PVR has prepared a Q&A to help with the new form CR-001, Insurance Replacement Cost of Tax Exempt Property. We hope this clarifies some of your questions.
Question: The Tax Department prepared form CR-001 and sent it out to municipal assessing officials. Are the municipal assessing officials responsible for sending the form to owners of exempt property located in the municipality?
The statute does not indicate a methodology for collecting the data that is required to be reported. The Department created the form for reporting the insurance replacement value as: (a) a means of publicizing the requirement; and, (b) a means of giving owners of exempt property who are required to report the insurance replacement value a way to uniformly provide this information to assessing officials.
There is no requirement that any landowner use the Form CR-001. The Department created the form solely as a means to promote the uniform collection of data across all municipalities.
The statute does not require that assessing officials send out the form or notice to property owners who may have to report. The obligation is on the PROPERTY OWNER to report. The Department forwarded the CR-001 form to the assessing officials and assessing officials can make the form available to owners of exempt properties in cases where they believe it will facilitate the collection of the insurance data. At the same time the Public Outreach division of the Department will be engaging in a publicity campaign directed at owners of the types of properties subject to the obligation to report in an effort to get these property owners to self report.
Question: Who has to report the insurance replacement values and what has to be reported? Does a municipal assessing official have to report insurance replacement value if the exempt property already has been assessed through the municipality’s regular assessment process?
The Legislature adopted Section 29 of Act 73 in the last session that requires nonprofit owners of certain kinds of property that are exempt from property taxes to report the insurance replacement value of the exempt property to the municipal assessing officials in the municipality where the property is located.
Here is the text of the statute:
§ 3802a. Requirement to provide insurance information
Before April 1 of each year, owners of property exempt from taxation under subdivisions 3802(4)-(6), (9), and (12)-(15) and under subdivisions 5401(10)(D), (F), (G), and (J) of this title shall provide their local assessing officials with information regarding the insurance replacement cost of the exempt property or with a written explanation of why the property is not insured. (Added 2013, No. 73, § 29, eff. June 5, 2013.)
Fact Sheet No. FS-1023 published by the Tax Department contains a list of the broad categories of exempt property included in each of the sections referenced in the statute. A copy of that Fact Sheet along with a copy of a form prepared by the Tax Department to gather the information required by the statute can be found here:
The statute requires that those persons who own the kinds of property identified in the specific statute sections listed must report the insurance replacement value of the exempt property to the local assessing officials or explain why there is no insured replacement value.
As local assessing officials have pointed out, the insurance replacement value is not the same as fair market value because insurance replacement value does not account for the value of land or necessarily adjust appropriately for depreciation. The Legislature’s goal was to reduce the number of exempt properties appearing in the grand lists at a value of $-0- . It would appear that the Legislature wanted to provide assessing officials with a starting point for determining an appropriate listed value by requiring the property owners to provide information about the value put on the improvements.
This statute does not absolve the municipal assessing officials from assigning a listed value to exempt properties as that requirement has existed for many years. For exempt properties without listed values, we suggest that the assessing officials consider using the insurance replacement value as reported for the building(s) as a starting point to which they can add, the value of land as well as the possibility that additional depreciation might be warranted. In other words, assessing officials should use the same method by which non-exempt properties are assessed, and apply any appropriate factors to create a better assessment and a more accurate grand list. HOWEVER, the statute allows the assessing officials to use just the insurance replacement value for exempt properties on the Grand List as long the value assigned to the exempt property is identified as having been reported as the insurance replacement value.
These values will be important to the Legislature as it looks at how the exemptions affect the grand list and the related education tax assessments each year.
Question. The list of properties that are subject to the reporting requirement in Act 73 does not appear to include all the types of exempt properties, is that right?
Yes, the Legislature did not include all of the types of exempt properties in the types of properties subject to the reporting requirement. Owners of the properties that are not listed in the statute do not have an obligation to report the insurance replacement values of their property. A brief summary of the types of property subject to the reporting requirement is on the second page of the Fact Sheet and on the back of the form. See links above.