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Quick and Dirty

Assessing the Situation

By David Morley | Posted 4/6/2005

In an effort to make sense of a discrepancy between property-tax assessments and the selling prices of business plots, parcels, and buildings in Baltimore, the City Council held an informational hearing on the matter March 30, using a report developed by the Abell Foundation, a local nonprofit organization. The report, called “A Costly Problem: Commercial Property Assessments in Baltimore,” asserts that the Maryland Department of Assessments and Taxation is severely underassessing commercial properties in the city and veritably cheating the city out of millions of dollars in real estate taxes. City Paper first reported on the report’s findings last year, when it was still in draft form (“Tax Break,” Oct. 13, 2004).

The report cites, for example, the recent sale of the Candler Building on Market Place, which sold for $65 million. The state had assessed the real estate at just $48 million. The report makes the point that severely underestimating property market values depreciates the property taxes the city would collect—which could ultimately end the need for new taxes imposed on Baltimore residents, such as the 2004 levy of a $3.50 tax on cell phones.

The City Council hearing featured a lengthy explanation of the report’s details by its author, John Hentschel, principal of Abingdon-based Hentschel Real Estate Services, who offered a scathing criticism of the state’s Department of Assessments and Taxation. He claimed that part of the reason many of Baltimore’s properties are underassessed is the department’s organizational problems and use of outdated technology. He said the department is “understaffed and underfunded for the tasks they have to perform.” Further, Hentschel said, the database the department uses to keep track of property assessments is “insufficiently” and “randomly organized.”

Hentschel also said that state assessors have no access to the internet at their desks, which prevents them from easy access to important assessment data, such as demographics.

The state issued a written rebuttal to Hentschel’s findings, which says his report was unfair and inaccurate. No one from the Department of Assessments and Taxation gave testimony at the City Council Hearing, and as of press time, no one from the department had returned calls to City Paper for comment on this story.

City Councilman Keiffer Mitchell Jr. (D-4th District), chair of the council’s Taxation and Finance Committee, says the hearing helped the city determine a course of action to remedy the assessment problem.

“The city’s going to work with state legislators to see more money invested in the state’s Department [of Assessment and Taxation],” he says. If that is done, Mitchell says, he hopes it will result in fairer assessments and tax rates for business properties in the city.

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