In The News › Revised N.O. assessments generally more accurate

Mar 15, 2008

Source: Times-Picayune

Revised N.O. assessments generally more accurate

Revised N.O. assessments generally more accurate
by Gordon Russell, The Times-Picayune
Saturday March 15, 2008, 9:32 PM

While thousands of New Orleans homeowners gasped at tax assessments that dramatically increased in 2007, an analysis of more than 800 home sales shows that assessments have gotten more accurate across the city and that the districts with some of the angriest taxpayers now have some of the city’s most accurate assessments.

Despite the improved effort to assess property fairly, however, the study also illustrates that substantial differences remain in the ways that New Orleans’ seven assessors value property, a problem taxpayers aimed to solve last year when they approved a measure to elect one citywide assessor.

Under orders from the state Tax Commission to correct widespread inequities, the assessors unveiled the results of a mandated reassessment in August. Thousands of residents, many suffering sticker shock after years of underappraisal, appealed the new valuations. Many, but not all, received some relief.

To gauge the accuracy of the assessors’ work, The Times-Picayune examined 836 home sales recorded between mid-August and Nov. 30, comparing the latest assessment with the sales price. The analysis showed:

— 5th District Assessor Tom Arnold, 1st District Assessor Darren Mire and 6th District Assessor Nancy Marshall did the best jobs of assessing residential property. In all three districts, at least two-thirds of the properties examined were assessed within 20 percent of their sales price. In Arnold’s district, covering Algiers, nearly three-fourths of properties met that standard.

By most measures, Arnold’s tax roll was the most accurate, as it was in 2004, when the newspaper last measured assessments. The accuracy of Marshall’s tax roll, meanwhile, seems to validate the reform “IQ” ticket she ran on in 2006. Members of the ticket promised to refuse their salaries and use them to hire professional appraisers.

— Determining whose tax roll was most flawed was more difficult, and it depends largely on which measure of uniformity is selected. The task also is complicated by the lingering effects of Hurricane Katrina, which make property value in much of the city a moving target.

But the analysis makes clear that several of the city’s longest-tenured assessors, including 2nd District Assessor Claude Mauberret, 3rd District Assessor Erroll Williams and 7th District Assessor Henry Heaton, each of whom has logged more than two decades in office, are hewing to their longtime practice of low-balling values for the benefit of their constituents.

In all three districts, assessments lag market prices by an average of around 33 percent, while in the other four districts, the average assessment is much closer to market value. In Heaton’s and Mauberret’s districts, the undervaluation of property cuts almost equally across flooded and unflooded areas. Williams, by contrast, has essentially given a break to the huge flooded portion of his vast district, by far the largest in the city, while assessing the unflooded section of the “sliver by the river,” including Faubourg Marigny and Bywater, more aggressively.

The seventh assessor, 4th District Assessor Betty Jefferson, was in the middle. Her appraisals were not as accurate as Arnold, Mire and Marshall, but they were more on target than Heaton, Mauberret and Williams. There was no sign that Jefferson was purposely low-balling values.

— Overall, more than two-thirds of the unflooded homes surveyed were valued within 20 percent of their selling price. Four years ago, only one in five homes was valued within 20 percent of the sale price.

In 2004, fewer than one in 10 New Orleans homes was valued at an amount within 10 percent of what it sold for. Today, in the unflooded sections of the city, that number has quintupled, according to the survey. More than half of the homes now meet that standard.

— Even in areas that flooded during Katrina, which are theoretically more difficult to assess, homes are more apt to be assessed accurately now than they were four years ago.

‘Measurable progress’

While the new values were an unpleasant surprise for many homeowners, the blow was softened somewhat when the City Council voted to lower the tax rate by 26 percent to compensate for the higher values.

“The assessors have made measurable progress in getting closer to accurate assessments,” said Bureau of Governmental Research President Janet Howard, who reviewed the data at the request of the newspaper. The bureau is a nonprofit organization based in New Orleans. “That’s not to say there aren’t still problems; one of the major ones is the disparity on a district-by-district basis. But that problem should be eliminated as we go to a single-assessor system.”

Voters will elect New Orleans’ first citywide assessor in 2010.

Howard said residents should expect assessments to get progressively better as an ongoing, multimillion-dollar effort to collect and computerize up-to-date information about properties starts to bear fruit.

“With good will and hard work, we should see improvements as the use of the computer system becomes more sophisticated and the markets become more stable,” she said.

The newspaper’s findings are echoed by the Tax Commission, which recently conducted its own analysis and found that all seven assessors are meeting state benchmarks for uniformity and accuracy.

Improved transparency

Beyond a doubt, the new assessments evince a far more genuine effort by the assessors to do their jobs as described in the state Constitution — to come up with values that reflect reality — than they have attempted in the past.

When the newspaper analyzed assessments in 2004, it was clear that most of the assessors rarely tinkered much with a property’s value unless it sold. When it did, it was generally put on the tax roll at its new price.

The practice of singling out recently sold properties for reassessment while leaving others alone is called “sales chasing” and is barred by Tax Commission rules. The result was that some residents absorbed a disproportionately heavy tax burden, while others, via their homestead exemptions, paid far less or even nothing.

Some properties, including lavish ones, went generations without receiving meaningful reappraisals. For instance, a French Quarter town house that sold in the summer of 2003 for $3.5 million was valued at just $285,000 by the assessor.

At the same time, relatively modest doubles and cottages that sold amid the run-up of property values in the late 1990s were getting taxed based on their full value. Chronic underassessment also caused public bodies that needed revenue to roll forward millages, resulting in ever-stiffer tax bills for the unlucky few paying full freight.

Before the City Council cut the New Orleans rate, the city had one of the three highest tax rates in the state.

The unintended consequence was to provide would-be newcomers yet another reason — alongside poor public schools, high crime, a lackluster economy and political corruption — to avoid buying a home in New Orleans.

Several things have changed in the past few years.

For starters, transparency has improved greatly, helping to expose poor assessments. Once closely guarded, the tax roll has been available for public inspection online since 2003, when it was first posted by Greg Meffert, Mayor Ray Nagin’s first chief technology officer.

That move irked the assessors, but to their credit, they soon followed up with their own posting, which was more thorough than the city’s. The Louisiana Tax Commission, meanwhile, led a successful push to require every assessor in the state to post his or her roll online.

The commission didn’t stop at insisting on transparency; it demanded better assessments. Former Chairwoman Elizabeth Guglielmo, concerned about The Times-Picayune’s findings, ordered her staff to perform an analysis of New Orleans assessments in 2004. That study found the same problems.

The commission ordered a reappraisal that was originally due in 2006. The deadline was pushed back a year because of Katrina.

Differences persist

If Katrina was a setback, requiring a house-by-house revaluation of much of the city, the assessors already had begun to modernize by the time of the storm. In particular, they had purchased a computer system designed to help them use bunches of data to appraise at a neighborhood level.

That the assessors are now actually using data to value property across the city is clear.

Whereas it used to be common to see a home still appraised for what it sold for 10, 15 or even 20 years earlier, that’s now a rarity. Most of the assessors have tried to calculate appraisals using some sort of per-square-foot value.

But the results still show great differences from district to district.

For example, logic dictates that if an assessor is aiming to hit the correct value on the nose, assessments will be high as often as they are low. On that measure, the seven assessors are all over the map.

At one end of the spectrum is Arnold. Almost half the homes that sold last year in his Algiers district went for less than Arnold thought they were worth. It’s probably no accident that Arnold also had the most accurate tax roll.

At the other end of the continuum is Mauberret, whose 2nd District includes the French Quarter, Treme, part of Mid-City and Lakeview. Only one out of every seven properties in the 2nd District was overassessed at the time of the sale, according to the analysis.

Though much of the district flooded, water damage does not explain Mauberret’s gentle touch. In fact, in the unflooded portion of Mauberret’s domain, only one of every 16 properties was overvalued.

Put another way, the survey suggests that a property on New Orleans’ West Bank is eight times more likely to be overassessed than one in the French Quarter or on the Lakefront.

The survey included plenty of examples of the old methodology in play. For instance, a Creole cottage at 1011 Orleans St. in the French Quarter, undamaged in the storm, sold for $675,000 in August; Mauberret had it on the tax roll for $300,000.

The same house previously sold in 1988 for $180,000. Since that time, property values in the Quarter have skyrocketed, but Mauberret’s assessment figures appreciation of only about 3 percent a year.

More aggressive

But the data make clear that all of the assessors, even Mauberret, are more aggressive than they used to be. Four years ago, only 3 percent of New Orleans homes sold for less than their assessed value. Now, that number is up to about 20 percent.

Four years ago, property on average sold for 70 percent more than the value listed on the tax roll. Now the average disparity between sales price and appraised value is just 14 percent for unflooded homes. For all properties, the difference is 24 percent, still a huge improvement.

If they’re demonstrably more accurate than the old ones, this year’s reassessments still aren’t perfect, nor are they necessarily popular.

When the tax roll was unveiled in August, hundreds of people thronged City Hall in hopes of talking their assessor into a reduction. Although the stampede might have been caused largely by sudden increases, many people had legitimate gripes.

Nearly 6,000 people, unsatisfied after a conference with their assessor, appealed their assessments to the City Council, which by law can make changes to the tax roll. As further evidence of Mauberret’s light touch, his district had the fewest appeals.

Faced with a task likely to take months, the council hired a law firm, Frilot LLC, to oversee the process; in the end, about two-thirds of the appellants won a reduced assessment from the council at Frilot’s recommendation.

The appeals aren’t over yet. More than 1,500 have been filed with the Tax Commission, which acts as an appellate body for the decisions of the City Council. But in this round most of the appeals came from the assessors, who were in many cases unhappy with the council’s decisions.

Some areas a challenge

The record of appeals and The Times-Picayune’s analysis both suggest assessors have had the most trouble with accuracy in areas where socioeconomic characteristics are in flux — for instance, neighborhoods that are slowly becoming gentrified.

The effect is likely a byproduct of the mass appraisal technique many assessors are using, in which they group sales in areas of their choosing and estimate average values for square footage in those sub-districts.

For instance, many homes on the river side of the Irish Channel were given assessments that seem to reflect the appreciation in value that the part of the neighborhood closer to Magazine Street has experienced.

But the sales prices, for instance, on Chippewa Street don’t back up the high assessments.

As an example, Jefferson put the value of 2371 Chippewa St. at $274,920. Not long after the tax roll was unveiled, the house sold for $180,000. The overassessment likely cost the homeowner $1,200.

Assessments also rocketed higher than sales data warrant on the fringes of the Bywater in areas that have yet to be discovered by renovators and real estate speculators.

And some homes on Baronne Street Uptown seem to have been assessed as if they were on nearby St. Charles Avenue, which commands higher prices.

The Tax Commission’s new study, while finding that the assessors are all doing a reasonably good job, uncovered similar patterns.

The commission zeroed in on both the Irish Channel and Bywater, and in both cases the commission’s appraisals came in lower than those of Williams of the 3rd District and Jefferson of the 4th, sometimes by a considerable margin.

For instance, 731 Bartholomew St. in the Bywater is valued for tax purposes at $238,200. But the commission’s appraiser figured its value at $155,600.

For the homeowner, the disparity makes a big difference: The tax bill that homeowner received is more than double what it would have been had the Tax Commission valued the house rather than Williams.

Whether and how any of those neighborhood wrinkles get ironed out is one of the remaining puzzles of last year’s wrenching reassessments. Many homeowners in those overvalued transitional areas appealed their assessments to the City Council, and most got some relief.

But the assessors have counterappealed in many cases, and how the latest round of appeals will be resolved is unclear.

Like the City Council, the Tax Commission hired a law firm, Montgomery Barnett, to oversee the process and make recommendations for changes. That process is set to wrap up soon.

Gordon Russell can be reached at or (504) 826-3347.

Mar 15, 2008

Source: Times-Picayune

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