In The News › State senator, business partners get sweet tax assessment

Mar 17, 2010

Source: WWLTV

Filed under: Taxation & Assessments

State senator, business partners get sweet tax assessment

Wednesday, March 17, 2010
By Dennis Woltering
Eyewitness News, WWLTV

NEW ORLEANS — Getting your property designated as “use value” is little like getting a huge gift from the taxman. Instead of paying a $25,000 property tax on 37 acres of land, you might pay as little as $60.

But keep in mind, as Janet Howard, president and chief executive officer of the Bureau of Governmental Research, points out someone has to pay for the services government provides.

“One man’s tax break is another man’s tax burden,” Howard said.

Louisiana law says very clearly that the “use value” designation should only go to property that meets the definition of “bona fide agricultural, horticultural, marsh or timber land….” The application for this special gift from the taxman calls for the property owner to certify that his property qualifies under one or more of those categories.

So how is it that state Sen. Jack Donahue and his partners got that special gift from the taxman for their Ashland Oaks business park?

Donahue and his partners bought the property in December 2005 for $1,744,900.30.

Their first tax bill in 2006 called for them to pay the fair market value tax, or $25,505.20.

Then one of Sen. Donahue’s partners filled out the application for a “use value assessment.” He certified part of the property is devoted to production of timber products. He certified part of the property is wetland devoted to agricultural, horticultural or timber purposes.

The form asks whether there are any improvements on the land. Donahue’s partner certified there were none, then signed the application.

The assessor approved the application.

Donahue and his partners got a huge gift, in this case from the tax woman – St. Tammany assessor Patricia Schwarz Core.

All but $59 of their $25,000+ tax was refunded.

Core says she believes Donahue’s property did qualify when his partner first applied for the “use value” designation.

“There was no development going on. It was just raw land that had never been developed,” Core said.

But when they started developing the land, Core says the “use value” assessment should have been removed.
Instead this gift kept on giving.

The owners of Ashland Oaks were taxed at the use value rate again in 2007, paying just $62. In 2008, they paid $55.60. In 2009, the tax bill was $106.64.

Donahue says he was totally in the dark about all of this.

“Needless to say I was surprised. Then my second reaction was I had to go find out what that meant,” he said.

Donahue says he had never even heard the terms “use value” or “land use” before and he asked his attorney to look into it for him.

“My instructions to my attorney are, research it thoroughly. Find out what needs to be done. And if there are taxes that are owed that we haven’t fairly paid, then I’m going to make sure that they are paid,” Donahue said.

He the research his attorney provided led him to a certain conclusion about drastically discounted use value assessment.

“It was something that the assessor awarded or granted to developers during the development process so that I guess the intention would be that it held down expenses when developers were spending you know a lot of money buying the land and putting improvements in to help them maintain their costs so they could eventually get that land into commerce and pay regular taxes on it,” Donahue said.

Of course that is not what the law says. Assessor Patricia Core says that clearly the tax break is not something given to developers to encourage development in St. Tammany.

“No, it’s not. It’s something that the taxpayer actually has to apply for. And they sign the document,” she said.

Core says she has to rely on the honesty of the property owner because she doesn’t have the staff necessary to police all the property assessments in St. Tammany.

But Donahue says if anyone is to blame for property owners getting tax breaks they don’t deserve, it is the assessor.

“I think it’s the assessor that needs to continue to enforce assessment practices. I mean if the developers in St. Tammany parish can’t rely on the assessor for that, then I think it would be a real problem.”

But Core points out the “use value” application clearly says the property owner must notify the assessor when he no longer qualifies for this special gift from the taxman.

“They must notify the assessor’s office by state law within 60 days upon the time this property does not qualify any longer for land use and the use value assessment,” Core said.

Yet Donahue says his attorney tells him the practice of developers getting “use value” assessments for property they’re developing is widespread. And he says his attorney talked to Patricia Core about it.

“She told him that that’s a practice that’s in place in St. Tammany parish for quite some time now,” Donahue claims.

But Core says that is not at all what she told Donahue’s attorney in a phone conversation.

“I do disagree with that,” Core said. “We do remove the land use upon us finding or someone letting us know such as in your case. You let us know so we’re removing it.”

Eyewitness News has found other developers getting the “use value” assessment that drastically slashes their taxes.

Alamosa Business park paid $101.85 a year, on 23 acres. Investments LLC, whose owners include developer Don McMath, paid a use value tax of $31.40 on six acres. The owners of the property developed into the Emerald Forest condominiums paid less than $30 a year over the past eight years.

But Core insists the practice is not widespread

“There’s no provision in the law that allows us to grant land use or use value to anyone if they really don’t qualify for use value,” she said.

Donahue didn’t have much to say when we asked how he would feel if he were a taxpayer watching a situation like this unfold, with a developer’s property being taxed at an extremely low rate.

“I would say to you that I pay a lot of taxes right now,” he said.

When dozens irate property owners converged on the assessor’s office in 2008 to protest big increases in their assessments, Donahue sent a message to his constituents, saying “an increase in property value at this time given the economic conditions which are prevailing is truly disheartening. I urge you to take the time to add your voice to the rising protest against this injustice.”

That painted Donahue as a champion of people paying only their fair share. Some would say the land use issue seems to be an instance where, because he is not paying his fair share, other people have to pay more.

“Well I haven’t had the opportunity, I don’t know why I have to keep going back to the fact that I’ve never heard of a land value assessment before. If I don’t even know what it is, I certainly can’t be responsible for it,” Donahue said.

When Eyewitness News stopped the on-camera interview, Donahue said he felt like “throwing up” when he saw in an earlier WWL report how the taxes had been slashed on his Ashland Oaks business parks.

When the Channel 4 photographer began filming again, we asked Donahue about that – whether when he is paying an inordinately low amount, it means other people are paying more than they should.

“I don’t know if that’s the way taxes… You know something? I think when they collect taxes, they’re looking for the bulk of the number and so whoever doesn’t pay taxes probably adds to everybody else’s burden, so I think it probably does add to the burden, yes,” Donahue said.

“I don’t think it’s good. I don’t think it’s good for me as a person, for business in St. Tammany parish, for the home owners in St. Tammany parish,” he continued.

Core says she has issued change orders to recover $50,153.37 in back taxes for Ashland Oaks business park. And Donahue says he intends to pay up.

“I’m taking every step that I know to, to find out what I am responsible for to make sure that it does get paid,” Donahue said.

When asked whether Donahue will be assessed a penalty, Core responded, “No, we have not assessed the penalty on that because we have never done it to anyone else.”

The law says a property owner who violates the “use value” assessment must pay a penalty of five times the back taxes he should have paid.

In this case that would be roughly $250,000.

Mar 17, 2010

Source: WWLTV

Filed under: Taxation & Assessments

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