MONTPELIER — Mistakes were made, but as hearings on reappraisal-related appeals moved ahead Thursday night, the Board of Civil Authority was at a loss to determine who had made them.
While one board member described the evening’s challenge as “mind-boggling” mathematics, the exercise had board members yearning for a run-of-the-mill property tax appeal — the kind where the condition of a home, the quality of its construction, the character of its neighborhood, and comparable sales can all be considered in determining its worth.
The kind the board heard last week and will again when the hearing process, which is scheduled to run into November, resumes. The kind where opinions about fair market value may differ, and inspections — typically a required part of the process — are useful.
That wasn’t what the board heard Thursday night, when it took up eight appeals involving 16 properties at once.
Downstreet Housing and Community Development was the common denominator in all of them and, board members were told, fellow nonprofit Evernorth is its partner in half of them.
Both organizations were represented at a hearing that opened with a prediction that proved far from prophetic.
“This should be a relatively simple one,” City Clerk John Odum said, noting representatives for Downstreet and Evernorth had agreed to waive inspections and planned to present a singular issue they claimed inflated the assessed value of all the challenged properties.
“It’s really more a matter of math,” Odum added.
Odum was right about that, which proved to be a huge problem on a night when the board voted to “suspend” the hearing after nearly an hour of conflicting testimony and essentially instructed both sides — the city and the property owners — to compare notes, double-check their math and get back to them.
John Davis, senior asset manager for Evernorth, told the board that didn’t happen during or after grievance hearings in what boils down to a dispute over expenses.
“We did not see … what (expenses) they say they are excluding that we are including,” Davis said.
Though the disputed numbers were relatively small, when pumped into a state formula used to determine the fair market value of publicly subsidized housing, they have a profound effect.
Downstreet’s properties were collectively assessed at nearly $9.7 million as a result of the reappraisal — a figure that is roughly $1.6 million higher than the $8.1 million the nonprofits contend they should be worth based on a well-established but complicated statutory formula.
“It’s an ‘income approach’ (to establishing fair market value), but it’s not an income approach anyone else would use,” said Davis, who was joined at the meeting by Christy Veleau, financial controller for Downstreet.
The hearing was nearly 20 minutes old before either Davis or Veleau weighed in. As is customary, City Assessor Marty Lagerstedt went first, providing second-hand testimony about calculations he didn’t perform, but was assured were accurate by the city’s contract appraiser, New England Municipal Consultants.
At issue, according to Lagerstedt, was “bad debt,” which isn’t an allowable expense and ambiguity involving miscellaneous administrative expenses he said the appraisal company was unable to clear up. Both were excluded in setting assessed values for the properties that weren’t changed during grievance hearings.
“If we can come to an agreement on expenses there shouldn’t be an issue,” Lagerstedt said.
While Lagerstedt said Downstreet counted “bad debt” as an expense when it shouldn’t have, Davis testified he feared New England Municipal Consultants may have excluded it twice.
“It’s not difficult to make math errors,” he said.
Davis acknowledged debt from uncollected rents can’t be counted as an expense, and confirmed they already were excluded by Veleau as part of her analysis.
Veleau told the board she’d just done a real-time computation involving one of the challenged properties and confirmed that, at least in that case, Davis’ suspicion was accurate: The bad debt had been subtracted twice.
Veleau’s assertion prompted board member Kim Cheney to pose a question to Lagerstedt.
“Are you saying you don’t know whether this (bad debt) is double counted or not?” he asked.
“I got the information from the reappraisal company a couple days ago, and they’re sure their information is accurate,” Lagerstedt replied.
Board members, who were already concerned about how they were going to resolve the dispute involving what was and wasn’t counted with respect to a formula most weren’t familiar with, agreed with Cheney and Mayor Jack McCullough that it was time to press pause.
Odum cautioned that ending the hearing on the appeals would be procedurally problematic and require the board to deliberate and make a decision without the benefit of any additional evidence.
Board member Mary Hooper and others agreed that would be a mistake.
“I don’t know how we determine if ‘bad debt’ has been double counted here,” she said, suggesting the answer to the issues in dispute could be found in a “side-by-side” conversation involving competing computations.
“This just seems to be a matter of fact,” she said, noting either “bad debt” was counted twice or it wasn’t, and property management expenses can be counted or they can’t.
The hearings on all eight appeals — most involving multiple properties — were suspended.
The Downstreet properties collectively include 190 affordable apartments, which, if you exclude 30 studios, have a combined total of 174 bedrooms.
david.delcore @timesargus.com
