HomeHome InsuranceSoaring New Orleans property assessments land with a thud | Business News

Soaring New Orleans property assessments land with a thud | Business News


Among its other charms, New Orleans is a city where routine home improvement projects seem to yield exponential returns on a home’s value — according to tax assessments, that is.

A new paint job and front-yard fence costing a total of $40,000 are the only improvements Inga Petrovich said she has made on her 2,300-square-foot Mid-City shotgun since Assessor Errol Williams’ last citywide property assessment four years ago. The Assessor’s Office’s latest valuation added $300,000 to the house value, more than doubling her tax assessment for 2024. 

What that means for Petrovich’s tax bill remains to be seen, since millage rates will be set later this year. In any case, she was shocked by the jump, and is planning to appeal for the first time. 

“We haven’t added a second story,” Petrovich said. “I’m having trouble understanding what has occurred…to justify an over 110% increase.”







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Afternoon light shines on a row of home on Canal Blvd. in the Lakeview neighborhood in New Orleans, Thursday, July 20, 2023. Lakeview is one of the neighborhoods can could see a potential jump in property taxes. (Photo by Sophia Germer, NOLA.com, The Times-Picayune)




Petrovich isn’t the only resident who is confused. Many New Orleans homeowners are receiving eye-popping tax assessments with astronomical, unexplained increases following the latest citywide reassessment.

Not everyone is seeing their assessments double, of course. Williams says the average increase in assessed value is 23%, but that is still well beyond what he said is typical. The last quadrennial assessment showed increases of about 15%, a hike that occurred as home prices surged in many parts of the city.

Williams says the assessments represent fair market value, in addition to property improvements over the last four years. In an interview Wednesday, he pinned the increases on a hot housing market that has only recently begun to cool, with sale prices at the end of 2022 far exceeding the valuations four years ago.

And while Williams says his office uses standard mass appraisal technology, City Council members like Helena Moreno are echoing their constituents’ bafflement over his results. At Moreno’s request, Williams is scheduled to appear in council chambers Tuesday to address that question. 

Looking from the street

Petrovich said this week that she doesn’t see how anything can explain a tripling in the value of her house – minus the land – from about $150,000 to about $450,000.







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Orleans Parish Assesor Erroll Williams, pictured  right, at the Orleans Parish Clerk of Court’s Office inside the Criminal District Court building in New Orleans, La., 2017.




Assessor’s Office spokesperson Devin Johnson said that whatever factored into the value four years ago wasn’t considered this time around, since previous valuations aren’t part of the formula. He said the assessment on Petrovich’s house looks accurate from the outside.

“It’s a beautiful house,” Johnson said in an email. “Keep in mind we’re looking at properties from the street and don’t have access to the inside. If it was just a paint job and the property really hasn’t been renovated in the past decade or so, they may merit a reduction. But we need to see interior photographs to corroborate that.”

Johnson added that the previous quadrennial assessment was probably too low since it didn’t account for earlier renovations. 

Petrovich and other aggrieved property owners will have several opportunities to appeal, starting with informal consultations with Assessor’s Office staff through Aug. 15.

Formal appeals are then due Aug. 18. The City Council, sitting as the Board of Review, will consider those at a hearing sometime this fall. The Louisiana Tax Commission will hear any unresolved cases after that.

Roll back, roll forward?

Whether property taxes actually increase will be decided once the New Orleans City Council, Orleans Parish School Board and other taxing bodies set millage rates later this year. Local tax rates automatically “roll back” when citywide assessments increase to keep revenue collections the same, but taxing bodies have the option to reinstate the previous rates, meaning residents would be required to pay more.

The citywide millage rate is about 146.8, with East Bank residents paying slightly more for flood protection and some parts of the city paying additional mills for special security districts. One mill is equal to one tenth of one center, and tax liability is calculated by multiplying the millage rate by 10% of a home’s value. A homestead exemption knocks $7,500 off the value for tax purposes.

In other words, a home valued at $400,000 owes $5,827, or $4,869 with a homestead exemption, under the citywide millage rate. Those figures would jump to $7,400 and $6,184, respectively, if all millage rates roll forward.

A 2018 state constitutional amendment provides additional relief for those like Petrovich, who have seen assessments increase more than 50%. In those cases, any additional tax liability is phased in over four years. 







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Homes in the Lake Shore-Lake Vista neighborhood photographed in New Orleans, Thursday, July 20, 2023. Property values across the city have jumped 23% according to Assessor Errol WilliamsÕ quadrennial assessment, causing a potential jump in in property taxes. (Photo by Sophia Germer, NOLA.com, The Times-Picayune)




Bad timing 

From a taxpayer’s perspective, the latest quadrennial reassessment comes at time when other property costs are skyrocketing. For one, it follows massive spikes in home and flood insurance premiums resulting from Hurricane Ida in 2021. Some homeowners are still working on storm repairs. 

It also reflects market values as of the beginning of this year, when historically low mortgage rates began rising sharply.

Thirty-year fixed mortgage rates dipped in 2019 and the decline accelerated during the pandemic in 2020 and 2021 to less than 3%, the first time that’s happened since the Federal Reserve of St. Louis started keeping track in 1971. The extraordinarily low interest rates fed a housing boom, with median home sale prices in southeast Louisiana spiking 9% in both 2021 and 2022. 

But mortgage rates this year have shot back up to levels not seen since the late 2000s, helping to cool off the market.

As a result, tax assessments reflecting last year’s boom are landing at the same time homes are losing market value and gut-punch insurance bills are coming due. Skyrocketing inflation since the pandemic has only complicated matters, though — while still high — it has begun to slow down this year. 

‘Triple whammy’ 

Madisonville-based real estate appraiser Paul Vidal said he’s been inundated with calls from New Orleans homeowners looking for an alternate appraisal to contest their assessments. The combination of higher home insurance, flood insurance and tax assessments are “going to reverberate through the whole state,” Vidal said. 

“This is a triple whammy,” Vidal said. “This is going to be one of these things dampening down what people can afford to buy.”

Land use consultant Nicole Webre said she gets sick thinking about the effect the assessments could have homeowners and renters who think they are now priced out of town. 

Webre met with Assessor’s Office staffer on Thursday to contest the latest valuation. She said they agreed to a reduction in the 35% assessment increase on her Irish Channel home, which she said still has Ida damage.

“My concern is that people don’t know there’s a path forward,” Webre said. “If I didn’t know there was a path forward, my knee jerk reaction would be I gotta get the heck out of here.”

Anomalies

Market dynamics alone don’t explain all of the assessment anomalies. The Assessor’s Office previously had the wrong square footage for a parcel on South Carrollton Avenue, for example, causing this year’s assessment on that land to spike more than 200%.

And Mid-City resident Wendy Laker is flabbergasted as to how the value of her Mid-City house increased 90%, especially when a larger house on her block decreased in value. Her house is now valued about $125,000 more than the other house, and the other house is now valued at less than what it sold for in 2021.

Laker said she wonders if she’s being punished for the artwork and gardening in front of her house.

“You cannot step back and look at the big picture and say this house is worth $125,000 more than that house,” Laker said. “It just makes no sense.”

Johnson said Laker’s case is under review and will likely result in changes. 





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