Frustrated with property tax revenues that don’t add up, Miami-Dade’s county government and school district are taking aim at a “cottage industry” they suspect is to blame for a massive backlog of tax appeals — and tens of millions in budget shortfalls.
Last week, school district administrators pulled information on hundreds of thousands of property tax appeals filed with the county’s Value Adjustment Board. District administrators are now poring over those records to see if favoritism, profiteering and stealth appeals are largely to blame for tax collection woes that could again leave the $4 billion school district scrambling to make up for $60 million in unrealized revenues.
“There is something very unholy at work here,” Superintendent Alberto Carvalho said Thursday during an hour-long visit with the Miami Herald Editorial Board.
Carvalho added that the district has contacted investigative agencies to review the data, which includes the identities of property owners, their agents and the magistrates who heard the cases. Miami-Dade County Mayor Carlos Gimenez, who announced he would be laying off workers last month in part because of concerns of a $44 million county tax collection shortfall, is also on-board.
Tax appeal agents, however, say there’s nothing amiss — even as a backlog of appeals remains almost two years behind and local governments feel the squeeze.
“We’re part of the solution. And you know what? When people like that are uninformed and point fingers at us it isn’t helpful,” said longtime appeals agent Stanley Beck. “They’re criticizing us as if we’re some kind of vermin.”
For local governments like the school district, Miami-Dade’s property tax revenues, or ad valorem revenues, are a lifeblood. They fund crucial services and pay for employees like police officers and firefighters, and make up a substantial portion of funding for the school district’s classroom coffers.
To figure out how much each government should expect, each summer the property appraiser issues a preliminary tax roll, estimating the value of properties countywide. By law, the school district and other government agencies must craft their budgets based on those projections.
But actual tax collections in recent year have fallen far short of those projections — in large part because of a surge in property tax appeals. Property owners disputed almost 200,000 bills combined in 2010 and 2011, leading to value reductions collectively worth $15 billion — and a steep drop in revenues.
Appeals have been voluminous since the market spiked and popped in the mid- to late-2000s. But the consequences of those reductions appear to have grown over the past few years due to a confluence of events.
Appeals and refunds are now being processed electronically and more quickly — which is good in the long run but adds to shortfalls because the surge in property tax refunds further cut into revenues. A new state law also pays the winner of an appeal — be it the taxpayers or property owners — interest of 12 percent annually on the difference between what was paid and what was ultimately owed.
But Carvalho says the largest driver of the problem for the school district is the two-year log-jam of appeals, because the state of Florida will actually cut the district a check for unrealized local property tax revenues at the end of the year as long as all appeals are resolved and the Miami-Dade tax roll has been “certified.”
That didn’t happen last year, as the 2012 tax year remains unresolved with about 11,000 cases pending. Now, it is threatening to happen again. The Value Adjustment Board has yet to begin hearing appeals on the most recently issued 2013 tax bills.
“I believe in everybody’s right to appeal the valuation of their property,” Carvalho said. “What we’re asking for is to complete that process countywide on time.”
The school district also deals with a unique problem where, unlike the county and municipalities, its books close before the beginning of July but their tax revenues for the year aren’t finalized until weeks later. Carvalho likened the problem to “flirting with bankruptcy.”
The school district is also seeking help from lawmakers in Tallahassee. But Carvalho and his staff believe the more important fix may be at home with tax appeals agents and the Value Adjustment Board magistrates who hear cases. They say part of the problem, for instance, is a state law that allows tax agents to file property tax appeals without first seeking the consent of a property owner — a “loophole” the district wants closed.
“I’ve had homeowners literally call me and say, ‘Who on earth authorized me to pay on my behalf to go to this hearing?’ and I have to politely say the law allows it and we don’t have a say in it,” said Property Appraiser Lazaro Solis.
The property appraiser does have the authority to settle cases before they get to a magistrate, and the district is sorting through those records as well. But Solis said his office has little authority over cases with the Value Adjustment Board, and can only sue if it disagrees with a magistrate’s ruling. He said in general, appeals have scant oversight.
“There’s nobody watching the fox or the chickens,” he said.
Some appeals agents, however, blame Solis and his predecessor, current Florida Lt. Gov. Carlos Lopez-Cantera for the backlog of appeals due to changes in the system. Beck, the agent, said Carvalho would make scapegoats out of tax appeals agents who are simply representing taxpayers who have been overbilled.
“We don’t know who the magistrate will be until we show up at 8:30 in the morning. It’s not like we do forum shopping or pick and choose anybody. There are no games played,” Beck said. “They can point fingers at us. It’s not going to make any difference.”
Lawrence Puyanic, a tax appeals agent who disputes thousands of property bills each year, bristled after learning Carvalho’s staff singled him out for holding up the finalization of the 2012 tax roll. He said at one point, the Property Appraiser’s Office actually lost 2,000 of his files, and has stalled his cases by being wishy washy about settling.
Solis’ office, on the other hand, said Puyanic has more than 4,000 cases outstanding, and has not been as cooperative as other agents.
“If you put anything in the paper about me holding it up, that would be a lie and I think that would be slanderous,” Puyanic said. “I’m all for helping to the best of my ability. They backed themselves into a corner, not me.”
Asked for comment, Lopez-Cantera’s office responded by emailing a statement saying he “remains committed to protecting property owners while working with local leaders to make sure their needs are addressed.”
Leo Fernandez, the School Board’s treasurer, said Monday that he was thinking about handing off the appeals files to someone else who would have more time to review the massive amounts of data.
Whatever they find is expected to be presented to members of the Value Adjustment Board, said Carlos Curbelo, who sits on the Value Adjustment Board and the School Board. But agent Tom Dixon doubted there would be anything damning in the data about agents or magistrates.
“I think the system has worked just fine,” said Dixon, an agent since 1997. “It’s upstanding and honest.”