Op-Ed: County Assessor Needs to Check the Math

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By Dennis Adderton

I am writing an open letter to Joseph Holland, Santa Barbara County Assessor, to raise his attention to dubious calculations used in the assessment of property values. I have discovered some strange distortions of generally accepted mathematical principles to arrive at erroneously inflated assessments. I am forced to publish this letter publicly because I have found Holland completely inaccessible to the public.

In particular, when a property with a structure under construction is assessed for present value, construction costs are continually revised upwards, backwards through time. That is, if the assessor-determined construction cost goes up during the course of construction, then the cost is revised upward for the years predating the increase. This is erroneous math. The correct calculation would be to use a summation over the years of construction, using the correct cost for each year.

This may seem like a subtle difference, but this math is simply not correct. It would be marked off as a wrong answer on a high school pre-calculus test. Having discovered this grave error, I brought it to the attention of the staff at the Assessor's Office. I was met with very surprising defiance in the face of facts. Having raised the issue to the highest level available to the public, the Chief Deputy Assessor, it was explained to me that the error was in fact intentional. They had somehow hybridized the concepts of cost and market value to arrive at a number that was neither cost nor market value, however, exceeded both.

This kind of intentionally erroneous math, when perpetrated by the public, is prosecuted as tax fraud. And yet, how is this justified by the tax assessor? There was no concise explanation forthcoming. I was given some printouts of legal jargon making vague statements about base values. No math was described in the text. Then I watched a manager jump back and forth between the terminology of cost and market value, unable to stand on either point. He was simply blurting gibberish to confuse and obfuscate the issue. Ultimately, I was told that I needed to pay for gold-plated toilets in Montecito.

The Assessor's Office is there to serve the public. There must be accountability and integrity for the public to rely on. Using wrong math to inflate values is beyond unacceptable. Joe Holland, if you are doing your job as Santa Barbara County Assessor, please check the math.

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yacht rocked Jun 08, 2022 08:06 PM
Op-Ed: County Assessor Needs to Check the Math

This explanation, found at https://www.boe.ca.gov/proptaxes/newconstructionproperty.htm, seems pretty straight-forward:

"New construction is generally assessable and may increase the taxable value of a property. The impact on a property tax assessment varies depending on the work being performed. Upon completion of the new construction, the assessor determines its fair market value and a base year value is established.

If the new construction is only partially completed on the lien date (January 1), the assessor is required to estimate the fair market value of the new construction in its state of completion on that date. This continues each successive lien date until the new construction is completed. Upon completion, the entire portion of the property which is newly constructed is reappraised at its fair market value and a base year value is established."

may3591 Jun 05, 2022 01:55 AM
Op-Ed: County Assessor Needs to Check the Math

I worked with Joe Holland for 20 years in the 80's and 90's as Real Estate Appraisers for tax purposes. The goal is to establish market value upon ownership changes and for new construction value when complete or as of lien date if construction is ongoing. The intricacies involved with the Revenue and Taxation Code in determining value that are complex and varied. (Not for the marginally literate as David Adderton implied and insulted. I believe Joe Holland is a person with above average honesty, integrity and intelligence. Real Estate Appraisers at the Assessors have heavy work loads and each property is assessed by State Board of Equalization Revenue and Taxtion Code Rules. Every appraiser has ongoing training required to maintain a State license and to understand the tax laws whether they agree with or if they consider them fair. Every property owner is assessed under these same parameters without any special consideration. The commission argument is ridiculous. Most comparable sale prices have the commission built in some way or another. Real Estate Appraisers as a rule do not deduct 6% commission from the sale price of a property when using it for a comparable sale. If the commission was clearly deducted, it should be added back on to the sale price to bring it up to a true comparable market value sale. The Assessor's Office does this at times when it has obviously been deducted. Example: I buy a washer at Best Buy. The sale price I pay has a built in sales commission which will go to the salesperson. Does Best Buy deduct the commission prior to applying the sales tax? Of course not! If Mr. Adderton can't understand that, he must be marginally literate. Beyond the valuation of properties there are court recording procedures and voting processes which are very complex and currently under such scrutiny. I considered voting for this young aspiring man (I suspect is a climbing politician) who is a Health Inspector and wondered how he would learn all this and step right in. He says he is a quick learner and would bring integrity to the office. I think maybe he should obtain a position at the Recorder/Assessor's and learn how things really work. He could then maybe run 4 years from now and really knows what he's up against. (often disgruntled taxpayers full of hot air). As far as integrity goes, I think it's already there.

adderton Jun 06, 2022 08:13 PM
Op-Ed: County Assessor Needs to Check the Math

Hi Matt,
You are exactly right. They are increasing the the price going back in time. It makes no sense. It would be insane if you actually had to pay retroactively for cost increases. Thank you for taking the time to understand this.

mattgreg01 Jun 06, 2022 06:38 PM
Op-Ed: County Assessor Needs to Check the Math

Say you hire a contractor at $100/hour and he works for you for a year. The next year, he raises his rate to $150/hour, and then proceeds to charge you retroactively for the previous year at $150/hour. That's not how it works. The price goes up moving forward, not back in time. That's what the County is doing per the Op-ed above.

adderton Jun 05, 2022 04:27 PM
Op-Ed: County Assessor Needs to Check the Math

I understand very clearly, and by your example, according to the method applied to new construction, as the price of a washing machine increased, you would receive a bill each year for the increase in sales tax.

I hope you didn't make this error for 20 years.

RHS Jun 04, 2022 07:04 PM
Op-Ed: County Assessor Needs to Check the Math

What an inappropriate complaint. Property values have risen rapidly over the past few years. Homes are usually offered at a buyers auction! Because of Prop 13, non-selling homes are protected at the general value of their purchase price plus a nominary but small increase. This means that when they sale the price is factually known and thus the value is factually know. The rates are applied to that known value. Same with new construction. To pretend that your new home is not greatly increase in value during its construction is disingenuous. Stop whining and accept your responsibility as a community member to pay for the cost of the government that we all need and benefit from.

a-1654358228 Jun 04, 2022 08:57 AM
Op-Ed: County Assessor Needs to Check the Math

If you want to address an unbalanced Property Tax Assessment, look at the breakdown between Land Value and Value of Improvements. When I lost my house in the Tea Fire I applied to have my assessment lowered. It was lowered but not by much because the Assessor uses a higher than market value for the land. I discussed this with someone at the Assessor's office and he told me that he didn't know why they did it that way but that they always made the land costs higher thanthe market for raw land.

may3591 Jun 07, 2022 05:32 PM
Op-Ed: County Assessor Needs to Check the Math

Untrue statement. The allocation of the market value of the property toward land and improvements when sold depends on the history of what similar vacant parcels would sell for and cost of the improvements less deterioration. There is no set percentage. The appraiser would have estimates of land value through sales of other parcels and construction costs from other homes in the area and then depreciate. Everyone knows in Santa Barbara that the land value often exceeds the improvement. This is only 1 method of evaluation which is the cost approach. The cost approach, the market approach (recent sales) and income approach (income based properties ie. commercial, multi unit etc.) all give and indication of value. It is then up to the appraiser to come up with an estimate of value. and put a number on it. In the Tea Fire you had a land base that stayed the same on the tax roll but the improvement portion should have been removed temporarily
and checked and assessed each lien date until construction was complete.

Memeingless Jun 03, 2022 06:05 PM
Op-Ed: County Assessor Needs to Check the Math

Calfornia Revinue and Taxation Code 71 - "...New construction in progress on the lien date (Jan 1st) shall be appraised at its full value on that date and each lien date thereafter until the date of completion, at which time the entire portion of property which is newly constructed shall be reappraised at its full value, and that value shall be the base year value. New construction in progress shall not acquire a base year value on each lien date."

Sounds to me like the assessor did exactly as above from what you are describing. If you have a problem with the law then you're going to need to go higher than Mr. Holland. County officials can't change state law.

adderton Jun 08, 2022 09:51 AM
Op-Ed: County Assessor Needs to Check the Math

It's high school level math. It doesn't take a genius to see that it's wrong. It's either ignorance or dishonesty. Which is less insulting?
Mr. Holland has the job of correcting the BoE on behalf of his constituency, but Mr. Holland is an empty chair, so things will get worse before they get better.

may3591 Jun 07, 2022 05:36 PM
Op-Ed: County Assessor Needs to Check the Math

There you go Mr. genius! Insult poor illiterate county employees! What a big head you must have and lots of hot air. If you don't like the way the math is done you need to contact the State Board of Equalization and show them your superior ways!

adderton Jun 04, 2022 09:22 AM
Op-Ed: County Assessor Needs to Check the Math

Yes I clearly demonstrate the correct way to do the math for the assessor. For the purpose of this letter I summarized it as briefly as possible, use the correct cost for each year. I can show clearly where the assessors math is wrong. I can write the expression as a summation and solve it with the correct values. I showed this to the assessor and tried to go over it in detail. First of all, they seem to only be marginally literate in math. Secondly, they were obstinate in standing behind legal jargon to ignore the math and use numbers that are just made up.

I can't type formulas here, but tin English it would simply be a summation over the years of construction with the cost of construction for each year being the cost per square foot for that year multiplied by the percent completed in that year, multiplied by the total square feet.

a-1654333726 Jun 04, 2022 02:08 AM
Op-Ed: County Assessor Needs to Check the Math

Adderton, you haven't "shown your work"; haven't shown any math.
And you can't fight government with a "they said" statement, you've got to get the data and advice at issue in writing in order to make your case to the public or the government.

a-1654286863 Jun 03, 2022 01:07 PM
Op-Ed: County Assessor Needs to Check the Math

If I’m following this right, the problem described only affects projects where construction continues over two or more years (which may be most house-building projects).

Lacomus Jun 04, 2022 12:06 PM
Op-Ed: County Assessor Needs to Check the Math

Over the years and 3 different properties I have added improvements that qualified as adding value to the property. The assessor uses the building permit data to evaluate the added value and has sent a questionnaire to me to fill out as to the value ie; cost of construction. As far as the realtor fees being included in the sale? You list your property and you pay the realtor their fee based on the sale price. I don't see how that is included in the sale.

a-1654279973 Jun 03, 2022 11:12 AM
Op-Ed: County Assessor Needs to Check the Math

State Board of Equalization report. Contact them re: assessment issues?

"The assessment practices survey program is one of the State's major efforts to address these
interests and to promote uniformity, fairness, equity, and integrity in the property tax assessment
process. Under this program, the State Board of Equalization (BOE) periodically reviews the
practices and procedures (surveys) and/or a sampling of the county's assessment roll (samples) of
specified County Assessors' offices. This report reflects the BOE's findings in its current sample
of the Santa Barbara County Assessor's Office. "

a-1654279779 Jun 03, 2022 11:09 AM
Op-Ed: County Assessor Needs to Check the Math

Property Tax Appeals
If you believe your house is unfairly over-assessed, the Santa Barbara County Tax Assessor can provide you with a tax appeal form and inform you of the tax appeal process. If your appeal is accepted, your property valuation (and property taxes) will be adjusted accordingly.

adderton Jun 06, 2022 01:52 PM
Op-Ed: County Assessor Needs to Check the Math

Thank you. I will try this. The last time I applied they scheduled me for Santa Maria, which made it impossible for me to make it. I will try again, but think that the appeals board may be there to defer accountability. The error I am addressing here is a clerical one.

m2457 Jun 03, 2022 11:06 AM
Op-Ed: County Assessor Needs to Check the Math

When I questioned my property taxes a few years ago, I was asked "how do you know it is too high?" Well I am a real estate appraiser, I value properties for a living. The person on the phone was very quiet!

Chip of SB Jun 03, 2022 10:43 AM
Op-Ed: County Assessor Needs to Check the Math

There is another issue with property tax assessments that I think should be addressed. When someone buys a property on the open market, it’s tax assessment is generally updated to reflect the purchase price. However, in a typical transaction 6% of the purchase price is commissions for the real estate agents. The assessor does not consider this and includes the agent’s commissions in the assessed value. Buyers with sufficient funds can pay the agent’s commissions directly, thus lowering their purchase price and resulting tax assessment by 6%. For a $1m property, paying the commissions directly would result in a savings of approximately $750 per year. Unfortunately, most buyers lack the funds to do this and are stuck paying property tax on the agent commissions for the duration of their property ownership.

dukemunson Jun 03, 2022 01:35 PM
Op-Ed: County Assessor Needs to Check the Math

11:55am - The assessed value is the purchase price, which yes includes the commission. So Chip is correct, you are paying property tax not based on what the seller got for selling you the property...but what you paid for the property as well as the usual 4% to 6% buyers/sellers agents commission.

Chip of SB Jun 03, 2022 12:40 PM
Op-Ed: County Assessor Needs to Check the Math

I don’t think the fees paid to the agents should be included in the tax assessment, but they almost always are. Most buyers include the agent fees in the price they pay for the home, making it possible to finance the agent fees in the mortgage as part of the purchase price. This also results in the agent fees being added to the tax assessment. Savvy buyers who have sufficient funds can pay the agents separately and save 6% on their property tax bill forever. However, the fees would be $60,000 on a $1m home purchase and very few buyers are in a position to pay that out of pocket on top of their down payment.

adderton Jun 03, 2022 09:11 PM
Op-Ed: County Assessor Needs to Check the Math

That was not a jab. Those were the words of the assessor. Hypothetical golden toilets in Montecito need to be averaged into construction estimates for everybody. That was some of the absurd gibberish I was subjected to that did not even address the problem of using wrong math.

fitz Jun 03, 2022 09:42 AM
Op-Ed: County Assessor Needs to Check the Math

Illegal political signs from one political party litter our roads. They come out in the dead of night and add to the litter. There are rules, and campaigns are expected to follow them. When you see these illegally posted signs on public property, remember to NOT vote for the sufflaws. If they can't even follow those rules, can you imagine the mess they will create if in a public office. Only legal signs are on people's lawns.

SoCalMommy Jun 03, 2022 09:16 AM
Op-Ed: County Assessor Needs to Check the Math

Vote for Elrawd Maclearn! We need accountability and integrity in our Assessor's office. The fact that Holland doesn't recuse himself from overseeing the election for his own office speaks volumes.

a-1654273500 Jun 03, 2022 09:25 AM
Op-Ed: County Assessor Needs to Check the Math

Or don't. The kid is completely unqualified and is funded by the fringe GOP. He also illegally has his political banner on the highway overpass around La Cumbre. Big fat no.

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