county commissioners had ever told her how to do her job.

“No,” she replied.