Tax assessor and CFO give tips on appeals at FIT meeting

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OCEAN CITY — Appearing before a March 2 meeting of Fairness in Taxes, the city’s Director of Finance Frank Donato and tax assessor Joe Elliott entertained questions and discussed the importance of property value in determining the tax rate.

They also offered their help to anyone who had a question concerning the value of their property when it came to a tax assessment.

With an overall increase of .35 percent in the municipal budget, Donato said “it’s the lowest we’ve come out of the gate in many, many years.”

“We’re very proud of that,” he said.

The budget proposed by Mayor Jay Gillian last month, he said, was a preliminary document. A revamped budget would be formally introduced by the second City Council meeting in March and likely be up for adoption at the second meeting in April.

Donato said there are three things that could cause a tax increase: an increase on the expenditure side, a loss in revenue or a loss of ratables.

The loss in ratables, he said, “is why we don’t have a tax decrease.”

The over 19,000 properties in the city were valued at $12,852,000 last year; this year that figure is $12,171,000 and the $681,000 loss has affected taxpayers.

“You are dividing that levy into a smaller base,” he said. “Any time you divide into something smaller, that number goes up.”

The loss in value, he said, started late last year. The reduction in ratables, he said, is delayed from the actual loss in market value that the city experienced over the past several years.

“The real estate market peaked in 2005,” he said. “The bottom started to fall out after that.”

The market, Donato said, is showing signs of stabilization, but the appeals process lags behind. Feb. 1, he said, “kicks of the appeal season.”

“Anyone who is not happy with their assessment has the right to appeal,” he said.

Appeals must be filed by April 1.

“Last year we had 650 appeals, compared to 240 the year before,” said Donato; 1,000 appeals this year would not be a surprise.

The reality, he said, is that more than 90 percent of those appeals are successful.

“Last year that resulted in $113 million in lost ratables,” he said.

Donato said it’s a conundrum for a CFO, even one with a sharp pencil.

You create a budget based on the ratable base you have on the books, he said. Successful appeals mean less revenue for an already cash-strapped municipality.

“The city didn’t collect the money we planned on when we formulated the budget,” he said. “We wanted to do something proactive to face the problem.”

Elliott approached the county tax assessor with what is called a “compliance plan” to reassess 3,200 properties.

“We bit off as many as we could chew,” Donato said.

Properties in the center of the island, he said, remained fairly stable, but those along the water had lost a lot of value. Through the plan the ratable base was reduced another $600 million, while only $50 million was added in value last year.

“So once again, here we are in appeal season,” he said.

Thus far, about 250 have been filed.

“Part of what we are saying is that we realize that there is a problem. We want you to know we are available to help you through the process. We are continuing to take a pro-active approach.”

A second compliance plan would be performed this year, and a third next year.

“We’ll look at the ratios again, and we’ll keep going,” Elliott said.

“You are more than welcome to file an appeal,” Donato said. “It hurts us to advertise this, but it’s the reality.”

For an appeal, Elliott said, “Look before you leap” when it comes to hiring outside help.

“Almost everyone has gotten a letter from an attorney,” he said, offering help in the process. “Do some homework. Find comparable sales, of residential properties.”

Elliott said his office keeps data dating back at least 10 years, offering the use of a computer system to check out comparable sales. He suggested contacting a local Realtor for help.

“What many of you will find is that your assessment is good,” he said.

Hiring an appraiser costs money, he said. A little homework ahead might be less costly.

Donato also reminded the crowd that, within a year or so, the city would do the assessment “for free.”

Taxpayers file an appeal with the county. Most times, Elliott said, his office “strikes a deal” with residents, who must present at least three timely comparables.

“I like to think that I am a reasonable guy,” he said. “If I make you an offer, you should take it. I know my business. I know what I’m doing.”

The assessment must be deemed “unreasonable, excessive or discriminatory.” The taxpayer must be persuasive and present credible evidence, he said, supported by fact, not beliefs.

“You have to prove the assessment is wrong,” he said. “You have to overcome the burden of proof.”

Donato said a majority of the appeals are settled Those who disagree with the city’s assessment can ask for a hearing at the county level. Of the 650 appeals last year, 50 were heard at the county. Elliott testifies on behalf of the city.

“If we don’t come to a meeting of the minds, I tell the board that this is what it should be,” Elliot said. “The vast majority of the time, the number will come out what it should be. I’ve been assessing a number of years.”

Comparables may not include short sales, estate sales, sales between family members and others that do not meet a market value, “any kind of distress sale,” Elliott said.

“Do the research. If your comps are not good, they will be thrown out,” he said. “They will say ‘assessments are no good, next case.’”

Donato said the assessment problem was not Ocean City’s alone.

“It’s statewide, up and down the coast,” he said, adding that Atlantic City had a far more severe problem due to a loss of ratables with casino properties.

Elliott suggested residents check out for more information.


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