No refunds for FY '03, CA board decides

Assessment-gain revenue amounts to $541,000

April 11, 2004|By Laura Cadiz | Laura Cadiz,SUN STAFF

Rising property assessments in Columbia resulted in an additional $541,000 in annual-charge payments to the Columbia Association for fiscal year 2003, but property owners won't get any of that money back.

Refunds from annual-charge payments - which are based on property assessments - could have ranged from $14 to $71 per household, but a Columbia Association board majority decided Thursday that the refunds would not have been significant enough to satisfy homeowners. Board members also expressed concern that the amounts were too small to justify the expense of funding and distributing them.

Based on a ruling from the Internal Revenue Service, the association is allowed to give property owners rebates or credits against their annual-charge payments without jeopardizing its nonprofit status in years when its surplus is higher than budgeted. The rebates must be given to all property owners, not just those who had higher reassessments.

"The minimal amount of money that we will be giving back is not what residents are looking for," said board member Barbara Russell, who represents Oakland Mills.

Board Chairman Miles Coff- man said he worried that the refunds would have a negative effect on the association's finances because it might have to borrow money for the refund. The association has spent the money generated from the higher reassessments.

The association staff determined that, based on various interpretations of the IRS ruling, the total refund could have ranged from zero to $2.7 million.

But if the board had been more accurate in its assessment income estimates for the 2003 budget, it could have correctly determined the amount of money it needed to borrow to extend the refunds, said board member Phil Marcus of Kings Contrivance.

However, the board could not have anticipated the increase, and it should not have to incur debt for something that was a "mistake," said board member Donna L. Rice of Town Center.

Fiscal 2003 was not the year that the Columbia Association benefited from skyrocketing property reassessments. That came in fiscal year 2004, when property assessments in east Columbia increased an average of 33.4 percent, padding the association's 2004 budget by an extra $2.7 million.

West Columbia homes that were recently reassessed jumped an average 47.4 percent in assessed value.

In response to Columbia's higher reassessments, the board dropped the annual-charge rate by a nickel - to 68 cents per $100 of valuation assessed on 50 percent of a property's value - and capped it at 10 percent for the 2005 budget. The cap would be retroactive to the east side.

Board member Cabell Greenwood of River Hill said the board had made a commitment to ease the impact of the assessment increases by approving the 2005 budget with an assessment cap.

The board's 10 percent cap reflects legislation that Del. Shane E. Pendergrass has submitted in the General Assembly. House Bill No. 566 would impose a 10 percent ceiling on rising property assessments in the town and would also phase in assessment increases over three years. The legislation would cover east Columbia assessment increases.

A Senate committee unanimously approved the legislation Wednesday; last month, the House unanimously approved the bill. The measure next goes to the Senate floor for final approval.

The Columbia Association board, however, does not agree on whether the 2005 budget assessment cap and phase-in is contingent on Pendergrass' legislation. Assistant Attorney General Robert A. Zarnoch has determined that the association cannot impose an assessment cap without unanimous approval by property owners or enactment of state legislation.

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