By Pat Fox - April 5, 2018
ALPHARETTA, Ga. – Dozens of parcels in Alpharetta slipped past tax assessments last year, leaving the city, the county and Fulton Schools with no way to collect tens – possibly hundreds – of thousands of dollars owed in taxes.
The properties, both commercial and residential, are primarily associated with recent development in the city. They were removed from the tax rolls when the Fulton County Assessor’s Office changed their status to “deactivated” because their lots were reconfigured.
Documents obtained through the Open Records Act show the city has been pushing the Fulton County Assessor’s Office for weeks to set values on dozens of these properties that were listed as having “zero value” in 2017, even though city officials say there are records of some having been sold for in the millions back in 2016.
“The property is basically in limbo,” Alpharetta City Administrator Bob Regus said. “How does a property that carries a value one year, then get bought up as part of a development lose all its value?”
When the “limbo” period extends through the first of the following year, its value remains at zero throughout that tax year because assessed values are set as of Jan. 1. If, for example, a person buys a home in February with a tax value set at $500,000 but pays considerably more for the property, its tax value remains the same until Jan. 1 of the following year.
“I think what we’re seeing is it takes a little time,” Regus said.
It is difficult to tell how widespread the issue is without cross-referencing all parcels in the county and comparing their value from one year to the next or whether they exist at all. City Finance staff has gone back through the tax rolls to draw up its own list of properties that carried a value in 2016 and were zeroed out the following year.
There is no record of other North Fulton neighboring cities pursuing this matter with the county.
In response to Open Records requests, officials in Milton, Roswell and Johns Creek reported that they have had no email correspondence with the county addressing concerns over zero-valued properties.
The first tip-off
The issue popped up in Alpharetta about two months ago when several property owners in Alpharetta’s Avalon development notified the city they hadn’t received a tax bill from last year. Other inquiries tipped off the city that property owners weren’t being billed.
“We know, as of the 1st of January, 2017, it should be something, probably the sale price of 2016,” Regus said. “So, in 2018, we want to kind of make sure that because the property’s been approved, we go back three months, I don’t know what the snapshot would be, but there’s building going on, there’s infrastructure – we send them permits. So, it ought to be a little bit higher, prudent man thinking, than 2017.”
According to city documents, in 2017, 82 new parcels were created in Alpharetta that currently have no – zero – assessed value. Sixty-five of these parcels were created from parcels that were retired in 2016. Seventeen parcels were created by splitting them from a parent parcel.
It cites one case where, in 2016, 22 parcels south of Thompson Street just west of Westside Parkway were consolidated into four parcels. Those 22 parcels carried an assessed value of $1.8 million in 2016, and were paying the city $10,350 in taxes. When they were consolidated into four parcels, their value was placed at zero, and they currently have no tax bill.
Moreover, the city cites a record of sale of these parcels in 2016 for a total of $14 million, placing their taxable value (40 percent of appraised fair market value) at $5.6 million. That is, they admit, if the sale price listed is accurate as an “arms-length” sale – one that properly reflects market value.
But, if the sale price is accurate, city officials said, the new parcels would have been billed $32,200 in city taxes. The calculation for missed school district and Fulton County taxes for 2017 would be more, about $55,000 for the county and $103,504.80 in school taxes.
Appraiser says it’s not that simple
But Fulton County Chief Appraiser Dwight Robinson says hold on.
He admits appraisals for consolidated properties are running behind, but placing values on these parcels is tricky.
First, he said, you cannot appraise parcels that no longer exist, so the old parcels are eliminated. The new parcels, once they are assembled, can be valued, but that can be complicated.
In the case of the Thompson Street parcels, he said, the old parcels had been sold and subdivided. The old parcels no longer existed.
In addition, Robinson said, there was no indication of development on the land.
“In 2017, if you look at aerial photographs, that’s vacant land – no development,” he said. “The site was being readied for development on the first day of January 2017.”
Insofar as the sale price listed on the parcels, $14 million, he said his office spent a great deal of time trying to validate that transaction.
In this case, he said, the buyer and the seller – both limited liability corporations – occupy the same office space and their registered agent is the same person.
“These sales appear to be not arms-length, open market transactions, and putting $14 million on them would not be prudent,” Robinson said.
What’s more, the appraiser added, the sale price on these parcels calculates to more than $900,000 an acre, far above anything in the area.
”We searched high and low, I could find no similar sale in the entire Alpharetta area for $900,000 an acre,” he said. “We made a conscious decision that we were not going to chase after the $14 million, only to lose an appeal and take it to the superior court level, then face legal fees.”
Robinson admitted that partly due to last year’s property tax revolt in Fulton County, there are parcels that should have been assessed but were not. They are late, he said, but all the child parcels – those created from the deactivated parent parcels – will be valued and assessments will be issued for prior years.
“That is something I freely admit, but they always get assessed,” he said. “They aren’t slipping through the cracks. We are assessing those parcels for 2017 and 2018.”
City willing to help out
Alpharetta Finance Director Tom Harris said his office has offered to provide staff to the county appraiser to help catch up and get the parcels on the tax rolls.
“Things like this happen,” he said. “Even appeals take years sometimes to get done. It may always be the case that it takes this long. I think maybe it’s because last year’s residential issue took so much of their time – and we had a lot of growth, but that’s why it created a red flag this year.”
Harris said his office has gone back to prior assessments and cross checked parcels to find those whose values have gone to zero. That information has been turned over to the county, he said, and the assessor’s office has, as late as this week, made progress on the information.
Alpharetta Mayor Donald Mitchell said he is hopeful the assessor’s office will catch up and place values on all the parcels whose values were set at zero in past years. The city can then back bill those properties for taxes, he said.
Still, having that time lag is not good for cities, the county or the school district, he said, because it complicates the budgeting process.
“Now that that data has been compiled, we’ll continue to do our due diligence to see that procedures are in place to make sure the future developments, that we can report that to the county,” Mitchell said.
Fulton County Commissioner Bob Ellis said he has also been looking into the issue. He said the assessment process is fairly independent and governed more by the Board of Assessors, so the County Commission is limited in the pressure it can place on the process.
Nevertheless, Ellis said, he’s trying to encourage the office to address the issue of placing values on the parcels as soon as possible.
“I don’t know if there’s a breakdown,” he said. “I don’t know whether it’s in the assessor’s office. I don’t know whether it’s in the data they’re sourcing…
“Like Alpharetta, I haven’t gotten a clear response.”