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Thursday, April 19, 2012
Thursday, April 12, 2012
T&G - Worcester could come up short from delay in tax bills
By Nick Kotsopoulos TELEGRAM & GAZETTE STAFF
WORCESTER — The delay in issuing fourth-quarter property tax bills could leave the city with an insufficient cash flow to meet its financial obligations before fiscal 2012 ends June 30, according to the city’s chief financial officer.
Thomas F. Zidelis told the City Council Tuesday night that in the event the delay in collecting fourth-quarter property taxes adversely affects the city’s cash flow, the city might have to ask the state for an advance on its local aid payment.
Any fourth-quarter taxes not collected by June 30 would negatively impact the city’s year-end fund balance, he said, and that could end up hurting Worcester’s bond rating.
The fourth-quarter tax bills are traditionally sent out April 1 and are due by May 1. But those bills have been delayed this year because the City Council has been unable to set the fiscal 2012 tax rates.
The council traditionally sets the tax rates in November or early December.
But the city is still waiting for the state Department of Revenue to give preliminary certification to Worcester’s new property values as part of the triennial revaluation process. Until that is done, the council cannot set the tax rates, Mr. Zidelis said.
City officials had hoped to have the council set the fiscal 2012 tax rates by mid-March so the fourth-quarter tax bills could be issued by April 1. They later revised that timetable, hoping to have the bills sent out by May 1 and due by June 1.
City Manager Michael V. O’Brien recently told the City Council the fourth-quarter tax bills will be further delayed because the city did not complete its review of all 4,800 commercial properties and submit those new property values to the Department of Revenue until last week.
With the City Council not scheduled to meet again until April 24, the earliest that the tax classification hearing could be held is early May. It then usually takes a couple of weeks from when the council sets the tax rates to when the tax bills are issued.
That means the fourth-quarter bills may not be issued until late May; the bills are then due within 30 days of issuance. In that instance, they would be due just a couple of weeks before the first-quarter fiscal 2013 tax bills go out July 1.
With property owners facing a potential one-two punch of having to pay two quarterly tax bills in such a short timeframe, the City Council Tuesday night asked the city administration to outline options on how the city can soften that blow for taxpayers.
Councilor-at-Large Konstantina B. Lukes asked for the remedies because taxpayers will have to pay out large amounts of money in a short time.
“This is our fault, and we’ve got to remedy it,” Mrs. Lukes said. “I’d like to see the administration come in with some options that we can give our taxpayers.”
Mr. Zidelis said that under state law, tax bills are due 30 days from the date of issuance. He said the city would be willing to work with those taxpayers who might face a financial crunch because of the back-to-back tax bills by establishing installment plans for them.
He estimated that 60 to 70 percent of the homeowners have their tax bills paid through escrow accounts with their mortgage companies or banks. He acknowledged that those without escrow accounts would be the most dramatically affected by the back-to-back tax bills.
“There’s not a heck of a lot we can do, but to entertain installment plans,” Mr. Zidelis said.
He did say, however, that another option that might be considered would be to push back the issuance of the first-quarter fiscal 2013 tax bill, to give taxpayers a little breathing time between tax bills.
WORCESTER — The delay in issuing fourth-quarter property tax bills could leave the city with an insufficient cash flow to meet its financial obligations before fiscal 2012 ends June 30, according to the city’s chief financial officer.
Thomas F. Zidelis told the City Council Tuesday night that in the event the delay in collecting fourth-quarter property taxes adversely affects the city’s cash flow, the city might have to ask the state for an advance on its local aid payment.
Any fourth-quarter taxes not collected by June 30 would negatively impact the city’s year-end fund balance, he said, and that could end up hurting Worcester’s bond rating.
The fourth-quarter tax bills are traditionally sent out April 1 and are due by May 1. But those bills have been delayed this year because the City Council has been unable to set the fiscal 2012 tax rates.
The council traditionally sets the tax rates in November or early December.
But the city is still waiting for the state Department of Revenue to give preliminary certification to Worcester’s new property values as part of the triennial revaluation process. Until that is done, the council cannot set the tax rates, Mr. Zidelis said.
City officials had hoped to have the council set the fiscal 2012 tax rates by mid-March so the fourth-quarter tax bills could be issued by April 1. They later revised that timetable, hoping to have the bills sent out by May 1 and due by June 1.
City Manager Michael V. O’Brien recently told the City Council the fourth-quarter tax bills will be further delayed because the city did not complete its review of all 4,800 commercial properties and submit those new property values to the Department of Revenue until last week.
With the City Council not scheduled to meet again until April 24, the earliest that the tax classification hearing could be held is early May. It then usually takes a couple of weeks from when the council sets the tax rates to when the tax bills are issued.
That means the fourth-quarter bills may not be issued until late May; the bills are then due within 30 days of issuance. In that instance, they would be due just a couple of weeks before the first-quarter fiscal 2013 tax bills go out July 1.
With property owners facing a potential one-two punch of having to pay two quarterly tax bills in such a short timeframe, the City Council Tuesday night asked the city administration to outline options on how the city can soften that blow for taxpayers.
Councilor-at-Large Konstantina B. Lukes asked for the remedies because taxpayers will have to pay out large amounts of money in a short time.
“This is our fault, and we’ve got to remedy it,” Mrs. Lukes said. “I’d like to see the administration come in with some options that we can give our taxpayers.”
Mr. Zidelis said that under state law, tax bills are due 30 days from the date of issuance. He said the city would be willing to work with those taxpayers who might face a financial crunch because of the back-to-back tax bills by establishing installment plans for them.
He estimated that 60 to 70 percent of the homeowners have their tax bills paid through escrow accounts with their mortgage companies or banks. He acknowledged that those without escrow accounts would be the most dramatically affected by the back-to-back tax bills.
“There’s not a heck of a lot we can do, but to entertain installment plans,” Mr. Zidelis said.
He did say, however, that another option that might be considered would be to push back the issuance of the first-quarter fiscal 2013 tax bill, to give taxpayers a little breathing time between tax bills.
Tuesday, April 10, 2012
Monday, April 9, 2012
T&G: Higher valuations loom for property. Past city practices are blamed
Source: T&G reporter Nick Kotsopoulos
To say there are concerns at Worcester City Hall about the yet-to-be released new valuations for commercial and industrial properties would be an understatement. There are big-time concerns.
Word has it the new valuations for many of those properties could be significantly higher than in the past and the increases won’t necessarily have anything to do with the state or health of the local business community.
Instead, the assessment increases that seem to be looming on the horizon for those properties are said to be the result of past city practices that kept valuations artificially lower than what they should have been for many years.
Talk about a hornet’s nest.
Last week, City Manager Michael V. O’Brien informed the City Council that there is a very good chance the fourth-quarter property tax bills, which city officials had hoped to mail out by May 1, will be further delayed.
He said the delay is likely because the city did not complete its review of all 4,800 commercial properties and submit those new property values to the state Department of Revenue for its review until early last week. City officials had hoped to have that done weeks before.
But the process to review the proposed new assessments for commercial and industrial properties did not go as smoothly as the one for residential properties, which received “pending preliminary certification” from the state Department of Revenue almost a month ago.
Mr. O’Brien said updating the assessed valuations for commercial properties proved far more complicated after it was discovered that city assessors for years had apparently been manually overriding valuations that had been set by computer programs.
Those familiar with the issue said when the computer-generated values were manually overridden, the new assessments often came out lower.
While assessments for residential properties are largely derived based on sales of comparable properties, establishing valuations for commercial and industrial properties is much different; assessors use the industry-standard income approach to generate a fair-market value for those properties. The income approach is most applicable to real estate that is normally bought and sold on the basis of its income-producing capabilities.
In the process of modernizing the city’s property revaluation systems, city assessors uncovered the previous practice of “manual overrides” on as many as 2,000 (roughly 40 percent) of the city’s commercial and industrial properties, according to the city manager.
He said those overrides allow an assessor to manually enter a data element or formula into the assessment system and override the resultant valuation that should have been calculated by the system.
As a result, Mr. O’Brien said the new property value would be based on an artificial override and not on the internal calculations of the system.
To make matters worse, no documentation could be found in files on why or when these manual overrides were put into place.
“There was no element within the old software program that highlighted that this action was taken or that prompted staff to review on a year-to-year basis,” Mr. O’Brien said. “It appears that some date as far back as 30 years as far as we can tell, with no supporting documentation as to why or when the adjustments were made.”
Mr. O’Brien said all the manual overrides have now been completely removed, because they have no standing based on the current parcel or market conditions.
That’s the good news; the bad news is that it’s not exactly known at this time what impact that will have on the new commercial and industrial property values. But one City Haller acknowledged the increases for some of those properties could be dramatic.
“The analysis of how these previous manual overrides may affect the commercial valuations of the parcels that had an override is under way,” Mr. O’Brien said. “There are many factors that will affect the revaluations this year, therefore, there is no one-size-fits-all.
“It will also depend on how many years this manual override was in effect and how dramatic the difference is between the manually entered information and current market conditions, along with all the data that the assessment system applies to derive fair and equitable valuations.”
If in fact the new assessments for commercial and industrial properties should dramatically increase, it could end up impacting homeowners as well.
In recent years, the City Council has frequently adopted the lowest possible residential tax rate as a way to buffer homeowners from significant property tax increases. When the council adopts the lowest residential tax rate, it translates into the highest possible tax rate for commercial-industrial properties.
But if there are dramatic increases in property assessments for business properties, there is no way the council would be able to vote the lowest residential tax rate this year, or anything close to it for that matter. If it did, the tax bills for some business could become overly burdensome.
So, if the council has to adopt a more favorable tax rate for businesses to buffer them from significant tax increases, guess what? It means a greater tax burden might have to be placed on homeowners even though local residential property assessments have decreased by 3.8 percent on average compared to the previous year.
Meanwhile, what does this all say about the public’s confidence in the city’s assessing practices if it is indeed true that some business property valuations were kept artificially low?
Mr. O’Brien said the fact that manual override practice has been discovered and removed is important and significant. He said the public should have the utmost confidence in the assessed valuations going forward.
“I knew and understood the potential to discover such previous practices and processes when undertaking such an intensive overhaul of these antiquated (assessment) systems,” Mr. O’Brien said. “As with all I have done as city manager, I fix what I find, fix it once and correct it with systems and processes that hold all to the highest standards of accountability from the point of correction forward, and for perpetuity.”
To say there are concerns at Worcester City Hall about the yet-to-be released new valuations for commercial and industrial properties would be an understatement. There are big-time concerns.
Word has it the new valuations for many of those properties could be significantly higher than in the past and the increases won’t necessarily have anything to do with the state or health of the local business community.
Instead, the assessment increases that seem to be looming on the horizon for those properties are said to be the result of past city practices that kept valuations artificially lower than what they should have been for many years.
Talk about a hornet’s nest.
Last week, City Manager Michael V. O’Brien informed the City Council that there is a very good chance the fourth-quarter property tax bills, which city officials had hoped to mail out by May 1, will be further delayed.
He said the delay is likely because the city did not complete its review of all 4,800 commercial properties and submit those new property values to the state Department of Revenue for its review until early last week. City officials had hoped to have that done weeks before.
But the process to review the proposed new assessments for commercial and industrial properties did not go as smoothly as the one for residential properties, which received “pending preliminary certification” from the state Department of Revenue almost a month ago.
Mr. O’Brien said updating the assessed valuations for commercial properties proved far more complicated after it was discovered that city assessors for years had apparently been manually overriding valuations that had been set by computer programs.
Those familiar with the issue said when the computer-generated values were manually overridden, the new assessments often came out lower.
While assessments for residential properties are largely derived based on sales of comparable properties, establishing valuations for commercial and industrial properties is much different; assessors use the industry-standard income approach to generate a fair-market value for those properties. The income approach is most applicable to real estate that is normally bought and sold on the basis of its income-producing capabilities.
In the process of modernizing the city’s property revaluation systems, city assessors uncovered the previous practice of “manual overrides” on as many as 2,000 (roughly 40 percent) of the city’s commercial and industrial properties, according to the city manager.
He said those overrides allow an assessor to manually enter a data element or formula into the assessment system and override the resultant valuation that should have been calculated by the system.
As a result, Mr. O’Brien said the new property value would be based on an artificial override and not on the internal calculations of the system.
To make matters worse, no documentation could be found in files on why or when these manual overrides were put into place.
“There was no element within the old software program that highlighted that this action was taken or that prompted staff to review on a year-to-year basis,” Mr. O’Brien said. “It appears that some date as far back as 30 years as far as we can tell, with no supporting documentation as to why or when the adjustments were made.”
Mr. O’Brien said all the manual overrides have now been completely removed, because they have no standing based on the current parcel or market conditions.
That’s the good news; the bad news is that it’s not exactly known at this time what impact that will have on the new commercial and industrial property values. But one City Haller acknowledged the increases for some of those properties could be dramatic.
“The analysis of how these previous manual overrides may affect the commercial valuations of the parcels that had an override is under way,” Mr. O’Brien said. “There are many factors that will affect the revaluations this year, therefore, there is no one-size-fits-all.
“It will also depend on how many years this manual override was in effect and how dramatic the difference is between the manually entered information and current market conditions, along with all the data that the assessment system applies to derive fair and equitable valuations.”
If in fact the new assessments for commercial and industrial properties should dramatically increase, it could end up impacting homeowners as well.
In recent years, the City Council has frequently adopted the lowest possible residential tax rate as a way to buffer homeowners from significant property tax increases. When the council adopts the lowest residential tax rate, it translates into the highest possible tax rate for commercial-industrial properties.
But if there are dramatic increases in property assessments for business properties, there is no way the council would be able to vote the lowest residential tax rate this year, or anything close to it for that matter. If it did, the tax bills for some business could become overly burdensome.
So, if the council has to adopt a more favorable tax rate for businesses to buffer them from significant tax increases, guess what? It means a greater tax burden might have to be placed on homeowners even though local residential property assessments have decreased by 3.8 percent on average compared to the previous year.
Meanwhile, what does this all say about the public’s confidence in the city’s assessing practices if it is indeed true that some business property valuations were kept artificially low?
Mr. O’Brien said the fact that manual override practice has been discovered and removed is important and significant. He said the public should have the utmost confidence in the assessed valuations going forward.
“I knew and understood the potential to discover such previous practices and processes when undertaking such an intensive overhaul of these antiquated (assessment) systems,” Mr. O’Brien said. “As with all I have done as city manager, I fix what I find, fix it once and correct it with systems and processes that hold all to the highest standards of accountability from the point of correction forward, and for perpetuity.”
Friday, April 6, 2012
Thursday, April 5, 2012
T&G: City Hall Notebook - Just the facts facts, ma'am
Property valuation winners and losers
As Sgt. Joe Friday of Dragnet fame used to say on the popular police TV show: "Just the facts, ma'am."
Well, here are some facts about how some of Worcester's elected officials fared with their new property valuations.
According to city assessor records, six of the 10 city councilors who own homes in the city saw their property assessments go down, while four saw their valuations go up.
The following are those council members whose property valuations have gone down; it includes their new assessments followed by their previous-year assessments in parenthesis:
Mayor Joseph M. Petty, $388,200 ($394,200), District 2 Councilor Philip P. Palmieri, $313,900 ($321,600), Councilor-at-Large Joseph C. O'Brien, $164,300 ($195,500), District 3 Councilor George J. Russell, $337,400 ($344,700), Councilor-at-Large Frederick C. Rushton, $297,200 ($307,600) and District 5 Councilor William J. Eddy, $210,100 ($214,900).
Those councilors whose property assessments have increased are (previous year assessments in parenthesis): Councilor-at-Large Konstantina B. Lukes, $278,800 ($268,700), District 1 Councilor Tony Economou, $399,800 ($355,100), Councilor-at-Large Kathleen M. Toomey, $194,600 ($180,600) and District 4 Councilor Sarai Rivera, $333,800 ($310,100).
Councilor-at-Large Michael J. Germain does not own a home in the city.
Other local notables who saw a decrease in their property values include City Manager Michael V. O'Brien, whose home assessment dropped from $387,100 to $380,800.
Also, Lt. Gov. Timothy P. Murray saw his home property value drop from $194,000 to $170,000, according to city assessor records.
Meanwhile, U.S. Rep. James P. McGovern, D-Worcester, saw a modest increase in the valuation of his home, from $177,000 to $178,100.
Local residential property assessments have decreased by 3.8 percent on average compared to the previous year, according to city officials
The average valuation for single-family homes dropped by 3 percent, compared to the previous year.
Meanwhile, the average assessment for two-family/duplexes dropped by 7.2 percent; three-deckers declined by 4.15 percent; and condominiums dropped by 3 percent.
Approximately 3,664 of the 38,277 residential properties saw an increase in their assessed valuations. Much of those higher assessments are attributed to new construction, renovations and increased square footage.
Those are the facts.
Assessor under microscope
One city official who has received more scrutiny and comment than anyone else at City Hall regarding his new property assessment is none other than the city assessor himself, William J. Ford.
According to the assessor's on-line data base, the new assessment for Mr. Ford's Salisbury Street home is $620,000, an increase over the previous year's assessment of $601,000.
But that conflicts with Certificate of Municipal Liens details for the property, which indicated that the previous year's assessment for the property was $617,000.
Meanwhile, the folks at Accurate Worcester Assessments on Real Estate, who have been on top of Worcester's revaluation effort, contend the previous-year's assessment for Mr. Ford's property was $687,200, not the $601,000 listed on the assessor's data base nor the $617,000 listed on the CML.
In addition, AWARE contends that the assessment for Mr. Ford's property has dropped by some $270,000 in three years. The group says his home and property was assessed at $897,100 for fiscal year 2010, $687,200 for fiscal 2011 and the new assessment is $620,000.
That has prompted Worcester resident Steve Quist to file a complaint with the state Ethics Commission. He said he does not understand how someone's property valuation, the city assessor's no less, can go down by more than $270,000 in three years.
"The valuation of his property has gone down while it has gone up for so many other people," Mr. Quist said. "It all begs the question of who's guarding the henhouse?"
Mr. Ford could not be reached for comment.
As Sgt. Joe Friday of Dragnet fame used to say on the popular police TV show: "Just the facts, ma'am."
Well, here are some facts about how some of Worcester's elected officials fared with their new property valuations.
According to city assessor records, six of the 10 city councilors who own homes in the city saw their property assessments go down, while four saw their valuations go up.
The following are those council members whose property valuations have gone down; it includes their new assessments followed by their previous-year assessments in parenthesis:
Mayor Joseph M. Petty, $388,200 ($394,200), District 2 Councilor Philip P. Palmieri, $313,900 ($321,600), Councilor-at-Large Joseph C. O'Brien, $164,300 ($195,500), District 3 Councilor George J. Russell, $337,400 ($344,700), Councilor-at-Large Frederick C. Rushton, $297,200 ($307,600) and District 5 Councilor William J. Eddy, $210,100 ($214,900).
Those councilors whose property assessments have increased are (previous year assessments in parenthesis): Councilor-at-Large Konstantina B. Lukes, $278,800 ($268,700), District 1 Councilor Tony Economou, $399,800 ($355,100), Councilor-at-Large Kathleen M. Toomey, $194,600 ($180,600) and District 4 Councilor Sarai Rivera, $333,800 ($310,100).
Councilor-at-Large Michael J. Germain does not own a home in the city.
Other local notables who saw a decrease in their property values include City Manager Michael V. O'Brien, whose home assessment dropped from $387,100 to $380,800.
Also, Lt. Gov. Timothy P. Murray saw his home property value drop from $194,000 to $170,000, according to city assessor records.
Meanwhile, U.S. Rep. James P. McGovern, D-Worcester, saw a modest increase in the valuation of his home, from $177,000 to $178,100.
Local residential property assessments have decreased by 3.8 percent on average compared to the previous year, according to city officials
The average valuation for single-family homes dropped by 3 percent, compared to the previous year.
Meanwhile, the average assessment for two-family/duplexes dropped by 7.2 percent; three-deckers declined by 4.15 percent; and condominiums dropped by 3 percent.
Approximately 3,664 of the 38,277 residential properties saw an increase in their assessed valuations. Much of those higher assessments are attributed to new construction, renovations and increased square footage.
Those are the facts.
Assessor under microscope
One city official who has received more scrutiny and comment than anyone else at City Hall regarding his new property assessment is none other than the city assessor himself, William J. Ford.
According to the assessor's on-line data base, the new assessment for Mr. Ford's Salisbury Street home is $620,000, an increase over the previous year's assessment of $601,000.
But that conflicts with Certificate of Municipal Liens details for the property, which indicated that the previous year's assessment for the property was $617,000.
Meanwhile, the folks at Accurate Worcester Assessments on Real Estate, who have been on top of Worcester's revaluation effort, contend the previous-year's assessment for Mr. Ford's property was $687,200, not the $601,000 listed on the assessor's data base nor the $617,000 listed on the CML.
In addition, AWARE contends that the assessment for Mr. Ford's property has dropped by some $270,000 in three years. The group says his home and property was assessed at $897,100 for fiscal year 2010, $687,200 for fiscal 2011 and the new assessment is $620,000.
That has prompted Worcester resident Steve Quist to file a complaint with the state Ethics Commission. He said he does not understand how someone's property valuation, the city assessor's no less, can go down by more than $270,000 in three years.
"The valuation of his property has gone down while it has gone up for so many other people," Mr. Quist said. "It all begs the question of who's guarding the henhouse?"
Mr. Ford could not be reached for comment.
Wednesday, April 4, 2012
T&G - Commercial assessments may hold up Worcester tax bills
By Nick Kotsopoulos TELEGRAM & GAZETTE STAFF
WORCESTER — Fourth-quarter property tax bills, which city officials had hoped to mail out by May 1, will likely be further delayed, City Manager Michael V. O’Brien said yesterday.
Mr. O’Brien said the delay is likely because the city did not complete its review of all 4,800 commercial properties and submit those new property values to the state Department of Revenue until yesterday.
The manager did not offer a date when the fourth-quarter tax bills reflecting the new property assessments will be mailed.
“This overall (property revaluation) undertaking has been arduous to say the least, but critical in determining fair and accurate market values based on the current parcel and market conditions,” Mr. O’Brien wrote in a report that went before the City Council last night. “This intensive effort revealed just how antiquated previous systems were and the inconsistencies between previously entered data and current parcel/market status.
“I am extremely cognizant of the compressed timelines we face, but I cannot sacrifice a high level of quality for expediency,” he wrote. “I am convinced at this time that a May 1 mailing of the fourth-quarter tax fiscal 2012 actual tax bills is more than optimistic and will likely be delayed.”
To issue the tax bills by May 1, the City Council would have to hold its annual tax classification hearing and set the tax rates in the next couple of weeks. But the date of the tax classification hearing has yet to be set — an indication that a May 1 tax bill is unlikely.
What this means for city taxpayers is that they could get two property tax bills within a couple of months.
The fourth-quarter bill, which will be the first tax bill for this fiscal year based on the new property values and new tax rates, is expected to be higher for most taxpayers because the first three tax bills for the year used estimates based on old property assessments and last fiscal year’s tax rate.
If the fourth-quarter bill goes out in the middle of May, for instance, taxpayers would have until the middle of June to pay it. Then they will receive their first-quarter tax bill for fiscal 2013 on July 1, and that payment will be due Aug. 1.
But if the tax bills are not issued until the end of May, taxpayers would be hit with a one-two punch, receiving a new quarterly tax bill soon after paying the previous one.
Last month, the city received “pending preliminary certification” of its assessments of 38,277 residential properties — single-family, two-family and three-family homes — and those property owners have already been informed of their new property assessments.
City officials have said that local residential property assessments have decreased by 3.8 percent on average compared to the previous year.
Mr. O’Brien said updating the property values for commercial properties has proven far more complicated.
He said the city assessor used the industry-standard income approach to generate a fair-market value for those properties. The income approach is most applicable to real estate that is normally bought and sold on the basis of its income-producing capabilities.
In the process of modernizing systems, Mr. O’Brien said, assessors uncovered a previous practice of “manual overrides” on as many as 2,000 commercial and industrial properties. He said those overrides allow an assessor to manually enter a data element or formula into the assessment system and override the resultant valuation that should have been calculated by the system for that parcel. As a result, Mr. O’Brien said, the new property value would be based not on the internal calculations of the system, but instead based on the artificial override.
“This manual override would continue, indefinitely, unless human intervention removed it, and (it) was not obvious when reviewing a previous property record,” the manager said. “There may have been reasons for these overrides; however, there is no documentation in the files or the notes as to why or when these manual overrides were placed.
“There was no element within the old software program that highlighted that this action was taken or that prompted staff to review on a year-to-year basis,” he continued. “It appears that some date as far back as 30 years as far as we can tell, with no supporting documentation as to why or when the adjustments were made.”
Mr. O’Brien said all the manual overrides have now been completely removed, because they have no standing based on the current parcel or market conditions.
WORCESTER — Fourth-quarter property tax bills, which city officials had hoped to mail out by May 1, will likely be further delayed, City Manager Michael V. O’Brien said yesterday.
Mr. O’Brien said the delay is likely because the city did not complete its review of all 4,800 commercial properties and submit those new property values to the state Department of Revenue until yesterday.
The manager did not offer a date when the fourth-quarter tax bills reflecting the new property assessments will be mailed.
“This overall (property revaluation) undertaking has been arduous to say the least, but critical in determining fair and accurate market values based on the current parcel and market conditions,” Mr. O’Brien wrote in a report that went before the City Council last night. “This intensive effort revealed just how antiquated previous systems were and the inconsistencies between previously entered data and current parcel/market status.
“I am extremely cognizant of the compressed timelines we face, but I cannot sacrifice a high level of quality for expediency,” he wrote. “I am convinced at this time that a May 1 mailing of the fourth-quarter tax fiscal 2012 actual tax bills is more than optimistic and will likely be delayed.”
To issue the tax bills by May 1, the City Council would have to hold its annual tax classification hearing and set the tax rates in the next couple of weeks. But the date of the tax classification hearing has yet to be set — an indication that a May 1 tax bill is unlikely.
What this means for city taxpayers is that they could get two property tax bills within a couple of months.
The fourth-quarter bill, which will be the first tax bill for this fiscal year based on the new property values and new tax rates, is expected to be higher for most taxpayers because the first three tax bills for the year used estimates based on old property assessments and last fiscal year’s tax rate.
If the fourth-quarter bill goes out in the middle of May, for instance, taxpayers would have until the middle of June to pay it. Then they will receive their first-quarter tax bill for fiscal 2013 on July 1, and that payment will be due Aug. 1.
But if the tax bills are not issued until the end of May, taxpayers would be hit with a one-two punch, receiving a new quarterly tax bill soon after paying the previous one.
Last month, the city received “pending preliminary certification” of its assessments of 38,277 residential properties — single-family, two-family and three-family homes — and those property owners have already been informed of their new property assessments.
City officials have said that local residential property assessments have decreased by 3.8 percent on average compared to the previous year.
Mr. O’Brien said updating the property values for commercial properties has proven far more complicated.
He said the city assessor used the industry-standard income approach to generate a fair-market value for those properties. The income approach is most applicable to real estate that is normally bought and sold on the basis of its income-producing capabilities.
In the process of modernizing systems, Mr. O’Brien said, assessors uncovered a previous practice of “manual overrides” on as many as 2,000 commercial and industrial properties. He said those overrides allow an assessor to manually enter a data element or formula into the assessment system and override the resultant valuation that should have been calculated by the system for that parcel. As a result, Mr. O’Brien said, the new property value would be based not on the internal calculations of the system, but instead based on the artificial override.
“This manual override would continue, indefinitely, unless human intervention removed it, and (it) was not obvious when reviewing a previous property record,” the manager said. “There may have been reasons for these overrides; however, there is no documentation in the files or the notes as to why or when these manual overrides were placed.
“There was no element within the old software program that highlighted that this action was taken or that prompted staff to review on a year-to-year basis,” he continued. “It appears that some date as far back as 30 years as far as we can tell, with no supporting documentation as to why or when the adjustments were made.”
Mr. O’Brien said all the manual overrides have now been completely removed, because they have no standing based on the current parcel or market conditions.
Monday, April 2, 2012
Saturday, March 31, 2012
Thursday, March 29, 2012
Worcester Magazine's Rosen Report takes City Assessor Ford to task
This article is courtesy of Worcester Magazine.
During the hot real estate market of 2002, my wife and I paid $220,000 for our modest home in the June-Chandler streets area of Worcester. We like the house, the neighborhood and the many services that this city has to offer. That’s why we stay.
While we’ve discussed moving to Maine, now is the wrong time to sell because it’s a buyer’s real estate market. And our house really needs some upgrades so we probably couldn’t even sell it for the price we paid 10 years ago.
However, Worcester assessor, Bill Ford, believes that we could sell our house for its new assessed value of $281,000. Now Ford is a throwback to the days when City Hall personnel acted like they were doing you a favor just by talking to you. But arrogance and sarcasm are not what shocked homeowners need when they question inaccurate and unreasonable property assessments.
The assessed value of a home represents the amount a willing buyer would pay a willing seller on the open market. So, in this depressed housing market, the $281,000 assessment on my 60-year-old, 1700-square-foot house is more inflated than Bill Ford’s ego.
A year ago, after our 2010 assessment of $261,000 climbed to $272,000 for 2011, I filed for an abatement. Mr. Ford’s response was that satellite photos alerted the city to a bedroom that a previous owner had added on to our house 30 years ago. Like many Worcester homeowners of today, evidently he chose not to take out required remodeling and construction permits to avoid paying higher property taxes.
While the assessed value of my land has decreased by $27,000, that’s really just a tease. The city immediately took back that relief by raising our house value by almost $36,000. It was even worse for a neighbor whose building value for no apparent reason was increased by more than $60,000.
Last week I attended the District 5 revaluation public meeting. The more than 100 angry homeowners present couldn’t believe that local residential assessments have decreased on average by 3.8 percent. The assessor responded to dozens of questions but failed to provide these homeowners with plausible reasons why their assessments have skyrocketed.
Before that meeting started, I sought a decrease in my home’s new assessment by asking Bill Ford to lower its grade (condition) from “Average to Good” to Average. But he said they would have to inspect the interior of my house to do that. So in order to rectify their over-assessment of my property, I’ll have to submit to an entirely different process than the drive-by method used to appraise the property of all other city homeowners.
After the City Council sets the new and painful residential tax rate, my annual property taxes on Herbert Road will be around $5,000. If inflated assessments and unreasonable property taxes become the norm in Worcester, middle- and upperincome families won’t see our city as an appealing place to live. What a blow that losing them will be to our schools, businesses and economy.
Once again, my wife and I will pay our tax bill and then file for an abatement. We’ll check off “overvaluation” on the form. Unfortunately, we can’t assess our own property. After Bill Ford bought his house on Salisbury Street, its 2010 assessed value plummeted from $897,600 to $687,200 in 2011. And now in 2012, it’s down to $620,000. But that’s what happens when the fox is allowed to guard the hen house.
During the hot real estate market of 2002, my wife and I paid $220,000 for our modest home in the June-Chandler streets area of Worcester. We like the house, the neighborhood and the many services that this city has to offer. That’s why we stay.
While we’ve discussed moving to Maine, now is the wrong time to sell because it’s a buyer’s real estate market. And our house really needs some upgrades so we probably couldn’t even sell it for the price we paid 10 years ago.
However, Worcester assessor, Bill Ford, believes that we could sell our house for its new assessed value of $281,000. Now Ford is a throwback to the days when City Hall personnel acted like they were doing you a favor just by talking to you. But arrogance and sarcasm are not what shocked homeowners need when they question inaccurate and unreasonable property assessments.
The assessed value of a home represents the amount a willing buyer would pay a willing seller on the open market. So, in this depressed housing market, the $281,000 assessment on my 60-year-old, 1700-square-foot house is more inflated than Bill Ford’s ego.
A year ago, after our 2010 assessment of $261,000 climbed to $272,000 for 2011, I filed for an abatement. Mr. Ford’s response was that satellite photos alerted the city to a bedroom that a previous owner had added on to our house 30 years ago. Like many Worcester homeowners of today, evidently he chose not to take out required remodeling and construction permits to avoid paying higher property taxes.
While the assessed value of my land has decreased by $27,000, that’s really just a tease. The city immediately took back that relief by raising our house value by almost $36,000. It was even worse for a neighbor whose building value for no apparent reason was increased by more than $60,000.
Last week I attended the District 5 revaluation public meeting. The more than 100 angry homeowners present couldn’t believe that local residential assessments have decreased on average by 3.8 percent. The assessor responded to dozens of questions but failed to provide these homeowners with plausible reasons why their assessments have skyrocketed.
Before that meeting started, I sought a decrease in my home’s new assessment by asking Bill Ford to lower its grade (condition) from “Average to Good” to Average. But he said they would have to inspect the interior of my house to do that. So in order to rectify their over-assessment of my property, I’ll have to submit to an entirely different process than the drive-by method used to appraise the property of all other city homeowners.
After the City Council sets the new and painful residential tax rate, my annual property taxes on Herbert Road will be around $5,000. If inflated assessments and unreasonable property taxes become the norm in Worcester, middle- and upperincome families won’t see our city as an appealing place to live. What a blow that losing them will be to our schools, businesses and economy.
Once again, my wife and I will pay our tax bill and then file for an abatement. We’ll check off “overvaluation” on the form. Unfortunately, we can’t assess our own property. After Bill Ford bought his house on Salisbury Street, its 2010 assessed value plummeted from $897,600 to $687,200 in 2011. And now in 2012, it’s down to $620,000. But that’s what happens when the fox is allowed to guard the hen house.
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