MONTGOMERY – While property tax appeals to the Baldwin County Revenue Commissioner’s Office had to be postmarked by this past Friday, the Alabama Department of Revenue released a report on Monday stating that the county needs to “immediately develop new land values throughout the county” and also develop new building costs. 

Also, the chief appraiser, Darrell Robinson, incorrectly applied what is called a trending factor to some neighborhoods “in an attempt to equalize neighborhood values to market values,” but this “perpetuates and worsens appraisal uniformity among neighborhoods,” according to the report. 

The factor, compiled by a computer program, increases the land value of a home or a group of homes such as a subdivision by percentages – determined by the county revenue office - ranging from 0 percent, if an increased appraisal is not warranted since neighborhood sales remained constant, to 235 percent, Revenue Commissioner Phil Nix said in an interview held August 8. 

If homes sold in a particular neighborhood increased in value since last year’s appraised value, the county revenue office applied “the factor” which scaled or multiplied the appraised value of a home upward to reach what the real estate market sales were showing, Nix said. 

(In a two part series, the Onlooker reported on the trending factor and possible discrepancies, as admitted by Nix, which can occur in its application prior to the state’s report).

Nix said in the interview: “Based on the neighborhood…if we see that we need to raise it up 30 percent then we would apply 30 percent (factor) to that neighborhood and it affects everybody in that neighborhood at one time,” but he added, “you might overvalue some folks and that is the one you’re going to have to go in and specifically adjust” during the appeal process.  

“So what happens is the factor could in fact over-inflate or overvalue property and then again it might not touch it at all,” Nix said. 

The state’s report confirmed Nix’s statements: “The chief appraiser adjusted appraised values in some…neighborhoods, but then applied a large land trending factor in an attempt to equalize neighborhood values to market values.”

Also, many of the neighborhoods examined by the state “had only one or two sales, which was insufficient for development of market trends.  When this type (of) scenario is applied to hundreds of neighborhoods, as in the case with Baldwin County, properties may not be trended at all because of poor sampling, resulting in inequities in market value,” the report stated. 

These findings and a slew of other issues in the report were presented by state revenue officials Monday morning to County Commissioners Wayne A. Gruenloh, Frank Burt Jr., and Charles F. “Skip” Gruber; State Representatives Randy Davis, Joe Faust, Steve McMillan and Alan Baker; and County Revenue Commissioner Phil Nix and Chief Appraiser Darrell Robinson. 

In early June, the state became concerned with the “accuracy of property values” in the county and ordered a procedures and staffing analysis of the county revenue commissioner’s office in order to review how they determined property appraisals for this tax year and also to question employees on the internal workings of the office.

State Revenue Commissioner G. Thomas Surtees said at the meeting: “We are responsible for equalization of property so that someone in Cherokee County in Northeast Alabama…or Montgomery County…or Baldwin County pay taxes based on market values.”

Equalization means that the appraised value determined by the county meets fair market value.  The county revenue office must be accurate, and is only allowed a 5 percent margin of error, according to state guidelines. 

“The State Department of Revenue oversees all of it so that we got a uniform and a consistent approach to property taxes,” Surtees said, but he later noted that “we have less than 100 people in our division on property taxes which is less than 2 (people) per county.”

On June 21, five State Revenue Department officials met with county revenue employees including Nix and Robinson for the review and report. 

The report, which provides a timetable, only mentions the June 21 meeting in which the following State Revenue officials examined the county revenue office: Lewis A. Easterly, department secretary; Bill Bass, director of property tax division; Charlie E. Lassiter, director of human resources; and two tax valuation analysts. 

Their findings – the Baldwin County Procedures, Processes and Staffing Analysis Report – were still being pulled together a few days before the meeting, according to a county official. 

In a telephone interview on Thursday, Michael Thompson, county administrator who was cited in the report as being present during the examination, said: “They’re still working on the report as we speak.”

The following day, Friday, was the last day the county revenue office would accept postmarked appeals. 

Report Recommendations

The report recommended that the county revenue office continue using its current mapping system, which pinpoints where a property is located, who owns it, and some basic characteristics such as the amount of acreage. 

The map was found to be “effective and efficient.”

The county revenue office failed, however, on a state requirement that calls for 25 percent of all parcels in a county to be reviewed – boots on the ground and not by computer software - every year. 

The report recommended that the chief appraiser “keep appraisers in the field throughout the year” and “appraisers should begin the next year’s maintenance work as soon as the current year’s maintenance work is completed.”

As for how the county revenue office determined appraised values this year, the report stated that there was misdirection, causing assessment inequities, with the application of the trending factor. 

“Instead of conducting a building cost index specific to Baldwin County, the chief appraiser stated that he elected to apply Jefferson County’s improvement trending factor of 2 percent to all parcels in Baldwin County…This is not an acceptable practice,” the report concluded.

The factor was also misdirected in its application toward land values.

“When trending neighborhood values, more emphasis was placed on trending land values than improvement values…which skews the final value,” the report stated, and recommended that “the chief appraiser should immediately develop new land values throughout the county.”

In the interview with Nix, he said that, in some cases, a 235 percent factoring was applied to land values in order to raise an appraised property to market value, which achieves the state and county goal of equalization. 

But, Bill Bass, state property tax director, said: “Anytime you’re trending, and you trend 50 percent or 80 percent or 200 percent, there is a problem, and you should never have to trend that much.”

Recommendation or Action?

At the meeting, Baldwin County property owners expressed concerns that the recommendations would merely serve as recommendations, and not be acted upon. 

“Well if you spend the time and the money to do this staff review and put out this nice report, then the recommendations, it seems to me, need to be followed up by action rather than just a piece of paper floating around,” said Georgia Bankston, a county property owner. 

At the moment, Surtees did not have short-term or long-term dates established as to when the recommendations would be implemented.   

When asked by a Onlooker reporter if the land values could be fixed prior to the County Board of Equalization’s hearings in which nearly 7,000 appeals will be reviewed, Surtees responded: “We’re going to take a look at it, tomorrow, I mean by Monday, I mean…Heck, if you want a commitment from me that says we’re going to fix it, I will stand here and guarantee that we will fix this system.”

When asked by a county property owner if the state could fix the county revenue office’s inequitable appraisals, Surtees said, “Can the state trump a county and go in and fix it, yes.”

Bankston asked, “Would you?”

Surtees responded: “Based upon the information I have right now, should the state go in and take over Baldwin County, no, fix it, absolutely, but that’s working with the county.”

Surtees added that the short-term solution is the appeals process and that the long-term solution will focus on implementing the report’s recommendations. 

State Rep. Steve McMillan said: “I want to ensure that all the parties involved in solving this problem are going to approach it in a cooperative manner, and if that doesn’t happen, you are looking at a guy that is going to be mad as hell when he gets up here next February” for the legislative session. 

Surtees said he will send out a “memorandum of understanding” to all involved parties, state and county, that will outline exact dates when the recommendations will be acted on and implemented.

“Everything that we can impact on, we being the Department of Revenue…I will put in there with a date and a time that we’ll do it,” Surtees said. 

Robinson noted that “as of Saturday at 12 noon, we had 3,500 appeals” logged into the computer and boxes filled with more appeals remain untouched. 

But, by Friday, he said the revenue office will know the final tally.