Hit by foreclosures, burdened by assessments

By Daniel Silliman


Property tax assessments are unfairly high in neighborhoods hit by foreclosure blight, according to a study released by an Atlanta advocacy group.

The study of five metro-area counties, including Clayton County, found areas with high rates of foreclosure also are areas over-paying in property taxes. According to Atlanta Neighborhood Development Partnership, Inc., a non-profit group advocating for affordable housing, county tax assessors are using a faulty appraisal method, putting a heavy burden on struggling communities and making rehabilitation more difficult.

"This is about fairness in who pays those taxes," said John O'Callaghan, president and CEO of the group. "There's a disconnect between the tax-assessed value and what we know these homes are selling for. That's creating a disconnect ... that's the difference between a vacant house and having a new family moving in. It's just not fair, that you should have to pay two to three times more, just because you live in a poor neighborhood."

In the 15 zip codes where most of the foreclosures occurred, the study shows that the median appraised value was about $26,000 more than the median sales price. The report claims that if tax assessors don't adjust their numbers, those zip codes will pay more than $71 million in "excess property taxes," next year.

In Clayton County, the report found foreclosures often happened in the zip code 30238, from Tara Road to the Mundy's Mill area; 30274, around Riverdale, and 30296, west of Riverdale to the Fulton-Fayette corner of the county.

In those three areas, the median home sale price was just $74,762, but the median appraisal was $119,887. The median tax assessment was overshot by more than $45,000, according to the study.

"Currently, many of these neighborhoods are suffering from high rates of vacancy, increased crime, and general deterioration, which represent a significant, albeit hard-to-quantify, cost to the county," the study reported. " A higher-than-deserved tax bill would only add to the reinvestment challenges these areas already face," the report continued.

The Atlanta Neighborhood Development Partnership, Inc., took a sort of paradoxical approach to the tax policies in the five counties. O'Callaghan seemed to indict them for oppressively taxing the poor, but also said the problem was probably part methodological, and part a slow adjustment to a rapid market change. The advocacy group is calling on the counties to review its study, which Clayton County officials said they would certainly do, though they said the study doesn't seem to accurately represent the county's situation.

Clayton County's Chief Appraiser Rodney McDaniel said his office already has taken a proactive approach to appraising houses impacted by area foreclosures.

"Just this year, we took it upon ourselves to look at those foreclosures," McDaniel said. "We reduced our property assessment notices for 27,000 parcels. So we are actively looking at the housing market, the economic situation, very closely. We are continuing to look at it very closely. If there are adjustments that need to be made in 2009, we will continue to work on that."

McDaniel said the county has proactively appraised property this year, but there's always a lag between assessment in value and sales value, especially when the market changes dramatically. Assessments are normally only done annually, and the taxes for 2008 are supposed to reflect the value in 2007, and taxes in 2009 will reflect the value of 2008.

The study compares this year's taxes with home sale prices in the first six months of this year. McDaniel's office won't look at January-through-June home sales until assessing the taxes for 2009.

Clayton County Board of Commissioners Chairman Eldrin Bell said he agrees with the advocacy group about the priority of fairness, but he thinks there's already a process to deal with possible discrepancies between market value and appraised value.

"Fairness is the doctrine by which we must operate in appraising and assessing houses; that is why each person ... is allowed to appeal," Bell said.

O'Callaghan said the taxpayers of zip codes 30238, 30274 and 30296 should appeal, because they're paying too much. He said the method traditionally used to assess property has discounted foreclosures, considering them exceptions and flukes, not representative of the market. Today, he said, the method needs to change, because some neighborhoods are having more foreclosures than sales.

Bell said that doesn't sound like an accurate representation of the Clayton County methodology. Before he was chairman in 2001, Bell appealed the tax assessment on his own property. At the hearing, he said, the board took into consideration the impact of area foreclosures on the value of his home, and granted his appeal.

"I can't just say we're going to change [the county's tax assessment method]," Bell said, "but I'm certainly willing to look at this study."