Surge of Appeals Tax O.C. Assessor to Limit : County: 10,000 on final day push backlog to 61,000. Property owners win automatically if staff can’t keep up.

On the last day that property owners could appeal their 1994 tax assessments, two tax consultants dumped a stunning 10,000 appeals on Orange County, bringing a collective groan from the staff of Orange County Assessor Bradley L. Jacobs.

In a single day, the number of property tax appeals, which have been in decline since 1993, jumped by more than a third and pushed the county’s backlog to 61,000 cases.

By law, the overworked, understaffed office has to investigate every individual appeal so that a hearing can be held within two years of the filing.

If the deadline expires before the assessors complete their review and a hearing, the county has to accept the owner’s lower property value, and this can cost the county millions in property taxes--as it did last fall when the county failed to challenge almost 200 appeals from homeowners and businesses.

In a memorandum sent to county Chief Executive Officer William J. Popejoy and every member of the Board of Supervisors, Jacobs is warning it just might happen again.

At a time when officials are counting every nickel, the prospect of losing yet more millions in disputed property taxes could seriously hamper Orange County’s recovery plan, Supervisor William G. Steiner said.

“We can’t allow the appeals process to be compromised again,” Steiner said. “I don’t think under the present circumstances we can afford to lose another half a billion dollars in tax assessments because of missed deadlines,” he added, referring to the bureaucratic snafu last year that forced the county to forgive millions in property taxes because it missed the two-year deadline.

That cost cities, schools and the county about $5 million in taxes, he said.

Keenly aware of the deadlines and facing bankruptcy-related cutbacks and hiring freeze that has reduced his staff by nearly 10%, Jacobs sent the supervisors a passionate memo on April 6 in which he warned: “A large growing number of assessment appeals hearings will not be supported . . . due to resource shortages at our current staff levels.”

As it is, Jacobs continued, the assessor faces a shortfall of more than 22,600 staff hours just to complete the work necessary for the hearings scheduled between now and June 30. In fact, his staff has been working overtime on Saturdays in buildings where the heating, ventilation and air conditioning are turned off for the weekend.

The result, Jacobs cautioned, is that people are beginning to speculate that the county “won’t support appeals adequately (and this) is likely to generate many more appeals. Two tax agents working on that assumption presented nearly 10,000 appeals on the last filing day in 1994.”

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Although these appeals were filed Sept. 15, they did not come to light until Jacobs mentioned them in his April 6 memo.

Jacobs was out of town and did not return calls for comment. Others in his office said they did not know the names of the agents who filed the appeals, but had heard they were from San Diego. Many of the appeals appeared to have been solicited through mass mail come-ons.

While the 10,000 appeals got everyone’s attention, said Webster Guillory, a manager in the assessor’s office, it was a perfectly legal maneuver. The law provides that any taxpayer can be represented by an agent in an appeal.

What concerned some county officials was that when Jacobs’ office called one of the agents to seek additional information about the property in question, the telephone had been disconnected and no forwarding address had been left.

Agents typically charge taxpayers $30 to $40 to file an appeal that is free by law, officials said. Others charged a sliding scale fee hinged to the amount of property tax reductions.

Bob Frazier, chief deputy of the San Diego County assessor’s office, said the plunge in real estate values in recent years has been a boon for tax consultants. Many are reputable and have been in business for many years, Frazier said, but others simply saw an opportunity to cash in quickly.

“We’ve talked to many other assessors and we’re all experiencing the same thing,” Frazier said. Last year, one agent brought in 2,000 appeals in San Diego on the last filing day, he said.

Regardless of who files the appeal, the assessor’s office must still process the work and, if the taxpayer doesn’t agree to resolve the matter early, a hearing must be held.

The setting and reviewing of property values is regulated by the State Board of Equalization. Every March 1, county tax assessors issue their annual tax assessments, telling owners the appraised value on which their properties will be taxed.

They are required to review market conditions and adjust property values accordingly. Hundreds of thousands of these reviews are fairly straightforward examinations of property sales on which the sales price is used to establish market value.

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Since 1988, for example, about 400,000 of Orange County’s 728,000 property parcels have changed hands and been reviewed, said Tom Childress, a manager in the assessor’s office.

The assessor’s staff also must physically inspect, take measurements and appraise the values of between 20,000 and 35,000 new houses and buildings--”a very time-consuming task,” Childress said.

Once the tax bills are sent, property owners who dispute the value used by the assessor to compute the taxes owed can file an appeal between July 1 and Sept. 15, Childress said.

In reviewing the appeals, Jacobs’ staff examines comparable prices of houses or buildings in the area, usually sold with 90 days of March 1, Childress said.

Many appeals are resolved quickly and by mail, especially when a property owner can produce evidence that the home or business has been overvalued. Those that aren’t are scheduled for hearings by the clerk of the Board of Supervisors.

Despite the county’s fiscal problems, Board Clerk Kathy Goodno said she doesn’t expect the county to miss the two-year deadline on any appeals this year.

“There is a critical number that need to be resolved between now and Sept. 30,” Goodno said. “The board is very much aware of our need,” and recently approved six additional staff members to handle appeals.

Property owners entertaining ideas of cashing in on the county’s current staffing shortages should think twice, Steiner said. “There’s a lot of obstacles to overcome before a tax is reassessed and, besides, it’s a two-year process.”

But losing 32 staff positions might make it impossible for the assessor to complete the appeals reviews, Steiner acknowledged.

“I would have to say you can’t expect a staff to do the impossible,” Steiner said. “There’s got to be sufficient resources.”

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(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Taxing Appeals

Orange County property tax appeals dipped last year after increasing, steadily, by more than 600% since 1988:

1994: 36,072

Process Deceleration

The processing of assessment appeals will take a dive this year from the nearly 30,000 handled in 1994. Current backlog: 61,000 cases. Property tax assessment appeals processed by fiscal year:

1995: 21,000*

* Projected

Source: Orange County, clerk of the Board of Supervisors