Following a 23 percent spike in citywide property values in a recent property tax reassessment, the New Orleans City Council — along with a few other local agencies that collect property taxes including the Orleans Parish Sheriff’s Office and the NOLA Public Schools district — now have to decide whether they will choose to collect all of those extra taxes next year.
The decision on whether to maintain current property tax rates — which would lead to higher tax bills for many residents who have seen their official property values rise — comes as New Orleanians are already facing massive cost-of-living increases.
Even though the citywide assessment was just announced last week — and with months to go before the council has to vote on 2024 tax rates — council members are already calling for a break for their constituents.
On Monday (July 24), the council released a letter pledging to lower or “roll back” tax rates to offset the higher home values and keep revenues at the same level they were this year, and encouraged other local taxing bodies to do the same. And on Tuesday, a council committee held a meeting where they heard testimony from the elected official whose office was behind the property valuation: Orleans Parish Assessor Erroll Williams.
Councilmembers questioned Williams over the process that led to such a large increase in property values.
“Why is it that in our parish it always seems like we are whacked with these really huge increases?” Councilmember Helena Moreno asked Williams.
Williams’ last reassessment in 2019 led to an average 15% rise in property values.
Councilmembers raised a number of concerns about Williams’ assessment process, including potential violations of state law.
On Tuesday, Williams admitted to the council that he knowingly refused to follow a state law requiring nonprofit groups that own property to reapply annually for a state exemption that allows them to be taken off the taxable rolls.
Williams said that it was a discriminatory law because it only applied to Orleans Parish. He also said that the point of the law was originally to bring in extra money through a $15 application fee.
“I don’t need the $15,” Williams said. “If I applied the law I would be taking the money when I don’t need it.”
But the main focus of the meeting was the potential tax hikes that could result from the quadrennial reassessment — a requirement in state law for parish assessors to revalue properties once every four years.
The potential tax hikes come at a bad time for New Orleans residents. Property values and rents have risen sharply in recent years. And residents who have long owned their homes are also facing serious problems with skyrocketing insurance rates, as private insurers have folded or pulled out of the market following major hurricanes in 2020 and 2021.
“This issue will inevitably affect homeowners and renters alike, as landlords will begin to pass their rising housing costs onto their tenants through written leases,” Leah LeBlanc, a program coordinator for the Greater New Orleans Housing Alliance told the council on Tuesday. “Families are already struggling with rising insurance and energy costs with no end in sight.”
Williams defended his process, and stressed that he is not responsible for setting people’s tax rates, only deciding the taxable value of each property.
“I have a simple role as administrator to determine the fair market value of every property,” he said. “That’s the mission. We try our best to try to get there.”
He also stressed that if residents believe their assessment is inaccurate, they have the right to appeal. The quadrennial assessment rolls are open for public inspection until Aug. 15 and for online appeals until Aug. 18.
Councilman Joe Giarusso assured residents that regardless of whether the council agrees with the property assessments or not, it has already pledged to ensure that the tax rates it controls are lowered to offset the rise.
Questioning Williams on the nonprofit exemption problem, councilmembers disagreed with the notion that the law is baseless. The law requires that the assessor provides nonprofit corporations with an annual form that certifies their nonprofit and tax-exempt status. Under state law, nonprofit-owned properties are exempt from taxes only when the properties are used for charitable, non-commercial, purposes.
Councilmember At-Large J.P Morrell offered examples of universities owning properties used by on-campus fast-food restaurants or a church vacating a property without notifying the assessor of this change. Morrell suggested taking a more “aggressive position” with nonprofit exemptions.
The council also asked about other apparent issues in the assessment process. Moreno questioned Williams as to whether he engaged in “sales-chasing” during this year’s assessment, an illegal practice where the assessor reappraises a property in relation to match its recent sale price, rather than the computer-assisted models that can assess all properties. Government watchdog organization Bureau of Governmental Research reported in 2019 and 2020 that Williams had practiced sales-chasing, as did a 2020 legislative audit.
Williams denied practicing sales-chasing during this year’s assessment.
“I don’t change sales, I analyze all the sales,” he said.
Additionally, the council pushed back on Williams’ contention that if residents have problems with their assessment, “the burden’s on you” to appeal. Devin Johnson, administrative director for the Assessor’s Office said it is “super, super easy” to appeal on the assessor office’s website, urging residents to file appeals as soon as possible, since they already received over 200 appeals and expect the office “to turn into a madhouse” in the next couple of weeks.
Giarrusso questioned the accessibility of these appeals — online or otherwise — for certain residents, particularly those who may lack internet access to easily check and appeal their assessments.
“I’m worried about our costs and manner, like even going online and getting appraisals and coming there. I just, I would love to see something that simplifies the process for people,” he said.
Residents fear tax increases
Residents and advocates told the council that tax increases could push long term residents from their homes and threaten the city’s middle class.
Mid-City resident Mary Mysing-Gubala spoke on behalf of her neighbors, many of whom do not have an age freeze on their property taxes like she does.
“Mr. Williams says that the average increase in property tax assessment is 23 percent,” Mysing-Gubala said. “One of the families in my neighborhood has seen a 47 percent increase and another a 50 percent increase, and another 110 percent increase, and finally, one at 128 percent increase. None of them have done any major repairs or renovations in the past few years. All of them are average middle class families.”
If something isn’t done to address these rates, she said, “We’ll soon end up with a city of very rich, very poor and transient tourists and students that could care less about the city one they’ve left.”
Resident Larry Morgan argued that the assessment increases have the potential to disproportionately affect Black and low-income communities. He specifically implored the Black councilmembers “to do everything in [their] power and authority to make it possible” for disadvantaged people to afford their rent and housing.
While property assessments may influence the taxes residents pay, Williams and the council emphasized that it is property tax rates — not these assessments — that ultimately determine property rates. Millages, a tax rate based on an archaic monetary unit that represents a tenth of a penny, are adjusted up or down in proportion to the change in property assessment. In other words, an increase in property value triggers a decrease in millage rate.
In light of resident and advocate frustration about assessment increases, Williams and the council also discussed external factors impacting the housing market, including the influx of short-term rentals, with high numbers of short term rental taxation fraud. In May, the assessor’s office found that hundreds of short term rental owners were fraudulently claiming that they lived in residences that they were using as full-time rentals. (Along with the property taxed break they received, homestead exemptions were previously required to obtain a short-term rental license in residential neighborhoods. The council voted to remove that requirement, pursuant to a court decision finding it was unconstitutional, earlier this year.)
Williams said that short-term rental properties should all be taxed as commercial properties, to which a higher rate is applied than residential properties.
“We believe that if you rent the house out that’s commercial use. It should be taxed as a commercial,” he said.
Budget Chairman Joe Giarrusso added that these are “not a victimless crime” in that they significantly impact the assessments of the surrounding areas. Giarrusso and other councilmembers promised to work with Williams’ office to address fraud and legal loopholes within the short term rental system, as well as the other issues in the assessment process.
“I think from a legislative perspective, the most important thing to do is to come up with a list of legislation to address a variety of issues,” Morrell said, continuing, “I think that’s definitely doable so that we can work with you as a council to put together a slate of different things that we think are viable. Let’s work together.”
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