Walter Bird Jr., GoLocalWorcester Reporter
Worcester businesses will go under if the city levies the highest possible tax rate on commercial and industrial properties, Dick Kennedy said.
That uncertainty, said Kennedy, president/CEO of the Worcester Regional Chamber of Commerce, combined with recent skyrocketing assessment, has city officials and property owners holding their breath until fourth quarter tax bills are delivered.
Kennedy said business owners are worried that property valuations, which in some cases have doubled and tripled, will contribute to a sharp increase in their taxes when the city finally mails out the final fiscal 2012 tax bills. Those will be followed in short order by the first quarter bills for fiscal 2013.
“Yes,” he answered flatly when asked whether some owners would go out of business if their tax bills increase sharply. “Let me put it this way. Very successful businesses are calling me, saying I don’t know if I would move or stay in business.”
Businesses are ‘backbone’
That is not a message Mayor Joseph Petty wants to send to a valuable and much-needed part of the city’s tax base.
“I certainly do not want one business to close in Worcester and certainly not because of our tax structure,” Petty said in a statement to GoLocalWorcester. “I am very concerned as to what the impact of the new assessments will have on the business community. Small business are the backbone of our economy and I will take a very detailed look once we receive the numbers as to what the impact will be for both the residential and the commercial owners.”
What will they pay?
Residential taxpayers, city councilors and officials all share the same concerns: With a tax classification hearing set for May 22, and tax rates (the city has a two-tiered tax system) ready to finally be set, how bad, exactly, will the news be for taxpayers? And is there anything the city can do to avoid putting the hurt on them? The answers aren’t pretty. The current residential tax rate is $16.06 per $1,000 assessed valuation. The commercial, industrial and personal property tax rate is $34.65 per $1,000.
“There are very few options, no one of them good,” At-Large City Councilor and former Mayor Konstantina Lukes said. “Should the council rectify past inequities and give residential taxpayers less of a burden to make up for what they had been picking up? On the other side, these are bad economic times. We’re trying to pass the burden around and we can’t, because we’ll lose business.”
While there is much speculation over just what the tax rates will be, Petty wasn’t about to join the rumor mill or raise any fears.
“I cannot comment on what the implications will be to the taxpayers until we see the numbers,” Petty said. “We currently have not been provided with that information.”
File an appeal
Still, the news does not appear good for residential taxpayers. Of course, there are options. Taxpayers have two routes when it comes to disagreeing with their tax assessments. They can request tax abatements or they can take the city to court. The first step is to file an appeal and the city has plenty of those on its plate. For fiscal 2011, there were a total of 95 residential and commercial appeals filed, according to Christina Andreoli, spokesperson for City Manager Michael O’Brien.
Based on early signs – some property valuations have increased, percentage-wise, in triple digits – a high number of appeals is likely for fiscal 2012. Big businesses are likely to feel the pinch, too. The valuation for the Saint-Gobain Abrasives property at 1 New Bond Street, where there are three factories, jumped by 484.6 percent over fiscal 2011 – from $3.3 million to $19.7 million. The valuation for property owned by Berkeley Management at 90 Front St. increased even more – from $2.19 million to $13.79 million, or 527.2 percent.
Calls to representatives for both companies were not immediately returned.
Controversial overrides
Adding to the furor over potentially crippling tax bills is a debate over the system the city once used for property valuations. Officials claim assessors previously performed several manual overrides – a practice the Massachusetts Department of Revenue (DOR) acknowledged is standard and widely used. Andreoli said a review of the assessing department, which O’Brien mandated when the new assessor, William Ford, arrived in 2009, revealed more than 2,000 manual overrides. That helped keep tax levels low, many now believe artificially, and when they were removed property assessments shot up.
Manual overrides are used, according to DOR spokesperson Bob Bliss, to account for any number of factors in a valuation, such as a change of building use or for a property that had become vacant.
“(Ford) found that more than 2,000 properties had manual overrides on them and in some cases properties had not been inspected in years – there was no back-up, documentation, or notes in the file to say when these changes or adjustments occurred,” Andreoli told GoLocalWorcester. “They could have been there for one reason at one time or another, but as they stand today, there is no place in law or DOR regulations for these overrides to exist. The city must develop fair and equitable values for all classes of property. These values must be based on the most current and accurate property data."
Andreoli said, “As part of this required triennial revaluation, property data was checked, double-checked and tripled-checked through virtual reviews, full-field reviews, and valuation reviews. These reviews were necessary to ensure fair and accurate valuations of individual properties.”
The discovery of manual overrides and the resulting increase in commercial and industrial property assessments has led to finger-pointing and blame, and when the question was posed to Lukes, she said, “That’s an interesting question.”
Former assessor Bob Allard’s name has popped up as officials and residents wonder just why so many overrides were done, something he has publicly refuted. Petty shot down any suggestions of wrongdoing by Allard.
“I do not believe there was tampering,” Petty said. “Bob Allard worked for this city for long time and was always held in the highest regards. I am not aware any issues or concerns as to how he acted as the city’s assessor or how the assessing department was run.
An outdated system
The real culprit could be an antiquated process that, as late as 2007 was operating on DOS, or disk operating system. Printers spit out large reams of green-barred paper with perforated edges.
“Now,” said Bliss, “The city has a new, state-of-the art system.”
Actions, which were previously done manually, are included in the new system, although Bliss said manual overrides can still be done.
Income approach
The new way of doing things has also ignited anger among some observers, including City Councilor George Russell, a licensed realtor whose business also includes a real estate school. The city now assesses commercial and industrial property using an income method, meaning it looks at what a property could generate in revenue. Russell believes the state has forced the city to use this method of valuating property.
“The administration tells me that’s what Boston is making us do,” he said, a charge Bliss vehemently denied.
“No,” Bliss said. “We did not encourage the city to use the income approach. That’s what they used to use.”
There are three approaches to assessing property, he said. One of them, the comparable sales method, is predominantly used to assess residential property, because it is easier to find other properties of comparable worth. That is not the case with commercial and residential property. Russell acknowledged that point, but believes it is unfair when it is the only method used to assess those properties.
“It works when you have income,” he said. “But if you have a vacant property … you can’t say, gee, in a perfect world it would rent for whatever.”
Russell made it clear he is an advocate for the lowest possible residential property rate for homeowners, “or slightly lower, but not more than, last year.”
Confidence high, low
Russell answered directly when asked whether he had confidence in the city’s handling of the fiscal 2012 property assessments.
“I’m confident in the city manager and the administration overall, but not happy with the way the whole valuation process has come out,” he said.
When asked about the current assessor, Russell said, “I don’t have confidence in the way he’s gone about this process. Personally, I think he’s honorable. I just think the process he’s chosen is not accurate.”
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Sunday, May 13, 2012
Thursday, May 10, 2012
T&G - Former Worcester assessor: valuations not tampered with
By Nick Kotsopoulos TELEGRAM & GAZETTE STAFF
The only manual overrides Mr. Allard said he was aware of were for large tax-exempt properties, such as colleges and hospitals.
WORCESTER — A former city assessor insists that computer-generated valuations for commercial and industrial properties were not manually overridden by staff during his tenure at City Hall to produce artificially lower assessments for business properties.
Robert J. Allard Jr., who served as city assessor from 2002 to 2009, said valuations for the city's 3,000 commercial and industrial properties were always determined by using the industry-standard income approach.
He said it was never a practice of his office to override the computer-generated data for commercial and industrial properties and establish lower assessments, and he is unaware of any instances of it ever happening.
“There is absolutely no truth to that,” Mr. Allard said in a telephone interview from his home in California.
But city officials stand by their contention that assessors for years had been manually overriding valuations set by computer program on as many as 2,000 of the city's commercial and industrial properties.
City Manager Michael V. O'Brien said the data and information shows there was “human intervention” to reduce the assessed valuations of those business properties below what was called for by computer programs.
“Things were done (in the Assessor's Office) that did not follow the standards of the (state Department of Revenue) and I have the charge of cleaning it up,” Mr. O'Brien said.
While assessments for residential properties are largely derived on the basis of sales of comparable properties, establishing valuations for commercial and industrial properties is much different. The income approach is most applicable to business 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 said they uncovered a practice that allowed assessors 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, they said, commercial and industrial property values were based on an artificial override and not on the internal calculations of the system. All of those manual overrides have since been removed, and what has resulted is a dramatic increase in the assessed valuations of many commercial and industrial properties.
But Mr. Allard said it is inconceivable that there could have been as many as 2,000 manual overrides of commercial and industrial properties because there are only roughly 3,000 such properties in the city. Of other commercial properties, he said there are 600 mixed-use (residential and business uses); 1,100 residential properties with four to eight units; and about 200 residential properties with nine units or more.
He said the letter “m” that was put on many property cards meant that the respective property had been assessed by using the market approach — determining valuation through comparable sales — and did not signify that the assessed values for those properties had been manually overridden.
In many instances, he said, the “m” designation was applied to apartment buildings.
Mr. Allard said the designation was also given to vacant commercial and industrial properties. He said the income method of assessing business properties could not be used on those properties because they were not generating any income.
He said the only manual overrides he was aware of were for large tax-exempt properties, such as colleges and hospitals.
By law, the city is still required to assign assessed valuations to non-taxpaying properties. Instead of assigning personnel and spending money to go out in the field to inspect and assess those properties, the Assessor's Office used financial statements from those institutions to set property valuations as best it could.
But William J. Ford, who succeeded Mr. Allard as city assessor in 2009, said the documentation the city has clearly shows that some 2,000 commercial and industrial properties had a manual override on them that drastically affected the value of the property.
“Having not been here, I cannot speak specifically to the what, whys and when,” Mr. Ford said yesterday. “I do not have any backup documentation or notes in the file to say when these changes and adjustments occurred. There could have been reasons at one time or another, but when you review the property as it stands today, there is no place in law or DOR regulations for this override to exist.
“I cannot speak for previous assessors,” he added. “All I know is that when I came on board I was asked to do a top-to-bottom review of the (assessing) division. I found property cards that indicated that properties had not been inspected for more than 25 years, some dating back to 1985.
Meanwhile, District 3 City Council George J. Russell has challenged the method used in setting new assessed valuations for commercial and industrial properties, contending it may be a big reason assessments for those properties have skyrocketed.
Mr. Russell questioned whether the city was “bullied” by the state to use an income approach to generate a fair-market value for those properties.
“I want to know if the city of Worcester had a choice at all in picking the process that was used to assess commercial and industrial property,” the councilor said at Tuesday's City Council meeting. “The way we put values on these properties was neither fair nor equitable. Did the state force us to use the income approach for businesses?
“The process has to be reviewed,” he added. “I'm frustrated by all heck by this. I'm asking the city to revisit this issue. This city government should be challenging the state of Massachusetts on this.”
The only manual overrides Mr. Allard said he was aware of were for large tax-exempt properties, such as colleges and hospitals.
WORCESTER — A former city assessor insists that computer-generated valuations for commercial and industrial properties were not manually overridden by staff during his tenure at City Hall to produce artificially lower assessments for business properties.
Robert J. Allard Jr., who served as city assessor from 2002 to 2009, said valuations for the city's 3,000 commercial and industrial properties were always determined by using the industry-standard income approach.
He said it was never a practice of his office to override the computer-generated data for commercial and industrial properties and establish lower assessments, and he is unaware of any instances of it ever happening.
“There is absolutely no truth to that,” Mr. Allard said in a telephone interview from his home in California.
But city officials stand by their contention that assessors for years had been manually overriding valuations set by computer program on as many as 2,000 of the city's commercial and industrial properties.
City Manager Michael V. O'Brien said the data and information shows there was “human intervention” to reduce the assessed valuations of those business properties below what was called for by computer programs.
“Things were done (in the Assessor's Office) that did not follow the standards of the (state Department of Revenue) and I have the charge of cleaning it up,” Mr. O'Brien said.
While assessments for residential properties are largely derived on the basis of sales of comparable properties, establishing valuations for commercial and industrial properties is much different. The income approach is most applicable to business 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 said they uncovered a practice that allowed assessors 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, they said, commercial and industrial property values were based on an artificial override and not on the internal calculations of the system. All of those manual overrides have since been removed, and what has resulted is a dramatic increase in the assessed valuations of many commercial and industrial properties.
But Mr. Allard said it is inconceivable that there could have been as many as 2,000 manual overrides of commercial and industrial properties because there are only roughly 3,000 such properties in the city. Of other commercial properties, he said there are 600 mixed-use (residential and business uses); 1,100 residential properties with four to eight units; and about 200 residential properties with nine units or more.
He said the letter “m” that was put on many property cards meant that the respective property had been assessed by using the market approach — determining valuation through comparable sales — and did not signify that the assessed values for those properties had been manually overridden.
In many instances, he said, the “m” designation was applied to apartment buildings.
Mr. Allard said the designation was also given to vacant commercial and industrial properties. He said the income method of assessing business properties could not be used on those properties because they were not generating any income.
He said the only manual overrides he was aware of were for large tax-exempt properties, such as colleges and hospitals.
By law, the city is still required to assign assessed valuations to non-taxpaying properties. Instead of assigning personnel and spending money to go out in the field to inspect and assess those properties, the Assessor's Office used financial statements from those institutions to set property valuations as best it could.
But William J. Ford, who succeeded Mr. Allard as city assessor in 2009, said the documentation the city has clearly shows that some 2,000 commercial and industrial properties had a manual override on them that drastically affected the value of the property.
“Having not been here, I cannot speak specifically to the what, whys and when,” Mr. Ford said yesterday. “I do not have any backup documentation or notes in the file to say when these changes and adjustments occurred. There could have been reasons at one time or another, but when you review the property as it stands today, there is no place in law or DOR regulations for this override to exist.
“I cannot speak for previous assessors,” he added. “All I know is that when I came on board I was asked to do a top-to-bottom review of the (assessing) division. I found property cards that indicated that properties had not been inspected for more than 25 years, some dating back to 1985.
Meanwhile, District 3 City Council George J. Russell has challenged the method used in setting new assessed valuations for commercial and industrial properties, contending it may be a big reason assessments for those properties have skyrocketed.
Mr. Russell questioned whether the city was “bullied” by the state to use an income approach to generate a fair-market value for those properties.
“I want to know if the city of Worcester had a choice at all in picking the process that was used to assess commercial and industrial property,” the councilor said at Tuesday's City Council meeting. “The way we put values on these properties was neither fair nor equitable. Did the state force us to use the income approach for businesses?
“The process has to be reviewed,” he added. “I'm frustrated by all heck by this. I'm asking the city to revisit this issue. This city government should be challenging the state of Massachusetts on this.”
Wednesday, May 9, 2012
T&G - Worcester councilor questions property valuation method
By Nick Kotsopoulos TELEGRAM & GAZETTE STAFF
WORCESTER — A city councilor has challenged the method used in setting new assessed valuations for commercial and industrial properties, contending it may be a big reason assessments for those properties have skyrocketed.
District 3 Councilor George J. Russell questioned whether the city was “bullied” by the state to use an income approach to generate a fair-market value for those properties.
While assessments for residential property are largely derived on the basis of sales of comparable properties, the valuations for commercial and industrial property were established differently and were instead based on their income-producing capabilities.
Mr. Russell, who has an extensive background in the real estate field the past 20 years, said business properties should be assessed the same way as residential properties based on comparable sales.
“I want to know if the city of Worcester had a choice at all in picking the process that was used to assess commercial and industrial property,” the councilor said. “The way we put values on these properties was neither fair nor equitable. Did the state force us to use the income approach for businesses?
“The process has to be reviewed,” he added. “I'm frustrated by all heck by this. I'm asking the city to re-visit this issue. This city government should be challenging the state of Massachusetts on this.”
The assessed valuations for most commercial and industrial properties is going up by at least 10 percent — and significantly more in many instances.
Of the city's 2,278 commercial parcels, the assessed valuations for 317 are going up 10 percent to 20 percent; 498 are going up 20 percent to 40 percent; and 540 are increasing by 40 percent to 100 percent, according to city officials.
Meanwhile, the valuations of 174 commercial properties will increase by more than 100 percent.
Of the 598 industrial properties in the city, the assessed valuation of 58 of those properties is increasing by 10 percent to 20 percent; 98 properties by 20 percent to 40 percent; and 101 properties by 40 percent to 100 percent.
In addition, the assessed valuations of 60 industrial properties have more than doubled.
By comparison, residential property assessments have decreased by 3.8 percent on average.
City officials have attributed the dramatic increases to the removal of “manual overrides” that were in place for many years for commercial and industrial properties.
While the assessed valuations for commercial properties were being updated as part of the city's triennial property revaluation, it was discovered that assessors for years had been manually overriding valuations set by computer program on as many as 2,000, or roughly 40 percent, of the city's commercial and industrial properties.
As a result, when the computer-generated values were manually overridden, the new assessments often came out lower.
But one source familiar with the city's assessing practices said the letter “m” that was on the property cards for those commercial and industrial properties did not mean the computer-generated valuations were manually overridden by staff. Rather, the designation meant that the property was assessed through the market (comparable sales) approach.
The dramatic valuation increases have drawn the ire of local business property owners, some of whom contend it will place a significant tax burden on them at a time when they can least afford it.
District 1 Councilor Tony Economou said the dramatic assessment increases could force businesses to layoff employees, reduce work hours and even force some to close their doors.
He also questioned what role the state Department of Revenue played in reviewing the city's past assessment practices.
“We may be on the brink of unraveling everything we've done the past several years,” Mr. Economou said. “There was no planning for these kinds of changes. These kinds of (tax) increases cannot be absorbed by businesses. What I want to know is where has the DOR (Department of Revenue) been in this process?”
Councilor-at-Large Konstantina B. Lukes also raised questions about the legal role of the DOR in reviewing the city's property assessments each year and what legal liability it may have for “misleading us.”
“We are now in a position where we will have to try to correct the culmination of a series of missteps,” she said.
City Manager Michael V. O'Brien said the public disclosure process for commercial and industrial properties ends at 7 tonight.
He said the city must then provide the DOR with all its final revaluation paperwork so it can obtain final certification of its property revaluation. He said the city hopes to receive that certification by next Wednesday.
If that happens, the manager said, the City Council would then be able to hold its annual tax classification hearing May 22, at which time it can finally set the tax rates for this fiscal year, which ends June. 30.
WORCESTER — A city councilor has challenged the method used in setting new assessed valuations for commercial and industrial properties, contending it may be a big reason assessments for those properties have skyrocketed.
District 3 Councilor George J. Russell questioned whether the city was “bullied” by the state to use an income approach to generate a fair-market value for those properties.
While assessments for residential property are largely derived on the basis of sales of comparable properties, the valuations for commercial and industrial property were established differently and were instead based on their income-producing capabilities.
Mr. Russell, who has an extensive background in the real estate field the past 20 years, said business properties should be assessed the same way as residential properties based on comparable sales.
“I want to know if the city of Worcester had a choice at all in picking the process that was used to assess commercial and industrial property,” the councilor said. “The way we put values on these properties was neither fair nor equitable. Did the state force us to use the income approach for businesses?
“The process has to be reviewed,” he added. “I'm frustrated by all heck by this. I'm asking the city to re-visit this issue. This city government should be challenging the state of Massachusetts on this.”
The assessed valuations for most commercial and industrial properties is going up by at least 10 percent — and significantly more in many instances.
Of the city's 2,278 commercial parcels, the assessed valuations for 317 are going up 10 percent to 20 percent; 498 are going up 20 percent to 40 percent; and 540 are increasing by 40 percent to 100 percent, according to city officials.
Meanwhile, the valuations of 174 commercial properties will increase by more than 100 percent.
Of the 598 industrial properties in the city, the assessed valuation of 58 of those properties is increasing by 10 percent to 20 percent; 98 properties by 20 percent to 40 percent; and 101 properties by 40 percent to 100 percent.
In addition, the assessed valuations of 60 industrial properties have more than doubled.
By comparison, residential property assessments have decreased by 3.8 percent on average.
City officials have attributed the dramatic increases to the removal of “manual overrides” that were in place for many years for commercial and industrial properties.
While the assessed valuations for commercial properties were being updated as part of the city's triennial property revaluation, it was discovered that assessors for years had been manually overriding valuations set by computer program on as many as 2,000, or roughly 40 percent, of the city's commercial and industrial properties.
As a result, when the computer-generated values were manually overridden, the new assessments often came out lower.
But one source familiar with the city's assessing practices said the letter “m” that was on the property cards for those commercial and industrial properties did not mean the computer-generated valuations were manually overridden by staff. Rather, the designation meant that the property was assessed through the market (comparable sales) approach.
The dramatic valuation increases have drawn the ire of local business property owners, some of whom contend it will place a significant tax burden on them at a time when they can least afford it.
District 1 Councilor Tony Economou said the dramatic assessment increases could force businesses to layoff employees, reduce work hours and even force some to close their doors.
He also questioned what role the state Department of Revenue played in reviewing the city's past assessment practices.
“We may be on the brink of unraveling everything we've done the past several years,” Mr. Economou said. “There was no planning for these kinds of changes. These kinds of (tax) increases cannot be absorbed by businesses. What I want to know is where has the DOR (Department of Revenue) been in this process?”
Councilor-at-Large Konstantina B. Lukes also raised questions about the legal role of the DOR in reviewing the city's property assessments each year and what legal liability it may have for “misleading us.”
“We are now in a position where we will have to try to correct the culmination of a series of missteps,” she said.
City Manager Michael V. O'Brien said the public disclosure process for commercial and industrial properties ends at 7 tonight.
He said the city must then provide the DOR with all its final revaluation paperwork so it can obtain final certification of its property revaluation. He said the city hopes to receive that certification by next Wednesday.
If that happens, the manager said, the City Council would then be able to hold its annual tax classification hearing May 22, at which time it can finally set the tax rates for this fiscal year, which ends June. 30.
Tuesday, May 8, 2012
T&G - Businesses shocked by tax assessments
Some increases higher than 100 percent
Marc Tsourides’ boat dealership (USA Marine Inc.) has been on Route 20 (200 Southwest Cutoff) since 1990.
In recent years, the 2-1/2-acre property, with its 22-year-old building, has been assessed by the city in the range of $600,000 to $800,000.
But then Mr. Tsourides received a notice in the mail from the city on Wednesday — as did all 4,707 commercial, industrial and mixed-use property owners — informing him that his building and property was now being assessed at nearly $2.5 million.
He was told the new assessment for his building is $1.56 million — an increase of 130 percent over its previous valuation — while the land is now being assessed at more than $800,000.
With that, Mr. Tsourides said his business is now looking at the prospect of having to pay up to $40,000 more in property taxes which is roughly double what he pays now.
Needless to say, the new assessed valuation figure staggered Mr. Tsourides in more ways than one.
“I don’t understand how (the city) can do this,” Mr. Tsourides said in an interview last week. “There is absolutely no justification for that kind of increase. We haven’t added on to our building and no improvements have been made to it. How did they determine that our property is all of a sudden worth $2.5 million?”
“I couldn’t get $2.5 million if I put it up for sale today; I don’t think I could come close,” he added. “The way I feel right now, I have to ask myself if we want to stay in Worcester. I don’t mind paying my fair share of taxes, but this is going to make it tough for me to keep our doors open here. If I could get $2.5 million, I’d move the business to Shrewsbury and put up a new building there.”
Mr. Tsourides is not alone. He said he has been in touch with several of his business neighbors along Route 20 since the assessment notifications went out and like him, their new valuations have “gone through the roof” as well.
Business property owners are indeed perplexed about what is going on.
Unfortunately, they are now paying the price for past sins by the city in the way it assessed business properties and kept the assessed valuations for a large percentage of those properties artificially low.
While the assessed valuations for commercial and industrial properties were being updated as part of Worcester’s triennial property revaluation, it was discovered that assessors for years had been manually overriding valuations set by computer programs. As a result, when the computer-generated values were manually overridden, the new assessments often came out lower than what they were supposed to be.
Manual overrides were found on as many as 2,000, or roughly 40 percent, of the city’s commercial and industrial properties. Those overrides allowed assessors 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, City Manager Michael V. O’Brien said, those property values were based on an artificial override and not on the internal calculations of the system. He said all of those manual overrides have now been completely removed because they have no relevance based on the parcel or market conditions.
The manger said another practice that was uncovered during the review was an unjustifiable “obsolescence” applied to a parcel. He said functional and economic obsolescent entries ended up reducing the value of a property because of certain existing physical characteristics or conditions beyond the property itself, such as negative economic forces.
With the removal of the manual overrides and the elimination of obsolescent entries, Mr. O’Brien said all properties are now assessed consistently, with the exact same set of stands as established by law, regulation, statute, policy and industry.
But the end result is not pretty for many businesses.
Of the city’s 2,278 commercial parcels, the assessed valuations for 317 have gone up 10 percent to 20 percent; 498 went up 20 percent to 40 percent; and 540 went up 40 percent to 100 percent, according to city officials.
Meanwhile, the valuations of 174 commercial properties have increased by more than 100 percent.
Of the 598 industrial properties in the city, the assessed valuations of 58 of those properties have increased by 10 percent to 20 percent; 98 properties went up by 20 percent to 40 percent and 101 properties shot up 40 percent to 100 percent.
In addition the assessed valuations of 60 industrial properties have more than doubled.
Mind you, residential property assessments have decreased by 3.8 percent on average compared with the previous year.
Business property owners will have an opportunity to address concerns and questions they have about their new assessments with city assessors during a public information session tomorrow in Cotsidas Auditorium at St. Spyridon Cathedral, 102 Russell St. The session will go from 3:30 p.m. to 7 p.m.
But Mr. Tsourides questions just what will be accomplished by meeting with assessors. He doesn’t believe for a second that the city will lower his property assessment.
There are going to be those who will have little sympathy for business property owners who have been whacked with much higher assessments; after all, it appears their properties were being under-assessed for some time. But to be hit with such dramatic assessment increases could be crippling for many businesses.
Why wasn’t this discovered during other triennial property revaluations, and where was the state Department of Revenue, which is supposed to review the revaluation work done by the city? Somebody dropped the ball on this, but who? Where was the oversight?
There are indeed a lot of questions; unfortunately, no one has offered any answers.
Sunday, May 6, 2012
Thursday, May 3, 2012
Wednesday, May 2, 2012
T&G - Ethics Commission wraps up complaint over Worcester assessor’s home. State panel ‘satisfied’ by review
By Nick Kotsopoulos TELEGRAM & GAZETTE STAFF
nkotsopoulos@telegram.com
WORCESTER — The state Ethics Commission is taking no further action on a complaint regarding the significant drop in the assessed valuation of City Assessor William J. Ford’s home in recent years.
Mr. Ford was notified of the Ethics Commission’s action yesterday in a letter it sent him.
“As you know, we discussed with you a concern that your home’s assessed value had been significantly lowered in the past two years,” wrote Katherine E. Gallant, senior investigator for the commission. “Relying on what you told us and on any other necessary follow-up investigation and document review, we are satisfied that this matter does not require any further action on our part.”
Stephen Quist of June Street filed a complaint last month with the Ethics Commission in which he raised questions as to how Mr. Ford’s property valuation could go down by roughly $270,000 since he purchased the home in August 2010.
Mr. Quist pointed out that the valuation of Mr. Ford’s home at 360 Salisbury St. went down considerably, while the valuations for many other homeowners had at least stayed pretty much the same or had even gone up in some instances.
“It all begs the question of who’s guarding the henhouse?” Mr. Quist said when he filed his complaint.
Mr. Ford has also been the target of criticism from the citizens group, Accurate Worcester Assessments on Real Estate.
The group has pointed out that Mr. Ford’s home and property was assessed at $897,100 for fiscal 2010, the year in which he purchased it.
The assessment then dropped to $687,200 in fiscal 2011 and the new assessment is $620,000
The group pointed out that the land valuation of Mr. Ford’s 2.52 acres, which includes two half-acre buildable lots, is $66,500.
In comparison, the group said, the assessed land value of an abutting .56-acre on Surrey Lane is $100,4000, while the assessed land value for another .62-acre abutting property is $100,300.
Both those properties are within different neighborhood assessing codes than Mr. Ford’s property.
nkotsopoulos@telegram.com
WORCESTER — The state Ethics Commission is taking no further action on a complaint regarding the significant drop in the assessed valuation of City Assessor William J. Ford’s home in recent years.
Mr. Ford was notified of the Ethics Commission’s action yesterday in a letter it sent him.
“As you know, we discussed with you a concern that your home’s assessed value had been significantly lowered in the past two years,” wrote Katherine E. Gallant, senior investigator for the commission. “Relying on what you told us and on any other necessary follow-up investigation and document review, we are satisfied that this matter does not require any further action on our part.”
Stephen Quist of June Street filed a complaint last month with the Ethics Commission in which he raised questions as to how Mr. Ford’s property valuation could go down by roughly $270,000 since he purchased the home in August 2010.
Mr. Quist pointed out that the valuation of Mr. Ford’s home at 360 Salisbury St. went down considerably, while the valuations for many other homeowners had at least stayed pretty much the same or had even gone up in some instances.
“It all begs the question of who’s guarding the henhouse?” Mr. Quist said when he filed his complaint.
Mr. Ford has also been the target of criticism from the citizens group, Accurate Worcester Assessments on Real Estate.
The group has pointed out that Mr. Ford’s home and property was assessed at $897,100 for fiscal 2010, the year in which he purchased it.
The assessment then dropped to $687,200 in fiscal 2011 and the new assessment is $620,000
The group pointed out that the land valuation of Mr. Ford’s 2.52 acres, which includes two half-acre buildable lots, is $66,500.
In comparison, the group said, the assessed land value of an abutting .56-acre on Surrey Lane is $100,4000, while the assessed land value for another .62-acre abutting property is $100,300.
Both those properties are within different neighborhood assessing codes than Mr. Ford’s property.
T&G - Commercial values going up in Worcester
By Nick Kotsopoulos TELEGRAM & GAZETTE STAFF
WORCESTER — The assessed valuations for most commercial and industrial properties will be going up by at least 10 percent — and significantly more in many instances — based on the “pending preliminary certification” the city received from the state Department of Revenue yesterday for commercial, industrial and mixed-used property values.
Of the city’s 2,278 commercial parcels, the assessed valuations for 317 will go up 10 percent to 20 percent; 498 will go up 20 percent to 40 percent; and 540 will go up 40 percent to 100 percent, according to city officials.
The valuations of 174 commercial properties will increase by more than 100 percent.
Of the 598 industrial properties in the city, the assessed valuation of 58 of those properties will increase by 10 percent to 20 percent; 98 properties will increase 20 percent to 40 percent; 101 properties will go up 40 percent to 100 percent.
The assessed valuations of 60 industrial properties will more than double.
City Manager Michael V. O’Brien said one of the key reasons for the dramatic increases is the removal of “manual overrides” in place for many years for those classes of properties.
While the assessed valuations for commercial properties were being updated as part of the city’s triennial property revaluation, it was discovered that assessors for years had been manually overriding valuations set by computer programs. As a result, when the computer-generated values were manually overridden, the new assessments often came out lower.
While assessments for residential properties are largely derived on the basis of 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. 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 practice of manual overrides on as many as 2,000, or 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, commercial and industrial property values would be based on an artificial override and not on the internal calculations of the system.
Mr. O’Brien said all of those manual overrides have been completely removed because they have no relevance based on the current parcel or market conditions.
He said another practice that was uncovered during the review was an “unjustifiable obsolescence” applied to a parcel.
He said functional and economic obsolescence entries ended up reducing the value of a property because of certain existing physical characteristics or conditions beyond the property itself, such as negative economic forces.
The city received “pending preliminary certification” of its residential property values in early April; certification of commercial and industrial property values was delayed upon the discovery of manual overrides.
WORCESTER — The assessed valuations for most commercial and industrial properties will be going up by at least 10 percent — and significantly more in many instances — based on the “pending preliminary certification” the city received from the state Department of Revenue yesterday for commercial, industrial and mixed-used property values.
Of the city’s 2,278 commercial parcels, the assessed valuations for 317 will go up 10 percent to 20 percent; 498 will go up 20 percent to 40 percent; and 540 will go up 40 percent to 100 percent, according to city officials.
The valuations of 174 commercial properties will increase by more than 100 percent.
Of the 598 industrial properties in the city, the assessed valuation of 58 of those properties will increase by 10 percent to 20 percent; 98 properties will increase 20 percent to 40 percent; 101 properties will go up 40 percent to 100 percent.
The assessed valuations of 60 industrial properties will more than double.
City Manager Michael V. O’Brien said one of the key reasons for the dramatic increases is the removal of “manual overrides” in place for many years for those classes of properties.
While the assessed valuations for commercial properties were being updated as part of the city’s triennial property revaluation, it was discovered that assessors for years had been manually overriding valuations set by computer programs. As a result, when the computer-generated values were manually overridden, the new assessments often came out lower.
While assessments for residential properties are largely derived on the basis of 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. 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 practice of manual overrides on as many as 2,000, or 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, commercial and industrial property values would be based on an artificial override and not on the internal calculations of the system.
Mr. O’Brien said all of those manual overrides have been completely removed because they have no relevance based on the current parcel or market conditions.
He said another practice that was uncovered during the review was an “unjustifiable obsolescence” applied to a parcel.
He said functional and economic obsolescence entries ended up reducing the value of a property because of certain existing physical characteristics or conditions beyond the property itself, such as negative economic forces.
The city received “pending preliminary certification” of its residential property values in early April; certification of commercial and industrial property values was delayed upon the discovery of manual overrides.
Wednesday, April 25, 2012
Thursday, April 19, 2012
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