Obscure changes in state law are expected to leave most Bibb County property owners subsidizing their neighbors’ tax bills or even those of entire neighborhoods.
The unfairness comes from how properties are valued, and the values are used to determine the amount of people’s tax bills, Bibb County officials said. If one neighbor gets an unfairly discounted property, everyone else in essence pays a greater share to make up the difference.
Nowhere is this more visible than Ivy Brook Way, a street in the troubled The Highlands subdivision off North Mumford Road in west Bibb County where banks sold off eight houses last year, county records show. The tax assessor’s office said those properties are worth a little more than $1.44 million; two banks -- Bank of America and HSBC -- sold them for $862,300. One house that’s assessed at $186,624 sold for just $75,000.
Because of a state law that took effect this year, the new owners will pay taxes based on the amount they actually paid for the house. For those eight properties, the selling price is an average of a 40 percent discount from what assessors say the actual value should be.
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There likely will be ripple effects, as the tax assessors lower some entire neighborhoods’ values where there are multiple bank sales. More neighbors are expected to file appeals on their values because of their neighbors’ discounted values. The same new state law that made the bank sales count as assessed values also made those appeals more inviting to file.
Bibb County Commissioner Elmo Richardson said those changes mean property taxes will become more unfair. The Georgia Association of Assessing Officials, which is led by Bibb County Chief Appraiser Andrea Crutchfield, is calling for that part of the law to be repealed to keep the tax burden fairly distributed.
The bank sales are held on the side steps of the Bibb County Courthouse, at auction. But there’s been a flood of bank sales because of foreclosures. A county database shows there were at least 398 bank sales of houses in 2010, or an average of more than one per day.
Crutchfield said there aren’t as many buyers, and banks are highly motivated to get rid of the homes even if they lose money. Buyers of foreclosed homes don’t always know if the roof was leaking or vandals damaged the home, making buyers more reluctant to bid full price for a property.
Richardson said banks aren’t waiting to get a fair value.
“Banks are unloading them just to get them off their books,” he said.
And that leaves places like Ivy Brook Way and the rest of The Highlands subdivision likely facing artificially low property values and lower tax bills.
That’s a rare bit of good news for the subdivision off North Mumford Road, where development companies associated with the Sivica home-building firm crumbled. Homeowners said in 2009 their homes were also crumbling, and they struggled to settle liens and get repairs done under house warranties.
But it also means other Bibb County taxpayers could have to pick up the slack for The Highlands.
The new law -- known as Senate Bill 346 -- requires the appraised value to be set at the lowest of either the appraised value or the sale price. It also explicitly makes assessors consider as fair market sales any transactions that have buyers and sellers acting fairly in their own interests, “including but not limited to a distress sale, short sale, bank sale or sale at public auction.” Tax assessors didn’t have to consider those sales to be fair-market transactions until the law changed it.
Crutchfield said she doesn’t yet know how much the new law will affect property values, nor how much neighbors’ appeals may bring down their own values.
Bibb County remains under a statewide moratorium on increased appraisal values. Crutchfield said she expects most homes would stay the same or decrease in value. But she said some homes should go up in value even though the assessed value cannot.
Richardson said he expects the county’s tax digest -- the value of all its properties -- to decline at least 2 percent, cutting government revenues. Richardson said the county will have to make hard decisions about services and taxes, because the county already expects next year’s budget to be about $10 million short at the current tax rate.
Richardson said other types of tax revenue, such as taxes on cars, personal property and business equipment, are also expected to decline.
A Telegraph analysis of Bibb County property sales data from 2010 shows the bank sales of the 398 homes netted about $18.8 million, but assessors valued them at $36.9 million. Residential lots, businesses and other properties were not included in the analysis.
In contrast, there were 784 “fair market” sales of homes, for about $109.8 million, with an appraised value of $113.2 million.
Information from Telegraph archives was used in this report. To contact writer Mike Stucka, call 744-4251.