Up to 300 city homeowners got inflated tax breaks, councilman says

New errors point to wider problem with historic credit

  • Joe and Kaitlin Eckard, with son, Joey, are among the many Baltimore City residents who will pay higher property taxes because of state miscalculations of historic tax credits.
Joe and Kaitlin Eckard, with son, Joey, are among the many Baltimore… (Amy Davis, Baltimore Sun )
July 30, 2013|By Scott Calvert, The Baltimore Sun

Up to 300 Baltimore homeowners are seeing a jump in property tax bills because the city says they have received excessive credits for historic renovations, according to a city councilman briefed on the issue.

The city has promised not to seek back taxes from homeowners who benefited from miscalculations made by the state. But city officials have made upward adjustments on tax bills starting with the fiscal year that began July 1 — prompting complaints of unfairness from homeowners in the 10-year program.

"I'm a little dumbfounded," said Joe Eckard, whose tax bill tripled on his rowhouse east of Patterson Park. Over the remaining years of the program, the higher taxes will cost him and his wife, Kaitlin, about $16,000. "The overall mentality of the city is, 'Sorry, you're going to have to pay for it.' As if everyone can come up with an extra couple thousand dollars."

The revelations about the historic tax credit are the most recent problem in the handful of programs that homeowners can use to ease the bite of Baltimore's property tax rate, which is the highest in Maryland.

Councilman James B. Kraft, who represents Canton, Fells Point and other parts of Southeast Baltimore where comprehensive housing rehabs are common, wants the city to honor the higher historic tax credit amounts for the full 10 years.

Kraft noted that many people bought homes based on assurances from state assessments officials showing what they would save on taxes, an approach that city officials now say was flawed. If anybody should pay the city going forward, Kraft said, it is the state, not the homeowners.

Referring to Mayor Stephanie Rawlings-Blake's population growth target, he said, "We cannot say we want 10,000 new families in 10 years if every time our people get screwed — regardless of who they get screwed by — we turn around and say we're going to make you pay. That's absurd."

He added, "This is not the citizens' fault."

City officials declined to comment on the issue Tuesday, but offered to provide details later in the week.

State officials, meanwhile, say some calculation errors identified by the city likely resulted from a poorly designed database program. Others reflect a different approach taken by the city since it assumed responsibility for the historic credit program last year.

State officials could make retroactive changes to help some affected homeowners, said Owen C. Charles, deputy director of the state Department of Assessments and Taxation.

Miscalculations involving the historic credit program recently made headlines when the city said it could not rebill several commercial property owners who were collectively undertaxed by more than $1.5 million going back to 2004 because of similar calculation errors by the state assessments agency.

An analysis by The Baltimore Sun last year revealed the erroneous calculations for the commercial properties, including a downtown hotel and apartments. But that analysis was limited to the 10 biggest recipients.

More recently, the city has reviewed all 1,200 or so historic credits, according to postcards mailed to homeowners.

Kraft said city officials told him last week that they detected problems with 250 to 300 of the credits — at least 20 percent of the total. In most cases, he said, qualified recipients were found to be receiving unduly large discounts because the state deemed too much of their home's value tax-exempt.

But Kraft said that in fewer than 50 cases, owners were receiving the break without even asking.

The Sun last year documented five such cases in which homeowners got a historic credit for two years without applying. Charles blamed a "coding error." One owner said she didn't realize she was getting the discount, partly because it is listed on tax bills as a "special credit." All five owners were told to repay the city.

When the Eckards bought their rowhouse on South Robinson Street in 2011, the 10-year historic credit was "the deciding factor," said Joe Eckard, a medical device salesman.

The couple had been planning to continue renting an apartment in Baltimore County. But they realized that, thanks to the historic credit, their monthly payments would be about the same if they bought the restored rowhouse. He felt confident after getting a worksheet from the state that put the tax break in writing.

The first two years, their tax bill was a relatively low $1,000. Then came this year's bill: $3,000. This is the third year of the credit, so they expect to pay $16,000 more than anticipated through 2021.

Canton real estate agent Andrew Lehr, who sold the Eckards their rowhouse, often works with developers to market rehabbed homes and says the historic credit is a major selling point. Under the program, the full value of approved home renovations goes untaxed by the city for 10 years.

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