Audit Takes Aim at O.C. Assessor’s Operation

Thousands of Orange County residents could be paying too much or too little in property taxes because Assessor Bradley L. Jacobs doesn’t have enough employees, according a critical audit released Thursday.

The study also found that Jacobs has been unwilling to apply for state loans that could have provided up to $20 million to hire workers and better handle an increasing workload.

Because of the understaffing, the assessor’s office is not performing some property value reviews required by state law and “may be depriving property owners of mandated tax reductions, or allowing values to be [recorded] that are lower than legally permitted,” the audit stated. With 18 more workers, it said, the county could generate nearly $4 million in additional property tax revenue.

Jacobs declined to comment Thursday on the audit by the Harvey M. Rose Accountancy Corp. But in a letter to Roger R. Stanton, chairman of the Board of Supervisors, he questioned many of the findings and maintained that the state loans could not be used for most of the improvements suggested in the audit.

Jacobs also pointed to the “high marks” the report gave to his department. The audit found, for example, that the assessor’s office has the highest appraiser-to-property unit ratio in the state.

“We are doing a lot more with less cost [and] keeping up or ahead of the changing needs of Orange County,” Jacobs wrote.

The Board of Supervisors ordered the audit earlier this year after a series of conflicts with Jacobs.

When real estate prices dropped in the early 1990s, thousands of property owner demanded that their tax bills be reduced, causing heavy backlogs in the appeals process.

Grappling with streams of requests, the county inadvertently let the two-year appeals deadline lapse on 100 parcels, meaning that the owners’ proposed value automatically prevailed.

At the time, some blamed Jacobs for the blunder, which cost the county more than $1 million. But a later Orange County Grand Jury review cleared Jacobs and blamed the clerk of the board’s office, which schedules appeals hearings.

The assessor’s office has about 315 employees. It is responsible for calculating the property tax charges to Orange County’s more than 750,000 property owners. The property tax roll this year totaled $173 billion.

Jacobs had complained last year that cutbacks triggered by the county’s $1.64-billon bankruptcy prevented the county from hiring more workers to handle the appeals backlog.

Gary Burton, the county’s chief financial officer, said supervisors will decide next week whether to implement the audit’s recommendations, which include applying immediately for the state loans.

“There are shortcomings pointed out in this audit, but it also points out some possible solutions,” Burton said. “We need to move on those right away.”

The state’s Property Tax Administrative Loan Program gives counties money to make the tax assessment process more efficient. Counties that receive the loans establish efficiency targets. If they meet those goals, the state converts the loans into grants.

Orange County stood to gain as much as $20 million under the program. A year ago, the Board of Supervisors voted to participate, but the county never applied for the first installment of $6.8 million “due to the assessor’s reservations,” the report stated.

As a result, the most the county could now receive is $13 million over the next two years, according to the audit. County officials said they cannot seek the money without the support of the assessor, who is an elected official.

The loans could be used to conduct state-required audits of “business personal property accounts,” some of which aren’t being done now because of personnel shortages. The report said such audits could increase countywide tax revenue by $3.7 million.

The assessor’s office also could use the loans to hire more appraisers to review assessment reductions granted in previous years on properties that had declined in value, in case those values went back up or continued to slide.

State tax codes require such reviews, which are designed to ensure that property values continue to conform to fair market values. But the assessor’s office does not perform them because of staffing shortages and other factors, the report found.

Both actions, the auditors said, would provide a more accurate measurement of property values and better ensure that property owners are paying their fair share in taxes.

Supervisor Don Saltarelli said he has yet to review the audit, but that applying for the state loans makes sense.

“It’s good way of reaching those efficiency levels,” he said. “I don’t know why we wouldn’t apply.”

But in his letter to the board, Jacobs maintains that most of his office’s needs “do not meet the basic criteria required for participation” in the state program. He does not elaborate.

The audit “provides an overview, and it is superficial in dealing with the state requirements,” he wrote. “Opinion substituted for facts.”

Overall, Jacobs faulted the auditors for taking a “simplified view of the range of the tasks, interactions of work, the related costs, the people resources and the people shortages.”

The Harvey M. Rose firm described Jacobs’ critique as “indicative of the misleading and negative manner in which he has responded to our audit.”

At the same time, the assessor concurred with some report findings, such as the conclusion that his office needs more employees.

The auditors also suggested a variety of procedural and structural changes that they estimated would produce a total of $1.7 million in one-time savings and $312,000 in annual savings.

The report called on Jacobs to do a better job of measuring his office’s workload and staffing needs so that he could better “articulate how staffing shortages will impede the assessor’s ability to perform assessments.”

Financial officer Burton also expressed concern that Jacobs provide a clearer sense of his staffing deficiencies.

“Is it five positions? Forty positions? No one has made a commitment there,” Burton said. “Like the report pointed out, there aren’t clear statistics to support the requests for more staffing.”