THE QUESTIONS SHOULD ASK QDIA'S IN CALIFORNIA BY BRAD RICHDALE

I think the younger and more politically ambitious the governor or mayor, the more onerous property taxation will be. Here in Looneyville, otherwise known as California, taxation is just crazy and there are a lot of angry people just like you and I. It’s the same everywhere, isn’t it?  

This is what you need to remember more than anything else if you go to ask for a lower valuation: getting market prices and other similar properties will impress an assessor. Especially if you correlate costs for the land, the structure, the front footage value and even pictures of similar properties will give you evidence that your property is overvalued.

The more you prepare the better off you are: know the rules for the re-valuation; ask the staff in the assessor’s office kindly and be needy when you first ask for help; get the state’s book on property tax laws; and try to find a great M.A.I. in your area if you own a lot of real estate. In places where I kicked assessors like cans, I knew the values better than they did and they knew it. I have this weird “Rain Man” quality. I remember numbers and facts that involve numbers and it would freak assessors out because I could list recent sales by memory, price and date. Heck, it freaked me out...and it still does.

Remember this above all else, market values will be volatile as will the stability of cities. With volatile market conditions and events, the first half of a valuation could be blown all to hell if the revaluation is in a major city and then half way through, there is a 12-day riot. 

Don’t be afraid of an assessor, especially if you are a senior. If you are kind and make a great first impression, they are usually very helpful. I’ve had assessors admit mechanical errors within 10 minutes of meeting and going over a property, especially when I walked in with blue prints and a humble smile.

They are paid by you and no matter how a person is in the assessor’s office acts; you can always go to the mayor’s office. If you are a senior or tax payer, fully describe what happened. It’s also wise at the mayor’s office to assert that you are very active politically and compliment the mayor if you like what he or she has done. 

Can I guarantee you will get every bill reduced on every property you own or investigate? No. But by now you understand that it is a giant mess that no one has ever really exposed. It’s a flawed system that I bet will become more confusing and onerous. 

Don’t be afraid. You do have the right to know how you are taxed. Be humble and if that doesn’t work, go to the mayor’s office and impress them how much you need their help. Remember when working with government employees, honey works better than vinegar.

If you have questions, call our office. I’m training everyone on property taxation so we can hopefully answer questions.


                                  written by Brad Richdale copyright 2010 all rights reserved
                                                blog by Bradford Richdale

                                                    

THE INSIDE SCOOP ON North Carolina Property Taxes BRAD RICHDALE SCAM

We said to one another, “The worst that can happen is we can get our assess kicked.”

The appeal was in Raleigh, North Carolina and the prevailing law at the time for property tax valuation was that the “market approach” was far and away the most important factor in arriving at values for property taxation. The cost and income approach were considered but really not used.

To be honest with you, to me, the real true market value is the still the best way to value property for tax purposes. But there are times you go to war just because you can and someone begs you and draws you in and like a fool, you make a mistake to engage.

Here were the facts of the case. For years, developers in North and South Carolina built and sold timesharing by the week, tenth and quarter share ownership plans on the East coast. Many developers were business acquaintances and a lot of them were very big clients.

So the assessor re-values the property (in an incredibly beautiful, yet hurricane prone area of North Carolina) by the precise market value of the quarter share, tenth share or weekly fractional ownership price paid in a fair market transaction. My friend was a very good trial lawyer and we knew we had a five percent chance of winning and our semblance of extremely logical BS that had worked in other similar landmark cases was our strategy for this uphill climb. 

A case at this level is serious and the implications were far reaching. I told clients after the initial meeting with the county assessor, “This guy is good and has a political agenda. I think we will get clobbered.” The local mayor cares less about second homeowners because they don’t vote but he could increase taxation by law. He was right and had to cut through us like a hot knife through butter. Man, was this guy connected.

After the county’s opening statement and the reaction on the faces of the board, I knew we were screwed. The case was decided before we ever stepped into the room. They even discussed when they would disallow our evidence – we got trounced. After all, it was North Carolina, and why be fair when it comes to tourists and second home taxation when you don’t need to be?

The timesharing taxation argument that had worked in South Carolina on two occasions didn’t work because the law was clearly on their side and the case was clearly decided long before we ever entered the courtroom. The files were flagged with post it notes and each member of the board had their files marked in the same places. I have had my ass kicked several times in my life, but this was like getting your ass kicked while you wore a nicely starched white shirt; it was formal and more impactful.

Am I an enemy of property taxation? Heck no! You can’t pay for the cops to come arrest your second cousin while he beats your wife unless you have a property tax system. What I’m against is spending levels remaining the same or slightly lower than before, the collapse of the financial system and $472 rolling stop sign tickets.

I can afford a $472 ticket. I’m very angry about it and on every show I’m on, it will come up. I’m angry about the lady that makes $472 a week getting the ticket. For her, I’m exceptionally pissed off. The $472 ticket is just a start. Property taxes will be the home of political shenanigans. Mayors don’t like firing firemen so prepare to get hammered if you own property.  

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Property Tax Reduction Part IN THE STATE OF TEXAS BY BRAD RICHDALE

can build an argument with similar properties as proof in a prepared presentation, you can informally argue the value will be very likely to agree if your evidence is conclusive.

If you want to hire a professional, hire an M.A.I. who is an appraiser that is of the most senior designation for qualifications. An assessor will tend to have respect for someone with professional credentials attending with you or preparing the case with you. I don’t suggest bringing an attorney to an informal meeting with an assessor because they want to dominate and assessors act more aggressively. I’ve witnessed it all over the country. 

But if you are an attorney, I suggest getting your M.A.I. or hiring a local M.A.I. and start the representation in property taxation. It’s a great model for legal income, especially on a contingency fee basis and price volatility will keep it that way.

I do think that knowing what the state’s laws are for property tax valuations is critically important to be successful in arguing for reduced value and for protecting your future. I expect that some states will change laws and start to focus on the cost and income approach to value to confuse the matter even more. I give this a 100 percent chance of happening; it’s just a matter of when. Mayors don’t like firing policemen and governors like building bridges, especially when they collapse.

Right now it costs way more to replace homes and buildings than what they are worth and incomes on rental real estate are plummeting. If states legislate to weigh equally with market, the cost and income approach to value property for taxation will be an even bigger mess and easier to win cases in my opinion (but even more confusing to folks that haven’t read this).  

Knowing my faith in government, I suspect there will be more new property tax legislation than ever before that will increase the confusion for the taxpayer and increase revenues.

Semi-formal hearings in some states happen annually and in all states happen during re-valuations. If you meet with your assessor during the designated period during a re-valuation and he says no to a lower value, then the next step is to go to the local Board of Equalization and Review. The title might not be exactly the same, but the board may be idiots or officials that really know their stuff. It’s great to see them at work before your hearing, which is open to the public.

For instance, if you are in Pooler, Georgia where Boss Hog lives, he may just deny you for no reason and his kangaroo court could see if you are willing to go the state board, it happens. Or you have a great case and the board says yes to your reduced value and you save $13,000. We may see a period where assessors are like insurance companies and will deny claims and make everyone either go to the next level or go away.

Here’s a rule of thumb, the larger the city and the more spending scheduled, the harder the fight. One nice thing about disputing property tax values is that governments are adroit at caring for themselves so the appeals and offices are usually in nice buildings.

The state level of appeal is an entirely different ball game and the case runs much like a formal court case. 

A great litigator who I knew years ago and I took on a lousy case that we both thought might hammer the county on behalf of resort developers and owners.


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Boston, Austin, Philadelphia, Los Angeles and New York City Property Tax LOOPHOLES By Brad Richdale

arguing lower property values due to changing market conditions.

The “exploding” sub prime-type loans will keep resetting and blowing up until 2013 so I’m sure there will be even more bank owned real estate flooding the market. This means that maybe other than a few calm places, all kinds of never before seen issues could screw up market values in hours or minutes. 

Market value is the value most states say they rely upon for valuation for the purposes of taxation. Again, I believe market values are going to be more volatile than ever before in United States. History and the volatility will continue for years to come. Volatility makes arguing that market values will become lower much easier.

If we have an 8.4 earthquake in Los Angeles and skyscrapers fall, the real estate market will be like burned toast in 10 minutes. Values could fall 80 percent in hours and never come back. 

My point again is market price, market price, market price! Every state has a book you can purchase that states its laws on real estate taxation. Usually the State Department of Revenue or similar institution will tell you how to order yours. 

I used to keep it to myself that I knew the state’s statutes on property taxation until the right time, but I always knew the state’s law on property tax valuation before I stepped foot into the assessor’s office. The paperback book that describes the statutes or laws for property tax re-valuation is not that expensive and the assessors usually know the laws. If you want to challenge them, you need to know their state’s laws so call your state’s department of revenue and ask how to get the book or go on line and search for it.

Now the Fun Part Begins

Let’s say that you did the “I’m dumb and need help” thing and met with the assessor to understand your property card and how they came to your value and you believe the value to be fair. If this happens, be grateful but I doubt the value will be fair.  Once again, we have too many constantly changing market factors that could affect everyone in this country quickly.

Even if you think you got a fair deal, you need to pull property cards of others in your neighborhood.  It’s the same process if you own commercial, industrial or any type of real estate.

Remember when companies or assessors re-value counties, they do so with computer programs. I’ve seen values double with no basis in revaluations. I had a County Assessor who had all the professional credentials imaginable see the results and say, “I guess we need to fix them.” You think? It was fall on the ground funny when I’d play the dumb moron role and hold their re-valuation manual and the property tax bill and show them the mistake that violated the manual.

I would often build a case that wasn’t simple by looking at 15 similar properties and try to see a trend in the valuations and would see the properties physically. I would always find mistakes that were easy to argue in almost 100 percent of the counties and municipalities I visited.

There are some hard-nosed, very bright assessors in big cities that are very full of themselves and they hate taxpayers. I won’t name names, but I will say this. Categorically, people are getting more pissed off than ever before about property taxes and hard-nosed arrogant assessors and angry tax payers are about to collide. I don’t want to be around when they do.

If you take the time to analyze how 15 properties around or similar to yours are valued, you will either say these guys did a good job or these guys are morons. Rarely did I find that they did a fair job, either D minus or B plus or better.

If you analyze 15 properties and their tax values, you will see some clues and you may even find a person who helps you enlist their help to get your argument prepared. I had it happen all the time when I was kind and gracious, especially with people that worked in the assessor’s office but wasn’t an assessor.

If you believe in this analysis of 15 similar properties that you have been taken advantage of, start to build your case and take copious notes as you do. If you organize a presentation of the facts sequentially and

                                                       written by Bradford Richdale 

                                         copyright Brad Richdale TM 2010 all rights reserved

GETTING YOUR PROPERTY TAXES REDUCED IN MINUTES BY BRAD RICHDALE

Chapter VII

The Importance of Your Property Records

In the last chapter I mentioned that a file exists on every property in a municipality. That property card is the foundation of your value and taxation – all the reasons for your property value are on the card or it can lead you to them.

On your property tax card or page, you will find the acreage or size of lot that you supposedly own. I mentioned this last chapter but can’t stress it enough. Go to the assessor’s office, all while being kind, curious, considerate and gracious and ask for an assessor to speak to you about your property. Have them explain the card and how they got to the value, especially when it’s a new valuation. At this time, you may discover that you are being assessed for more property than you own. It’s my experience that you have a one in five chance of finding a mistake on how much property you own. These mistakes cause multiple-year refunds.

In a government office, you will get more with honey than vinegar and once you understand your property card, you are very dangerous. Sometimes if you are female, you get the right assessor and he’s willing to let you in on some of the mistakes he sees that get made often. Shut up and listen to Romeo. If you are a guy and have a female assessor, ride the same wave, nice flirting works.

If there has been a re-valuation, the manual will explain a sample property card and what each figure or designation means, making it easy to figure it out on your own. However if you can find an assessor who likes to talk, they will eventually hang themselves with some simple fact or mistake that has catastrophic effects on property values that may be in your favor.

But if you can act oblivious and somewhat needy, get someone in the assessor’s office to explain how the system works to you in plain language. At the age of 52, I have perfected this and it is the basis of most of my successes. Then again acting stupid is easy for me and comes naturally.

How They Come Up With Property Values

So let me give you a frequent scenario and why challenging property tax values may be the most fun business of 2010 and beyond in the United States.

Here we go market value…Zippidy, Zippidy do-da-day, “What’s your house worth?” What’s funny is what your house worth today? Will it be worth the same in ten weeks or three weeks?

You see, there are three accepted courses to the valuation of real estate, market, income and cost, but market value is the usual winner and how I got my ass kicked in a big case (more on that later).

We are not talking rocket science here. Most states will acknowledge that they consider income and cost (which is mostly BS) and they most commonly rely on market value. We have seen a global currency collapse so here’s my question again, “What’s market value?”

I think the real estate market isn’t even close to the bottom. 

No one has factored in what civil unrest will do to property values in large cities. No one has factored in what is next for the dollar as it loses reserve currency status and how different your life will be. 

Worst of all, no one has factored in war, which has become more and more of a reality with each passing day. At the very moment I’m writing this, there is no war in Iran but there will be, and China and Russia will jump in and voilà, World War III.

By the way, I don’t think that 12/21/12 is the last day of the world’s existence, but the Biblical prophecies are coming true. Whether you are a Jew, Christian, Atheist, Agnostic or whatever…the Bible, Old and New Testament, are occurring on cue, event by event.

No one has factored in what the next big earthquake will do to California’s real estate. Get out of Los Angeles and the Valley when this quake occurs because you will know that God’s judgment has been levied for our sins. I’m praying for my friends that live in that area that God will protect them no matter what.

I’ve brought all these elements up to make sure you realize more than anything that there will be very few stable, consistent real estate markets. I also believe that market volatility is beginning and not even close to stabilizing. All of this instability due to wild market conditions leads right into your hands in

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Brad Richdale for: Brad Richdale Business Strategies for LEGITIMATE TAX WRITE OFFS AS THEY APPLY TO QDIA BY BRAD RICHDALE

recognizes the trade-off between capital appreciation and capital preservation.

Management of the fund is based on the employee’s age and/or target retirement date. A QDIA must be a mutual fund managed by either an investment manager, plan sponsor, plan trustee or a committee made up of employees of the plan sponsor or an investment company.

There are four types of QDIAs:

1.  A product with a mix of investments that takes into account the individual’s age, life expectancy or retirement date. Investment allocations must change over time to become more conservative with increasing age. Investments, risk preferences or other factors of an individual participant need not to be considered. An example of this is an age-based life cycle or targeted retirement-date fund.

2.  A product with a mix of investments that has the characteristics of a group of employees as a whole, rather than each individual. Individual participant ages, risk preferences or investments need not to be considered. Plan fiduciaries must consider participant demographics, such as age of the participant population. An example of this is a balanced fund or risk-based lifestyle fund.

3.  An investment service that allocates contributors among existing plan options to provide an asset mix that takes into account the person’s age or retirement date and changes over time to become more conservative as the person gets older. The decisions are not required to take into account risk preferences, investments or other factors of an individual participant. An example of this is a professionally-managed account.

4.  Designed to be only a temporary solution, a capital preservation product for the first 120 days of participation after the first elective contribution is made in an eligible automatic contribution management. Plan sponsors hoping to simplify administration if workers opt-out of the plan before incurring an additional tax fee. By the end of the 120-day period, the individual’s account must be transferred to a long-term QDIA in order to continue the fiduciary safe harbor. This is also known as a short-term QDIA.

Technically, the short-term QDIA is defined as an investment that seeks to maintain the dollar value that is equal to the amount invested, provides a reasonable rate of return, and is offered by a state or federally regulated financial institution.

The long-term QDIAs are target maturity funds or models, balanced funds or models (including risk-based lifestyle funds) and managed accounts.

The grandfathered QDIA is a stable value investment. The regulation defines it generally as a product “designed to guarantee principal and a rate of return generally consistent with that earned on intermediate investment grade bonds.”

To gain a better understanding of the types of QDIAs, here are examples of three investments that qualify:

Lifecycle/target date option: This is an investment fund, model portfolio, or product that is diversified to minimize the risk of massive losses and is designed to provide varying degrees of long-term appreciation and capital preservation through a mix of equity and fixed income exposure based on the employee’s age, life expectancy, or target retirement date.

Lifecycle options are constantly monitored and managed to get the best retirement income and help to offset the opportunity for longevity and inflation. Each of these options increasingly becomes more conservative as it nears closer to the target retirement year.

Balanced option: This is an investment fund, model portfolio, or product that is a diversified mix of investments designed to provide long-term appreciation and capital preservation based on the target level risk for the employees as a whole, rather than each individual.

Different from lifecycle options, balanced options aren’t automatically reallocated to become more conservative over time. A fiduciary must review the investment from time to time to make sure the target level of risk is appropriate for the employees taking advantage of the plan.

Managed account: This is an investment service where the investment manager allocates and manages the assets of the individual’s portfolio. Like lifecycle options, managed accounts are diversified to minimize the risk of massive losses and also seek varying degrees of long-term appreciation and capital preservation through a mix of equity and fixed income securities. This account is based on the employee’s age, life expectancy or target retirement date. This service might also taking into consideration the employee’s financial situation, goals and risk preferences.

One major difference between lifecycle options and managed accounts is that the latter usually use a plan’s existing investment lineup. Lifecycle options are an established portfolio of funds.

In order for a person to qualify for a QDIA safe harbor protection, these conditions must be satisfied:

·      The individual and their beneficiaries must have had the opportunity to direct the investment of the assets in their accounts, but did not do so.

·      The individual’s assets must be invested in a QDIA, as defined by the Department of Labor.

·      The individual and their beneficiaries must have the opportunity to direct investments out of a QDIA as often as other plan investments, but not less often than once per quarter.

Once the decision has been made that a QDIA is a wise decision for your personal situation, it’s time to evaluate your options as to which step to take next. While there are three types of investments appropriate as QDIAs, the regulation doesn’t require

                                                     written by Bradford Richdale 

                                        copyright Brad Richdale TM 2010 all rights reserved

Navigating Through a FINRA Claims by Brad Richdale

Arbitration can provide many benefits to investors if implemented correctly and with much planning. Weigh the advantages and disadvantages of taking your case to arbitration to decide whether it is best for your claim.

Section II – Chapter IV

The Greatest Corporate Screw Up of All Time!

How You Can Rip Your Employer’s Heart Out and Recover Retirement Account Losses

There once was an era where many corporations in America all had pension plans as part of their employees’ retirement packages. But by the 1980s and early 1990s, these pension plans were already overfunded and companies found that most of their assets lied within the hands of their employees.

As a result, the retirement plans started to fall through and companies had to enter the lion’s den of angry shareholders, global competition and trade deficits when the bottom line didn’t grow as fast as these large corporations expected it would. They could no longer keep up with the payments into the pension accounts and needed to make a change. To hold onto their employees and keep the idea of pension accounts alive to avoid going into bankruptcy, these companies needed to put the burden on their employees to save for their retirement accounts. As long as this transition was done under an ethical manner, these companies saw nothing wrong with this idea.

Today, these pension plans are now known as 401k, SEP and IRA accounts.

In 2006, Congress passed the Pension Protection Act (PPA), a piece of legislation that promoted the flexibility in retirement plan programs. The PPA worked along the lines of the Employee Retirement Income Security Act of 1974 (ERISA) to allow for employers to obtain fiduciary protection for investments without automatic enrollment plans. With this plan, Congress aimed to increase this plan among companies across the nation believing that these arrangements would encourage a high potential for boosting retirement readiness among workers in America.

The Department of Labor (DOL) finalized the rules on how fiduciary protection could still exist for amounts contributed to the retirement plan while no investment direction was received directly from the employees. Finally, a program was created with a number of requirements and strict guidelines put into place about how these accounts should be set up, including the use of a qualified default investment alternative (QDIA). In other words, the PPA created the QDIA concept to limit fiduciary liability for plan losses by establishing a safe harbor for selecting an investment for participants who fail to choose their own.

This new retirement plan allowed for the fiduciary to select a fund for amounts not directed by employees to other plan options and be relieved from any losses that might be a direct result from the investment.

Under the ERISA guidelines, a system of checks and balances had to take place, especially as it pertained to diligence and suitability. It was the responsibility of corporations to adhere to and follow these guidelines. Otherwise, it would mean outright negligence if they didn’t comply.

Big corporations came to the notion that they could save time and money by delegating this work out to the major mutual fund companies. They also believed that the mutual fund companies would not let them down and they would keep them in compliance under the guidelines of QDIA and the ERISA mandates.

The Department of Labor defines QDIA as an investment fund or model portfolio that is designed to provide long-term appreciation and capital preservation through a mix of equity and fixed income exposures. The DOL generally requires a QDIA to include a mix of stocks and bonds that 


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