New Orleans Homeowners, Already Burdened By Katrina, Could Be Hit With Higher Property Taxes

Tuesday, July 10th 2007, 5:31 pm
By: News On 6

NEW ORLEANS (AP) _ Ben Maygarden is only half-joking when he wonders whether he should wear a bulletproof vest to City Hall, where he works for one of the city's seven tax assessors.

New Orleans is wrapping up a mandatory, citywide reassessment of property values for the first time since Hurricane Katrina damaged or destroyed thousands of homes and businesses.

The reassessment could lead to big property tax increases for some homeowners at a time when many already are being hit with soaring insurance premiums in Katrina's aftermath.

``People are going to be upset,'' said Maygarden, chief deputy to Assessor Nancy Marshall. ``We joke about needing bulletproof vests, but it's not entirely a joke.''

Some fear the results could pit neighborhood against neighborhood, as well as discourage people from moving to New Orleans and buying homes at a time when the city desperately wants to rebuild its population.

Assessing property values was a notoriously haphazard process in New Orleans well before Katrina struck. But the August 2005 storm cast an even brighter light on inequities in the system.

For years, critics have complained that the seven elected assessors are prone to undervalue homes to appease their constituents, while other homeowners _ particularly new buyers _ are forced to shoulder an unfair piece of the tax burden.

Last November, voters approved a state constitutional amendment that calls for consolidating the seven assessors' offices. A single citywide assessor will be elected in 2010, after the assessors' current terms expire.

Also last year, seven reform-minded candidates challenged the incumbent assessors with a pledge to quit if elected. Nancy Marshall, a resident of Uptown, a mostly comfortable section of the city that escaped the worst of Katrina, was the only candidate on the ``I Quit'' ticket to win.

Instead of quitting, she has set her sights on cutting politics out of the process and conducting honest assessments based on the fair-market value of property.

The results may stun the homeowners who elected her. Many will see their assessments more than double or triple after Marshall's deputies finish their work in the Uptown neighborhood, Maygarden said.

A 4,480-square-foot home in a well-to-do part of Uptown recently sold for $965,000 even though its assessed value has been $409,000 since 1999. The home's former owners were paying about $6,000 in annual property taxes.

The City Council, school board and other government entities that collect property taxes could ease the blow by lowering the tax rates. But that is an iffy proposition in a city that has teetered on the brink of bankruptcy since Katrina.

Because of the damage wrought by the storm and the exodus of close to half the city's 450,000 residents, property tax revenue was projected to fall from $80.1 million in 2004 to $68.2 million this fiscal year. The city's current $773 million budget relies heavily on disaster-relief loans and grants.

Other assessors say they are committed to fairly reassessing property values elsewhere around the city. But it is going to be a difficult job.

In the devastated, poverty-stricken Lower Ninth Ward, thousands of homeowners have yet to return, and many homes are still under construction and won't be completed until after the reassessments are due.

``There's too much property that's sitting out there gutted and idle or is just a vacant lot,'' said assessor Erroll Williams, whose district includes the Lower Ninth. ``It's an uneasy feeling for an assessor. You try to cover as much ground as possible, but you still know there's a lot out there that you're missing.''

In 2005, the Louisiana Tax Commission found that the city's residential properties were under-assessed by an average of 25 percent. And a May 2005 study by the nonprofit Bureau of Governmental Research concluded that New Orleans properties of similar value bear drastically different tax burdens, with many people paying little or no property taxes.

The bureau estimated that chronic under-assessments and overly generous tax exemptions were costing the city $172 million annually.

``I've always found it rather inexplicable,'' said Janet Howard, bureau president. ``It just impoverishes the city.''

Marshall said newcomers to New Orleans have shouldered a disproportionate share of the tax burden because their assessments were based on sale prices. Owners of property that hadn't changed hands in years were less likely to be assessed at fair-market value.

``We're trying to attract people back to the city, but it's really an incredible burden,'' she said.

The new assessments are due Aug. 1, and property tax bills are mailed out in December.

Marshall said property taxes will drop for many if everybody is fairly assessed. But some homeowners are preparing for bad news.

``Everyone is just kind of waiting for the hammer to drop,'' said Shelley Landrieu, executive director of the Garden District Association, which represents homeowners in a neighborhood that escaped the worst of Katrina's wrath.

City Council member Shelley Midura, whose district overlaps with Marshall's, worries that her constituents will pay a steep price if Marshall ``does it right'' while other assessors ``keep to their old ways.''