An effort to appease homeowners in Fulton County, who this year complained about dramatic increases in property assessments, might come back to haunt them next year when assessed values are expected to be even higher.
The lag in assessing property at market value is already costing local governments revenue. Its persistence could lead to even more difficulty raising values to their proper levels in the coming years.
The issues became more glaring this week after a new state report said the 2016 residential property values — which Fulton County plans to use again this year — were already below acceptable levels.
The report, by the state Department of Audits and Accounts, shows Fulton’s 2016 residential appraisals were nearly 15 percent too low, on average. Freezing assessments at a time when residential property values are rising fast could make them even more inaccurate in the future.
“It’s clear to me from this preliminary study that Fulton County’s residential properties are appraised too low,” Todd Paschal, director of the Department of Audits division that examined the county’s assessments, told The Atlanta Journal-Constitution.
The discrepancy is a matter of fairness, and means many Fulton homeowners may be getting a tax break at the expense of others who are assessed at or above the appropriate level – and commercial property owners are likely making up the difference, Paschal said. Additionally, Fulton County residents whose appraised values are closest to market value are likely picking up the freight for residents whose values are lower than they should be.
Still, Fulton County Commission Chairman John Eaves defended the decision to freeze 2017 values at 2016 levels, after residents decried 2017 assessments that jumped, in most cases, by double digits. The move was intended to allay the sticker shock residents felt when they opened their assessment letters late last month.
Eaves said he thinks residents will be more amenable to high increases in the future, now that they know they are coming.
Now, he said, “they’ve been served notice” that values are going to rise next year and in the future.
“When we roll out 2018 assessments, they should be a lot better received next year,” Eaves said. “The reality is, you’ve been undervalued.”
Nearly a quarter of the county’s 318,000 residential parcels had values that increased by 50 percent or more, while half were up at least 20 percent.
Dwight Robinson, the Fulton chief appraiser who lobbied against the freeze, said it's difficult to catch up when the county is so far behind. Fulton had not reevaluated residential data since the 1990s, a step other counties take annually. Additionally, he said, low staffing — and a decision by the previous chief appraiser not to raise values much in 2016 — contributed to the lag.
The county will be penalized for failing to keep up with rising values: It will not be able to collect the full amount of money it is owed from public utilities. Additionally, if the problem persists in its next evaluation, in 2019, it could be fined nearly $1.9 million.
“The further we fall behind, the more ground we have to make up,” Robinson said. “The losses will add up.”
When the county doesn’t assess properties at the right level, it “loses a lot of money,” said Burt Manning, who retired as Fulton’s chief appraiser in 2012.
“With the county commission rolling back values to 2016, it’s going to make it harder to get to full market value over the next couple years, particularly if they don’t like to see big-digit increases,” Manning said. “If the market continues like it’s been, they’re going to have to raise values and they’re going to have to raise them significantly.”
Manning said commissioners’ decision to freeze values this year will make it increasingly difficult to assess everyone uniformly.
In addition to valuing residential properties below where they should have, the report also found evidence Fulton did not uniformly appraise homes across the county – meaning some neighborhoods may be significantly undervalued, while others may be overvalued.
The last time Fulton was evaluated, in 2013, the county was fined for being outside the required range. It’s still fighting that charge in court.
Although the latest test showed Fulton met state standards, Paschal said the results showed evidence that Fulton is backsliding.
The report is preliminary and its findings could be appealed. But it’s the latest evidence that Fulton County botched the appraisals process that helps determine property tax bills for hundreds of thousands of people and ensures everyone pays their fair share.
John Pollock, an Alpharetta resident who said his valuation only increased by 4 percent before the freeze — indicating he is close to his home’s true value — said he feels like he’s one of the residents who’s stuck paying more than he should. Pollock said he thought the freeze was a “knee-jerk reaction,” and unnecessary.
“It makes me feel really angry. …I’m frustrated by the whole thing,” he said. “I don’t mind paying my fair share. I resent paying more than my fair share because (other) people are under-assessed.”
The new state report shows Fulton’s 2016 residential values were 14.75 percent below fair market value – what the properties would be worth on an open market. State standards require them to be within 10 percent of fair market value.
Additionally, the low residential assessments are a drag on the county’s overall values. Of the 159 counties in the state, only two others have lower overall appraisal levels — the ratio of assessed values to market value — than Fulton does. Robinson, the Fulton chief appraiser, said the numbers are just within acceptable range.
“We barely squeaked over,” Robinson said. “It’s really a squeak.”
An AJC analysis of property tax data submitted to the state Department of Revenue shows Fulton lagged far behind other metro counties in raising residential values in recent years.
From 2013 to 2016, DeKalb raised residential values 40 percent and Gwinnett raised them 38 percent. Cobb (28 percent) and Clayton (26.5 percent) also raised residential values substantially.
During the same period, Fulton raised residential values just 17 percent – less than half as much as DeKalb and Gwinnett.
Steve Pruitt, the former Gwinnett chief appraiser who is consulting with Fulton County, said people who had their assessments frozen for three years during the recession, after appealing too-high values, were likely shocked by how much better the market was.
“It’s even worse, since they did not receive those incremental increases,” he said of the slow recovery. “All of a sudden, the market coming out of (2014), it’s a rocket ship.”
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