Millions slip away from city as condo values set too low

In a database with a lot of numbers, this one jumped out: $55,000. How on earth could a condo at the prestigious Ritz-Carlton Residences – where author Tom Clancy owns a sprawling multimillion-dollar penthouse – have an assessed value that low? 

When we noticed that as part of our reporting of the Sun’s Taxing Baltimore series, we went looking for more examples of developer-owned homes with bargain-basement property assessments. Two other clusters turned up close by along Baltimore’s Inner Harbor: The handful of unsold Pier Homes at HarborView are assessed at $20,000 each, while the unsold Silo Point condos are assessed at $10,000 apiece.

--Read more Taxing Baltimore coverage here.

But a variety of other projects similarly launched when the housing market was hot and left to struggle in the bust weren’t getting that same deal. The 414 Water Street condos downtown, for instance.

We turned to the state Department of Assessments and Taxation to clear up this mystery, sending the agency an Excel file in mid-March with the oddly low assessments. The answers came in like – well, a mystery novel, with lots of twists and U-turns.

Deputy Director Owen C. Charles figured the units weren’t substantially completed. Assessors have to wait until that point to apply a full-market value on a new property, so that would seem to be that. Except the projects were built years ago.

He checked with the agency’s city office, which is responsible for the assessments, and came back with the (apparent) answer: The developers had all appealed to an independent panel. The panel set the values, not the agency. That’s what he’d been told, anyway, but he said he’d verify it.

Then it turned out Silo Point and the Ritz hadn’t appealed. Only the Pier Homes had its assessments knocked down by the panel. Charles saw in this the solution to the mystery: The assessors had relied on this decision to guide them on the question of when the Ritz and Silo Point condos would be sufficiently complete to allow for a full assessment.

Except the condos had certificates of occupancy, issued by the city in 2008 and 2009 when it was satisfied the units were all set for people to live in. Wouldn’t that mean they were ready (and then some) for market-value assessments? We did some number-crunching and estimated that the city would have collected more than $10 million in additional taxes if the condos had such assessments starting July 2009.

Last week Charles came back with the final (we assume) answer to this whydunit: The assessors had questions about whether the condos were sufficiently done. This surprised us, considering that the state defines “substantially completed” as “buildings under roof with completed walls.”

In any case, he said they’re going to revalue the units in the next month or two anyway on the principal that it’s been too darn long – something that won’t mean retroactively higher bills but will increase the tab for the tax year beginning in July.

“That was the assessors’ intent, even before your inquiry came up,” he said.

--For more on the underassessed condos, read our Sunday story on the subject.

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