Critics say undervaluing pricey shopping centers and apartment buildings shifts the tax burden to homeowners, who have seen their property values rise exponentially in recent years.
"This is enormous," said Julian Bene, a former board member of Invest Atlanta, the city's economic development agency. "Homeowners are getting the shaft in a big, big way."
The audit echoes a city of Atlanta report released in May that showed expensive properties — and particularly commercial developments — were typically appraised for tax purposes at a lower percentage of fair market value than other parcels.
Together, the findings suggest homeowners and small businesses are paying more than their fair share of taxes to support schools, courts and public safety, as property tax rates rise to cover the loss of millions of dollars that commercial property owners would otherwise have to pay.
Bill Conway, who owns a townhouse in Virginia-Highland, said it frustrates him when well-connected developers get property tax breaks and ordinary homeowners do not.
“It’s my job to contribute to the community,” Conway said. “But if you don’t have faith that taxes are equitable, everyone tries to avoid them. They could probably lower my millage rate if they were collecting a fair amount of tax from everyone.”
Dwight Robinson, the Fulton County chief appraiser, did not return phone calls seeking comment about the audit. In a written response to the audit, Robinson said he agreed with the auditor’s conclusions and recommendations, which include changes to the appeals process.
The audit showed that many of the undervalued properties involved new construction; sales of multiple parcels at once; sales that included other, un-appraised property; or sales that were not arm’s-length transactions.
But the bulk of the under-valuations related to appeals.
Over three years, commercial property owners were able to reduce their values by more than $7 billion by successfully appealing the county’s values, the audit said. The issue compounds itself because appealed values are frozen for three years.
Those lower, frozen values are used as comparisons for appeals of neighboring buildings, further exacerbating the issue, the audit said.
“We found that the appeals process has weaknesses that may have resulted in significant differences in the appraised value and sales price,” the audit said.
The audit recommended that the county have more than two hearing officers to consider appeals of properties worth more than $750,000. It also suggested that members of the Board of Equalization have more training and oversight, and that documentation of the hearings be kept.
Robb Pitts, the chairman of the Fulton County commission, said he was glad to see that the audit’s findings were consistent with the Atlanta study. He said the county has already funded more hearing officers, and will work to make other changes to improve consistency between values and worth.
Robinson’s office asked for changes including limits to appeals on parcels owned by city and county development authorities, and a requirement that owners share recent appraisals. He also wants to eliminate the use of frozen values on neighboring properties as a comparison during appeals.
Lee Morris, the Fulton County commissioner who requested the audit, said he intends to ask the legislature to help make some of those changes. If commercial properties were taxed at their true values, he said, everyone in Fulton would know the difference.
“We wouldn’t have to tax the homeowners so much,” he said. “It’s big-time numbers that we’re all forgoing here. It’s just something that needs to be fixed.”
In November, an Atlanta Journal-Constitution and Channel 2 Action News investigation found dozens of commercial properties — including apartment buildings, warehouses, office complexes and shopping centers — were valued for property tax purposes at far less than what buyers paid for them in recent sales. Critics said the under-valuations might have shorted local governments millions of dollars in revenue. The report triggered independent studies by the city of Atlanta and Fulton County.