In The News › Numerous variables affect outcome of evaluations

Feb 28, 2010

Source: The Times-Picayune

Filed under: Jefferson Parish, Taxation & Assessments

Numerous variables affect outcome of evaluations

State, newspaper get different results

Sunday, February 28, 2010
By Mark Waller
The Times-Picayune

When the Louisiana Tax Commission reviewed Jefferson Parish’s 2008 property rolls, it found Assessor Lawrence Chehardy to be spot on.

The commission uses a tool called a ratio study to decide whether to order assessors to re-do their work. If an assessor’s median property values fall more than 10 percent under or over actual sales prices, it triggers the do-over.

In the New Orleans area, the commission found three parishes — St. Bernard, St. John the Baptist and St. Tammany — more than 10 percent under-assessed for 2008. But using a sample of about 500 sales in Jefferson Parish, the commission concluded that Chehardy’s median assessment exactly matched sales, giving Jefferson a rating of 100 percent accurate.

Applying the same measurement to a larger list The Times-Picayune gathered, including 1,123 real estate transactions filtered in a similar style as did the commission, the median came in at 82 percent of sales prices, outside the commission’s acceptable range of 90 to 110.

In its study, which not only included more properties but also focused on averages instead of medians, the newspaper found sales 14 percent higher than assessments.

Commission officials said real estate appreciation between the time of Chehardy’s assessments and the sales likely accounts for the differences.

The newspaper and the tax commission also differ in their approaches. The Times-Picayune used only addresses with standard homestead exemptions, for example. The commission includes commercial property as well as residential, and it conducts drive-by appraisals of properties in its sample, gathering more types of information about different types of property.

Perhaps most notably, the state regulators use sales from the same timeframe as the assessments, while the newspaper used only sales occurring after Chehardy had finished his work on the 2008 property roll.

Chehardy argued that The Times-Picayune’s method merely reflects changes in the market from the time of the assessment to the time of the sales.

“You can’t pass judgment on the accuracy of the assessments,” he said.

That point is the subject of some debate. While the commission applies the test Chehardy favors, some real estate professionals and government observers criticize using sales from the same period as the assessment itself.

“You’re giving me a test, and you’re telling me what the right answers are,” said Wade Ragas, a real estate consultant.

The Bureau of Governmental Research, a watchdog group, echoes the sentiment.

“The Tax Commission’s ratio studies do not always paint an accurate picture of assessor performance,” according to a recent BGR report on changing property-assessment practices in New Orleans. “The Tax Commission often includes assessments that have already been adjusted to the sale. This undermines the validity of the studies.”

Charles Abels, chief administrator of the tax commission, acknowledged that the key studies it uses to decide whether assessors must reevaluate their parishes have “built-in pros and cons.” But he said the commission uses several kinds of studies and spot checks throughout the four years between major reassessments, so it keeps track of assessors in multidimensional ways.

“Each study has its own weaknesses,” he said, “but all of them together make a good study.”

The commission makes another key calculation in its review of assessors — measuring the uniformity of assessments or the fairness factor. It calculates the difference between each property’s assessed value and the median assessment, totals the differences and divides the sum by the number of properties in the sample. A score more than 20 means assessments are too scattered.

The commission gave Jefferson a score of 7.28. In The Times-Picayune’s data, the score rose to 17.

The commission also filters out more transactions. It excludes any sale involving financial institutions because these sometimes involve foreclosures and might not be “arm’s length,” open-market exchanges. The newspaper filtered out sales with institutions as buyers, but it included institutions as sellers on the presumption that these transactions reflect banks and government housing agencies returning properties to commerce on the open market.

Excluding all sales involving financial institutions, as the commission does, cuts the newspaper’s sample size from 1,312 properties to 1,123. And it changes Chehardy’s performance, putting his average assessment 18 percent under sales prices instead of 14 percent under.

Feb 28, 2010

Source: The Times-Picayune

Filed under: Jefferson Parish, Taxation & Assessments

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