Utility company property valuation

The Department assesses the property of approximately 400 interstate and intercounty companies in the airline, electric, gas, pipeline, private railcar, railroad, and telephone industries. The total assessed property value of approximately $24 billion is apportioned to the 39 counties and 1,800+ taxing districts. The county assessors levy the property taxes for billing and collection by the county treasurers.

Documents and links

 

Frequently asked questions

How accurate are apportioned utility values? How accurate are apportioned utility values?

Very, and improving! In Washington, the Department uses a first in the nation, IAAO award winning GIS based apportionment system for distributing utility values.  Our processes have come a long way from sending paper tax code area maps to companies and having them make an educated guess of where their assets are.

Now, companies report to us an Excel document containing the location and historical cost of their assets. The locations can be provided in latitude/longitude, street address, street intersection, section/township/range, county parcel ID, TCO number, or airport code. Some companies have tens of thousands of assets reported in these documents, most with unique locations. If any errors are detected or our system can’t find a location, the report is returned to the taxpayer with the errors identified for them to fix. Since they have the best records available regarding asset locations, these errors are usually fixed promptly and accurately.

Once all companies have reported their asset cost and locations, we then take a current GIS map of all tax code areas in the state and overlay each company’s reported assets. Our software, in a matter of hours, is able to parse out, by company, the total asset cost in every tax code area in the state. It is then able to be transferred into our administrative software for review and manual correction.
We also have companies submit GIS files of their assets when available, to verify lineal mileage of railroads, power lines, pipelines, natural gas systems, and fiber optic cables down to the fraction of a foot in every single tax code area! This precision allows us to be certain that we are providing all Washington taxing districts and taxpayers with accurately apportioned utility values, ensuring fairness for all parties.

RCW 84.12.350, 84.12.360

Are utility values ready yet? When will I get my utility values?

The Department is always working to get utility values into the hands of county staff as soon as possible. In the past, we have been getting the first certifications completed in late October/early November, but continue to make advances in our processes hoping to move this earlier. We understand that levies need to be calculated accurately and rolls need to be closed. However, due to the complexity of the apportionment work to be done, the limited staff resources available, and the volume of data that must be processed by our proprietary software, sometimes delays are inevitable.

There are several pieces of information that must be finalized before we can start apportioning and certifying values. A hiccup in any of these steps could potentially delay certification:

Companies must file valid and accurate apportionment reports into the Department’s GIS system (June 1st) Appraisers and taxpayers must resolve issues with tentative utility values before final values are determined (August 20th) Counties must file all annexations and other taxing district changes to Department cartographers timely (August 31st) GIS Cartographers must update and map all changes to taxing districts (Early September) Appraisers transfer GIS based asset data to our administrative software and must manually edit apportioned values that fall below minimum thresholds. (Several weeks)


RCW 84.12.370

As mentioned, we are also making constant improvements to our processes and software to save time and improve accuracy. Some of these changes include:

Implementing taxpayer uploaded asset reporting and error correction when previously Department appraisers would perform this task.

Creating a private railcar apportionment algorithm instead of performing calculations manually. Requiring counties to report annexations in GIS format. Creating functions in our administrative software to automatically identify and correct values that fall below minimum thresholds for assessment. Integrating the Department’s Utility and Ratio software to ensure fast and accurate confirmation of a county’s final certified ratios.
  • Appraisers and management must review apportioned values for errors and large value swings. 
  • A county must have finalized and certified both their personal and real property ratios.
Are centrally assessed companies subject to leasehold excise tax?

If a centrally assessed company is leasing publicly owned property, then they are not subject to leasehold excise tax. RCW 82.29A.130 states:
“The following leasehold interests are exempt from taxes imposed pursuant to RCW 82.29A.030 and 82.29A.040:
(1)    All leasehold interests constituting a part of the operating properties of any public utility which is assessed and taxed as a public utility pursuant to chapter 84.12 RCW.”

Centrally assessed companies report these possessory leases annually to the Department. The appraiser values the leasehold interest, and then apportions that value to the tax code area where the property is located. The net effect is that while the company does not pay LET, they do a pay property tax on the leasehold interest. A simple example would be an airline leasing a check in counter at SeaTac Airport, a public entity. The airline is exempt from LET, but the market value of the lease is included in their assessment that is apportioned to King County.

 

How are private railcar values allocated and apportioned by the Department?

Private railcars are unique in that they are fully mobile personal property, they are centrally assessed, and they are in constant movement throughout the state and the rest of the country. Each railcar company we assess has one or more unique ‘car marks’ that designate the railcar’s company of ownership. Railroad companies like BNSF and UP use these car marks to track how many cars they haul and for how many miles. We use these tracked miles in our assessments.

To determine a company’s Washington assessed value, we first calculate the value of the private car company’s entire fleet. We use a replacement cost new, less depreciation (RCNLD) value. We then divide the total fleet miles travelled in Washington by the total fleet miles travelled in the country to come up with an allocation percentage. The fleet value is multiplied by this percentage to come up with the Washington assessed value.

Example: $250,000 fleet, 100 miles in Washington, 1000 miles total

100/1000 = 10% X $250,000 = $25,000 Washington assessed value. 

Once we have all the railcar values of all companies determined, we must assign each county a portion of this total value. To determine how much each county receives, we take the mileage of main railroad track in that county and divide it by the mileage of main railroad track throughout the state to arrive at an apportionment percentage. This percentage is then multiplied by the total value of all private car companies in the state to determine the county’s railcar value to be assigned.

Example: 50 miles in Pierce County, 1000 miles total in the state, $1 million total Washington railcar assessed value

50/1000 = 5% X $1,000,000 = $50,000 railcar value assigned to Pierce County

Because cars are moving constantly, it is impossible to apportion an individual car or company to any given tax code area, let alone county. In the interest of efficiency and for ease of administration, the Department uses a simple algorithm to assign which companies are assessed in each county. This method creates the fewest amount of issued bills for companies and counties alike. We start with the highest value railcar company and assign it to the county with the lowest value assigned. When a county’s apportioned value is used up, the company has their balance moved on to the next county, and so on. Once that rail car company’s value is used up, the next company fills in the balance of assigned value in that county, and so on.  Using this algorithm allows us to apportion all 200 railcar companies to 31 counties in just a few seconds. The values are then ready for certification to counties.

Example: Company A = $20,000 value, Company B = $10,000 value

County X = $8,000 apportioned value, County Y = $10,000, County Z= $12,000

Company A is apportioned $8000 to County X, $10,000 to County Y, and $2000 to County Z. Company B is then apportioned to the remaining $10,000 in County Z.

Of note, a few companies do know where their cars go, or request a proportional distribution across the state. The Department accommodates their requests by ‘pre-assigning’ these companies to certain counties as long as we determine it to be reasonable and fair. This does not affect the total amount of railcar value each county receives.

When each company’s values are certified, all are multiplied by the respective counties’ personal property ratio to ensure uniformity. We provide a certification report to each county, showing which companies are assessed how much, as well as a billing address. We also provide the county with a measurement and percentage of railroad main track miles in their county, broken down by each tax code area as a recommended apportionment solution. The county assessor is not required to use these percentages, but it does provide a reasonable framework.

The Department also strongly recommends not apportioning any railcar value to tribal or federal exempt tax code areas (8888 or 9999). Because of the apportionment algorithm and the mobile nature of the property, assigning value to be exempted on these track miles may unfairly reduce the assessment for companies in that county relative to similarly valued railcar companies in other counties. The Assessor may have to alter the tax code area apportionment percentages to adjust for this.

RCW 84.16.050, 84.16.110, 84.16.120, 84.16.130

A developer of a proposed solar project is asking whether their property will be assessed by the county locally or by the state centrally. What should we tell the developer? Who should be the assessor, the county or the state?

The Department is charged with determining whether a whether a property should be assessed locally by the county assessor or centrally by the Department, RCW 84.12.220. In the determination process there are three basic questions that the Department asks and answers about the property.

1. Is the property owned, managed, used, or controlled by a “Public Utility” company as defined in RCW 84.12.200. If “YES,” go on to number 2.  If “NO,” the property is assessed by the county.
a. "Airplane company".
b. "Electric light and power company"
c. "Gas company"
d. "Logging railroad company"
e. "Pipeline company"
f. "Railroad company"
g. "Telegraph company"
h. "Telephone company"

2. Does the company’s property operate as an economic unit that crosses county or state lines? If “YES,” go on to number 3.  If “NO,” the property is assessed by the county.

3. To be assessed, the company must have nexus with, or situs in, Washington.  A company has situs or nexus if it uses real or personal property located in Washington on a continuous or habitual basis (an issue with airplane companies.) If “YES,” the Department centrally assesses the property.  If “NO,” the property is assessed by the county.

If it is unclear whether a company or property qualifies for central assessment, the ambiguity should be resolved in favor of local assessment.

RCW 84.12.200, 84.12.220