If historic tax bills are wrong in the future, at least city property owners will know who to blame.
The City Council voted unanimously Monday to give Baltimore’s government authority to do the appraisals that determine the size of historic tax credits — essentially stripping state officials of the duty in response to errors that left some property owners with wildly inaccurate bills.
The plan, which is expected to get final approval next week, ends months of finger-pointing between state and city officials over who is to blame for the problems.
“If the city wants to take it all over, that’s great,” said City Councilman James B. Kraft, whose southeast district has dozens of historic properties. “We can have one group of people to praise if it works, and we can have one group of people to blame if it doesn’t work.”
The city’s historic tax credit program allows the full value of approved home renovations to go untaxed for 10 years. The program gives out thousands of dollars to those who renovate historic properties — and, the city says, spurred $560 million in renovations over the years. But it was dogged by inaccurate tax bills that city officials blamed on the state.
“While it would have been easy to ignore these problems and kick the can down the road for future administrations, fixing the problem now is the right thing to do,” Mayor Stephanie Rawlings-Blake said in a statement Monday.
“Clearly, what the state was doing wasn’t working,” said City Councilman Brandon Scott.
But as some on the City Council praised the administration’s acceptance of responsibility for the program, others questioned whether the city government is best equipped to do the appraisals.
“The typical taxpayer is left with many questions,” said economist Anirban Basu of Sage Policy Group, a consulting firm. “There’s no guarantee that the new set of assessors will do a more credible job than the current assessors.”
The Baltimore Sun has detailed problems with the historic tax credit system. In 2012, The Sun found, the city failed to collect more than $1.5 million in taxes because of historic tax credit errors on some apartment buildings and commercial properties. Last year, the paper reported, more than 300 city homeowners saw significant increases in their property tax bills after officials discovered that previous tax breaks were larger than they should have been.
Officials in the state Department of Assessments and Taxation have disputed that the problem was all their fault, but have said they support the change to have the city take over the appraisals.
This year’s city budget includes funding to increase the Billing Integrity Unit, which will grow from three to seven employees — including an appraiser, tax and revenue analysts and a data manager. The new positions, at a cost of $290,000, were created to enable the city appraisals as well as monitoring to better catch erroneous bills.
The move to take over the assessments of historic improvements, restorations, and rehabilitations is the city's latest step to try to remedy the errors. The city also has moved to an automated system to calculate the bills.
City Councilman Nick Mosby voted for the plan, but said implementation would be the real test.
“It’s great that we’re taking it over and managing it,” Mosby said. “But it’s critically important that we run it right.”
Kraft said he has been assured by William Voorhees, the city's director of revenue and taxation, that city appraisers will respond quickly to property owners — and appraise properties within days of a request. He said many people buying and selling properties need to know immediately what their tax credits will be.
“The question is, can the city’s assessors get out there quickly?” Kraft asked. “If they can do that, then this can work?”
Councilwoman Mary Pat Clarke said she felt “comfortable” knowing that new finance director Henry Raymond would be overseeing the program.
City officials say the legislation needs final approval by Oct. 1 so they can carry out the changes in time for the next round of tax bills.
Officials have also announced that they will pay about $3 million to owners of historic properties whose tax bills in coming years will be higher than what government officials had told them to expect. Rawlings-Blake has appointed a three-member panel to distribute the funds.
Retired Baltimore Circuit Judge John M. Glynn, City Auditor Robert McCarty, and City Solicitor George Nilson will decide which owners will get the checks, which will cover portions of up to nine years of future tax bills. About 75 property owners submitted applications that could make them eligible to receive the checks, city officials said.
In other business, the council took up two additional financial matters. The body gave preliminary approval to offer up to $5,000 in tax credits to homeowners who move to new homes but choose to remain in the city. The Resident Retention Tax Credits are intended to help residents who lose their Homestead tax credits when they switch homes.
And City Council President Bernard C. “Jack” Young introduced a resolution calling for an investigative hearing into CitiBuy, the city's electronic procurement system, which helps in selecting more than $270 million in contractors a year.
“It is important to ensure that the taxpayers receive the best price available,” Young said in a statement. His resolution means city finance and purchasing officials will be called to appear before the council to answer questions about the system’s efficiency.