The Columbia Association ignored the advice of the state attorney general's office and might have violated Maryland law when it changed the way it computes property assessments, two state officials say.
Contrary to what Columbia Council members seemed to think when they voted Dec. 21, a new state law does not require the association to assess property at 100 percent valuation rather than 50 percent, the officials said Friday. In fact, they said, state law might forbid it.
The Truth in Taxation law, which went into effect Oct. 1, does not apply to the private homeowners association because it is not a municipal or county government, according to Assistant Attorney General Robert A. Zarnoch and Ronald W. Wineholt, director of the state Department of Assessments and Taxation.
"I don't think that law affects anything they do," said Zarnoch, who wrote a legal opinion to that effect in June.
Zarnoch and Wineholt questioned the Columbia Association's authority to assess property at anything other than 50 percent valuation as dictated by state law for more than 20 years. A provision to the state's tax law that directs Columbia to levy fees based on a 50 percent valuation was passed at the request of the Columbia Association in 1978.
The Truth in Taxation legislation would not have affected this provision, Wineholt said.
"It seems to me, if the General Assembly has said by state law that ... the assessed valuation is 50 percent, that's due some recognition," he said. "That's the law of the state of Maryland. I don't know how you get around it."
The Columbia Association charges an annual property assessment to support recreational amenities and other services for the community's 87,000 residents.
Under the Truth in Taxation law, local governments will tax residential and business properties at 100 percent of their assessed value instead of at a percentage of that value. The measure was intended to simplify confusing assessment notices and attract businesses to Maryland by helping the state fare better in national tax-rate rankings.
The law was not intended to affect the amount taxpayers are charged, because it will be coupled with corresponding decreases in tax rates. But changing the assessment base could, at least in theory, drastically increase how high Columbia assessments climb by undercutting a cap on assessments.
Columbia assessments are capped, under legally enforceable covenants, at 75 cents per $100 of assessed valuation. But if property is assessed at 100 percent of market value rather than at the 50 percent level, and the tax rate stays the same, assessment bills would double.
100 percent assessment
On Dec. 21, the Columbia Association's board of directors - who also serve as the Columbia Council - voted 6-4 to assess property at 100 percent and cut the lien rate in half, from 73 cents to 36.5 cents.
Those opposed to changing the assessment questioned whether the action opened the door to huge assessment increases. They said a new cap of 37.5 cents - half of the 75-cent maximum - might be needed to maintain existing limits.
In a two-page opinion written in June, Zarnoch noted provisions in state law that set Columbia valuations at 50 percent and concluded that the new law did nothing to change that.
David H. Bamberger, an attorney who advises the Columbia Association, said he received a copy of Zarnoch's opinion but disagreed with it. Some, but apparently not all, of the council members received copies of Zarnoch's opinion.
"I'm very confident that what the board did was not only authorized but appropriate and, frankly, necessary to make sure people don't end up paying more," Bamberger said.
"The bottom-line objective is people don't get zapped."
Bamberger acknowledged that, "as a technical matter," the Truth in Taxation law "does not expressly apply to the Columbia Association or for that matter any other private entities." But he said assessment bills would have doubled if the board had not taken action because the covenants link assessments to county and state values.
"Essentially what it says is, when you compute the annual charge you are to use the highest valuation placed on real estate for either Howard County or Maryland for real estate purposes," he said.
Wineholt and Zarnoch disagreed, noting that since 1978 Columbia has computed assessments differently from Howard County. Until the new law took effect Oct. 1, the county assessed at 40 percent while Columbia assessed at 50 percent.
Surprise over decision
Wineholt said he had discussed the new law in June with Paul Papagjika, the Columbia Association's treasurer. He said he told Papagjika that the law did not apply to the association and was surprised to read about the Dec. 21 vote.
Papagjika could not be reached for comment.
Council members on either side of the resolution issue said they were voting to protect residents. Those in favor said assessments would double without the measure. Those against said they were trying to protect the integrity of the 75-cent cap.