Critics home in on assessment increases

Residents, officials fight Montgomery's property tax method

3-year cycle bypassed

January 20, 2002|By Robert Nusgart | Robert Nusgart,SUN STAFF

The head of the state assessments and taxation department calls it "the Welcome Wagon from hell."

Three Montgomery County lawmakers call it "tax gouging."

And Bethesda resident Kevin Schuyler, told by the county to pay another $1,700 in property taxes, is ready for a court fight.

Saying they stand "on solid legal ground" in using an obscure section of state law, Montgomery County officials are ignoring the state's traditional three-year assessment cycle by immediately reassessing hundreds of homes that have been bought for more than $150,000 above the state's current assessment for that property.

"We've caught on to what they are doing. The state has caught on. And the people have caught on," said Schuyler.

Midcycle assessments, which have accelerated as home values have skyrocketed, have generated millions of dollars for Montgomery County, angered state officials, prompted legislation and, possibly, created a showdown in Maryland Tax Court.

The state worries that if Montgomery - the only county to apply the law - is allowed to continue, then perhaps other counties looking for more revenue will follow its lead and effectively subvert the traditional three-year assessment cycle.

"Any of the ... counties or 157 municipalities could attempt this practice," said Ronald W. Wineholt, director of the State Department of Assessments and Taxation. "We are concerned that it could spread."

However, the finance directors for Baltimore and Howard counties said last week that they are unaware such a provision exists or that Montgomery County is engaged in such a practice.

"Just because we're the only jurisdiction doesn't mean it shouldn't be done," said Timothy L. Firestine, director of finance for Montgomery County.

But Howard County finance director Dale Nuibert said that what Montgomery County is doing isn't practical for her county, where homes have also increased greatly in value.

"I really don't think this has an application in Howard County" she said. "[Montgomery] made the decision to go forward with it, obviously successfully, for a number of years."

For many unsuspecting Montgomery County homeowners, it has meant a sharp rise in property tax bills - often thousands of dollars - while the jurisdiction reaps $2 million to $3 million annually from the reassessments, according to county officials.

"I think when you buy a house, you should expect your property taxes will be based on the value of the sale," said Montgomery County Executive Douglas M. Duncan. "So we are just looking at where there are major discrepancies between the sales price and the assessed price and get that corrected."

In an area where million-dollar homes are commonplace, it might be hard to generate public sympathy for such homeowners. Blame the state, Duncan says, for not doing its job properly.

"They don't want to admit that they are not doing a good job with assessments throughout the state," he said. "That's the real problem."

`Unconstitutional'

But the practice, which the county could use to generate even more money by lowering its self-imposed $150,000 threshold, has caused outrage.

Republican County Councilman Howard A. Denis entered a bill last month to end midcycle assessments, and a hearing is scheduled for Tuesday. Democratic state Sens. Brian E. Frosh and Patrick J. Hogan are co-sponsoring similar legislation in Annapolis. Also, 15 affected homebuyers, including Schuyler, are preparing for a Feb. 21 showdown with the county in Maryland Tax Court. Oddly enough, one of their staunchest allies will be Wineholt, the state's director of assessments.

Wineholt, whose office has dismissed every one of Montgomery's petitions for reassessment - the first step in the process - said the provision is "obsolete," the practice is "unconstitutional," and it violates the spirit and the intent of the three-year assessment cycle created by the General Assembly in 1979.

"I have no quarrel with local governments if they choose to appeal assessments that our department has issued if they feel that the value is incorrect," Wineholt said. "But I feel they should appeal it when the assessment is issued, not wait a year or two years later when inflation has built up, and come in out of cycle and try to raise people's assessments. I feel that is inappropriate."

The practice, which began years ago, when the county started going after commercial properties, lately has grown and become magnified on the residential side as housing values have soared in such upscale neighborhoods as Bethesda, Potomac and Chevy Chase.

"They have a way of generating income but not calling it taxes," said Steven Van Grack, an attorney and former mayor of Rockville who serves as chairman of the Maryland Real Estate Commission.

"Governments are going to have to become a little bit more innovative and creative. Of course, [Duncan] would never use the word `tax,' but that's what it is," added Van Grack, who lost to Duncan in a re-election bid as mayor of Rockville in the late 1980s.

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