Concerned with rapidly increasing property assessments, eight Montgomery County citizens offered reform plans last week ranging from a homestead tax break to an investigation of legislators.
Among the proposals offered to the county's 20-member citizen Task Force on Real Property Assessment Practices were:
A homestead tax break, giving homeowners discounts on their property tax bills based on the length of home ownership. The discounts would take effect in stages after the fifth year of continuous home ownership, and would apply only to increases in assessments. Longtime county residents would pay no taxes on assessment increases until they sold their homes.
A change from assessing by dollar value to assessing on objective non-dollar "assessment units" derived from the physical characteristics of the property. As proposed, this system also would eliminate differences in assessments based on property location.
A uniform formula for land assessments to insure that all property with the same zoning is assessed at the same per-acre amount for land value. Also, the proposal would allow separate appeals on land and improvements.
Elimination of property assessors entirely - a proposal several citizens endorsed. This proposal calls for use of a standard inflation index or even of amateur assessors. Joan Hatfield, legislative lobbyist for the Montgomery County Board of Realtors, said most realtors and citizens can come closer to estimating the value of property than the county's 47 paid assessors.
Elimination of settlement fees and real estate commissions from the market value of property on which assessments are based. Because of the high turnover in Montgomery County residential property, taxes on this part of the assessment have a large cumulative effect.
An end to the tax breaks given undeveloped farmland property, which one citizen said benefited big landowners and speculators in league with legislators and other public officials. He asked the task force to investigate if any Maryland lawmakers who supported the special farmland tax may have benefitted by it.
Scott Fosler, chairman of the property assessment task force, which was established four months ago by the county council, said after last week's hearing that he was impressed with the suggestions for a homestead tax break and an objective measurement of property values.
"There needs to be some action taken to resolve the very fundamental problem of people who cannot pay their taxes. We can't force people out of their homes because they can't pay their taxes," he said of the homestead discount plan. He suggested that the county's circuit breaker, which exempts some low-income elderly homeowners from part of their property tax, could be extended to cover more people.
The homestead tax discount plan, proposed by William B. Davis, a career diplomat with the U.S. Information Agency and a Potomac resident, would grant increasing tax discounts to long-time homeowners only on the yearly increases in their assessments.
Davis said he designed his propsal to help the long-time homeowner "against the 'fast-buck operators' who continously drive up the 'values' and assessments of our properties by quick sales of homes in our areas." Homeowners who refuse to sell are "penalized by higher assessments and thus, higher taxes," he said.
Under Davis's plan, a homeowner would pay the full tax on his full assessment for the first five years of owning a home. In the sixth year, however, his tax bill would be discounted by 10 per cent of the last year's assessment increase. In succeeding years, the discount would increase. In succeeding years, the discount would increase 5 per cent a year until it reaches 100 per cent in 24 years.
Then, a 24-year-homeowner would be exempt from taxes on further assessment increases, and he would retain the benefit of discounts from assessment increases in prior years. The discount would affect only the tax bill, not the assessment. The accumulated discounted savings would be computed and paid by the homeowner from the proceeds of the sale when the house was eventually sold.
As Davis explained it, his plan would help a couple around age 40 who purchased a home in Montgomery County and "could be in need of every tax break possible" when they reach age 64. Discount rights would not be transferable, so only residents who buy homes in Montgomery County and keep them would benefit.
Fosler said he also liked the suggestion of Bethesda resident Thomas L. Clemons that a non-dollar measure be used to assess property on its physical and other characteristics.
As Clemons explained the plan, all residential property would be assigned a certain number of "assessment units" based on the size and construction of the house. Thus, a larger house would receive more units than a smaller one, and a house of better construction materials, which demands less from local fire departments, would receive fewer units.
Clemons said he thought houses of similar construction in different parts of the county should receive the same number of assessment units. He said different locations should not make any difference, adding, "Does the person in lower Silver Spring with the same house (as someone in Potomac) desire fewer or more county services or deserve to pay more or less in property taxes?"
Fosler disagreed with Clemons's view on discounting property location - "Location is everything in real estate," he said - but said the idea of unit-measure assessments would be helpful. He said the state assessment department unit measurements now in computing assessments, "but it may be useful for people to know what their unit measure is, because now they don't, and it's one of the sources of confusion.
The citizens' task force on property tax assessments was established by the county council in March. Its chief mandate is to study the fairness of assessments, but it will also consider the appeals process and policy questions such as whether counties should have to rely on property taxes.
It can only make recommendations to the council, which has limited control over assessments. Fosler said the council could increase funding for the public advocate's office, which represents public interests at assessment appeal hearings, "pressure and persuade" other agencies to make changes, and implement taxes such as the recapture tax to correct inequities. But most changes would have to be made by the state administration or the General Assembly, he said.
The full task force plans to meet tonight to compare notes and consider tentative recommendations. Its second and final public hearing is scheduled for 8 p.m. August 4 at the auditorium of the Park and Planning Commission, 8787 Georgia Ave., Silver Spring.