Property Tax

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Youssef Mahmoud

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Aug 16, 2010, 1:43:28 PM8/16/10
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In an earlier conversation, I had mentioned that I think Baltimore's
property tax needs to be drastically reduced to spur real
revitalization. I seemed to get some grumbles of agreement from people
in this group, but then we quickly moved on to other topics (as we
should). However, I really do think that this is THE key to short term
recovery for the city (in the long term, we need well designed public
space and a diverse group of citizens and economic activities).

So, I am curious if anyone knows of any groups of people who are
actively fighting to give this issue more urgency. If not, is there
anyone interested in forming such a group?

Fritz Ohrenschall

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Aug 16, 2010, 1:45:28 PM8/16/10
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In the same thread I asked about the Baltimore property tax rates and comparisons to the neighboring counties so I can get a better sense of what the disparity is.  Not only what are the rates but how do assessments work, etc.  If anyone can provide information on this I would love to look over it.

Youssef Mahmoud

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Aug 16, 2010, 1:50:17 PM8/16/10
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http://www.dat.state.md.us/sdatweb/taxrate.html

All the property tax rates for the state.  As you can see, our real property tax rate is by far the highest in the state.  The next highest rate is less than half of ours.  Also note the special benefits classifications designed to lure or keep big business in the city.  We are missing out on a huge chunk of tax revenue because of these classifications.  If our normal rate weren't so high, we probably wouldn't need these special incentives to keep business from fleeing to the county.

Fritz Ohrenschall

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Aug 16, 2010, 2:11:10 PM8/16/10
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I'm trying to wrap my head around this.  So let's just do Baltimore city 2.268% and Baltimore County 1.1%.  Let's say the home in both places is valued at $300,000.  In the city that's $6,804 and in the county it's $3,300.  So, if the housing markets and valuation systems were the same in the county and in the city that would be a pretty big difference that would only be paid by someone who wanted to live in the city for some other reason.

We all know houses (generally) are cheaper in the city than in the county.  I don't mean to say that this lessens the burden of the property taxes since what's relevant is, is _your_ potential house in the city cheaper than your potential one in the county.  And I assume we're talking about a demographic that will not be buying a $45,000 market price (valued even less) vacant. So:
1) For "comparable houses" will they cost more in the city or the county?*
2) As opposed to market price, is tax valuation done similarly in both county and city?


* This isn't exactly fair since you can get a 3,600ft2 house in the city for cheaper than that in the county but it might have 0.06 acres when a county 2,000ft2 will have half an acre.  Comparable is a hard word and for some people having Wyman Park Dell right next to their house will mitigate their smaller lot but for others they want to have the lot.

Youssef Mahmoud

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Aug 16, 2010, 2:24:41 PM8/16/10
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I'm sure there are ways to make the comparisons you speak of, but I'm not really interested in doing so.  One of the major goals of lowering the city tax rate is to increase demand for city property.  This has several obvious positive effects.  It increases the assessments on city property, allowing more tax revenue to be collected without increasing the tax rate (eventually leading to excess revenue that the city can use to add more services or cut taxes even further).  It pushes revitalization out the current pockets and into surrounding communities, raising their property values and infusing them with fresh, pioneering, concerned citizens who will fight to make those communities more appealing places to live and work.  It encourages new construction and renovation of dilapidated properties.  Finally, an increasing city population is a clear sign to businesses that they need to come to Baltimore.

Currently, Baltimore City caps yearly assessment increases to 4% of the current assessment.  The state cap is 10%.  Baltimore would be wise to use the state cap so that they can more quickly reap the benefits of increased property value.  This will allow them to lower their rates faster, which will lead to more increased demand and even higher values.  It's a no brainer and I can't figure out why it hasn't happened yet.

James Hunt

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Aug 16, 2010, 2:40:26 PM8/16/10
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On Mon, Aug 16, 2010 at 2:24 PM, Youssef Mahmoud <humana...@gmail.com> wrote:

...   It's a no brainer and I can't figure out why it hasn't happened yet.

+++++++++++++++++++++++++++

Fear of the howling of those affected by the sudden rise in their (already high) property tax bills is why. Calibrating an commensurate reduction in prop tax rates is beyond our solons, and no wonder. Increased property values are largely a function of the asset bubble caused by an extended period of really easy money thanks to Fed policy, federal policy, the securitization of mortgages, and the proliferation of "liar loans" and other such fraud. In other words, just about everyone except the Upright Citizens League is responsible. It was a heck of a ride, though. It's over, and once interest rates start heading up again (and they will), property values will drop.

PETER DUVALL

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Aug 16, 2010, 2:51:16 PM8/16/10
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Actually, you can afford a house that has about 1/8 less value in the city for the same mortgage payment.  This difference, while not the only factor in investment and home buying decisions, can clearly make the difference between a project that works financially and one that doesn't.

I would also encourage raising the assessment cap to the extent that folks receiving the Homestead Credit might have falling or negligible yearly tax increases.  Property that is fully taxed should be the primary beneficiary of any reduced tax rates.


--- On Mon, 8/16/10, Youssef Mahmoud <humana...@gmail.com> wrote:

Richard Chambers

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Aug 16, 2010, 3:00:38 PM8/16/10
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I'm no expert on property taxes, but I do know of one sacred tax cow I'd like to see slaughtered - the exemption for churches and parsonages. Not sure if all church owned property is tax exempt (like, say, a homeless shelter owned by a church), but Baltimore is awash in these types of properties. If a property takes advantage of city services, it should pay property tax, in my opinion.

Gerald Neily

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Aug 16, 2010, 3:43:47 PM8/16/10
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You're all on the right track. It's complicated, no question about that, and such obfuscation is what enables all the many shenanigans that end up crippling the city. Any solution will have to be applied gradually to muffle the howls of those who lose in the process.

The assessment cap has actually helped the city make more money this year. Assessments have gone down, but so many people have so far to go for their taxes to catch up to their assessments that their taxes have gone up anyway. This is good for the city coffers, but bad for the people and bad for the economy. In a recession, taxes should go down and then rise again when times get good and people can afford it. This is just the opposite.

I haven't heard anyone respond to my brief mention on my proposed solution: a LAND TAX.

I guess that means I'll have to offer a full explanation.


James Hunt

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Aug 16, 2010, 4:13:05 PM8/16/10
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On Mon, Aug 16, 2010 at 3:00 PM, Richard Chambers <richard...@earthlink.net> wrote:
I'm no expert on property taxes, but I do know of one sacred tax cow I'd like to see slaughtered - the exemption for churches and parsonages. Not sure if all church owned property is tax exempt (like, say, a homeless shelter owned by a church), but Baltimore is awash in these types of properties. If a property takes advantage of city services, it should pay property tax, in my opinion.


++++++++++++++++++++

Religious orgs pay taxes on property not directly related to their mission. For example, Loyola U. pays prop taxes on their dorms and food service facilities. Plus I'm pretty sure all non-profits pay an "energy tax." At any rate, taxing places of worship will have knock-on effects. Historic but mothballed churches such as Niernsee and Nielsen's St. John the Evangelist in East Baltimore and St. Peter's near Hollins Market will be torn down to reduce their tax bill. More parishes and schools on the margins will close, and probably some social service programs. That's not a threat, just a fact. I've been a parishioner at four city churches: St. Leo's in Little Italy, St. Thomas Aquinas in Hampden, St. Mary's Govans, and the Cathedral of Mary Our Queen and none of them were running surpluses once the backlog of maintenance was taken into consideration. The Cathedral right now is laying out for 100s of thousands in roof work.

I'm curious, though: how do you assess a place of worship for taxation? Based on the value if an office building or house of comparable size was there?

 

PETER DUVALL

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Aug 16, 2010, 4:14:46 PM8/16/10
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Actually, I have a defunct church on North Avenue in my cross hairs right now.  The building is assessed for well over $1,000,000 so it would have a hefty bill to pay (or not pay) if it is declared no longer exempt.  The reality is that the only way the former church can hold on to a big, unused, and deteriorating building is that it's holding costs are essentially zero.

--- On Mon, 8/16/10, Richard Chambers <richard...@earthlink.net> wrote:

James Hunt

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Aug 16, 2010, 8:12:43 PM8/16/10
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On Mon, Aug 16, 2010 at 4:14 PM, PETER DUVALL <pwdu...@yahoo.com> wrote:
Actually, I have a defunct church on North Avenue in my cross hairs right now.  The building is assessed for well over $1,000,000 so it would have a hefty bill to pay (or not pay) if it is declared no longer exempt.  The reality is that the only way the former church can hold on to a big, unused, and deteriorating building is that it's holding costs are essentially zero.

+++++++++++++++++++++++++++++++++++++

Yeah, I think I know the one you're talking about. Big, beautiful place.

Possible futures:

** Another up-and-coming urban congregation takes it over, as happened with Christ Church Episcopal at Chase and St. Paul and Franklin Street Presbyterian (designed by Robert Cary Long) at Cathedral and Franklin.

** North Avenue gets hot and an up-and-coming creative agency or organization takes it over, as happened on the Avenue in Hampden (Did a nice, expensive rehab, but I think they've since sold it and moved on).

** It gets stripped for resale of its stained glass and furnishings and demolished for a parking lot (happening a lot in Detroit).

The latter two options get the property, or some part of it, back on the tax rolls. What's lost is the volunteer human capital of the sort provided by, for example, the late Ken Harris's church, Huber Memorial in Govans, which has ministries reaching out to get drug addicts into treatment, people in prison, etc. http://www.huberchurch.org/

Anyway, those who want to tax the churches will, in many cases, get their wish by default. Literally. There are any number of dwindling congregations in beautiful old churches running on their endowments and fumes. When the endowment runs out, as happened at Christ Episcopal Church on Chase years ago (there may have been some financial shenanigans involved), the place folds. The cost of upkeep is too much.

A new tax now would accelerate the process. Since there aren't enough up and coming urban congregations who can take on these churches, try to time this for an upswing in the economy so conversion is feasible. Or get ready for more parking lots in our fair city.

Antero Pietila

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Aug 16, 2010, 9:31:01 PM8/16/10
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    From Antero Pietila: There surplus churches galore. For example, what's the story with the old Episcopal church at the NW corner of Garrison and Liberty Heights? Some investor presumably bought it but there it sits empty.
     On the other hand, did you see this? Ghetto clearance http://www.baltimoresun.com/news/maryland/bs-md-madison-park-license-20100816,0,6989451.story?track=rss
 

Date: Mon, 16 Aug 2010 20:12:43 -0400

Subject: Re: [BALTOmorrow] Property Tax

Gerald Neily

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Aug 16, 2010, 9:43:00 PM8/16/10
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So if tenants of a building commit crimes, the landlord can be punished by taking away his ability to rent out the property? What crime did the landlord commit? There is nothing about that in the article. Whatever happened to simply enforcing the laws and punishing whoever broke the laws?

And if this process was applied uniformly throughout the city, there would not be much rental  property left in a lot of neighborhoods.

laurie feinberg

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Aug 16, 2010, 10:12:46 PM8/16/10
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one minor comment from a lurker.  And this certainly doesn't address property tax challenges.

In writing the draft new zoning code, we recognized old buildings such as surplus churches are often a challenge to reuse productively.  We created a new category within residential districts (where most of these buildings exist) called Neighborhood commercial.  It is for buildings that are not residential by their nature though located in residential zones, such as former churches, small industrial buildings or storefronts.  It provides for uses such as office, retail and art galleries, that otherwise would not be permitted, by conditional use.

It is minor, but every little bit helps.

On Mon, Aug 16, 2010 at 9:31 PM, Antero Pietila <hap...@hotmail.com> wrote:

Fritz Ohrenschall

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Aug 16, 2010, 10:14:28 PM8/16/10
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Gerry, it's a tort.  The landlord has a standard of care to provide to residents, the public in general and that standard of care has been (allegedly) violated.  It's not because a crime was committed, it's because of the systematic lack of safety.  It may also relate to getting public subsidy.  So, this is all civil law and not criminal law.  And, it could be simply for not meeting the requirements of statute/regulation to obtain a rental license.

PETER DUVALL

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Aug 17, 2010, 12:06:10 PM8/17/10
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Actually not,  this building used to be a movie theater, roller rink, etc. Until the roof caves in, It actually has value as something other than a church. 

--- On Mon, 8/16/10, James Hunt <jamieh...@gmail.com> wrote:

From: James Hunt <jamieh...@gmail.com>
Subject: Re: [BALTOmorrow] Property Tax

James Hunt

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Aug 17, 2010, 1:59:47 PM8/17/10
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On Tue, Aug 17, 2010 at 12:06 PM, PETER DUVALL <pwdu...@yahoo.com> wrote:
Actually not,  this building used to be a movie theater, roller rink, etc. Until the roof caves in, It actually has value as something other than a church. 

++++++++++++++++++++++++++++++

Ah. Interesting. Think there're some pics in the Museum of Industry of that building in one of its previous incarnations during the 50s when that stretch of North was quite the happening place. Good luck!
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