THE GOOD,THE BAD & THE JUST-PLAIN-NOT-LEGAL: AN IMPACT & EQUITY ANALYSIS OF NEW ORLEANS’ 2020 PROVISIONAL PROPERTY TAX ROLLS AUGUST 2019 1 Parish assessors have one job: to determine and list the fair market value of every property in their parish. BACKGROUND Assessors are required to reassess all property in a parish at least every four years. 2020 “provisional” tax rolls were released in July. After challenges are considered, the rolls will be certified in October. 2 OVERALL PICTURE 2020 provisional rolls show big value increases across much of the City. ?Elie RISING PROPERTY ASSESSMENTS LAME PON ., I - I . PERCENT CHANGE IN VALUE - Tax exempt . . Decrease . change uourcnoirg *0-2596 Increase was. c. s? "when" 3? I. I ,r ?if? -d em mum 25-50%lncrease . . . . . ky- nil/ll, 50-75%lncrease Q?R?omou I .. .. . - 75-10096 Increase - anaoaomoon 3anl?m. .I. .: .. - 100 200%lncrease - . Amiens - 200%lncrease or more A '.ramssic?. . .- . \I'sx/SHiril A. [m . 5. Misha Lf_? Viigraphic by Lighter gray areas indicate properties whose assessments did not . . JEFFADELSON, ll? - DANSWENSON change this year. Those include 40,000 properties Assessor Erroll Williams said he did not have time to re-evaluate this year. Properties that were not reassessed this year may see their value change next year. Sumter." Orleans Parish Assessor's Of?ce, Dam as 0' July 27. 2019 Lu Avg home values: 2015 to 2020 OVERALL PICTURE Avg home values have increased by 70% over last 5 years +21% +14% Current assessments show largest 1-year increase to date (21%) +7% 5-year avg increase: +70% +7% +9% 4 TNO STUDY ASKED 2 TYPES OF QUESTIONS: #1 – IMPACT QUESTION How serious is the impact of the increasing assessments? What people and neighborhoods are most severely affected? #2 – FAIRNESS QUESTION To what extent have assessment increases been applied consistently across different kinds and values of property? IMPACT QUESTION: How serious is the impact? What people and neighborhoods will be most severely affected? 6 1-year vs. 4-year time-frame Constitutional Amendment 6 passed in 2018. Homes with 1-year increase in taxable assessment of 50% or more will pay increase over 4 years (25% of increase per year) Impact needs to be evaluated on a 1-year & 4-year time horizon. 7 EXAMPLE: 218 N ROCHEBLAVE $285,100 $21,010 983% 202% $94,400 (tax impact higher than change in market value due to homestead exemption) $1,940 2019 2020 MARKET VALUE 2019 2020 TAXABLE VALUE TAX IMPACT CURRENT TAXES: $293 YEAR 1 (2020): taxes increase from $293 to $1,013 $720 tax increase (+246%) YEAR 4 (2023) : taxes increase from $293 to $3,013 $2,880 tax increase (983%) 1,998 households will see an increase of $1000 or more in their housing costs next year 5,188 households will see an increase of $1000 or more in their housing costs over next 4 years (assuming zero further assessment increases) 9 RENTERS LIKELY TO BE MORE SERIOUSLY AFFECTED Cost of tax increases likely to be passed on by landlords Homestead exemption, senior tax freezes and 2018 constitutional provision will not apply (no buffers) For renters, it’s less easy to identify precisely which households will be impacted 10 IMPACT RANK BY NEIGHBORHOOD NEIGHBORHOOD Area median income 2019 avg 2020 avg Increase as of avg area medlan IMPACT RANK increase [household] taxes taxes menthl mart a [cut of 433} income If 3 Increase as of Aug tax NEIGHBORHOOD ST. AUGUSTINE 1 $1,951 2% $25,594 $2,053 $3,951 11% CITY PARK 2 $3,343 5% $51,455 $3,529 $5,559 13% ESPLANADE TRIANGLE 3 $1,553 5% $29,294 $2,255 $4,335 5% TULANE-GRAVIER 4 $520 5% $15,455 $1,255 $1,599 5% XAVIER UNIVERSITY 5 $697 5% $13,194 $295 $830 12% PARKVIEW 5 $2,505 5% $51,455 $3,319 $5,595 11% ARCADIA COURT 2 $1,535 5% $31,529 $2,252 $3,523 5% BROADVILLE 5 $1,022 4% $24,425 $1,332 $2,249 10% WEST END PARK SOUTH 9 $3,125 4% $21,590 $4,125 $2,139 13% ST. JOHN VILLAGE 10 $1,344 4% $32,415 $1,539 $2,524 9% MLK - OCH 11 $559 4% $21,205 $1,455 $2,215 2% BYWATER RAILROAD 12 $1,252 4% $44,911 $2,242 $4,290 5% CORRIDOR DERBY PLACE 13 $1,435 4% $32,223 $554 $1,955 15% FAIRGROUNDS 14 $1,025 4% $29,552 $1,154 $2,155 9% TU LAN E-FALSTAFF 15 $525 3% $15,552 $1,051 $1,442 5% IMPACT RANK BY NEIGHBORHOOD NEIGHBORHOOD Increase as 943 of 2020 avg Increase a5 ?36 of avg Area median income 2019 avg NEIGHBORHOOD IMPACT RANK area median (out of 433) In crease income (household) taxes taxes mortgage GUSTE 19 $339 3% $9,922 $939 $1,942 4% DE SAIX NORTH 12 $1,254 3% $32,223 $999 $2,119 13% TU LANE 84 BROAD 19 $515 3% $15,945 $911 $1,395 5% TREME 19 $999 3% $22,999 $999 $1,599 9% EAST RIVERSIDE COM 61 29 $1,423 3% $49,999 $5,593 $2,919 9% SOUTH LAKE VISTA 21 $3,413 3% $112,913 $5,211 $9,999 12% BANCROFT 22 $1,529 3% $55,449 $4,399 $5,299 9% HARRISON CANAL 23 $2,299 3% $94,259 $3,935 $5,999 11% PARK 24 $299 3% $29,594 $1,599 $2,259 5% UPPER WEST LAKEVIEW 25 $1,929 3% $21,999 $3,993 $5,599 19% ST BERNARD 29 $921 3% $23,555 $999 $1,492 2% WEST LAKEVIEW 22 $1,222 2% $21,999 $3,359 $5,915 9% WAREHOUSE DISTRICT 1 29 $1,492 2% $93,915 $5,949 $2,195 4% LEGION OAKS 29 $1,491 2% $99,114 $2,249 $3,422 19% BAYOU ST. JOHN 39 $933 2% $45,299 $3,299 $4,953 4% TALE OF TWO Recent assessment changes: NEIGHBORHOODS XAVIER UNIVERSITY $76,229 Avg home value: TALE OF TWO NEIGHBORHOODS $3.7M Recent assessment changes: AUDUBON PLACE $76,229 Audubon Pl avg home value XAVIER U avg home value UITY UESTION Have the assessment changes been applied consistently? 3 big problems with assessor’s 2020 provisional rolls 1) High-value Bias 2) The Parking Lot / Vacant Lot Perk 3) Industrial-scale omissions 16 Problem #1) High value bias Question: Do the 2020 assessed values track with recent sale prices? Let’s look at properties by value cohort … 17 THE HIGHER-VALUE THE ASSESSMENT, THE LOWER THE ASSESSMENT IS RELATIVE TO RECENT SALES OF COMPARABLE PROPERTIES Value cohort Below $200K $200K to $500K $500K to $999K $1M to $5M $5M + Avg recent sale price $124K $326K $662K $1.7M $23.1M Avg 2020 assessment $150K $309K $578K $1.2M $9.5M % variance from sale price + 20% -5% -13% -26% -59% (Sales comps are from 2015 to 2019 from same assessment area in same value cohort.) 18 High-value bias is in part due to what areas did not get re-assessed Areas with highest home values are in purple 19 Areas with highest home values are in purple And here are the areas that did not get re-assessed 20 HIGH-VALUE BIAS $458,608 $245,146 2020 increase: 21% AVG HOME WHOLE CITY 2020 increase: 1.7% AVG HOME ASSESSMENT AREA #6 9?6 ASSESSOR Area's median AVG HOME VALUE assessment DISTRICT Inee me Increase 2 $339,709 24.8% $61,077 7 $274,163 12.4% $49,167 1 $294,536 12.3% $31,772 3 $151,537 10.5% $32,076 4 $333,053 5.2% $40,613 5 $153,545 4.2% $45,537 6 $453,603 1.7% $62,139 Problem #2) Parking Lot / Vacant Lot Perk Under-valuation of land relative to structure builds in a tax subsidy for vacant properties and non-structure commercial properties. 23 Assessments have 2 components: Value of land Value of structure Structure didn’t improve. But “building value” accounts for 75% of value increase. Land is under-valued throughout rolls relative to building costs as a proportion of the total property value 24 WHY DOES THIS MATTER? #1) It gives a tax subsidy to vacant land #2) It undervalues parking lots and other nonstructure commercial properties 25 PROBLEM #3: INDUSTRIAL-SCALE OMMISSIONS Taxable industrial property is being treated as though it were tax-exempt 26 Folger’s has $85M in property listed as “exempt” for which exemptions expired in 2015, 2016 or 2017. Expired 27 Owner Name Mailing Address Location Address Property Class Owner and Parcel Information FD LG ER COFFEE CD MICHAEL MAST THE J.M. SMUCKER CG. STRAWBERRY LANE ORRVILLE, DH 4466? 14601 OLD GENTILLY HW sew-r Subdivision Name Zoning District Square Book Line Legal Description Land Buildin Year Value Value *2020 0 23,599 2019 0 23,599 Uncerti?ed Values PRAIRIE LN Viewer not available PARCEL 1 14 0'50 Expired 1. PRAIRIE LANDS PT PARCEL 1 LOT 92:: 2. SIC 2095 CONTRAC -ITE 3. EQUIPT: $23,599,139 2006 2015 Value Information Assessed Assessed Total Value Land Building Value Value 9 ,140 23,599,140 0 3,539,870 ,140 23,599,140 0 3,539,870 2018 0 23599: 140 23,599,140 0 3,539,8?0 Today's Date Municipal District Tax Bill Number Special Tax District Land Area (sq ft) Building Area (sq ft) Revised Area (sqft) Lot I Folio Parcel Map Assessment Area Total Homestead Assessed Exemption Value Value 3,539,890 0 3,539,810 0 3,539,890 0 Taxable Assessment $0 $0 $0 August 16, 2019 3 39W956124 92C 014 Parcel Map Not Available for this Parcel NA Estimate Taxes Tax Information Special Assessment Treatment Age Disability reeze Freeze Change Tax Contract ITE10 ITE10 ITE10 LIST OF TAXABLE INDUSTRIAL PROPERTY BEING TREATED AS TAX-EXEMPT Owner Name ENTERPRISES, L.L.C. AIR PRODUCTS 81 CHEMICALS INC DR TICHENOR ANTISEPTIC ENTERGY NEW ORLEANS INC MICHOUD PLANT ENTERGY NEW ORLEANS INC MICHOUD PLANT FOLGER COFFEE CO FOLGER COFFEE CO FOLGER COFFEE CO FOLGER COFFEE CO FOLGER COFFEE CO REILY FOODS COMPANY UNITED STATES GYPSUM CO UNITED STATES GYPSUM CO ENTERPRISES, L.L.C. DR TICHENOR ANTISEPTIC ENTERGY SOLUTIONS DIST. ENERGY, ENTERGY SOLUTIONS DIST. ENERGY, ENTERGY SOLUTIONS DIST. ENERGY, TEXTRON MARINE 81 LAND SYSTEMS TEXTRON MARINE 81 LAND SYSTEMS THE CRESCENT CLUB NEW ORLEANS I LLC TRINITY YACHTS LLC TRINITY YACHTS LLC TRINITY YACHTS LLC TRINITY YACHTS LLC Years Expire 3 3 3 Total Pro ert value [2 . Owed 1,151,000 4,012,352 291,452 339,200 529,533 15,230,133 23,599,133 22,023,400 25,245,415 15,539,530 2,552,933 333,400 552,200 1,293,300 43,333 3,123,352 220,000 212,500 1,534,133 3,335,400 25,293,333 431,233 339,533 25,200 252,500 155,222,395 Additional Taxes 88,050.90 304,212.30 22,105.00 2,032,543.33 2,455,010.53 1,524,433.43 1,215,401.33 1,053,223.39 124,191.09 25,235.25 22,533.32 52,315.22 5,030.15 151,552.91 13,103.35 33,145.52 532,232.33 10,911.25 15,434.30 10,003.52 34,932.52 10,510,003 Tax Bill Number 102205218 39W948438 39W968344 39W964554 39W964555 39W956134 39W956124 39W956118 39W920851 39W015744 39W015754 102205221 39W968343 104103525 104103522 104103521 39W948251 39W948247 105204737 39W955078 39401955027 39W955075 39W955080 TAXABLE INDUSTRIAL PROPERTY ILLEGALLY OFF $155 THE ROLLS TAXES OWED $10.5 MILLION NO State law on assessors omitting property … If any tax assessor intentionally or knowingly or through negligence omits any taxable property from the assessment list, or permits it to be omitted therefrom, he and his sureties in solido shall be liable on his official bond for the full amount of the taxes due on the property so omitted from the list, together with ten percent interest per annum thereon from the due date of the taxes, ten percent attorney fees on the amount of the judgment recovered against him, and all costs of the suit. RS 47:1957F 31 RECOMMENDATIONS 1) Put all non-exempt taxable property on the tax rolls ($155M) and conduct a supplementary assessment to collect back taxes for 3 years (assure this happens by October) 2) Fix the “Parking Lot / Vacant Lot Perk” (land under-valuation problem) 3) Correct the high-value bias 4) Provide for better transparency, by making public the formulas for re-assessments and treating the tax rolls as public documents (i.e. you cannot charge $8,000 to access them as a database) 32