Some Reappraisal Surprises

Monday, August 28, 2017

The recent Hamilton County property reappraisal was a mandatory lottery required by state law. Property owners are entered in that lottery every four years whether they like it or not. The county itself cannot win in this lottery, but it can’t lose, either; the total taxes collected after reappraisal must be the same as they were before. Individual property owners in the county can win big, though – or lose big – depending on the assessors’ whims. And the assessors get to pick all of the numbers, all of the winners, and all of the losers. It’s not exactly a fair game. 

If you hung a map of Hamilton County on the wall, stepped back and closed your eyes, then randomly threw a lot of darts at the map, you wouldn’t expect very systematic results. Each of the properties your darts landed on would be in the county, but that’s about all the similarity and consistency you could expect. Some of your darts would land in the city of Chattanooga – maybe a fourth of them, based on relative land areas.  

If your darts all followed truly random paths, they’d hit some large and expensive isolated estates, some small and humble homes all crowded together, and various middle-class neighborhoods spread here and there around the county. Property values and living conditions would be high, low, and average. That’s all reasonable enough. Oh, they’d also hit some government-owned land that pays no taxes, and those beloved PILOT properties, too; they don’t count here. I’m only talking about private properties, family homes and such, real taxpayers. 

The Assessor’s 2017 reappraisal claims the average taxpayer’s property value has increased more than 10.7 percent since 2013 – strictly based on the assessors’ decisions. You can easily figure the basic effect for yourself: If you won in this lottery (if your appraisal increased less than the 10.7 percent average), then you’ll pay less tax this fall. But if your appraisal increased more than the 10.7 percent average (meaning, you lost in the lottery), then you’ll pay more tax this year. And that’s without any open and honest and publicized tax increase whatsoever; that’s just the way the reappraisal works, and you’ll pay more taxes with no relief or recourse. 

So, some of the properties your darts hit would have new appraisals above the average increase, while others more lucky would have appraisal increases lower than the average. You’d logically expect half of the properties you hit to be losers; the other half of them would be winners. That’s the way state law requires it to work out, on the average. That’s what you’d expect if everything was really average, if everything was really random, if everything was really on the up and up. 

I have some serious doubts about the whole process and its skewed results, so I did a quick and random Internet search (no darts) and found a big handful of properties that have some surprising similarities. Here’s a list of 19 recent new property values according to Hamilton County’s websites, and the percentage increase in those values relative to their 2016 assessments; remember, the overall average value increase was 10.7 percent, and as in golf, a low score wins in this special kind of game: 

          New value       Increase
          $469,500         +0.34%
          $360,500         +0.95%
          $165,900         +1.34%
          $102,500         +1.89%
          $136,300         +2.10%
          $266,100         +2.19%
          $134,100         +2.60%
          $204,600         +2.87%
          $120,300         +3.26%
          $298,000         +3.98%
          $91,500           +4.10%
          $315,300         +4.13%
          $193,900         +6.19%
          $77,300           +6.77%
          $158,200         +6.96%
          $197,800         +7.61%
          $370,700         +7.79%
          $400,600         +8.12%
          $153,200         +8.50% 

Notice that none of those 19 properties had a value increase above the 10.7 percent average increase. Every one of them is below the average increase, so every property owner represented in that list gets a nice tax cut this fall; every one of them won in the 2017 reappraisal lottery. And those that are in the city of Chattanooga get a reduction in their city taxes, too. They still pay double taxes, but they also get a reduction on both tax bills, so they still pay less than last year. 

As far as I can tell, it would be nearly impossible to select any 19 properties really at random, here and there around the county, and find that all 19 owners won this latest mandatory and arbitrary lottery. It just wouldn’t happen. But that’s the obvious result of my recent search of online records. 

No, of course I didn’t throw a bunch of darts at a map on the wall. I simply took published lists of local government employees, selected some specific names from those lists, and did a little research on each one. The properties shown above are all linked to the names of (a) members of the Assessor’s appointed Board of Equalization, (b) workers in the Assessor’s office, and (c) a few more folks from the latest list of Hamilton County employees with salaries above $60,000. So the properties themselves, and their locations around the county, really are pretty much random. But their owners all have that one special common denominator – they all work for the county, or did until recently. 

Look at the first two properties on that list – a couple of way above average places whose lucky owners got nearly 10 percent tax cuts for this fall. Those two exceptionally fortunate lottery winners were (surprise!?) both on the Assessor’s five-person Board of Equalization. As a matter of fact (surprise!?), every one of the five government-appointed Board of Equalization members is represented on the list above. They all got their nice tax cuts. How pleasant. How fortunate. How surprising. 

Now, how reasonable is it to expect that five out of five members of the Assessor’s Board of Equalization would all get property tax breaks this year? In an honest lottery it probably wouldn’t happen. In a very simple and fair game it’s as likely as tossing a coin five times and getting heads all five times in a row. In other words, it’s not the sort of thing you’d expect to happen every day. It’s not the way most of us would bet. It is a very surprising coincidence. 

But then that supposedly fair and impartial Board of my peers agreed with the Assessor that my own much less valuable property’s ‘fair market value’ had suddenly increased by more than 26 percent this year. That’s right; every person on the Assessor’s Board of Equalization won the reappraisal lottery, and then they declared me a big loser in the same lottery. That’s another surprising coincidence. 

During my half-hour appeal before the Board of Equalization, one of those five lottery winning officials patiently explained to me that my property didn’t really have an overnight value increase of 26 percent, but that it had occurred over the past four years. Unfortunately for me, my personal income hasn’t increased by anything like 26 percent in the past decade or more, let alone in the last four years or (as my tax bills just did) overnight. Instead, at age 74, I’ve discovered that my earning ability has decreased drastically in recent years, and folks with similar experience know that’s not likely to change. I’ve never had a high-salary government job with all of its perks and a pension, either.

Oh, you want to know the probability that 19 local government employees would all win in the reappraisal lottery? Most simply explained, if you toss a coin 19 times, you can expect to get 19 heads in a row only once in half a million tries – once in about 10,000,000 tosses. It’s just not a likely thing to happen. But it happened right here in the 2017 reappraisal. Hamilton County is really special; we should be on national news. 

Why did I stop with only 19 examples? Why didn’t I rack up hundreds of similar cases to really prove my point? Because the Hamilton County GIS website often works so slowly, and seems reluctant to give up its precious public data. For an outsider, it’s a tedious process to find much information about random or specific properties, their owners, and their claimed values. 

To me and many other property owners in the county and city, it’s obvious that our new appraisals and our upcoming 2017 tax bills had to be arbitrarily increased greatly just to cover the surprising reductions that the Board of Equalization members, and the Assessor’s employees, and various other local government workers received – and that had to be done quickly, almost overnight, regardless of how they may explain it. The county is guaranteed the same tax income this year as last, so when special blessings are given to some folks, the rest of us have to make up the difference. And an appeal to the Board of Equalization ... well, that only messes up the nice, neat and symmetrical result of the reappraisal. The assessors have chosen the winners and the losers, and that’s that. 

In the months since the reappraisal results were announced, there has been only one letter to praising the Assessor and his workers for a job well done. And (surprise!?) the writer of that letter, a former assessor, also has a property on the list above. Surprise? No, not really; not any more. What could possibly surprise anyone now about this setup? I suppose fairness and equity would be a surprise, but don’t hold your breath waiting for that to happen. 

Throughout the reappraisal season we were told that fairness was the entire basis of the process. We were given the usual political song and dance about the Assessor’s staff determining the fair market value of each individual property based on recent sales of comparable homes and properties in the neighborhood. We were led to believe that everyone involved in the process was diligently working with properly accumulated facts to make sure that everything was done by the book, with new property values based only on public records, all consistent, all fair and square. 

But there’s not much evidence of fairness in that list of 19 properties above. Maybe the definition of ‘fair’ depends on who you work for, or who’s working for you, or who you know, huh? 

I didn’t realize when I bought my home seven years ago that I was entering a never-ending compulsory government-run lottery, that I’ll never have any say in the price I have to pay every year, and that the whole system is biased against me. But that’s the way it works; the game consists of Us, the ordinary home owners – and Them, the ones who own and run the game. They have all the power, and they have the final say in who wins and who loses. 

You know, we’d all be just as well off – and some of us would be a lot better off – if the assessors simply threw darts at the map or tossed a handful of coins to determine our tax bills, rather than pretending to work with ‘fair market values’ while they’re going through all the other black magic, voodoo, and mumbo-jumbo they actually use. 

It may be legal, but it’s not right. 

Larry Cloud
Chattanooga and Hamilton County taxpayer

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