Property tax appeals process rigged, audit finds
Boards that consider property tax appeals from the public lack independence and are stacked against property owners, an audit has found.
By Dan Christensen
A state performance audit of county boards that hear property tax appeals by unhappy homeowners and businesses says appeals appear to have been rigged by local government officials who are more interested in safeguarding tax revenues than fairly valuing real estate.
Value Adjustment Boards (VABs) are ostensibly independent decision-making authorities where taxpayers can appeal a property appraiser's assessment. Yet county and school board interests dominate them.
"Independence in the appeal process at the local level may have been compromised due to local officials involved in the process who may not have been impartial and whose operations are funded with the same property tax revenue at stake in the appeal process," states the audit released this month by Florida Auditor General David W. Martin.
"Rigged is the very word that a lot of people are using," said Tallahassee attorney Benjamin K. Phipps, a veteran expert on property tax matters. "They rig it by making sure that the taxpayers don't get a fair shot, though not in Miami-Dade because they have the only system in the state that's really fair."
In Broward County, the audit says the county's Value Adjustment Board compiled "tracking reports" on special magistrates who recommended large reductions in property assessments to the board and used them to get rid of six magistrates who had given the highest assessment reductions to taxpayers.
"These reports identified and tracked, by special magistrate, those special magistrates who recommended property assessment reductions that either exceeded 50 percent of the original property assessment or exceeded $200,000," the audit states. The VAB used the information "when considering continuing the special magistrate's service in the subsequent year."
In October 2012, an unidentified former special magistrate filed a complaint with the Florida Department of Revenue, which oversees county VABs, exposing Broward's practice. Asked about it by the state, VAB lawyer Monroe Kiar responded that the practice was legal, "but did not address the issues of transparency and influence on the special magistrates," the audit states.
Broward County Commissioner Stacy Ritter chairs the county's VAB. In an April 30 response letter to the auditor general, Ritter defended the VAB and noted that last year it discontinued the practice of targeting special magistrates.
"It should be noted that at all times the Broward County VAB has been transparent and has never unduly influenced the decision of any special magistrate," Ritter wrote in her response.
"We all really believe they stopped that, of course," Phipps said with sarcasm. "So how come the same guys [special magistrates] are still there?"
Property taxes in Florida make up about 50 percent of public-education funding and 30 percent of local government revenues, according to the 20-page audit. In 2011, the most recent year for which statistics are available, more than 140,000 tax-adjustment petitions were filed in Florida.
The audit, however, does not say how many taxpayers in South Florida and elsewhere were apparently overcharged, or how much in taxes was improperly collected by cities, counties, school boards and special districts, including the South Florida Water Management District. Likewise, the audit did not address whether tax refunds could or should be made.
As an example of the mindset of VAB officials who place an "inappropriate emphasis on preserving property tax revenues," the audit quotes remarks by Hillsborough County Commissioner and VAB Chairwoman Sandra Murman at a July 21, 2011, county VAB meeting.
"What you need to look at is the endgame because every review costs us money [and] it affects the tax roll. We allow . . . millions of dollars to be taken off the tax rolls through additional review, the whole VAB process," Murman said. "I think you have to kind of keep that in mind because as you know and I know where you are educating children, and I'm trying to take care of the needs in the county."
The audit recommended that the Legislature consider a VAB shakeup to promote fairness for taxpayers who disagree with a property appraiser's decisions regarding exemptions, classifications and value assessments. Its key recommendations:
• To promote integrity, establish "rules of conduct or ethical codes, with appropriate sanctions" for VAB members and staff, including clerks, attorneys and special magistrates.
• Create a new process to appeal decisions by the VAB at the regional or state level.
• Require that the majority of VAB board members not be government officials from the county or school board. Today, county VABs have five members: two from the county commission; one from the school board and two citizens appointed by the county commission and the school board.
The audit, conducted between September 2012 and September 2013, examined 15 VABs across the state that it said were representative of small, medium and large counties. Broward, Miami-Dade and Palm Beach counties were included in the audit.
In 2011, Miami-Dade's VAB saw, by far, the most taxpayer petitions filed — 91,519 — and granted 49 percent of them. In contrast, Broward's VAB saw about 25,000 petitions and granted 18 percent of them. Palm Beach, with about 8,400 petitions, granted 21 percent.
A central theme of the audit findings is that VABs often do not scrupulously follow state law or rules prescribed by the Department of Revenue, the state entity that oversees VABs.
For example, a VAB is not supposed to hold hearings until its lawyers verify that it has met all legal requirements. Yet VABs in Miami-Dade, Palm Beach and nine other counties could not document for auditors that they had made those verifications. Similarly, the Miami-Dade and Palm Beach VABs could produce no records showing they had verified information supplied by their citizen members in written applications or oral statements.
Moreover, the audit found that VABs in Miami-Dade, Broward and Palm Beach had on multiple occasions issued written decisions that failed to include information required by law, such as findings of fact, conclusions of law and/or the reasons for upholding or overturning the property appraiser's determination.
Broward Commissioner Ritter took issue in her response letter with some of auditor general's recommended fixes, including the need for ethics rules.
"The Broward County VAB asserts that at all times its VAB members, special magistrates, members of staff, clerk and attorney have always conducted themselves in a high ethical manner," Ritter's response states.
"Broward County has concerns regarding the creation of a regional or state level appeal process," Ritter wrote. She expressed a similar concern about altering the composition of the board to reduce the clout of government officials on VAB decisions.
Read more here: http://www.miamiherald.com/2014/06/18/4186985/prop erty-tax-appeals-process-rigged.html#storylink=cpy