Errors Cost $40 Million, Assessor Says

Los Angeles County has failed to assess more than $4 billion in property, costing financially strapped governments millions of dollars while allowing thousands of residents to escape paying more than $40 million in taxes, according to county Assessor Kenneth P. Hahn.

Hahn said his staff discovered the errors as part of an ongoing analysis of the office’s problem-plagued computer system and processing methods.

The properties that escaped proper assessment range from multimillion-dollar office buildings to small plots of vacant land valued as low as $20,000, Assistant Assessor Gary Billan said Friday. Many of the errors were made in recording new construction, he added.

The errors range from properties that had never been recorded to those in which the assessed value was calculated incorrectly. In other cases, the property had been assessed properly and recorded, but a year or two late, officials said.

“Some of it just fell through the cracks,” Hahn said. “Some of it was just in ‘dead files.’ ”

About 8,000 properties, with a value of $2 billion, were not assessed by county officials, Hahn said. He added that 8,146 other parcels--worth $2.1 billion--were improperly assessed, usually at a value that was too low.

The assessor would not reveal the names of the individuals and companies who have escaped paying taxes because most have not yet been notified of the errors.

In all, the errors amount to nearly 1% of the county’s total property tax base of $480 billion, Hahn said. There are more than 2.4 million assessed properties in the county.

Under terms of Proposition 13, the state’s property tax statute, the $4 billion in new assessments would provide $40 million in additional taxes. The county would receive about 38%, or about $15.2 million. The remainder of the taxes would be shared by cities, other local governments, school districts and the state.

The discovery of the error “confirms my worst suspicions,” said Jay Curtis, president of the L.A. Taxpayers Assn. and onetime candidate for assessor. “And there’s probably more beyond this.”

Curtis joined Hahn in blaming the errors on former Assessor John Lynch, whom Hahn defeated two years ago.

Hahn and Curtis campaigned for the assessor’s job in 1990, saying that the department’s computer system was ineffective, difficult to work with and prone to errors. Upon taking office, Hahn began the review that uncovered the errors--many of which date back four years.

Lynch did not respond to calls seeking comment Friday.

“Now we must quickly proceed to ensure that these lawful assessments are accurately placed on the roll before their statute of limitations expire,” Hahn said in a letter this week to the Board of Supervisors. In most cases, the ability to assess back taxes is limited to four years, but in some special circumstances it can be extended to eight years, assessor’s officials said.

“It’s what (property owners) should have been paying in the first place,” Hahn said in an interview. “Taxes should be paid according to the law. That’s fair and equitable.”

Curtis agreed. “No taxpayer organization would ever say someone should squeak by unassessed.”

Chief Deputy Assessor Gary Townsend noted that along with higher reassessments, the review also discovered that some taxpayers were paying too much. They will soon be notified and mailed refunds, Townsend said.

The assessor’s office, like virtually every arm of county government, has suffered deep budget cuts in the last several years.

The county’s $13-billion budget is more than $300 million in the red even after severe cuts in staff and services were made in virtually every department. Libraries, museums and parks have been closed, payments to the homeless have been slashed, and the ranks of sheriff’s deputies and firefighters were thinned.

In reporting the new assessments, Hahn appealed to the Board of Supervisors to keep funding the staff at a level needed to provide the most tax assessments and collections.

“By informing you of this . . . I am asking for your continued cooperation,” Hahn wrote to the board. “I cannot deliver the revenue base needed by your board and required by the laws of California without your continued support. . . . I strongly feel that this department has given your board and the taxpayers of Los Angeles County ‘more for less.’ ”