Assessor’s office was off the radar
On his first day as a special assistant to Los Angeles County Assessor John Noguez, David Zoraster was surprised to see the methodical, data-driven process of property appraisal replaced with a system known within the office as “Let’s Make a Deal.”
One of Noguez’s deputies ignored appraisals valuing the site of Hollywood’s Old Spaghetti Factory site at $16 million to $18 million, and sided with the property owner’s tax consultant — Ramin Salari, a prominent Noguez campaign fundraiser — who said the parcels were worth only $10.5 million.
A week later, Noguez dropped it to $7.8 million. The deals generated $427,000 in tax refunds for the owner and a substantial fee for Salari.
“I felt they gave away the farm,” said Zoraster, when he resigned from the department after four months.
In October, prosecutors filed charges alleging what Zoraster and others in the office had suspected: The Old Spaghetti Factory was part of a massive bribery scheme. Noguez and at least one of his deputies took $460,000 from Salari in exchange for millions in tax cuts on dozens of properties, according to investigators.
So far Noguez, Salari and two former assessor’s office employees have been charged in the alleged corruption.
As the details of the case have emerged through a yearlong Times investigation and in court documents, it remains unclear how such a scheme could have gone undetected. So many of the steps were carried out in plain sight, leaving witnesses and an extensive paper trail.
At least part of the answer lies in the obscurity the assessor’s office, the lack of outside scrutiny and the sheer size of the property tax rolls, which make it difficult to detect reductions, even when they amount to hundreds of millions of dollars.
The Los Angeles County assessor oversees the nation’s largest local tax roll — more than 2 million properties worth more than a trillion dollars. Even a slight reduction in the assessed value of a property can produce a windfall in tax savings for the owner for years to come.
Despite that power, few Angelenos could have named the county assessor before the Noguez scandal made headlines.
“I think I even voted for the guy,” said one investigator from the district attorney’s office working on the case, who spoke on background because he isn’t authorized to address the media. “But honestly, who remembers?”
The last time the public showed active interest in the office was in the late 1980s. They weren’t concerned about corruption; they were fighting off efforts by local politicians to boost their budgets by appointing assessors who would be more willing to raise property taxes.
In 1988, Californians overwhelmingly approved a state constitutional amendment requiring all county assessors to be elected.
Historically, the job has attracted low-key candidates, rank-and-file employees who worked their way up through the assessor’s bureaucracy and, when the boss retired, ran for the agency’s top job without much public attention.
Noguez aimed to change that. Tall and handsome, with a game show host’s easy charm, he spent his evenings on the town, meeting with real estate industry groups. Colleagues envisioned him as a state legislator one day, maybe a congressman.
For his campaign, Noguez raised the kind of money that would impress Democratic Party bosses, whose support he would need if he chose to run for higher office.
He collected well over $1 million for a race in which his chief rival was a little-known Southeast Los Angeles County real estate agent who raised less than $50,000.
Much of Noguez’s money came from business people — developers, big property owners, tax consultants — who had big tax bills. When Noguez won in November 2010, they got extraordinary access.
For most residential properties, the appraisal process is simple. The tax value is the price the house sold for and then goes up by no more than 2% every year.
Commercial property appraisal is more subjective. The assessor can reduce values based not only on the property value, but also on the profitability of the enterprise. Owners of idle factories or empty apartment buildings frequently ask for reductions.
Noguez set a new tone in the office, referring to high-profile property owners and campaign contributors as “family.”
Shortly after Noguez’s election, a low-level appraiser in the Sylmar office disagreed with a request from Salari, the tax consultant, to reduce the value of a North Hollywood apartment building from $44 million to $30 million.
Noguez sent two of his top deputies and Salari to the appraiser’s office to complain. Noguez participated via speakerphone.
Noguez said in a February interview that he saw nothing wrong with sending a campaign contributor to the meeting: “We encourage the outside community to come in with general information and help us.”
But Santos Kreimann, who was appointed to lead the agency after Noguez went on paid leave in June, said it was a violation of office policy. There has to be a clear separation between the day-to-day workings of the assessor’s office and campaign contributors, Kreimann said. “When Mr. Noguez came in, that line may have blurred.”
There’s little oversight of California’s 58 county assessor offices. The state Board of Equalization audits them every few years but focuses on policies and practices.
In normal economic times, when Los Angeles property values seem relentlessly on the rise, large reductions might have attracted more scrutiny. But during the recession, there was less reason to question a drop in value.
The only outside agency that closely monitors the assessor’s office is the county’s Assessment Appeals Board — lawyers and real estate experts appointed by county supervisors to hear complaints from owners who think the assessor’s office has overvalued their property.
But the board’s job is to referee disputes, not raise questions when the property owner and assessor are in agreement.
In those cases, the board is happy to approve the deal and move on.
“I think there was a certain amount of expediency desired by the board,” said Sharon Moller, a top assessor’s office administrator. “And a certain amount of relief when things moved quickly.”
The developers who bought the Old Spaghetti Factory site had filed two appeals for 2008 and 2009. They languished until Noguez took office and placed a deputy, Mark McNeil, in charge of handling appeals.
Cases, including the Old Spaghetti Factory, were soon being settled in favor of Noguez’s campaign supporters.
McNeil was arrested in October and charged with conspiracy and misappropriation by a public officer. He pleaded not guilty and posted bail.
Noguez, who also pleaded not guilty, has been in jail since October, unable to make his $1.16-million bail because he must prove any money used for his defense did not come from illegal activity.
Noguez’s attorney did not respond to requests for comment. McNeil’s attorney, Vicki Podberesky, said: “I firmly believe that McNeil did absolutely nothing inappropriate. ...Ultimately, it was the responsibility of the appeals board to make the decisions.”
Salari’s attorney, Mark Werksman, said all of the reductions his client won were warranted. “He is an aggressive advocate who does his homework,” Werksman said. “The system was set up to allow the flexibility that we’ve seen.”
In the aftermath of the Noguez scandal, Los Angeles County Supervisor Michael D. Antonovich put an advisory measure on the November ballot asking the voters if the county should push for a constitutional amendment that would allow the supervisors to appoint the assessor, presumably providing greater accountability and oversight.
The answer was a resounding “no” — 78% of voters opposed it.
The supervisors, saying the public’s confidence in the assessor’s office had eroded, banned tax agents, such as Salari, from contributing to assessor’s races.
The measure went into effect Dec. 13.
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