Wednesday, July 11, 2007

Star Highlights Disparity In Property Tax Assessments

The Star's Tim Evans has a front-page story today which really brings home the point that, at least in Marion County, businesses have been grossly under-assessed relative to residential property. One example he provides is not far from my neighborhood. A nice home on the old northside is assessed at $531,300, a 50% increase over the prior assessment. The nearby Kroger story is assessed at $516,800--the same as its old assessment. The Kroger sits on a very big lot at the corner of 16th & College. Those familiar with the price of a small lot, let alone a prime piece of property as the Kroger lot, know that the land owned by Kroger alone is worth at least $1 million.

The key point in Evans' story is that both the state and Marion Co. Assessor Greg Bowes were aware of this problem months ago and chose to bury their heads in the sand. As Evans writes:

The Department of Local Government Finance and county officials were aware of the potential problem months before tax bills went out.

"We are concerned about the uniformity of the assessments in certain areas," former department Commissioner Melissa Henson wrote in a March 27 letter to Bowes, the Marion County assessor.

"Specifically, we are concerned about the Improved Residential property class in Center Township, as well as the Commercial and Industrial Property classes county-wide."

The letter also said the assessor "should complete a countywide reassessment of commercial and industrial properties and continue refining Improved Residential property in Marion County" before tax bills are calculated next spring.

AI readers first learned about this problem back on April 27, 2007 after I quoted from a story Ed Feigenbaum wrote in the Indiana Legislative Insight. Unfortunately, Evans lets Bowes off the hook in his story. Quoting Bowes, Evans writes:

Bowes said several factors led to what he believes to be an underassessment of commercial property: Township assessors were pressed to complete reassessments;
they had too few business property sales to use as comparisons; and there weren't enough people who could handle business property reassessments. "The result is the assessed value (of commercial property) did not go up enough," Bowes said.
So what's next. The Star reports the idea of a 10-month reprieve in the payment of your property taxes is being considered for Marion County property taxpayers. The idea was conceived by Marion Co. Treasurer Mike Rodman and will be taken up by the city-county council. You would be required to pay your first installment on time; however, you would have ten months to pay your second installment without penalty rather than paying the full second installment in November. A special session is still a possibility. If I'm reading the tea leaves correctly, a special session will be called if there is a concrete plan put out in advance that lawmakers can mull during the special session.

Matt Tully is now on board with the call for a special session. "A special session could be the first step toward a long-term restructuring of local government finances. Indiana needs a serious and focused conversation about consolidating government and making it harder for entities such as library boards and township trustees to increase taxes," he writes today. He adds, "A special session free of silly resolutions and wedge issues could start that conversation." He also thinks the privatization of the Lottery should be put back on the table. Nice try, Matt, but that issue is a non-starter with Democrats.


Anonymous said...

Add one more TAX increase to worry about.

From USA Today - Cigarette packs may see 61-cent tax

WASHINGTON — Smokers would pay an extra 61 cents per pack of cigarettes to expand health insurance to about 2 million children under a tentative deal worked out Tuesday between Democrats and Republicans on the Senate Finance Committee.

The tobacco tax increase would boost the federal levy from 39 cents per pack to $1, an increase of 156%. It would raise about $35 billion over five years to pay for the largest expansion of the Children's Health Insurance Program (CHIP) since its creation a decade ago.

Add that on top of the .44 cent State tax increase. A smoker may pay more in Cig. Tax increases than they may in Property tax increase !

Anonymous said...

Matt might think about curing the problem instead of treating the symptoms. Too much spending among layers and layers of government. Start there and then we can re-evaluate to see if revenue needs to be raised elsewhere.

Anonymous said...

How about taxing the real estate owned by non-governmental not-for-profits, such as private colleges, that own more than one acre of real estate?

Anonymous said...

Mayor Peterson tried a simple plan for stormwater drainage assessment, for NFP properties, two years ago. He was shouted down by Rev. Greg Dixon and other demagogues. The stormwater problem brewed for over 30 years, unfixed, and the icnreased cost is choking us.

The concept of fees for use of governmental services, such as stormwater drainage and public safety, is solid. But of course it cannot be a tax. Sticky wicket.

Curing the overall problem is important, starting with runaway spending. And there is rampant abuse at most school corporations, as well as other taxing entities.

Schools think they're running lean, when in fact their budgets are cesspools of waste. The school administration community fosters a narrow view of budgets, without outside thought entering the process. It isn't pretty. And they want one of their own--an architect--to be governor. Pardon my skepticism...these folks don't understand prudent budgets.

But honestly, I've watched the City-County Council and the Mayor tackle overspending for two years. They worked hard at wringing out the excesses. There is more to be done, but they saw this coming. And they got almost no support

In Marion County, if you want real savings, attack the biggest wasteful spender of all--IPS. They just added hundreds of millions in bonds to their tax base, and it will not get any better. All for a school system that's horribly broken. It's time to face the music there: IPS probably cannot be fixed.

Anonymous said...

Uh, sorry, 7:12...I never worry about cigarette tax increases.

If I live to be 100, and the per-pack tax rises to $5, it won't come close to covering the cost of health woes caused by tobacco.

There's a reason they add nicotine to cigarettes.

Anonymous said...


It should be noted that several business organizations have for several years said that the SYSTEM of assessing properties is broke(e.g. unqualified township assessors), and that the system as a whole needs to be fixed.

stAllio! said...

minor quibble: that kroger is at 16th and central, not college.

Anonymous said...

Gary, you are correct in stating that this problem with commercial assessments was known for quite some time.
So what happened? In a word, LOBBYISTS.
I would prefer that outside professional real estate appraisors be brought in and the commercial properties re-appraised.

I find it rather odd that our assessors can't seem to be able to appraise commercial property but real estate brokers somehow are able to arrive at a price to list it at.

Finacially, Indanapolis is broke. It will, in time, go the way of Cleveland, Detroit and a host of others cities that had their populace head for the burbs and then the exurbs.
Does anyone have any conception of just how many more abandoned houses will start to appear in Center Township? Even the slumlords took it in the shorts.

I hate to say it but I'm afraid we are looking at a city that's taking it's last breath of life. When people and businesses leave, they don't come back.

Anonymous said...

It would be interesting to match up the list of abandoned / vacant houses with the database of assesments for those properties and see how those got assesed ?