CORRECTION: Sage International School is a charter school.
Nearly 54 percent of all real estate in Ada County was exempt from property taxes last year, an Idaho Statesman analysis of Ada County assessor records shows. And the percentage is rising.
Since 2000, the number of wholly tax-exempt parcels in Ada County increased 37 percent, from 3,016 parcels to 4,121. They covered 10,877 acres, a 3 percent increase over total exempt acres in 2000.
The scenario in Canyon County is quite different. Most of the county is farms. Federal land covers just 1.2 percent of the land. As a result, just 6.5 percent — 25,235 acres — of Canyon’s 386,560 acres are wholly tax-exempt.
The slowly shrinking base of taxable land means the remaining taxpayers pay more. When a property goes off the tax rolls, the city, county and other taxing districts still get to collect the same amount of property tax overall as the prior year, as long as they do not exceed the maximum levy rate. But now there are fewer taxpayers.
“They stop paying tax and everyone else pays a little more,” said Alan Dornfest, the State Tax Commission’s property tax policy supervisor.
The Statesman counted 4,121 tax-exempt parcels owned by governments, schools, hospitals, churches, cemeteries and nonprofit organizations in Ada County. The county’s total assessed property value is $48 billion. Of that value, about $3.68 billion — 8 percent — is wholly tax-exempt.
WHO GETS AN EXEMPTION AND WHY?
Most of Ada County’s tax-exempt land is publicly owned. All properties owned by federal, state and local governments are wholly tax exempt.
The federal government owns 295,967 acres in Ada County — 44 percent of the county’s land. Most of that land is in the Snake River Birds of Prey area south of Kuna and in the Foothills north of Boise.
State holdings include Fish and Game land, Boise State University and state government office buildings, including the Capitol. City properties includes hundreds of acres of parks and open space, along with the Boise Airport.
A much smaller amount of untaxed land is owned by hospitals, churches, nonprofit organizations and private schools or educational organizations. State law exempts them from paying property taxes because they provide social services or public benefits. Taxable property can become exempt when a government agency, hospital, church or nonprofit buys it.
In Ada County, more than 325 such organizations are exempt from paying property taxes. But while their acreage is small compared with government’s, their land value is high.
About half of the value of Ada’s exempt properties — $2 billion — is for government-owned property. Hospitals account for $793 million, churches $527 million, nonprofits $150 million and private schools $122 million.
In Canyon County, less than half of 1 percent of the land — 1,495 acres — is exempt for religious, hospital, charitable or educational uses. The rest is government property.
Tax-exempt hospitals, churches, nonprofits and schools must apply yearly to their county commission to get the exemption. Counties decide whether applicants meet state criteria for exemption.
“We processed 993 property tax exemption applications last year, 28 of which were denied,” said Larry Maneely, chief of staff for the Ada County Board of Commissioners. Reasons for denial include property not being in use or owned by the applicant. Five of the 28 were reversed on appeal to the county Board of Examiners, which comprises the three commissioners.
TAX SHIFT CAN LEAD TO SPIRAL
Most new exemptions are for churches, nonprofits or cities. For example, in 2000 the city of Boise owned 9,752 acres; by 2015 its holdings had increased to 15,137 acres. Much of that is open space in the Foothills and new parks.
Over the last few years Southeast Boise’s ParkCenter Mall and an adjacent building changed from office and retail space to a private school, Sage International School. The property tax paid on two parcels dropped from $21,266 in 2012 to $0. A third parcel now receives a 34 percent property tax exemption because some of the building on it is not yet being used for the school, and some is used commercial businesses, which are not exempt.
As more properties become tax-exempt and the burden rises for nonexempt taxpayers, Dornfest says an exemption spiral can occur: Exemptions lead to higher property tax levy rates, which in turn result in new pressure for exemptions, which in turn lead to higher property tax levy rates.
FEDERAL PAYMENTS IN LIEU OF TAXES
Congress offsets some of the financial burden of the federal government’s tax exemption through the payment in lieu of taxes, or PILT, program.
PILT pays to local governments annually lands administered by the Bureau of Land Management, the National Park Service, the Fish and Wildlife Service, the Forest Service, federal water projects and some military installations.
In Idaho, BLM and Forest Service land covers 32,619,832 acres, about 60 percent of the state’s land base. In 2015, the state received $28.6 million in PILT payments, the seventh-highest total in the nation.
Ada County received a $757,910 PILT payment in 2015; Canyon County received $48,496.
Ada County last year also received $6,194 from Idaho Fish and Game as a fee in lieu of taxes for 81 parcels it owns in the county.
Disappearing ag land
Twenty-seven percent of Ada County land received agricultural exemptions in 2015. An ag exemption means farmers and ranchers pay property tax on land value that is set much lower than developed land. For example, 10 acres of irrigated farmland near Kuna is valued at $8,200. Nearby, the one acre of land upon which a home sits is valued at $65,500. In 2015, the exempt value of the agricultural land in Ada County was $1 billion.
While more tax-exempt properties are appearing, agricultural land is disappearing, with development bringing higher-value property to the tax rolls. In 2000, one-third of Ada County, 219,822 acres, received agricultural land exemptions. By 2015, there were 34,553 fewer acres receiving agricultural exemptions, a 16 percent decrease.