Officials Fume Over Tax Glitch : Government: Failure to put assessment appeals data into computer system will get 179 property owners off the hook for at least $1.7 million.

The county’s bungling of property assessment appeals will get 179 homeowners and businesses off the hook for at least $1.7 million in taxes, and the financial impact could eventually be much greater, county officials said Tuesday.

Orange County Administrative Officer Ernie Schneider also revealed that a newly installed county computer system aimed at automating the appeals process could have prevented the bureaucratic snafu had data been put into the system. Instead, the computer went unused after July because the Assessment Board clerk said she didn’t have enough staff to log the information.

“At this moment (we are) trying to understand the magnitude of the problem and suggest changes in procedure and policies that will prevent this from occurring in the future,” Schneider said.

A preliminary review of the problem, he said, found that the county failed to review at least 179 property-tax assessment appeals before their statutory two-year deadline expired. As a result the county will have to accept the owners’ estimates of the property value. Schneider said the review is continuing, and there may be additional cases in which the deadline has expired.

Of the 179 parcels that were confirmed, the county tax assessor’s value for all the properties was $446,304,991 compared to the property owners’ value of $272,466,511--resulting in a difference of taxable property of $173,838,480 for 1992. Using the basic 1% property tax rate, the one-year loss of revenue to governmental agencies is $1,738,384.

The county’s share of that revenue would have been 6%, or $104,300. The rest of the lost tax money would have gone to local schools, cities, special districts and other governmental agencies.

Among the property owners who will see their assessments adjusted are the Irvine Co., the company’s head Donald Bren, Mola Development Corp. and Olen Properties. The amount of the adjustments varied, from as little as a few thousand dollars to as much as $21 million.

County officials said that it is likely that the owners’ values of their properties may be on the tax rolls for a couple of years, resulting in further revenue losses. The county’s attorneys are researching how soon the county will be able to reassess those property values, officials said.

At Tuesday’s board meeting, some members of the Board of Supervisors vented their frustrations over the situation and called for a thorough review of the mishap. No county official has been willing to take responsibility for the problem.

“Who is at the wheel?” asked Supervisor Gaddi H. Vasquez. “Who is on the watch? . . . Clearly, there was a breakdown.”

The foul-up came to light last week when county officials discovered they had lost a multimillion dollar assessment appeal on several properties owned by the Bank of America because the statutory two-year review deadline had expired before a hearing was held. County officials said as much as $3 million in taxes could be lost in that case alone.

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Since that discovery, the county has reviewed hundreds of cases, trying to determine whether the deadline has lapsed in other cases.

Meanwhile, the county’s tax assessor, who reviews the appeals and the clerk of the assessment board, who schedules the hearings, have blamed each other for the mishap. Assessor Bradley L. Jacobs has been out of the office and largely unavailable since last week. He also has directed his staff not to discuss the situation.

“I haven’t seen any correspondence, any writing, any communiques of any sort explaining anything,” an angry Vasquez said about Jacobs. “I would think that to an elected official, accountability is one of those things that you would take initiative of and at least try to publicly inform people about what’s been going on.”

Vasquez also pressed Phyllis Henderson, the clerk of the assessment board, for answers. He said he wanted to know why nobody had been imputing information into an automated assessment appeal computer since it came on-line July 1.

“I think accountability and responsibility is very, very important in this process,” he said. “Some of these episodes suggest that maybe there has been a lack of process, a lack of accountability and perhaps a lack of responsibility.”

Earlier this month, the board approved 2.5% salary raises for both Henderson and Jacobs. Henderson earns $62,129 a year, and Jacobs makes $100,214.

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Supervisor William G. Steiner called for an overhaul of the appeals process so that there is a definite chain-of-command and “centralized authority and responsibility” for handling the appeal cases.

Supervisor Roger R. Stanton said the issue has upset him and many of his constituents because property taxes hit close to home. “Everyone is talking about it,” he said, “because everyone relates to their own property taxes.”

When the real estate market faltered in the early 1990s, tens of thousands of Orange County property owners requested new assessments.

At one point last year, the county faced a backlog of 68,000 appeals. The backlog prompted supervisors to hire more assessment workers and add a third appeals board. The actions made a dent in the backlog, but the county still must deal with 36,000 appeals.

Several members of the appeals board said that the hearing process could be run more efficiently.

Sarah L. Catz, a Laguna Beach attorney who has served on one of the county’s three assessment appeals boards since March, said she noticed a decline in the number of cases the board has heard over the last few months.

Fall is usually the assessment boards’ busy season because the deadline for many assessment appeals is in September, she said. In previous years, boards have worked as many as 16 days in September holding appeals hearings, she said. This September, however, her appeals board worked less than eight full days.

“Normally, September is crazy. The board works four days a week. It’s booked,” she said. “This September was very slow.”

Kent Pierce, a Huntington Beach resident and appeals board member, said the hearing process has been slowed because the assessor’s office doesn’t usually review the appeals until hearings are scheduled. Often, the assessor’s office and property owners agree on parcel valuations. This means that by the time the hearing is held many items on the board agenda have already been resolved.

“Nine out of 10 times, everything has been (resolved) . . . when the (board) gets it,” he said. “We end up having very short” hearings.

He said the appeals process could be quickened if county officials previewed the appeals before they are put on the board agendas.

Both Catz and Pierce said that one factor slowing down the appeal boards’ work is a staffing shortage at the board clerk’s office.

At one point, Pierce said, the clerk’s office had just one staffer to compile agendas for all three hearing boards.

“There’s a cloud over the assessor’s and clerk’s office,” Catz said. “I think the silver lining is that because of this, the (offices) will get more support staff and the citizens of the county will get their cases heard more quickly.”

Board member Mary Aileen Matheis, however, said that the hearing process has improved since the board increased the assessor’s staff last year.

It remains unclear which government agencies would be hurt most if the county is forced to refund millions of dollars in tax revenues.

The county has collected more than $2 billion in property tax revenues this year, according to the county auditor’s office.

For the 1994-95 fiscal year, school districts will receive more than 60% of the tax revenue. Cities will receive 11% and the county is set to get 10%, according to Neil Gruber, an official in the auditor’s office.

But under a complex web of regulations, the state must make-up for any funding losses school suffer because of declining tax revenue, Gruber said.

Cities, however, don’t enjoy such safeguards.

“We’ve already had so much taken away from the state,” said Seal Beach Councilman William J. Doane, adding that even a small reduction in property tax revenue could cause problems for the city. “This is a concern.”

Changing Values

More than 170 property owners whose property value assessment appeals were not heard by the legal deadline are due for tax breaks, county officials said Tuesday. Because of the missed deadline, parcels in question will be assessed at the value suggested by the owner. Here are the five owners who saw the largest value changes on a parcel:

County Owner Change Property owner assessment assessment in value Hunt Wesson Corp. $33,734,901 $12,268,000 -$21,466,901 Carter Hawley 29,734,717 12,000,000 -17,734,717 Lyon Co. 16,703,930 6,189,876 -10,514,054 Irvine Co. 17,614,320 9,000,000 -8,614,320 Pyrovest Corp. 15,781,200 10,000,000 -5,781,200

Source: County of Orange