While the mayoral campaign grabs most of the headlines, the result of the first election for the new unified tax assessor’s office could be just as consequential.
For more than a century, the city had seven assessors, and each became something of a kingmaker. Without computerized records, assessors had free rein to suppress the assessed values, and therefore the taxes, of important allies in exchange for financial and other support during election season. Not only did rampant underassessments let socially and politically connected families and big businesses avoid paying their fair share, but the deprivation of revenue forced increases in property tax rates, or the millage, to pay for regular city services.
Assessor seats in each of the seven districts were passed down as if they were a family business. The Heaton family, for instance, has controlled the 7th District seat, which extends from Riverbend to Lake Pontchartrain since 1936. The Mauberret family has controlled the 2nd District, which includes the French Quarter and parts of Mid-City and Lakeview. Claude Mauberret III, who was elected as the 2nd District assessor in 1994, is now running for the unified seat.
Though computerization has brought increased scrutiny to the gross inequalities and reformist efforts to consolidate the assessors have leveraged some changes from the outgoing system, those who have traditionally benefited from artificially depressed assessments still do. Common practice has been to reassess the value of a property only when it is sold. Not only does this deprive the city of additional revenue from taxes that would have been collected from the regular growth of home values, but also it means that assessments for properties held within families, transferred as gifts or through inheritance, were rarely updated to reflect their modern value.
The millage increases made necessary by revenue-depleting special deals have created an enormous disincentive to new investment in New Orleans. I’m no fan of big box chain stores but the fact that new businesses must pay for their own accurately assessed property at a high rate designed to subsidize the lifestyles of old money families is an important factor contributing to commercial growth in Jefferson Parish instead of Orleans.
There have been several investigative reports over the past few years that have examined these inequalities and who tends to benefit from them. In 2004, Gordon Russell and The Times-Picayune surveyed over 1,000 properties and found political contributors to be twice as likely to receive special breaks to make the assessed value of their home less than the actual sale price. Just a few months ago, Richard Webster at New Orleans CityBusiness found wild underassessments of valuable properties in the French Quarter. The most remarkable was that of the W Hotel, which was purchased for over $21 million in 2001 but assessed for only $3.76 million. That difference represents a tax break of more than $340,000 per year amid a municipal budget crisis. Webster points out the incongruity between that enormous discount and the steady stream of testimony in front of the City Council budget committee from criminal justice stakeholders concerned that critical programs for witness protection would be cut. Just yesterday, The Times-Picayune published another stinging report detailing incredible discrepancies between the sale price and assessed value of properties, particularly in the wealthy French Quarter.
On Feb. 6, New Orleans will have the opportunity to elect its first single assessor after the seven districts were consolidated by charter change in 2006. There are three major candidates, Claude Mauberret III of the 2nd District, Errol Williams of the 3rd, and Janis Lemle, Deputy Assessor for the 6th District under Nancy Marshall. I was briefly a consultant for the Lemle campaign on technical issues, will be supporting her enthusiastically when I go vote, and believe the reasons are quite apparent to anyone paying attention to these investigative reports. Yesterday’s Times-Picayune survey of properties currently on the market found those in Mauberret’s district to be underassessed by an average of 44 percent, and an average of 28 percent in that of Errol Williams. Properties in Nancy Marshall’s district, where Lemle is deputy assessor, are undervalued by 8 percent.
Marshall was elected in 2006 as a reformer and won an upset victory over Al Coman, whose family had held the wealthy Uptown 6th District seat for decades. Marshall cracked down hard on underassessed properties and as a result, as YRHT explains, the City Council was able to lower the millage rate for everyone by 27 percent in 2007.
Yesterday, I wrote about the prevalence of what is often mysteriously referred to as the “shadow government.” I described “the shadow government” as a loose network of the city’s wealthy individuals and businesses organized around familial, social, and professional associations and examined the prevailing public sentiment that this loose network leverages disproportionate influence over the political process.
The inequalities built into the assessor system represent the most visible manifestation of this undue influence. The assessor system has been used to protect the city’s wealthy from paying the taxes they owe, at the expense of the city’s poor. While the new mayor will set a new agenda for the city’s future, his or her ability to implement that vision will be dependent on the availability of tax revenue and the city’s accessibility to outside investment. The election for assessor will determine whether New Orleans’ historically rich will be allowed to maintain the special deals that help subsidize their privileged lifestyles on the backs of those already paying what they owe. There can be no substantive or systematic change in New Orleans if property values remain artificially depressed due to the abuse of political, social, professional connections by those who are able to obtain them.