A Tale Of Two Venues

Can two wrongs eventually make a right?

Did you file an Abatement Application?

T&G: Letter to the Editor - Housing assessments don’t make sense

The Telegram & Gazette has been writing about what the city manager and the tax assessor’s office have been saying, that the single-family home valuation has dropped on average 3 percent. Does the T&G want to hear the real story?

I received my parcel information from the assessor’s office, and to my surprise (shock) the value of my single-family home went up 23 percent. When I called the assessor’s office the person I talked to told me he would look into it. He called me back a week later and told me he had a little room to work with, and then told me upfront not to expect the value to be less than last year, because that was not going to happen. They did drop the value down, but it’s still at 10 percent higher. I think they are just picking numbers out of the air and hope most people won’t say anything.

I have talked to a number of people, and they say their property values have all gone up. The house next door to mine sold for $225,000 in 2005. That house is now on the market for $135,000. And my property value has gone up?

When you file for your abatement, who is going to do the review, the assessor’s office?

I don’t trust them, and I can’t see how they can be trusted to be fair. They should prove to us where they got these numbers, not us having to prove they are wrong.

RONALD ROY

Worcester

Telegram: Tomorrow is deadline to contest Worcester real estate assessments

It’s last call for property owners wishing to contest their new real estate and personal property assessments.

Tomorrow is the deadline for property owners to file an abatement application with the assessor’s office and the way things are trending the city could see its biggest number of applications in years.
As of Friday, the city had received 1,217 real estate abatement applications, according to City Assessor William J. Ford.

While that number is consistent with previous year application numbers, Mr. Ford said, his office expects to receive “a large volume” of applications by tomorrow’s filing deadline, especially from commercial and industrial property owners.

The assessor said it is difficult to determine just how many applications have been requested or obtained because there are multiple ways in which a property owner can obtain an abatement application, including printing one off the city’s website at www.worcesterma.gov.

Of the 1,217 real estate abatement applications to date, Mr. Ford said the breakdown of the filings is as follows: 822, residential; 371 commercial, industrial and apartments; 24, mixed-used.

In addition, the city has received 79 abatement applications for personal property values, the assessor said.

Mr. Ford said about 40 abatements have been granted so far, and all have been for residential properties.

“Of the total applications received, we have reviewed and inspected 238 properties (212 residential and 26 commercial/industrial/apartments),” Mr. Ford wrote in a report that goes before the City Council Tuesday night. “An additional 24 inspections have been scheduled.”

Last fiscal year, the city received 1,257 abatement applications, while 1,432 were received in fiscal 2010 and 1,784 in fiscal 2009.

In 2009, 844 abatements were granted, totaling $708,648, according to the assessor. Meanwhile, 483 abatements, totaling $457,117, were approved in 2010 and 277, totaling $702,389, were approved last year.

The city assessor must act on an abatement application within three months of the date of its filing, unless the applicant agrees in writing before the three-month period expires to extend it. If the assessor does not act on the abatement application within 90 days, it is deemed denied.

Mr. Ford said when an application is received by his office, it is time stamped and logged. He said the information on the application is then entered into the Vision assessment system for tracking and approval, and scanned into the city’s electronic record database.

Each application is assigned to an assessor for further review and inspection.

Because city officials anticipate there will be an increase in the number of applications, the city has hired KRT Appraisals to assist with the review and interior inspection of residential properties.

Mr. Ford said that frees up in-house staff to focus on the review and interior inspections of commercial and industrial properties.

City officials are bracing for an influx of abatement applications from commercial and industrial property owners because of dramatic increases in their assessed valuations.

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.

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.

In comparison, residential property assessments decreased by 3.8 percent on average compared with the previous year.

Property owners are encouraged to pay the tax as assessed to avoid any loss of rights or additional charges. If the tax due is more than $3,000 for the entire year, the full tax must be paid without incurring interest, otherwise, the right to appeal to the state Appellate Tax Board is forfeited.

The assessor is required to provide written notification of the disposition of all abatement applications. Those who wish to appeal the decision of the assessor have 90 days to file an appeal with the state Appellate Tax Board.

Don't Be Late - File by June 25th

Worcester Surpasses Boston

GoLocalWorcester June 8, 2012

Attention Businesses

Telegram: Questions remain over Worcester's commercial property valuations

By Thomas Caywood TELEGRAM & GAZETTE STAFF

WORCESTER —  In the 2008 property tax revaluation, city assessors rated a four-story office building near Lincoln Square to be largely obsolete by the construction standards of the day, a decision that contributed to reducing the value of the building for tax purposes by millions of dollars.

It was a curious move, however, given that construction on the building, the Life Sciences and Bioengineering Center at Gateway Park, had only been completed the year before.

City officials said this past week they could find no explanation or justification on file as to why assessors would judge a new, state-of-the-art office building to be so outdated that it qualified for a significantly reduced property tax assessment.

The situation also has produced some head scratching at Worcester Polytechnic Institute, which owns the building through a subsidiary corporation.

“I have no idea how that transpired, frankly,” said WPI Chief Financial Officer Jeffrey S. Solomon, who added that he wasn't aware that the city had rated the building largely obsolete until he was contacted for this report.

The life sciences center is just one of hundreds of commercial structures across the city for which obsolescence ratings were set unusually high, which has the result of reducing the taxable values of those buildings, according to city records and independent assessing experts.

Most of the questionably high obsolescence ratings have been dialed back in this year's revaluation, but serious questions remain about how so many commercial buildings in productive use came to be assessed as mostly obsolete and whether the cash-strapped city lost untold millions in commercial property taxes as a result.

The functional and economic obsolescence ratings for WPI's life sciences center were reset to zero in this year's revaluation, which contributed to more than doubling the building's assessed value from just under $8 million last year to $17.1 million this year.

That was one of many jaw-dropping jumps in commercial property valuations unveiled as City Assessor William J. Ford combed through the property tax rolls slashing or eliminating high functional obsolescence rates set under his predecessor, Robert J. Allard Jr.

In one method of placing a value on a commercial building for tax purposes, known as the “cost approach,” assessors start with the replacement cost of a building. That amount is then reduced based on several factors, including the condition of the building and how well it suits the needs of modern business tenants. In assessing terms, that is, the value of the building is depreciated based in part on the degree to which it is functionally obsolete.

A moderately outmoded building might be judged to be 5 percent functionally obsolete. A completely outdated structure, such as a brick mill building from the 19th century, typically would be capped at 25 percent functionally obsolete, according to Mr. Ford and other assessing experts.

But hundreds of commercial and industrial buildings in Worcester were rated far more than 25 percent functionally obsolete as of the previous revaluation four years ago.

The functional obsolescence of 552 buildings was judged to be between 25 percent and 40 percent, while another 135 buildings were rated at between 41 percent and 70 percent, and 27 buildings were rated between 71 percent and 100 percent, according to a Telegram & Gazette review of city assessing records. All told, a quarter of the city's inventory of 2,900 commercial and industrial buildings was judged to be 25 percent or more functionally obsolete.

Massachusetts Association of Assessing Officers President Ronald Keohan said he couldn't recall ever having seen a functional obsolescence percentage higher than 25 percent in his work as the deputy assessor in Saugus. Larry Clark, the director of professional development for the International Association of Assessing Officers based in St. Louis, said he occasionally has seen them as high as 50 percent but only for long-disused industrial plants in the Midwest.

Mr. Ford, the city assessor who inherited the high commercial obsolescence figures when he took over the office three years ago, said he couldn't speak to how things were done before his appointment because the old software didn't provide a space for comments explaining unusual depreciation calculations and he couldn't find any written records justifying the high percentages. He has since overseen the installation of a new assessment software package.

“If my guys put something down as 15 percent obsolete, I'm not going to question that, but if it's 80 percent, you better have an explanation why,” Mr. Ford said.

After he took over, with the city manager's backing, Mr. Ford set about hacking away at what he considered to be questionably high obsolescence rates applied to commercial and industrial properties throughout the city.

The resulting spike in commercial property valuations incited an uproar among building owners fearful that the new assessed values would send their tax bills skyrocketing. Under intense pressure from the business community, the City Council last month approved a lower commercial tax rate, negating the financial impact of the higher valuations for some properties, and thus, quieting the tumult.

In defending the new higher values from strong business community pushback, City Manager Michael V. O'Brien initially seemed to cast doubt on the propriety of the former valuations. But Mr. O'Brien later backpedaled, assuring councilors that the previous values had been calculated in accordance with state regulations.

That puts Mr. O'Brien in the contorted position of publicly accepting the validity of the previous valuations, which were set on his watch, while at the same time systematically undoing them. He did not respond to several interview requests over the last two weeks.

The previous assessor, Mr. Allard, now retired and living in California, again defended the appropriateness of his valuations in a recent telephone interview. His position is backed up by the state Department of Revenue, which certified Mr. Allard's valuations in 2008 and continues to stand by that certification today.

Mr. Allard maintained that the high obsolescence percentages under his tenure had no impact on commercial property taxes because his assessors analyzed the rents earned by comparable buildings to arrive at an initial valuation, known as the “income approach” to assessments. The resulting valuations are then depreciated based on factors such vacancy rates and expenses.

The Department of Revenue requires assessors to calculate commercial valuations using at least two assessment approaches and further mandates that the resulting values must be within 15 percent of each other.

“The assessors were essentially matching the cost approach to the income approach by adjusting the obsolescence percentages. But it's meaningless,” Mr. Allard said. “We used the income approach. That's really the only way to value these commercial properties.”

But Mr. Ford said he also found many unusually high depreciation percentages in the income approach assessments calculated by his predecessor.

Late last month, the Department of Revenue certified the new, sharply higher commercial property values calculated under Mr. Ford's supervision.

Department spokesman Robert Bliss said he sees no inconsistency in signing off on a set of valuations that all but wipes out an important factor in arriving at the previously certified values.

“All I can say is that in our sampling of the values the city proposed, we looked at them, conducted a sort of audit. We felt it passed muster, and we approved it,” Mr. Bliss said. “I think what we've seen four years later is a conversion to a new data system, and the new assessor having the ability to exercise his own judgment.”

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