Possessory Interest
Possessory Interest (PI) falls into two categories:
- Improvements on land owned by public entities
- Real property owned by a local government outside its jurisdiction (Section 11)
Real property owned by a local government (such as a county, city, or special district) and located outside its boundaries is considered PI. In general, land owned by a local government and located outside its boundaries is taxable if the land was taxable when acquired, and improvements owned by a local government and located outside its boundaries are taxable if the improvements were taxable when acquired or were constructed to replace improvements that were taxable when acquired.
The private possession of PI property is taxable if the possessor meets these two conditions:
- Physically occupies or holds either the right to physically occupy or the claim to the right to physically occupy the subject real property.
- Occupation is independent, durable, exclusive, and confers a private benefit upon the possessor.
Aumentum valuation determines the value of PIs. PI properties are:
- Valued as real property
- Treated as unsecured for billing and supplemental purposes. All supplementals associated with possessory interest accounts are unsecured
Class Codes P01 and P02 are used for PI.
| Short Descr | Descr | Display Order | Roll Type | Class Type | Class Category | Class Sub Category | Tax Type | Functional Calendar Type |
|---|---|---|---|---|---|---|---|---|
| P01 | P01-PI-Hydrocarbon Possessory Interest | 250 | PossInt | Unsecured | Possessory | Hydrocarbons | LocalReal | Real |
| P02 | P02-PI-Other Possessory Interest | 251 | PossInt | Unsecured | Possessory | Other | LocalReal | Real |
NOTE: During Implementation, the particular jurisdiction is allowed to create additional PI class codes that also follow the same rules for the two existing class codes by identifying the Roll Type of either:
- Possessory Interest (100404 PossInt) or
- ICPipeline (1104008 ICPipleline)
IMPORTANT: It is imperative that any ICPipeline (Intercounty Pipeline) class codes are created with a tax type ofInterPipe; the BOE-801 report separates the ICPipeline value based on the tax type. When revenue objects are created that represent an Intercounty Pipeline account, they must use a class code pointing to the Intercounty Pipeline tax type.
When a new PI revenue object is created, it is created with an object subtype of Possessory Interest. A Possessory Interest Base Parcel modifier has been created for PI accounts and is available on the Maintain Revenue Object Modifier screen (Asmt Admin > Modifier Maintenance > Modifier Search > Maintain Revenue Object Modifier) for the purpose of identifying PI revenue object accounts. For Section 11 properties, should the property be sold to a non-government entity, the base revenue object becomes the active revenue object and the PI revenue object is inactivated. A Section 11 modifier is also available to identify Section 11 properties.
Once a PI account is created, the account is transferred to the lessee within the standard Records module transfer (Records > Revenue Object Maintenance > Maintain Revenue Objects > [T for Transfer]) so that the necessary supplemental event is generated.
The appraisal of the PI account occurs within the Valuation module and the final values are treated as market value. The value is routed to Assessment Administration (AA). AA establishes the necessary supplementals for the PI based on the transfer date (event date) and values established within Valuation. Once the PI has reached AA, a workflow is generated workflow processing for enrollment of value review and processing. The workflow is available via the Workflow icon on the sidebar of any screen, which navigates to My Worklist, from which you can select the PossessoryInterest workflow for processing.
All taxable possessory interest receives a base year value. If in existence on March 1, 1975, the base year value (BV in Aumentum) is the market value as of that date. If after March 1, 1975, the BV is the market value on the date of acquisition. The BV for taxable improvements on tax-exempt land completed after March 1, 1975 is the market value of the newly constructed improvements on the date of completion. The BV of PI assessments is factored annually as are other real property values.