By Scott Calvert, The Baltimore Sun
11:02 AM EST, November 16, 2012
Update: On Friday afternoon, Henry J. Raymond, the city’s deputy finance director, sent The Sun this email: “We are in our continuous audit process and will not take any action until all accounts can be reviewed and we can approach these errors with a standardized procedure and communication. We are still determining issues related to values allowed for use as the base year assessment. Until we have that determination, it is not cost effective to recalculate the credit because we might need to correct the accounts again once we have the determination relative to the base year assessment from a legal perspective. Finally, I look forward to briefing members of the City Council that may have additional questions.”
The chairman of the City Council’s taxation committee said he wants an explanation from Baltimore’s Finance Department on what it’s doing to recoup more than $1.5 million in property tax revenue that the city failed to collect because of chronic errors in how a tax break was computed.
Four months ago, the state assessments agency detailed for the city how the state’s earlier errors had led to the under-billing. The state provided information the city needed to issue revised tax bills to owners of the properties, all large commercial buildings.
But one affected owner recently said it has heard nothing from the city, while the owner of another building said the city has begun “slowly” recouping the unduly generous breaks, which in some cases go back to 2004.
“Someone has to take responsibility for this and frankly it’s the Finance Department who has to accept responsibility for not checking and double-checking the numbers that the state has given them,” said Councilman Carl Stokes, who chairs the Taxation, Finance and Economic Development Committee.
“It’s not just about transparency, but we seem not to care at all about where our tax dollars or public funds are going,” Stokes said. He added that if finance officials agree with the revisions provided by the state on July 6, “they should send the proper bills to the owners.”
We are in our continuous audit process and will not take any action until all accounts can be reviewed and we can approach these errors with a standardized procedure and communication. We are still determining issues related to values allowed for use as the base year assessment. Until we have that determination, it is not cost effective to recalculate the credit because we might need to correct the accounts again once we have the determination relative to the base year assessment from a legal perspective.
The errors involve the miscalculation of a city property tax break meant to encourage the restoration of historic properties.
On Tuesday the state gave The Sun details on a different error involving the same historic tax credit. The newly detailed mistakes collectively cost the city about $300,000 in potential tax revenue.
Though the historic credit is supposed to last 10 years after a rehab, 23 city property owners somehow received extra credits — nine of them for an 11th year and 14 for an 11th and 12th year, according to Owen C. Charles, deputy director of the state Department of Assessments and Taxation.
Some properties got an extra year because the state didn’t recognize a partial year credit had been granted in the first year of the credit, Charles wrote in an email. “However, I am not certain why the credits on some accounts were granted for more than one additional year.”
The city, which created a “billing integrity program” in 2011 to ferret out such mistakes, did not catch the glitches when it took the state’s calculations and applied those to annual property tax bills. On Tuesday O’Doherty said city finance officials would provide information about the extra years of credits. They have not done so.
Among the properties on the list is a 13-unit apartment building in the 500 block of South Ann Street in Fells Point. According to the state, its owner should not have received a $29,000 tax discount last year because that constituted an eleventh year of discounts under the historic credit.
Owner Ken Klotz said he was unaware that his subsidy lasted beyond 10 years. “I’m just surprised to hear that,” he said, adding, “They would have to demonstrate they made a mistake.”
He said the four-story brick building was a decrepit warehouse before it was renovated.
“It was a rather ugly, horrible-looking thing we grabbed a hold of and, supported by the community, we put apartments in there,” he said. “We rehabbed the whole thing and did it historically. It was a dog when we did it….It turned out rather nice.”
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