Why Overrides MatteredImagine you just pulled into a parking spot downtown. You dig out a couple of quarters to pay for your metered parking spot. You look back at the space behind you and see the guy in the big fancy SUV in front of you drop a couple of coins in himself – except his coins are nickels, not quarters. Out of curiosity, you check the time displayed on the meter, and it’s just the same as yours! You complain to the meter maid strolling by, and she just shrugs her shoulders. Over at city hall, your complaint falls on deaf ears: hey, if you want to park downtown, you have to pay for it. Anyway, what does it matter to you that someone else gets to park cheaper than you?Well, what does it matter? Except of course that you and most of your friends and neighbors pay one rate, and a select group gets to pay much less. And one starts to wonder how much less those parking meters would cost if everyone had to pay with quarters, even the select special few.Which is that point: every year, the City Council sets it budget, and the Assessor’s office sets the values, which are supposed to be reflective of full market value. The money to be raised by the property tax levy is divided by the total value of the city’s taxable properties in order to determine the tax rate, which later gets split (classified) by the Council. The total amount of money to be raised is determined by total budget minus estimated receipts – items like local aid, motor vehicle excise, and parking meter revenues – subject to the limits of Proposition two-and-a-half. That revenue to be raised by the property tax is constant and is not based upon the value of the city. The city’s property values will ultimately determine the tax rate, but it’s your individual value that ultimately determines your tax bill.The problem arises when some properties aren’t assessed at their full value. Since the pool of total tax money is constant, anyone whose assessment is at less-than-market value has his property tax bill subsidized by everyone else in the city. Now this happens legally when farmers apply for classification as agricultural land, which comes with a substantial discount to value. The issue in Worcester however pertains to those 2000 or so business properties which received manual overrides prior to committing their final assessed values.Now, some properties may legitimately receive manual overrides: those under construction, or damaged by fire, or who won a judgment at Appellate Tax Board, and even those strange few whose property is physically divided by the city boundary line. But 2000 overrides represent about half of the entire commercial and industrial tax base, meaning half of that valuable class had their values determined not by an impartial, unbiased computer-assisted mass appraisal system, but based solely on the personal judgment of the former assessor.
Why Overrides Mattered (2)One of the purposes of the installation of a CAMA system in the assessor’s office is to ensure a method of delivering uniform and equitable assessments. For example, if you own a 800 square-foot condominium unit and it’s assessed for $150,000, your neighbor in the same complex with an identical 800 square-foot unit will also be assessed for $150,000, as will everyone else in your complex with an 800 SF unit. But revisiting my original example, you can imagine (or maybe you don’t have to!) how you would feel if one of your neighbors was only assessed for $75,000. Not to suggest that your unit isn’t still worth $150,000 but how does your neighbor end up paying half as much in property taxes for the exact same unit as yours?Of course, income-producing real estate is rarely as uniform as condominium units. Nevertheless, assessors use the traditionally three approaches to value – cost, market, and income – to value commercial and industrial properties, and Worcester has plenty of data in all three categories to generate accurate values within the CAMA system. It’s against that background that the 2000 overrides really stand out. Keep in mind that in most CAMA systems, overrides are negative only; that is, they diminish the assessed value of a parcel of real estate, not add to it. Which begs the question: what was so defective about the assessment system in Worcester that it required overriding half of the business property values? Who actually implemented the overrides and who approved them at City Hall? And did the Massachusetts Department of Revenue – the auditing bureau charged with oversight of Assessors’ offices in Massachusetts – have knowledge of them, and if so, who approved of their usage?These are not just academic questions. Unlike residential real estate, where the vast majority of individual property values range from $100,000 to $300,000, business properties are often worth two to three times more, and can be worth more than ten times as much. These discounts generated by the overrides would have amounted to hundreds of millions of dollars in value, meaning millions of real tax dollars that were shifted from commercial and industrial taxpayers to residential taxpayers for years, maybe decades, without the knowledge of the residents or their elected representatives on the Council. Unfortunately, under state law, there is no way to go back in time, no way to restore that which may have been taken under false pretense in the past, or recover what would have been owed. But at a minimum, the taxpayers of the city are due an explanation, from both the city administration, and that state agency that signed off on these arbitrary property values for so many years
Good post. The issue is clearly elaborated, that the Allard manipulated valuations to benefit individual businesses. And residential. Anyone who thinks things are on the up-and-up at city hall is mistaken. Allard left no records. What dos that say? That the city manager did only damage control once the Allard manipulations (that Ford timed) came to light and Ford used that to deflect attention from his personal tribulations. Without a doubt Allard used his office to benefit city hall insiders and their friends (city councilors). Using the state auditors to give Ford, and O'Brien, a clean slate is the biggest hypocrisy one can imagine. Did anyone expect a different outcome? Does that mean they are cleaning up the issues and creating transparency. Absolutely not. Why should they?The Allard story reflects the corruption inherent in the system. Ford is no different.
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