In The News › N.O. Homeowners Worry About Taxes

Jul 10, 2007

Source: Forbes.com

N.O. Homeowners Worry About Taxes

New Orleans Homeowners Worry About Taxes – By MICHAEL KUNZELMAN

Ben Maygarden is only half-joking when he wonders whether he should wear a
bulletproof vest to City Hall, where he works for one of the city’s seven tax
assessors.

New Orleans is wrapping up a mandatory, citywide reassessment of
property values for the first time since Hurricane Katrina damaged or
destroyed thousands of homes and businesses.

The reassessment could lead to big property tax increases for
some homeowners at a time when many already are being hit
with soaring insurance premiums in Katrina’s aftermath.

“People are going to be upset,” said Maygarden, chief deputy to
Assessor Nancy Marshall. “We joke about needing bulletproof vests,
but it’s not entirely a joke.”

Some fear the results could pit neighborhood against neighborhood,
as well as discourage people from moving to New Orleans and buying
homes at a time when the city desperately wants to rebuild its
population.

Assessing property values was a notoriously haphazard process in
New Orleans well before Katrina struck. But the August 2005 storm
cast an even brighter light on inequities in the system.

For years, critics have complained that the seven elected assessors
are prone to undervalue homes to appease their constituents, while
other homeowners -particularly new buyers -are forced to shoulder
an unfair piece of the tax burden.

Last November, voters approved a state constitutional amendment
that calls for consolidating the seven assessors’ offices. A single
citywide assessor will be elected in 2010, after the assessors’ current
terms expire.

Also last year, seven reform-minded candidates challenged the
incumbent assessors with a pledge to quit if elected. Nancy Marshall,
a resident of Uptown, a mostly comfortable section of the city that
escaped the worst of Katrina, was the only candidate on the “I Quit”
ticket to win.

Instead of quitting, she has set her sights on cutting politics out of the
process and conducting honest assessments based on the fair-market
value of property.

The results may stun the homeowners who elected her. Many will see
their assessments more than double or triple after Marshall’s deputies
finish their work in the Uptown neighborhood, Maygarden said.

A 4,480-square-foot home in a well-to-do part of Uptown recently sold
for $965,000 even though its assessed value has been $409,000 since
1999. The home’s former owners were paying about $6,000 in annual
property taxes.

The City Council, school board and other government entities that
collect property taxes could ease the blow by lowering the tax rates.
But that is an iffy proposition in a city that has teetered on the brink of
bankruptcy since Katrina.

Because of the damage wrought by the storm and the exodus of close
to half the city’s 450,000 residents, property tax revenue was projected
to fall from $80.1 million in 2004 to $68.2 million this fiscal year. The
city’s current $773 million budget relies heavily on disaster-relief loans
and grants.

Other assessors say they are committed to fairly reassessing property
values elsewhere around the city. But it is going to be a difficult job.

In the devastated, poverty-stricken Lower Ninth Ward, thousands of
homeowners have yet to return, and many homes are still under
construction and won’t be completed until after the reassessments are
due.

“There’s too much property that’s sitting out there gutted and idle or is
just a vacant lot,” said assessor Erroll Williams, whose district includes
the Lower Ninth. “It’s an uneasy feeling for an assessor. You try to
cover as much ground as possible, but you still know there’s a lot out
there that you’re missing.”

In 2005, the Louisiana Tax Commission found that the city’s residential
properties were under-assessed by an average of 25 percent. And a
May 2005 study by the nonprofit Bureau of Governmental Research
concluded that New Orleans properties of similar value bear drastically
different tax burdens, with many people paying little or no property
taxes.

The bureau estimated that chronic under-assessments and overly
generous tax exemptions were costing the city $172 million annually.

“I’ve always found it rather inexplicable,” said Janet Howard, bureau
president. “It just impoverishes the city.”

Marshall said newcomers to New Orleans have shouldered a
disproportionate share of the tax burden because their assessments
were based on sale prices. Owners of property that hadn’t changed
hands in years were less likely to be assessed at fair-market value.

“We’re trying to attract people back to the city, but it’s really an
incredible burden,” she said.

The new assessments are due Aug. 1, and property tax bills are
mailed out in December.

Marshall said property taxes will drop for many if everybody is fairly
assessed. But some homeowners are preparing for bad news.

“Everyone is just kind of waiting for the hammer to drop,” said Shelley
Landrieu, executive director of the Garden District Association, which
represents homeowners in a neighborhood that escaped the worst of
Katrina’s wrath.

City Council member Shelley Midura, whose district overlaps with
Marshall’s, worries that her constituents will pay a steep price if
Marshall “does it right” while other assessors “keep to their old ways.”

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Jul 10, 2007

Source: Forbes.com

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