In The News › Broader homestead exemption on ballot

Sep 21, 2006

Source: Times-Picayune

Broader homestead exemption on ballot

Broader homestead exemption on ballot
People still trying to repair homes could keep benefit
Thursday, September 21, 2006
By Ed Anderson
Capital bureau

CONSTITUTIONAL AMENDMENTS

This is part of a series looking at the 13 proposed changes to the state Constitution included on the Sept. 30 ballot.

AMENDMENT NO.8

To authorize the continuation of the homestead exemption and the special assessment level where the home has been destroyed or left uninhabitable

due to a declared disaster or emergency. Amends Article VII, Sections 18(G)(5) and 20(A)(10) of the state Constitution. (From Act 70 of the first special session of 2005.)

AMENDMENT NO.11

To extend the homestead exemption to property owned by a revocable trust, in addition to the existing application to property owned by an irrevocable trust. Amends Article VII, Section 20(A)(3) and (5) of the state Constitution. (From Act 852 of the 2006 regular session.)

Source: Louisana Legislature

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BATON ROUGE — A measure that will allow displaced homeowners to keep their property tax exemption for five years even if their homes have been destroyed by hurricanes, ice storms, tornadoes or other disasters is on the Sept. 30 ballot and assessors expect it to pass easily, despite opposition from a New Orleans-based issues group.

Shortly after Hurricanes Katrina and Rita destroyed more then 200,000 homes in 2005, Rep. John Alario, D-Westwego, persuaded the Legislature to approve a proposed change in the state Constitution allowing homeowners to keep the homestead exemption on their destroyed homes for five years, as long as they file annual affidavits with their assessors stating they intend to rebuild and reoccupy the home in that period.

Under existing constitutional provisions, a person must own and occupy a home to qualify for the exemption, which keeps the first $75,000 of a home’s value off the tax rolls.

Alario said the two hurricanes “brought attention to the problem” of homeowners being required to pay full property tax bills on homes they could not live in. He said his Constitutional Amendment No. 8 removes the requirement that a property owner must occupy the home after a disaster to keep the tax break.

The proposal would apply to any homeowner whose residence is destroyed by any disaster designated by the governor, not just those hurt by Katrina and Rita, said Jefferson Parish Assessor Lawrence Chehardy, a longtime proponent of the homestead exemption.

The measure also allows homeowners eligible to receive a special frozen assessment — the assessment level imposed when the homeowner turns 65 or a surviving spouse 55 or older or with minor children — to keep it for five years after a declared disaster. The homeowner with the special assessment must file an annual affidavit with the local assessor to qualify.

In either scenario, if the homeowner rebuilds at another site, he or she cannot receive the tax break on the old home, but can apply for it on the new home.

BGR is against it

The Bureau of Governmental Research, an issues-oriented research organization based in New Orleans, has come out against the measure, saying that while “assisting homeowners working to rebuild their homes is a worthy goal, the proposed amendment is not the solution” because the assessment freeze and tax exemption would “apply for too long a period of time.”

The bureau’s analysis said it would be “virtually impossible to determine whether a homeowner satisfied eligibility requirements” to qualify or maintain the tax breaks. BGR President Janet Howard said if Amendment 8 passes, the public bodies that rely on property taxes in New Orleans “would continue to experience reduced property tax income.”

Each homestead exemption costs tax-recipient bodies up to $1,300, Howard said.

“This will help people who are truly hurt by the storms last year to rebuild their homes and revitalize their neighborhoods,” Chehardy said, downplaying the BGR opposition.

Charlotte Bergeron, a staff attorney with the Public Affairs Research Council, a nonpartisan government watchdog agency that analyzed the amendments, said if the proposal does not pass, the homeowner would lose the homestead exemption and special assessment “for failing to satisfy the occupancy requirement (to qualify for the tax breaks) and be required to pay any additional property taxes.”

The PAR study points out that shortages of supplies and labor “have slowed rebuilding efforts and prevent homeowners from reoccupying their homes.”

Chehardy and Caddo Parish Assessor Charlie Henington Jr., both active in the Louisiana Assessors Association, said they think the measure will pass. Chehardy said he will sponsor radio and television ads to tell voters the measure is on the ballot Sept. 30 and urge passage.

Rebuilding costs

The Constitution now prohibits the special frozen assessment from being granted to homeowners whose homes increase in value by more than 25 percent because of construction or reconstruction, but Chehardy said that proviso would be superseded in the case of homes that have to be rebuilt in the wake of a governor-declared disaster.

He said it would be hard to rebuild a home at today’s construction costs without exceeding the 25 percent threshold.

The amendment is also backed by the Council for a Better Louisiana, another nonpartisan government watchdog agency. Council President Barry Erwin said the proposal does not expand the homestead exemption “but it does appropriately ensure that homeowners can take advantage of the exemption in the midst of extraordinary circumstances.”

Bergeron said in her analysis that some opponents argue that the measure “would give a windfall to some elderly homeowners by freezing assessments permanently without regard to any potential increase in the value of the rebuilt home.” Chehardy said that would be a rare case, “but the greater good” would be served.

An issue of trust

Another property tax measure on the ballot, Constitutional Amendment No. 11 sponsored by Rep. Warren Triche, D-Thibodaux, would treat homes placed in a revocable trust — a legal arrangement drafted by the homeowner in which he or she specifies who will receive the assets of the trust when the owner dies — on the same footing as homes placed an irrevocable trust.

Voters approved a constitutional amendment in 2004 authorizing the homestead exemption to be granted to homes placed in an irrevocable trust, and the Triche measures would extend the same exemption to homes placed in a revocable trust.

An irrevocable trust can be changed only by the person who sets it up with the permission of the beneficiaries; a revocable trust is one that can be canceled by the person who sets it up, giving that person access to the assets in the trust without the beneficiaries’ permission.

Chehardy said in either trust, the owner must still occupy the home to qualify for the homestead exemption.

BGR said it opposes the Triche amendment because it is an expansion of the homestead exemption. “The homestead exemption should be eliminated or applied restrictively on a needs basis,” Howard said. “Expanding coverage is a move in the wrong direction” and further depletes tax money available to public bodies.

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Ed Anderson can be reached at eanderson@timespicayune.com or (225) 342-5810.

Sep 21, 2006

Source: Times-Picayune

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