Marylanders For Fair Property Taxation

Presents

The Case for Marylands Property Tax Assessment And Appeals Process Reform
November 1, 2012 516 Walters Mill Road Forest Hill, Maryland 21050-1428

TABLE OF CONTENTS Bulleted Summary Preface The Existing Property Tax Assessment System The Appeals System First Level Assessor or Supervisor Appeal Second Level The Property Tax Assessment Appeals Board (PTAAB) Third Level Maryland Tax Court Additional Concerns about the Appeals Process The Sales Versus Assessment Value Debacle Past Legislative Efforts Former SB 395,458,498 & HB 881 Task Force to Review Property Tax Assessment Procedure and the Tax Assessment Appeals Process Former SB 482 State Commission of Real Estate Appraisers and Home Inspectors Former HB 1519 Computer Assisted Mass Appraisal System Performance Audit Former SB 724 Bill of Rights for Taxpayers Former SB 190 Senior Property Tax Relief Former SB Property Tax Appeals Ombudsman Former SB 215 & HB 789 Internet Access to Property Worksheets Former SB Sufficient Notice of Appeal Noteworthy News Items Suggested Legislation 3 4 6 10 10 11 13 13 15 31 31 33 34 34 35 35 35 36 37 40

BULLETED SUMMARY THE PROBLEM Assessment system is archaic, biased, convoluted, corrupt, inaccurate, incomprehensible, inequitable, non-uniform, subjective, unfair, and not in concert with current fair market values. Present construction cost based assessment system in place basically since 1977 inception. Assessment system updated without public input or methodology change. Assessor staff down from 280 to 158. Assessor staff unable to make physical inspections, or update market value data base and indices. Assessor staff competency questionable with no mandatory continuing education required. Assessor staff education and skills less than Licensed Real Estate Appraisers taxpayers often forced to hire to challenge inaccurate and unfair assessments. Large percentage of assessments incorrect due to lack of up-to-date record keeping. Millions of potential assessable tax base dollars lost and unaccounted for. Triennial assessments assure at least 2/3 of 2 million taxpayers assessments at least 2 years out of date. Property assessment worksheets unavailable to taxpayers on line BUT SDAT website promotes private firm, SpecPrint, who purchased said worksheet records and profits by resale negating privacy concerns touted by SDAT Director. Assessment system based on construction cost BUT can only be taxpayer challenged based on fair market value sales. Assessor hearings waste of time, primarily fishing expedition with little accomplished. Property Tax Assessment Appeals Board (PTAAB) and assessment offices housed and staffed together eliminating any separation of function or separation from possible collusion. PTAAB staffed with politically connected citizens with questionable property value knowledge. PTAAB staff qualifications unknown to taxpayers. Tax Court inconvenient, time consuming, unfair to taxpayer who must prove State wrong rather than each side proving their case.

THE SOLUTIONS Create task force to study system to develop a fair, equitable property tax assessment and appeals system. In lieu of creating a task force, enact legislation as suggested herein to modify the assessment system to a fair market value sale based, automatically index upgraded, assessment system by the nationally recognized Case Shiller Home Price index

Taxation Marylanders For Fair Property Taxation

516 Walters Mill Road E-mail mdfairtax@juno.com Forest Hill, Maryland 21050-1428 www.marylandersforfairpropertytaxation.com

THE CASE FOR MARYLANDS PROPERTY TAX ASSESSMENT AND APPEALS PROCESS REFORM
H. LeRoy Whiteley, Jr., Founder ******************************************************************* PREFACE For over forty years, my father, my brothers, and I, literally ever year, have appealed our Maryland property tax assessments for a Sassafras River waterfront property we own in Kent County because of archaic, biased, convoluted, corrupt, inaccurate, inequitable, non-uniform, subjective, unfair assessments which have been exorbitantly high and not in concert with current fair market values. We win some appeals, lose others. We taxpayers are unfortunately placed in the untenable position that, as far as we know, does not exist in any other court of law --- the taxpayer has the sole burden of proving the State is wrong in its establishment of our tax assessment. In analogous terms you are deemed guilty until you prove yourself innocent (correct). The assessment values are primarily based on construction data adjusted with incomplete, seldom current market analyses and indices BUT the taxpayer is specifically limited to arguing the validity of a so-called fair market value based solely on comparable market sales values unless definitive mistakes are found in the propertys site data worksheet for items such as size, construction or amenities. We have endured the unfair practice of being assessed by incompetent assessors with only high school educations. They testify us against and are being accepted by Property Tax Assessment Appeals Boards and the Maryland Tax Court as equals to Maryland Licensed Real Estate Appraisers (who by law must comply with Maryland Real Estate Commission regulations completing a bachelors college degree, 90 to 180 specific Commission defined credit course hours, 2000 to 3000 supervised work experience hours within 2 years and pass each credit course examination plus a final written examination). Unlike the State employed assessor, the Licensed Real Estate Appraisers work experience may NOT be substituted for education and education may NOT be substituted for work experience. Hows that for fairness and equality? We have been the victims of vindictive actions by an assessor who lost his case to us in Tax Court and was heard by several witnesses to vow to get even. He did by nearly doubling our assessment at the next triennial re-evaluation. It took us eight years fighting through each of the States three appeals bureaucracy levels to rectify that matter. A formal complaint of the assessors actions resulted in a mere slap on the wrist by the Attorney General with said assessor remaining as our assessor of record. The property referred to herein consists of two contiguous lots, 50 and 100 feet wide, totaling 0.86 acre. It is improved by three summer cottages built in 1940, 1961, and 1972. Two are one story frame bungalows on concrete piers. The other is a one story slab on grade masonry block dwelling. The property is serviced by a single well and septic system on the larger, higher elevated, of the two lots. The smallest lot having two houses grandfathered on its 11,500 square feet does not percolate and is therefore incapable of standing alone. Current septic regulations require a 10,000 square foot 4

disposal system with an equal sized reserve system a physical impossibility! The gravel entrance road has a grade in excess of 10% to descend from the 90 foot high Sassafras River hills to the waterfront lots at elevation 3 above river level. The lots and houses are subject to flooding at least once per year from either the river or from a 100 acre farm drainage area runoff during high frequency rain events which are exacerbated by no-till farm practices. A combination masonry block garage/storage shed and a small well/pump house complete the improvements. While the property has excellent recreational seasonal value for our family even with the aforementioned drawbacks, it has little value to anyone else. Current regulations prohibit any further development or improvement if the property could even be sold, in-part or whole. Recent assessments set the value of this property pictured herein (copy attached) at $607,800 before our 2011 Tax Court ruling corrected the value closer to but not equal to market conditions at $357,900. As a result of these cited egregious assessment practices as well as with similar conditions we have with other family owned properties, we embarked on an effort to seek property tax assessment and appeals reforms to a broken, flawed system. We established Marylanders For Fair Property Taxation to educate the public as to their rights, the process of property assessments and appeals, and the laws that affect the process. Through the Internet and public meetings, we provide a direct interface with our fellow suffering property taxpayers and in turn, with our legislators, to influence the creation, enactment, and fair use of property tax laws. In the following report we show how the current system is structured, how it fails to work, and how we know it can be changed for the betterment of the State and its property taxpayers. Bringing about change to the current broken property assessment taxation and appeals system will result in greater overall property assessment totals AND will also result in lower tax rates and many attendant individual taxes, while still producing sufficient revenue to meet societys needs. We invite your scrutiny and questions, but more importantly your support in convincing our legislators that there is nothing to fear but much to be gained in reviewing the assembled materials and evaluating the system. The goal of this effort and its mission is the setting of fair property market values with automated assessment methodology to obtain the tax revenues required to meet societys needs. H. LeRoy Whiteley, Jr., Founder

November 1, 2012 5

THE EXISTING PROPERTY TAX ASSESSMENT SYSTEM Prior to recent (2011-2012) format changes, individual property assessment worksheets depicted assessment values in a structured, step by step, format (copy attached) showing a somewhat detailed trail of how SDAT (The Department of Assessments and Taxation) supposedly arrived at their fair market value of each property. The current new format (copy attached) no longer shows this road map of derivation leaving the taxpayer to wonder how all of the factors are derived and applied. In our following dissertation we have followed the previously used methodology to describe how values were calculated and to address some of the problems found with said calculations and derivations. The State of Maryland created the Department of Assessments and Taxation (SDAT) and charged it with establishing the fair market value of over 2 million property accounts. Annual reassessments are supposed to be conducted resulting in one third of the States property being reassessed triennially. Assessments are certified by SDAT to all local governments who in turn convert the assessments into property tax bills by applying the appropriate local property tax rates. State law specifically requires that all taxable property be assessed based on its fair market value. Although all properties are supposed to be assessed every three years to keep them current; this requirement is not being met.***Article 15 of the Declaration of Rights of Marylands Constitution requires that all property be assessed and taxed uniformly. Courts have interpreted this to mean that assessments must be based on the fair market value of the property*** *** SDAT brochure A Homeowners Guide to Property Taxes and Assessments. Two appraisal approaches (sales and cost) are generally used by appraisers (assessors, actually since SDAT claims it does not perform appraisals, yet its literature is replete with the use of the terms "appraiser and appraisal) to establish fair market values. Maryland property assessments are basically developed via a Computer Assisted Mass Appraisal (CAMA) technique originally developed in 1977 with only one known major update in recent years. Said update appears to have been accomplished without any public taxpayer input. No significant improvements have been observed. In fact, our observations, internal reports, and conversations with friendly insiders indicate major problems with the system and general chaos, some even describing the system to be in shambles. A former Director of the Department stated in a personal interview that were he in office today with the current state of the Department he would feel compelled to resign in disgrace. Thats a damning stated status position. The premise of the sales approach is that the fair market value of a given property may be determined by examining the sales prices of comparable properties. The key to the sales approach is TRUE comparability and the availability of sufficient data within the same geographic assessment area. Said area should not go beyond the same postal zip code but the Appeals Boards and Tax Court allow comparables to be used from any and all parts of the State. This approach defies any logic of having consistency in the comparables being equal in age, construction type, demographic diversity, economic equality, environmental congruity, location, zoning or other value influencing features. The premise of the cost approach is that the fair market value of a given property equals the total of the cost to construct a similar improvement, less depreciation of age and condition, plus the land price. A major fallacy to the cost approach is the fact that SDAT uses a blend of heterogeneous data in establishing the unit price data used to calculate dwelling values. For instance, the system is incapable of distinguishing whether a frame structure is constructed with a specific thickness of siding, the spacing or thickness of studding, insulated or not, or finished interior surfaces. Likewise, 6

masonry structures are not valued based on brick or stone veneer over framing or of solid masonry backup which could easily be varying in thickness from 4 to 12 inches or more. There is no methodology to compensate for such differences immediately producing a large possible disparity in actual value. Property assessments are calculated, tabulated, and depicted on an assessment worksheet which is available free of charge to the property owner for review and recordkeeping. The worksheet produced by the CAMA system gave the following information prior to the aforesaid formatting change: 1. The General Administrative Data -- i.e. location information, name, address, grade, condition, dwelling type, foundation area, enclosed area, year built , land use , and identity of assessor. 2. Dwelling Cost Calculation number of stories, generic construction type, dimensions, square footage, unit price, and total calculated cost. The fallacies noted hereinbefore in the ability of the system to properly estimate the unit prices of indeterminate construction to the penny as used by SDAT is absurd. It is equally absurd to base the value of an improvement on these questionable construction unit prices and then limit the taxpayer to challenging the construction cost derived value solely based on sales data as the Property Tax Assessment Appeals Boards and Tax Court do. Another fallacy to this construction pricing scenario is the methodology used to arrive at the square foot rate for this section. The pricing begins with a figure designated as the Constant Rate, an ill defined estimate supposedly for one bath, one kitchen, one hot water heater, all stairs present in the model and one electric box. There are 9 grades of dwellings in the SDAT system. How is it possible to even think that each of these grades will each have, or even be assumed to have, nearly equal construction of the identified components? For instance, does each graded bath have the same size, same fixtures and quality? Does each graded kitchen have the same size, same fixtures and quality? Is each graded hot water heater the same size and powered by the same source? Are all graded stairs the same size with an equal number of risers or treads? What is the size of the graded electric boxes, i.e. number of circuits, size of main, size of circuits? There is no equality, no consistency and certainly no comparability, except implied. We have never been able to have SDAT accurately define these parameters. Next SDAT develops to the precision of one cent, square foot rates for each type of indentified construction. Most of the data, we understand, is obtained from an estimating service known as Marshall & Swift used throughout the construction and real estate industry. How SDAT uses and adjusts the data is questionable. In the current new worksheet format, little or almost none of the square foot data is given, leaving the taxpayer with only a questionable lump sum value of unknown origin or source. SDAT then derives a Perimeter Rate for Construction which is actually double calculating the cost of the dwelling since a square foot rate normally includes ALL costs for the basic structure. Adding in the Perimeter Rate is double dipping These questionably derived figures are then assembled by taking the: Constant Rate Plus The Square Foot Rate times the Square Footage of the Dwelling Plus The Perimeter Rate for Construction times the Dwelling Perimeter 7

Divided by the Area of the Dwelling To equal the Square Foot Rate to be multiplied by the dwellings Square Footage to obtain the Dwelling Square Foot Cost. To this nebulous Dwelling Square Foot Cost, SDAT then calculates a series of Other Charges such as roof composition and fireplaces. These items are normally included within a Dwelling Square Foot Cost since a roof is an integral component, commensurate with construction grade ranging from economy to luxury. These items are logically part of the basic dwelling and fireplaces especially along exterior walls are an integral part of the basic wall system. They are therefore normally costed as part of the basic dwelling package. SDAT is again double dipping Legitimate Other Charges such as extra baths, heating and cooling systems, finished basements or attics, porches, patios, built-in garages and dwelling amenities are sized and calculated on a unit basis and cost. These are added to the Dwelling Square Foot Cost to become the Total Dwelling Base Cost. The new format eliminates all definition of these items and the derivation of their values. This Total Dwelling Base Cost is then adjusted by SDAT using a Cost Index defined as an index which updates historical figures to the current time and location. A January 29, 2012 Sunpapers article quoted SDAT Director Robert Young as being unable to keep this data (i.e. assessments) current due to loss of staff. Lack of up-to date data that supposedly is used to develop these cost indices obviously produces inaccurate and incorrect assessment values. The CAMA manual lists nine geographic areas within the State assigning each area with its own statistical index value. We have found these values ranging from 0.86 to 1.32 or higher. Not since the 2002 CAMA manual have we ever seen a CAMA area with a value of 1.0 which would indicate the benchmark for all cost data actually matched all construction costs in that geographic area. ( i.e. Area I, Montgomery County and Area IV, Prince Georges County, the two most expensive construction areas of the State) Since then, SDAT has not ever defined the location of such an area where such index producing conditions exist. Nonetheless, SDAT blithely multiplies this Cost Index by the Total Dwelling Base Cost to arrive at a new value called Replacement Cost New (RCN). This is supposedly the value of a new dwelling equal to a newly constructed replacement of the original dwelling. It is NOT the value of an exact reproduction of the original dwelling. The Replacement Cost New value is then adjusted by SDAT to allow depreciation of the dwelling based on its age. Although we can find no published data available to the taxpayer, SDAT has reported to us that depreciation is calculated on the basis of a 1% per year for the first ten years of age and thence 1% for each two years of age thereafter. We have observed inconsistency in the application of this described methodology. A subtotaled depreciated Replacement Cost New value is derived by subtracting the calculated depreciation percentage times the Replacement Cost New value from the said Replacement Cost New figure. Next, SDAT makes yet another adjustment known as the Market Value Index. This is a multiplier used to link the cost and sales approaches to market values. It is applied to the value by the cost approach supposedly to adjust for market conditions. Unfortunately, as noted hereinbefore, the market data has not been kept current due to lack of sufficient staff so therefore the application of inaccurate cost data indicated to questionably reliable sales or market condition data can only produce a highly suspect adjusted value called the Dwelling Value. To complete the improvement picture of the property, SDAT creates a series of Accessory Structures with attendant unit price values. Items like boat houses, gazebos, garages, greenhouses, piers, pools, pool/pump houses, and sheds are sized and valued. Condition and depreciation is often ignored. The total value of accessory structures on the property is added to the Dwelling Value to 8

produce the Total Improvement Value. This is the taxpayers assessment improvement value upon which the dwelling and improvements portion of his property taxes will be based. The new format apparently lumps these items into a new category labeled Outbuilding Data. Next SDAT adds a Land Valuation to the property. This is the most nebulous of figures within the SDAT stable of values to be conjured up. At a meeting in our home some years ago, then Director C. John Sullivan and Deputy Henry Sikorski offered the comment We have so many numbers to play with we can make them come out any way we want them to. Thats exactly what they do. Responses to freedom of information requests to define Land Type resulted in a conglomerate of answers such as There is no generic definition of Land Type. That term represents a computer field that must be filled in when using the Departments CAMA software The Land Type is a code assigned to a specific area, for use in calculating the appropriate land value. This land type may apply to a rather specific location, such as a subdivision, or it may cover a large area. Market conditions determine the usage. Accompanying these vague definitions from numerous area supervisors were square foot Land Type numbers literally numbering in the hundreds for several of the County Supervisors that responded. The land types are inconsistent in value and so called description from county to county. Complicating the issue are added descriptions which label property as primary, secondary, tertiary, excess, waterfront, waterview and on and on ad infinitum. The land valuation appears to be the catch all which allows SDAT to select any figure it decides to use to add to the property to attain the Total Land Value SDAT desires to establish. SDAT then adds questionable Total Land Value to the aforementioned Total Improvement Value thereby producing the Total Property Value upon which the taxpayers property is assessed and taxed. We have seen much waterfront property in Kent County arbitrarily valued at $50/sf or $ 2,178,000/acre from Georgetown to Rock Hall with nary a shred of evidence of any property ever selling for such value in the history of Kent County. Whenever questioned about this exorbitant value and the non-existence of any backup of the value, the standard answer is ALWAYS, Well, that's what we THINK the land is worth! Therein lays one of the greatest fallacies and inconsistencies in arriving at a fair market value for any property. This less than well derived or documented valuation methodology really instills confidence in the validity of the valuation In summary, this system of assessments is a heterogeneous, piece meal, attempt at deriving a construction reproduction cost of an ill defined construction model. It is impossible for said system to match actual construction techniques and conditions to any subject property making every assessment a one size fits all inaccurate approximation of the real thing. Instead of trying to devise a simple uniform, equitable system that meets a set of equalizing conditions, SDAT has gone out of its way to complicate a system that defies uniform, equitable values for like properties. SDAT instead argues that its system is one of mass appraisals and therefore average conditions of the masses are acceptable. We do not accept that premise To make matters worse, SDAT has now modified its worksheets eliminating all of the above defined calculations. The new worksheets are devoid of any indication of how any of the values contained thereon were derived thereby denying the taxpayer of any individual analyses of the bottom line only figures shown. This new format with its total lack of transparency reinforces our position regarding SDATs blatant attempt to hide its valuation methodology, confuse the taxpayer, and make the system harder to comprehend or appeal.

THE APPEALS SYSTEM First Level Assessor or Supervisor Appeal Upon receipt of a triennial assessment notice in January, the taxpayer has 45 days to file a written appeal of his assessed value. This first level appeal can be conducted by phone, in writing, or in person usually at the office of and with the assessor who was responsible for the original assessment value. The assessors supervisor may sit in on the hearing or actually conduct it. Alternate sites and times are generally available to the taxpayer so that taxpayers schedules can possibly be accommodated without added inconvenience to address the questionable assessment. Taxpayers are not limited to just this triennial assessor appeal. The taxpayer may file a petition for review of his assessment every year if he so desires by filing a SDAT petition form before December 31 of the current year for review of the assessment for the next year. Assessors today need only a bachelors degree from an accredited college or university with zero experience to be your assessor of record setting your property value and testifying against you at any appeals level. Many assessors are grandfathered into their current positions and therefore have a lesser or more limited education with equally limited experience, since their daily work is merely a repeat of the previous days efforts. Their touting of multiple years of experience is actually reduced to one years experience multiple times Continuing education is not mandated. Therefore, the taxpayer is dealing with individuals using a system, each with limited credibility, flexibility and experience. This is the root of the States flawed system. When faced with a court appearance to refute assessments set by these individuals, the taxpayer is often forced to hire a licensed Real Estate Appraiser at considerable expense to evaluate his property to prove the assessor to be in error. By comparison, the State licensed appraiser must have at least 90 to 180 classroom credit hours in specified courses approved by the Maryland Real Estate Appraisers Commission and 2000 to 3000 hours of appraisal work experience over a required time period of 24 to 30 months and pass a written examination for each course plus a written licensing examination before becoming licensed and being allowed to work as a qualified licensed Real Estate Appraiser. While the State employee can substitute hours worked for education experience the licensed appraiser cannot in the qualification process. Less than 25% of State assessors today hold Real Estate Appraisers licenses or have the qualifications to be so licensed. Most assessors we have encountered have not had the education nor experience to address the items such as construction details and variances noted herein and therefore do not address them in their evaluations or in the input data they robotically enter into the computerized CAMA appraisal system assuring us of the old axiom GIGO -- Garbage In Garbage Out At the assessor hearing the taxpayer can address any items found on the worksheet and present any information regarding the construction, condition, and value affecting items regarding the property. Generally, we have observed that sales figures are not as a limiting discussion factor as they are at the second and third appeals levels. Sales values certainly carry the most convincing arguments if good comparables are available and are presented. Probably the most discouraging part of this hearing level is knowing you may be dealing with a totally incompetent individual who is limited in being able to understand the total picture, is incapable of making more than cursory adjustments and is limited to providing only stock responses and applying data blindly to an inflexible computer system. Equally discouraging perhaps is the fact that the assessors may not really understand their own SDAT system they are working with. A case in 10

point, we have had an assessor disallow certain previously allowed value adjustments when new information would dictate additional value adjustments be applied. However, when it turned out that said adjustments when just added together would total 100% said assessor would not permit their application. The assessors flawed reasoning occurred because of failure to understand the proper application of simple mathematics to the assessors own SDAT system that would multiply the adjustments rather that just add them. In this case, a 50% adjustment to one item plus another companion 50% adjustment to a second item equated 100% in the assessors mind set instead of the correctly applied 75%. The assessor steadfastly defended the 100% position and sadly a 3 person Property Tax Assessment Appeals Board agreed with and affirmed the assessors faulty arithmetic. Incompetence personified We have never reached agreement with an assessor during a hearing and seldom have we heard of decisions ever being rendered on the spot except in the case of obvious errors in things like dimensions or construction materials where photos or construction drawings obviated correction to be made. The process is obviously easier for assessors to reject the taxpayers arguments via mail than in person. When the taxpayer receives an unsatisfactory result from a hearing, an appeal can be filed within 30 days to the next, second or Property Tax Assessment Appeals Board level. Second Level -- The Property Tax Assessment Appeals Board This second level of appeal is before a three member board of members appointed by the Governor from a list of qualified citizens nominated by the head of the local governing body. We have been repeatedly told that the Property Tax Assessment Appeals Board is in fact a quasi taxpayer advocacy board, supposedly protecting the taxpayers rights. If the Boards are truly taxpayers advocates they should be separated from the assessment offices and personnel. The present configurations do not promote a true, physical or philosophical, separation of the two entities, since most assessment offices and County PTAAB boards share the same offices and staff. There apparently are no specific qualifications listed for appointment. However, the right political connections obviously have its benefits. (We obviously do not meet that criterion since we have twice been nominated for appointment but failed to gain appointment) We have advocated that if this system remains in place certain changes should be made to enhance the quality of the members and its effectiveness on the taxpayer. This leads us to the fact that presently the taxpayer is totally unfamiliar with the qualifications/background of the Board members. The taxpayer therefore is faced with trying to make a presentation, to an audience acting as judge and jury, without the benefit of knowing who he is addressing and what their qualifications might be. Having biographical sketches of Board members available to the taxpayer in board offices and via the Internet at all times especially prior to a PTAAB appeal would be beneficial to the taxpayer. It might help the taxpayer prepare his facts in a manner more pertinent and meaningful to one or more Board members without talking down or in a condescending manner. Or the opposite might be true, as has been pointed out to us, that because of our technical background and training, this taxpayer might be presenting material too technical and complex for the members to fully understand and comprehend. Knowing ones audience can only improve ones presentation. This naturally leads to the makeup and qualifications of the Boards. Most commissions, councils, advisory boards, and agencies have their attorney, engineer, accountant or technical advisor present at meetings. These advisory people interject pertinent comments to clarify the position being presented by any party. The most compelling reason to have such a person available to the Boards is to be able to impose an impartial response to material presented which may be 11

beyond the scope of any members purview, education, training, experience, knowledge or area of expertise. It might help clarify the official position being presented by the testifier. Further to this Board makeup question, we feel that consideration should be given to having specific educational and experience requirements for an enlarged Board. For instance, a five member Board might consist of someone from the real estate field, another from the construction industry, architectural or engineering area, another from commercial business, and another from agriculture and a fifth from any other field of endeavor. Such a makeup would be consistent with Boards we are associated with like our own Professional Engineers and Land Surveyors Boards where engineers from several disciplines (i.e. Civil, electrical, mechanical, structural, etc) plus a non-registered ordinary citizen sit in judgment of engineer licensing and disciplinary matters. To preclude placing members in a possible position of potential conflict of interest while hearing appeals, members could be required to be retired or currently inactive in the field they would represent. We have witnessed assessors being allowed to remain in conversation related to an appeal with Board members following the apparent hearing conclusion and departure of a taxpayer. This is contrary to all legal procedures we are familiar with. We understand the former PTAAB Administrator addressed this matter to all Board members but we have reason to believe the practice still goes on in some counties. On numerous occasions we have been advised that contrary to the item clearly published in the State of Maryland Rules of the Property Tax Assessment Appeal Boards brochure wherein it is stated (2) Exhibits such as maps, plats, photographs, and comparable sales are encouraged and permitted, we have had such materials summarily rejected by one Board. The PTAAB Administrator has apparently addressed this matter with the Board in question, since our latest presentations were accepted. But we soon thereafter learned they were promptly discarded as no written records are kept. At a meeting with Delegate Sossi, we were enlightened by the Administrators revelation that since we were obviously experiencing personal animosity problems with one of our current assessors, we could request a peer review of our disputed case by an assessor from another jurisdiction. Similarly, another Board from outside the area of the property in question could address dissatisfaction with conditions and/or personnel at the PTAAB level through a hearing. When we requested such a peer review soon thereafter, our request was denied. Assistant Attorney General David Lyon representing the Department of Assessments and Taxation informed us that such rights are not available to the taxpayer. We learned from the former PTAAB boards Administrator that he at his discretion routinely allowed such alternate assessor and site reviews to be conducted. We question why this right is not allowed and why if allowed the information is not made widely public by inclusion in the aforementioned rules brochure handed out to taxpayers when filing for a PTAAB appeal along with the procedures necessary to effect such a change in hearing venue. If the taxpayer were to investigate those options to learn more about the areas and personnel available the aforementioned biographical sketches of the Boards members could become invaluable in making the selection for a relocated hearing in adjacent counties. It should be noted that the States Property Owners Bill of Rights lists the following as one of the taxpayers rights - i.e. To be provided with the option of an assessment office, alternate site, evening, or Saturday assessment appeal hearing To this layman, that clearly seems to allow alternate site or assessor or Board locations to be requested and used. Like most agencies and businesses, the State assumes that everyone has Internet access and therefore all contact is directed to an Internet address. Nothing could be further from the truth since current statistics indicate that over 50% of computer owners do not subscribe to an Internet service. It 12

is therefore imperative that a postal mailing address and a telephone number, both toll free and TDY accessible be displayed on agency documents such as the aforementioned brochure to enable the taxpayer to utilize the postal or telephone system to contact the agency, Administrator or his staff. This address exclusion has been explained as being omitted due to apparent frequent address changes for this agency. Over-stamping, reprinting or insertion of an addenda flyer easily overcomes this lack of information. Third Level Maryland Tax Court The Maryland Tax Court is probably the best opportunity for the taxpayer to obtain a fair assessment evaluation if appropriate facts are presented. We have been before most of the judges assigned to the Court and find; in general, they are knowledgeable and fair. There have been exceptions where we witnessed what we believe is collusion, actually occurred and sadly, leaves the specter of possible corruption being a part of the system. The hearing before the Court is usually quite informal with both parties, State and taxpayer sitting around a table with a judge at the head, presiding. Each side makes its presentation accompanied by exhibits, if desired, and expert witnesses such as Realtors or Real Estate Appraisers. Each side can question the other. Final arguments are presented and if the case is not too complicated, the judge often takes a break to review the evidence in private and then returns to render a decision. For complicated cases, decisions are generally rendered in writing within thirty to forty-five days. The Court is headquartered in downtown Baltimore, where parking, cost of travel, need for meals, loss of work, and general inconvenience coupled with the ever present idea that you cant beat city hall so why bother, prevails. This discourages most taxpayers from ever advancing to this level. We also understand additional court cases are regularly held in Annapolis, Centreville, and Rockville. If case loads warrant, cases can be scheduled in any county. Additional Concerns about the Appeals System We are continually astonished that the taxpayer is placed in the untenable position of having to hire a licensed Real Estate Appraiser when pursuing an appeal to the Tax Court level to receive creditable recognition of the taxpayers evaluation of his property. The qualifications of the licensed individual far exceed the qualifications of the States assessment personnel. We likened our argument to the condition in our engineering/surveying profession where governmental agencies routinely employed non-registered engineering personnel in agencies like public works to review, comment upon and approve the works of registered professionals. Our Boards ultimately were successful in obtaining legislation that now generally requires at least supervisory personnel in such roles to be registered engineers/surveyors just as the plan submitting, approval-seeking engineer/surveyor is required to be. This is a no-brainer situation where the State needs to upgrade the quality of its personnel to provide the taxpayer with better quality work and service and place their personnel on equal professional status with the appraisers who may be challenging them for a taxpayer. Many professions today, like this writer's, require continuing education programs to improve and maintain proficiency. Why not require the same of assessors? One assessor constantly reminds us that he has 24 years of experience; to which we reply that he has one years experience, 24 times!! since he has not improved his educational status nor has he performed any work different from any of his past years. 13

Assessors are testifying far beyond the scope of their expertise and with total acceptance by reviewing authorities such as supervisors, PTAAB board and Tax Court simply because these individuals are viewed as authority figures. When challenged in such instances we have found the Court loath to dismiss the testimony of such assessors. The same conditions apply when they testify before PTAAB boards. Similarly, the qualifications of PTAAB board members are unknown to the taxpayer. Their backgrounds and qualifications should be public information published and distributed to the taxpayer upon appeal of his property. These appointed citizens may or may not have enough knowledge to render proper decisions regarding fair market value. Appeals we have observed that resulted in the Board questioning or disagreeing with the assessors resulted in the Board remanding the case back to the assessment office for re-evaluation. This places the decision-making process right back to the same individual that created the need for the appeal in the first place. If the Board were perhaps increased in size and constituted of designated members with specific backgrounds from construction, economics, real estate, engineering, business, agriculture, and the general public, then decisions could be rendered by said Board much like the Tax Court does without remand to the assessment office. Comparables specifically ruled as being not comparable by a Tax Court have been presented to a PTAAB Board by assessors when those assessors were part of the Court hearing and knew the Court ruling. The assessor appears not to have learned from the experience and the Board allows said comparables to be entered into evidence for their consideration. This makes one wonder how much the Board really understands the process. When technical evidence is presented and simple explanations are offered, the Boards questions often lead to the obvious conclusion that they do not understand one iota of the material presented. Two recent examples come from our experiences. One of our properties is restricted by COMAR regulations in the placement of on-site water and sewage disposal systems. Said restrictions limit available land for both utilities to a space 9-feet by 12-feet. When it was explained that a septic tank is about 7-feet by 11-feet, and therefore the space would almost be totally occupied by said tank thereby precluding any space available for a well or the required two 10,000 square foot disposal areas, members of the Board failed to understand these simple facts or the regulations that govern these facts. They also failed to understand that two 10,000 square feet plots of land are not available for sewage disposal on a lot that is only 11,500 square feet in area. We know this because at least one Board member in a later part of our presentation pointed to the small 9 by 12 available area and asked Why cant you build the systems right here? Still another Board member questioned our comparison of State provided comparable property values of properties ranging in size from 10,000 to 31,000 square feet in size bracketing our 26,000 square foot parcel. We had equated all of the properties to a common denominator square foot value. The Board president kept arguing that a large parcel of say 100 acres (his words) would influence the square foot price radically. We agreed with him trying to convince him that the comparisons being made were limited to properties of size equal to the subject. He never did understand. We feel that a more diversified Board would be likely to explain such matters during their deliberations or if they had a technical advisor assigned to assist them in their decision making process. Similarly, when we questioned our assessment values of $50/square foot and the States inability to show one comparable sale of that value no one seemed to understand that fact, but blithely accepted the authority figure assessors statement that thats what we think its worth. In other words, dont confuse us with facts. 14

The Legislature is responsible for oversight of the Department of Assessments and Taxation. However, we have seen no indication that such oversight is or ever has been conducted. The system has only been significantly updated once since inception of the current system in 1977. Although the update was performed by the successful bidder after a public bidding; there apparently was no taxpayer involvement in any system review or input. No transparency exists and the Legislature is ill equipped or even prone to spend the time or effort to provide any check or even take the time to investigate the myriads of reports of mismanagement, errors, and taxpayer dissatisfaction such as are touched upon herein. With assessments constantly increasing but property values actually decreasing without tax rates proportionally being reduced to adhere to the constant yield theory, the taxpayer is left without recourse. Senior citizens on fixed incomes are sometimes being forced to sell old, long held family homesteads because of their inability to meet tax obligations. A well-defined, highly qualified, technical advisory committee should be impaneled to annually review the assessment regulations, procedures, methodology, and quality control of the system and assessment department personnel. We urge the legislature to place this type of tax overview and relief in place. THE SALES VERSUS ASSESSMENT VALUE DEBACLE As part of the argument for the use of a sales based assessment system, we offer a sampling of ten properties in each of Marylands 24 jurisdictions to show the disparity and unfairness of assessments resulting in a major loss of assessable base affecting tax rates, taxes, and revenues. Note that if all properties were assessed at their sale price, i.e. the actual fair market value if the willing buyer, willing seller concept applies, millions of dollars could be added to the assessable tax base of each jurisdiction. Doing so would enable said jurisdictions to lower their respective tax rates, most individual taxes, while maintaining, or if they so elect, increasing actual revenues. SDAT will undoubtedly argue that some of the differences in sales values versus assessed values are attributable to the phasing in of assessments over a three year period or preferential land treatment. When one looks at some of the names of the beneficiaries of these assessments which are significantly lower than the sales price, it could be argued that owner preferential treatment also occurred. That fact will vigorously be denied by SDAT. The important fact remains that no matter what the reasoning; a significant loss of at least two years of this assessable base is gone forever. In the tabulation that follows, ten properties were randomly selected from SDATs 2012 Internet website property listings in each of the States 24 jurisdictions. These 240 properties were selected from a total of about 10,600 properties listed in the cited 2012 SDAT sales. Therefore, in this random 2.3% sampling, these 240 properties produced a grand total of $48,453,263 in potential lost assessable base. Extrapolating these figures of an average of $201,888 per sample property and assuming only 1% of the States 2,138,648 residential assessed properties reported in SpecPrints list, are under assessed, then at least $4,317,576,768 in assessable base is not being recorded. Think of the effect of incorporating this additional assessable base into the system and its potential effect of lowering tax rates, most individuals taxes, and not losing any current revenues. TRULY, A WIN-WIN SITUATION. The sample properties follow for each of Marylands 24 jurisdictions.

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ALLEGANY COUNTY Property Address Sales Price $ 192,500 145,500 180,000 149,000 215,000 142,000 245,000 247,000 189,000 133,000 1,838,000 Assessed Value $ 157,900 108,000 161,800 132,000 183,700 117,200 129,600 175,300 187,600 112,280 1,465,380 Lost Assessable Base $ 34,600 37,500 18,200 17,000 31,300 24,800 115,400 71,700 1,400 20,270 372,170

338 Barnard Street 12118 Cash Valley Road 11207 Dehaven Road 115 Kelley Avenue 19014 Kerr Road 609 N. Fourth Street 10328 Shortest Day Road 14514 Valley Road 14706 Viewcrest Road 160 W. Main Street Totals

SDAT 2012 sales records for improved, arms length, residential property produced about 150 records from which these 10 properties were randomly selected and tabulated. This is about 6.69% of the total sample available for these parameters. SpecPrint, a private firm, that has purchased the Maryland SDAT assessment records for sale and redistribution reports 40,797 Public Release Data records for Allegany County on their February 20, 2012 website. Complete SpecPrint listings are attached. IF these figures even remotely represent the status of the Countys assessable base conditions, then it can logically be projected that even if only 1% of the Countys 40,797 records or 408 properties are similarly assessed; then with the average of $37,217 underassessment indicated it is highly probable that Allegany County could be losing at least $15,184,536 in assessable base each year! Do the math in each of the following jurisdictions to see what the actual total conditions might be ANNE ARUNDEL COUNTY Property Address 49 Bay Drive 115 Bay Drive 814 Broadwater Way 4188 Cadle Creek Road 28 Eastern Avenue 202 Prince George Street 238 Riverside Road 314 Riverview Avenue 28 Spa View Circle 238 Westwood Road Totals Sales Price $ 2,750,000 2,875,000 1,600,000 1,125,000 1,267,500 1,300,000 2,085,000 1,500,000 2,050,000 4,850,000 21,402,500 Assessed Value $ 2,046,000 2,133,800 1,366,700 1,062,600 851,600 848,300 1,405,100 725,200 1,949,000 4,202,200 16,590,500 Lost Assessable Base $ 704,000 741,200 233,300 62,400 415,900 451,700 679,900 774,800 101,000 647,800 4,812,000 16

SDAT 2012 sales records for improved, arms length, residential property produced 1868 records from which these 10 properties were randomly selected and tabulated. This is 0.5% of the total sample available for these parameters. SpecPrint, a private firm, that has purchased the Maryland SDAT assessment records for sale and redistribution reports 195,488 Public Release Data records for Anne Arundel County on their February 20, 2012 website. IF these figures even remotely represent the status of the Countys assessable base conditions, then it can logically be projected that if this 0.5% ratio prevails throughout the Countys 195,488 records then 9,774 properties are similarly assessed. With the average of $481,200 underassessment indicated it is highly probable that Anne Arundel County could be losing at least $4,703,248,800 in assessable base each year! BALTIMORE CITY Property Address Sales Price $ 1,030,000 1,598,000 1,898,000 1,823,000 1,348,000 1,475,000 998,000 725,000 2,189,600 1,170,018 14,254,618 Assessed Value $ 448,900 938,000 840,000 1,189,333 756,667 450,000 842,800 602,000 1,803,200 832,200 8,703,100 Lost Assessable Base $ 581,000 660,000 1,058,000 633,667 591,333 1,025,000 155,200 123,000 386,400 337,818 5,551,518

1023 S. Curley Street 801 Key Highway #712 801 Key Highway #715 801 Key Highway #773 801 Key Highway #792 801 Key Highway #795 801 Key Highway #811 801 Key Highway #854 801 Key Highway # 869,870 & 871 2607 Moorings Court Totals

SDAT 2012 sales records for improved, arms length, residential property produced 164 records from which these 10 properties were randomly selected and tabulated. This is 6.1% of the total sample available for these parameters. SpecPrint, a private firm, that has purchased the Maryland SDAT assessment records for sale and redistribution reports 233,350 Public Release Data records for Baltimore City on their February 20, 2012 website. IF these figures even remotely represent the status of the Citys assessable base conditions, then it can logically be projected that even if only 1% of the Citys 233,350 records or 23,335 properties are similarly assessed; with the average of $555,161 underassessment indicated it is highly probable that Baltimore City could be losing at least $1,295,724,768 in assessable base each year! BALTIMORE COUNTY Property Address Sales Price $ 1,274,958 Assessed Value $ 778,800 Lost Assessable Base $ 503,158 17

6502 Abbey View Way

28 Caveswood Lane 4021 Hess Road 800 Hillstead Drive 12413 Hunters Glen 119 Hunts Bluff 20 Ivy Reach Court 6 Meadow Road 1010 Monaghan Court 706 Race Road Totals

1,550,000 2,200,000 1,750,000 2,200,000 945,000 1,995,000 1,700,000 1,475,000 1,240,000 16,329,958

725,700 509,800 1,507,600 2,144,300 684,800 1,674,000 1,341,800 1,227,500 862,800 11,457,100

824,300 1,690,200 242,400 55,700 260,200 321,000 358,200 247,500 377,200 4,872,858

SDAT 2012 sales records for improved, arms length, residential property produced about 1820 records from which these 10 properties were randomly selected and tabulated. This is 0.5% of the total sample available for these parameters. SpecPrint, a private firm, that has purchased the Maryland SDAT assessment records for sale and redistribution reports 285,517 Public Release Data records for Baltimore County on their February 20, 2012 website. IF these figures even remotely represent the status of the Countys assessable base conditions, then it can logically be projected that if this 0.5% ratio prevails throughout the Countys 285,517 records, then 14,276 properties are similarly assessed.; with the average of $487,286 underassessment indicated it is highly probable that Baltimore County could be losing at least $621,779,936 in assessable base each year! CALVERT COUNTY Property Address Sales Price $ 525,000 601,000 426,636 485,000 456,443 440,000 870,000 969,900 599,900 425,000 5,798,879 Assessed Value $ 393,600 446,100 364,000 458,500 434,800 399,400 418,700 727,600 551,200 375,500 4,569,400 Lost Assessable Base $ 131,400 154,900 62,636 26,500 21,643 40,600 451,300 242,300 48,700 49,500 1,229,479

3339 Cannoncade Court 277 Cove Drive 6918 Donau Court 3713 Grace Street 3181 Lawrin Court 1915 Matapeake Court 7134 Old Bayside Road 2765 Spout Lane 12017 Steven Lane 8615 Thornberry Court Totals

SDAT 2012 sales records for improved, arms length, residential property produced about 148 records from which these 10 properties were randomly selected and tabulated. This is 6.89% of the total sample available for these parameters. SpecPrint, a private firm, that has purchased the Maryland SDAT assessment records for sale and redistribution reports 39,804 Public Release Data records for Calvert County on their February 20, 2012 website.

18

IF these figures even remotely represent the status of the Countys assessable base conditions, then it can logically be projected that even if only 1% of the Countys 39,804 records or 398 properties are similarly assessed, then with the average of $122,948 underassessment indicated it is highly probable that Calvert County could be losing at least $48,933,304 in assessable base each year! CAROLINE COUNTY Property Address Sales Price $ 645,000 269,900 731,051 334,000 750,000 300,000 550,000 275,000 325,000 278,000 4,457,951 Assessed Value $ 185,600 230,300 477,800 136,500 275,600 280,100 274,000 235,600 296,200 241,400 2,633,100 Lost Assessable Base $ 459,400 39,600 253,251 197,500 474,400 19,900 276,000 39,400 28,800 36,600 1,824,851

Castle Hall Road 15375 Church Lane 7904 Clark Road 15237 Day Road 7439 Dion Road 24652 Long Branch Drive 21438 Marsh Creek Road 17799 Melville Road 23581 Thawley Road 24696 Tribbett Circle Totals

SDAT 2012 sales records for improved, arms length, residential property produced 84 records from which these 10 properties were randomly selected and tabulated. This is 11.9% of the total sample available for these parameters. SpecPrint, a private firm, that has purchased the Maryland SDAT assessment records for sale and redistribution reports 15,640 Public Release Data records for Caroline County on their February 20, 2012 website. IF these figures even remotely represent the status of the Countys assessable base conditions, then it can logically be projected that even if only 1% of the Countys 15,640 records or 156 properties are similarly assessed; then with the average of $182,485 underassessment indicated it is highly probable that Caroline County could be losing at least $28,467,660 in assessable base each year! CARROLL COUNTY Property Address Sales Price $ 499,000 515,000 499,900 480,000 660,000 615,000 560,000 Assessed Value $ 474,700 467,300 426,900 466,800 591,600 596,600 482,700 Lost Assessable Base $ 24,300 47,700 73,700 13,200 68,400 18,400 77,300 19

2222 Cherokee Drive 2227 Cherokee Drive 385 Chisled Stone Road 6823 Fox Sedge Court 5553 Livesay Drive 7307 Morgan Road 881 Moss Creek Drive

3220 Sidetracked Drive 6280 Quadratic Drive 2407 West Liberty Road Totals

745,000 584,500 850,000 6,008,400

625,600 525,600 445,300 5,103,100

119,400 58,900 404,700 905,300

SDAT 2012 sales records for improved, arms length, residential property produced 476 records from which these 10 properties were randomly selected and tabulated. This is 2.1% of the total sample available for these parameters. SpecPrint, a private firm, that has purchased the Maryland SDAT assessment records for sale and redistribution reports 63,341 Public Release Data records for Carroll County on their February 20, 2012 website. IF these figures even remotely represent the status of the countys assessable base conditions, then it can logically be projected that even if only 1% of the Countys 63,341 records or 633 properties are similarly assessed; then with the average of $90,530 underassessment indicated it is highly probable that Carroll County could be losing at least $57,305,490 in assessable base each year! CECIL COUNTY Property Address Sales Price $ 438,773 440,000 414,734 406,180 650,000 405,000 468,020 441,775 460,000 520,000 4,644,482 Assessed Value $ 387,000 375,000 349,900 293,500 605,400 300,700 409,900 390,400 331,400 468,300 3,911,500 Lost Assessable Base $ 51,773 65,000 69,834 112,680 44,600 104,300 58,120 51,375 128,600 53,700 732,982

152 Antego Drive 15 Autumn Woods Drive 533 Claiborne Road 589 Claiborne Road 38 Duck Hollow Lane Geralds Way 50 Rhodes Mountain Drive 74 Rhodes Mountain Drive 3193 Telegraph Road 394 Walnut Lane Totals

SDAT 2012 sales records for improved, arms length, residential property produced about 146 records from which these 10 properties were randomly selected and tabulated. This is 6.8% of the total sample available for these parameters. SpecPrint, a private firm, that has purchased the Maryland SDAT assessment records for sale and redistribution reports 44,315 Public Release Data records for Cecil County on their February 20, 2012 website. IF these figures even remotely represent the status of the Countys assessable base conditions, then it can logically be projected that even if only 1% of the Countys 44,315 records or 443 properties are similarly assessed; then with the average of $73,298 underassessment indicated it is highly probable that Cecil County could be losing about $32,471,014 in assessable base each year!

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CHARLES COUNTY Property Address Sales Price $ 332,000 326,000 514,820 505,000 439,900 747,287 475,000 426,080 363,000 367,740 4,496,827 Assessed Value $ 300,200 296,500 479,600 469,400 350,500 588,200 429,200 378,900 358,200 344,700 3,995,400 Lost Assessable Base $ 31,800 29,500 35,220 35,600 89,400 159,087 45,800 47,180 4,800 23,040 501,427

503 Clarks Run Road 1209 East Patuxent Drive 5575 Fish Hawk Court 6215 Hampstead Court 16956 Rivers Beach Lane 9392 Stonestreet Road 7423 Vision Court 3016 Wildflower Drive 203 Williamsburg Circle 11910 Winged Foot Court Totals

SDAT 2012 sales records for improved, arms length, residential property produced about 486 records from which these 10 properties were randomly selected and tabulated. This is 2.1% of the total sample available for these parameters. SpecPrint, a private firm, that has purchased the Maryland SDAT assessment records for sale and redistribution reports 55,221 Public Release data records for Charles County on their February 20, 2012 website. IF these figures even remotely represent the status of the Countys assessable base conditions, then it can logically be projected that even if only 1% of the Countys 55,221 records or 552 properties are similarly assessed; then with the average of $50,143 underassessment indicated it is highly probable that Charles County could be losing at least $27,678,936 in assessable base each year! DORCHESTER COUNTY Property Address Sales Price $ 325,000 455,000 475,000 350,000 340,000 780,000 579,000 350,000 670,000 350,000 4,674,000 Assessed Value $ 291,500 325,000 332,600 329,900 292,600 599,200 486,100 119,700 658,300 306,100 3,740,000 Lost Assessable Base $ 33,500 130,000 142,400 20,100 47,400 180,800 92,600 230,300 11,700 43,900 934,000 21

15 Bayview Drive 1 Court Lane 1612 Deep Point Road 1009 Hambrooks Boulevard 15 Hatsawap Road 5946 Horns Point Road 5947 Horns Point Road Lewis Road 15 Manito Drive 15 Railroad Avenue Totals

SDAT 2012 sales records for improved, arms length, residential property produced about 84 records from which these 10 properties were randomly selected and tabulated. This is 11.9% of the total sample available for these parameters. SpecPrint, a private firm, that has purchased the Maryland SDAT assessment records for sale and redistribution reports 19,929 Public Release Data records for Dorchester County on their February 20, 2012 website. IF these figures even remotely represent the status of the Countys assessable base conditions, then it can logically be projected that even if only 1% of the Countys 19,929 records or 199 properties are similarly assessed; then with the average of $93,400 underassessment indicated it is highly probable that Dorchester County could be losing at least $18,586,600 in assessable base each year! FREDERICK COUNTY Property Address Sales Price $ 660,000 525,000 435,000 460,000 617,500 530,000 505,000 450,000 515,000 700,000 5,397,500 Assessed Value $ 539,200 459,400 421,700 358,100 518,000 487,000 412,700 434,700 368,800 538,500 4,538,100 Lost Assessable Base $ 120,800 65,600 13,300 101,900 99,500 43,000 92,300 15,300 146,200 161,500 859,400

9132 Belvedere Drive 4005 Belvedere Lane 4131 Brushfield Drive 6826 Cherry Tree Court 5204 Fairgreene Way 11664 Fairmount Place 11113 Innsbrook Way 4022 Lomar Drive 10406 Regina Court 9100 Whitmore Lane Totals

SDAT 2012 sales records for improved, arms length, residential property produced about 812 records from which these 10 properties were randomly selected and tabulated. This is 1.2% of the total sample available for these parameters. SpecPrint, a private firm, that has purchased the Maryland SDAT assessment records for sale and redistribution reports 86,085 Public Release Data records for Frederick County on their February 20, 2012 website. IF these figures even remotely represent the status of the countys assessable base conditions, then it can logically be projected that even if only 1% of the Countys 86,085 records or 861 properties are similarly assessed; then with the average of $85,940 underassessment indicated it is highly probable that Frederick County could be losing at least $73,994,340 in assessable base each year!

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GARRETT COUNTY Property Address Sales Price $ 800,000 695,000 1,849,000 610,000 1,325,000 698,000 522,000 660,000 557,000 870,000 13,284,000 Assessed Value $ 304,400 660,000 1,053,500 575,600 1,178,470 572,900 475,900 574,000 504,300 794,500 6,693,570 Lost Assessable Base $ 495,600 35,000 795,500 34,400 146,530 125,100 46,100 86,000 53,500 75,500 6,590,430

553 Garretts Road 1297 Harvey Peninsula Road 1931 Lake Shore Drive 187 Markwood Drive 2359 Paradise Point Road 865 Penn Point Road 106 Red Brush Drive 1929 Rock Lodge Road 185 Ruta Lane 3415 Turkey Point Road Totals

SDAT 2012 sales records for improved, arms length, residential property produced about 140 records from which these 10 properties were randomly selected and tabulated. This is 7.1% of the total sample available for these parameters. SpecPrint, a private firm, that has purchased the Maryland SDAT assessment records for sale and redistribution reports 27,366 Public Release Data records for Garrett County on their February 20, 2012 website. IF these figures even remotely represent the status of the Countys assessable base conditions, then it can logically be projected that even if only 1% of the Countys 27,366 records or 274 properties are similarly assessed; then with the average of $659,043 underassessment indicated it is highly probable that Garrett County could be losing at least $180,577,780 in assessable base each year! HARFORD COUNTY Property Address Sales Price $ 620,000 415,000 425,000 590,000 438,000 415,000 446,000 629,900 545,000 443,500 4,967,400 Assessed Value $ 564,300 359,600 357,800 513,700 372,600 354,600 364,800 567,900 469,800 392,900 4,318,000 Lost Assessable Base $ 55,700 55,400 67,200 76,300 65,400 60,400 81,200 62,000 75,200 50,600 649,400 23

1603 Copper Gate Court 100 Deputed Testamony Place 611 Edinshall Trail 1407 Hidden Valley Court 1944 Medallion Court 1016 Milchling Drive 2501 Putnam Road 1160 Sparrow Mill Way 402 Teresa Marie Court 1014 Young Avenue Totals

SDAT 2012 sales records for improved, arms length, residential property produced 764 records from which these 10 properties were randomly selected and tabulated. This is 1.3% of the total sample available for these parameters. SpecPrint, a private firm, that has purchased the Maryland SDAT assessment records for sale and redistribution reports 88,753 Public Release Data records for Harford County on their February 20, 2012 website. IF these figures even remotely represent the status of the Countys assessable base conditions, then it can logically be projected that even if only 1% of the Countys 88,753 records or 888 properties are similarly assessed; with the average of $64,940 underassessment indicated it is highly probable that Harford County could be losing at least $57,666,720 in assessable base each year! HOWARD COUNTY Property Address 3788 Church Road 5154 Good Memory Lane 13779 Lakeside Drive 6199 Lawyers Hill Road 2950 New Rover Road 6517 Ocean Shore Lane 12355 Pleasant View Drive 9705 Starling Road 13609 West Gilbride Lane 3950 West White Rose Way Totals Sales Price $ 510,000 615,185 1,462,500 550,000 825,000 775,000 800,000 590,000 1,700,000 1,867,500 9,695,185 Assessed Value $ 424,000 576,100 1,021,400 377,600 794,700 679,000 715,600 535,600 1,191,900 1,345,700 7,661,600 Lost Assessable Base $ 86,000 39,085 441,100 172,400 30,300 96,000 84,400 54,400 508,100 521,800 2,033,585

SDAT 2012 sales records for improved, arms length, residential property produced about 812 records from which these 10 properties were randomly selected and tabulated. This is 1.2% of the total sample available for these parameters. SpecPrint, a private firm, that has purchased the Maryland SDAT assessment records for sale and redistribution reports 92,131 Public Release Data records for Howard County on their February 20, 2012 website. IF these figures even remotely represent the status of the Countys assessable base conditions, then it can logically be projected that even if only 1% of the Countys 92,131 records or 921 properties are similarly assessed; then with the average of $203,359 underassessment indicated it is highly probable that Howard County could be losing about $187,293,639 in assessable base each year! KENT COUNTY Property Address Sales Price $ 1,696,590 650,000 Assessed Value $ 258,500 545,800 Lost Assessable Base $ 1,438,090 104,200 24

11925 Chesterville Road 22430 Creekwood Terrace

13131 Davis Road 13950 Eagles Nest Farm Lane 31285 Georgetown Cemetery Road 11128 Green Cove Drive 14010 Hilltop Road 12334 Kennedyville Road 8719 Park Drive 12855 Scotts Lane Totals

1,700,000 650,000 2,224,235 1,625,000 825,000 2,175,000 675,000 950,000 13,170,825

266,700 329,400 874,500 1,115,600 571,400 314,300 645,700 661,300 5,583,200

1,433,300 320,600 1,349,735 510,000 253,600 1,860,700 29,300 288,700 7,587,625

SDAT 2012 sales records for improved, arms length, residential property produced about 72 records from which these 10 properties were randomly selected and tabulated. This is 13.9% of the total sample available for these parameters. SpecPrint, a private firm, that has purchased the Maryland SDAT assessment records for sale and redistribution reports 12,753 Public Release Data records for Kent County on their February 20, 2012 website. IF these figures even remotely represent the status of the Countys assessable base conditions, then it can logically be projected that even if only 1% of the Countys 12,753 records or 128 properties are similarly assessed; with the average of $758,763 underassessment indicated it is highly probable that Kent County could be losing at least $97,121,664 in assessable base each year! MONTGOMERY COUNTY Property Address Sales Price $ 620,000 785,000 775,000 732,000 850,000 810,000 785,000 635,000 1,628,000 799,000 8,419,000 Assessed Value $ 561,500 732,600 728,100 696,100 832,600 765,000 715,300 514,400 1,407,800 726,700 7,680,100 Lost Assessable Base $ 58,500 52,400 46,900 35,900 17,400 45,000 69,700 120,600 220,200 70,300 738,900

14304 Brass Wheel Road 4109 Everett Street 13320 Foxden Drive 8231 Inverness Hollow Terrace 336 Oak Knoll Drive 5150 Massachusetts Avenue 9101 Sligo Creek Parkway 4612 Sunflower Drive 11407 Swains Creek Court 307 Tschiffely Square Road Totals

SDAT 2012 sales records for improved, arms length, residential property produced about 572 records from which these 10 properties were randomly selected and tabulated. This is 1.7% of the total sample available for these parameters. SpecPrint, a private firm, that has purchased the Maryland SDAT assessment records for sale and redistribution reports 311,745 Public Release Data records for Montgomery County on their February 20, 2012 website. IF these figures even remotely represent the status of the Countys assessable base conditions, then it can logically be projected that even if only 1% of the Countys 311,745 records or 25

3,117 properties are similarly assessed; then with the average of $73,890 underassessment indicated it is highly probable that Montgomery County could be losing at least $230,315,130 in assessable base each year! PRINCE GEORGES COUNTY Property Address 1723 Albert Drive 4016 Danville Drive 14414 Dolbrook Lane 1607 Fairlakes Place 7811 Jacobs Drive 408 Jones Falls Court 12702 Knowledge Lane 9909 Pitman Avenue 3046 Powder Mill Road 707 Yarrow Court Totals Sales Price $ 312,500 375,000 290,000 265,000 250,000 320,000 260,000 300,000 350,000 376,990 3,099,490 Assessed Value $ 248,400 289,700 277,600 252,700 206,500 303,300 201,000 265,300 315,700 358,660 2,718,860 Lost Assessable Base $ 64,100 85,300 12,400 12,300 43,500 16,700 59,000 34,700 34,300 18,390 380,630

SDAT 2012 sales records for improved, arms length, residential property produced about 332 records from which these 10 properties were randomly selected and tabulated. This is 3.0% of the total sample available for these parameters. SpecPrint, a private firm, that has purchased the Maryland SDAT assessment records for sale and redistribution reports 265,801 Public Release Data records for Prince Georges County on their February 20, 2012 website. IF these figures even remotely represent the status of the Countys assessable base conditions, then it can logically be projected that even if only 1% of the Countys 265,801 records or 2,658 properties are similarly assessed; then with the average of $38,063 underassessment indicated it is highly probable that Prince Georges County could be losing at least $101,171,454 in assessable base each year! QUEEN ANNES COUNTY Property Address 1606 Calvert Road 236 Evelyne Street 240 Evelyne Street 17 Greenwood Shoals 281 Harvest Court 322 Keene Farm Lane 408 Macum Creek Drive 214 Mattapex Plantation Lane 1560 Price Station Road 481 Willow Branch Road Totals Sales Price $ 580,000 552,250 576,784 580,000 785,000 1,700,000 595,000 2,775,000 1,030,000 560,000 9,734,034 Assessed Value $ 369,800 517,200 510,500 449,600 778,000 1,694,400 480,500 2,682,500 138,200 520,300 8,191,000 ` Lost Assessable Base $ 210,200 35,050 6,284 130,400 7,000 5,600 134,500 92,500 891,800 39,700 1,543,034 26

SDAT 2012 sales records for improved, arms length, residential property produced about 144 records from which these 10 properties were randomly selected and tabulated. This is 6.9% of the total sample available for these parameters. SpecPrint, a private firm, that has purchased the Maryland SDAT assessment records for sale and redistribution reports 23,766 Public Release Data records for Queen Annes County on their February 20, 2012 website. IF these figures even remotely represent the status of the Countys assessable base conditions, then it can logically be projected that even if only 1% of the Countys 23,766 records or 238 properties are similarly assessed then with the average of $154,303 underassessment indicated it is highly probable that Queen Annes County could be losing at least $36,724,114 in assessable base each year! SAINT MARYS COUNTY Property Address Sales Price $ 454,000 410,000 430,000 421,534 415,000 445,000 403,000 451,000 407,000 519,900 4,356,434 Assessed Value $ 427,000 396,000 378,300 402,900 361,500 419,200 334,900 430,600 333,600 475,000 3,959,000 Lost Assessable Base $ 27,000 14,000 51,700 18,634 53,500 25,800 68,100 20,400 73,400 44,900 397,434

49700 Airedele Road 24441 Bateman Court 23564 Belmar Drive 39814 Claires Drive 47935 Fordwick Way 21822 Hazeltine Court 26283 Jesse Jane Place 25080 McIntosh Road 41415 West Citation Street 17651 Whitestone Drive Totals

SDAT 2012 sales records for improved, arms length, residential property produced about 284 records from which these 10 properties were randomly selected and tabulated. This is 3.5% of the total sample available for these parameters. SpecPrint, a private firm, that has purchased the Maryland SDAT assessment records for sale and redistribution reports 42,392 Public Release Data records for Saint Marys County on their February 20, 2012 website. IF these figures even remotely represent the status of the Countys assessable base conditions, then it can logically be projected that even if only 1% of the Countys 42,392 records or 424 properties are similarly assessed then with the average of $39,743 underassessment indicated it is highly probable that Saint Marys County could be losing at least $16,851,032 in assessable base each year!

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SOMERSET COUNTY Property Address 20971 Caleb Jones Road 13152 Hop Fisher Lane 31700 Mitchell Road 12300 Palmetto Church Road 32739 Peach Orchard Road 7510 Pocomoke River Road 13441 Pruitt Lane 10860 Stewart Neck Road 27074 St. Peters Church Road 32715 West Post Office Road Totals Sales Price $ 230,000 219,000 885,000 1,500,000 860,000 229,000 365,000 265,000 232,000 260,000 5,045,000 Assessed Value $ 86,300 163,200 304,400 744,300 489,400 205,900 311,500 212,600 153,400 70,600 2,741,600 Lost Assessable Base $ 143,700 55,800 580,600 755,700 370,600 23,100 53,500 52,400 78,600 189,400 2,303,400

SDAT 2012 sales records for improved, arms length, residential property produced about 72 records from which these 10 properties were randomly selected and tabulated. This is 13.9% of the total sample available for these parameters. SpecPrint, a private firm, that has purchased the Maryland SDAT assessment records for sale and redistribution reports 16,167 Public Release Data records for Somerset County on their February 20, 2012 website. IF these figures even remotely represent the status of the Countys assessable base conditions, then it can logically be projected that even if only 1% of the Countys 16,167 records or 162 properties are similarly assessed. With the average of $230,340 underassessment indicated it is highly probable that Somerset County could be losing at least $37,315,080 in assessable base each year! TALBOT COUNTY Property Address Sales Price $ 2,078,300 6,000,000 350,000 370,000 525,000 400,000 310,000 443,500 1,687,500 495,000 12,659,300 Assessed Value $ 2,054,100 5,867,400 341,800 331,900 471,400 343,200 200,000 437,000 1,348,800 452,300 11,847,900 Lost Assessable Base $ 24,500 132,600 8,200 38,100 53,600 56,800 110,000 6,000 338,700 42,700 811,400

8990 Bozman Neavitt Road 26890 Double Mills Road 10640 Hiners Lane 1961 Ocean Gateway 28719 Outram Street 9213 Rockcliff Drive 407 S. Aurora Street 8678 Spur Lane 27638 Villa Road 609 S. Washington Street Totals

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SDAT 2012 sales records for improved, arms length, residential property produced 142 records from which these 10 properties were randomly selected and tabulated. This is 7.0% of the total sample available for these parameters. SpecPrint, a private firm, that has purchased the Maryland SDAT assessment records for sale and redistribution reports 19,700 Public Release Data records for Talbot County on their February 20, 2012 website. IF these figures even remotely represent the status of the Countys assessable base conditions, then it can logically be projected that even if only 1% of the Countys 19,700 records or 197 properties are similarly assessed; then with the average of $81,400 underassessment indicated it is highly probable that Talbot County could be losing at least $15,984,580 in assessable base each year! WASHINGTON COUNTY Property Address Sales Price $ 310,000 284,000 315,000 900,000 425,000 750,000 450,000 421,640 297,450 620,000 4,773,090 Assessed Value $ 281,200 271,500 303,000 457,900 118,100 353,700 194,600 389,400 260,400 590,700 3,220,500 Lost Assessable Base $ 28,800 12,500 12,000 442,100 306,900 396,300 255,400 32,240 37,050 29,300 1,552,590

13019 Cathedral Avenue 22330 Durberry Road 19238 Jamestown Drive 12019 Kemps Mill Road National Pike 9750 Old National Pike 12435 Pleasant Valley Road 10110 Roulette Drive 18103 Westbury Court 9008 Wildberry Court Totals

SDAT 2012 sales records for improved, arms length, residential property produced about 284 records from which these 10 properties were randomly selected and tabulated. This is 3.5% of the total sample available for these parameters. SpecPrint, a private firm, that has purchased the Maryland SDAT assessment records for sale and redistribution reports 55,404 Public Release Data records for Washington County on their February 20, 2012 website. IF these figures even remotely represent the status of the Countys assessable base conditions, then it can logically be projected that even if only 1% of the Countys 55,404 records or 554 properties are similarly assessed; then with the average of $155,259 underassessment indicated it is highly probable that Washington County could be losing about $86,013,486 in assessable base each year! WICOMICO COUNTY Property Address 215 N. Clairmont Drive 25323 fairway Drive Sales Price $ 220,000 228,000 Assessed Value $ 164,500 175,300 Lost Assessable Base $ 55,500 52,700 29

34377 Fox Hound Court 27206 Loch Lomond Court 8574 Middlesex Drive 5928 Morgans Way 3805 Old Post Road 405 Pinehurst Avenue 617 Ridge Road 6284 Strawberry Way Totals

250,000 319,000 225,000 340,000 344,500 273,000 362,500 298,800 2,860,800

242,900 269,100 160,700 234,100 255,400 190,900 350,600 233,300 2,276,800

7.100 49,900 64,300 105,900 89,100 82,100 11,900 65,000 584,000

SDAT 2012 sales records for improved, arms length, residential property produced 236 records from which these 10 properties were randomly selected and tabulated. This is 4.2% of the total sample available for these parameters. SpecPrint, a private firm, that has purchased the Maryland SDAT assessment records for sale and redistribution reports 43,392 Public Release Data records for Wicomico County on their February 20, 2012 website. IF these figures even remotely represent the status of the Countys assessable base conditions, then it can logically be projected that even if only 1% of the Countys 43,392 records or 434 properties are similarly assessed; then with the average of $58,400 underassessment indicated it is highly probable that Wicomico County could be losing at least $25,345,600 in assessable base each year! WORCESTOR COUNTY Property Address Sales Price $ 1,067,000 350,000 335,000 405,000 325,000 302,500 430,000 308,500 699,000 745,000 4,967,000 Assessed Value $ 850,000 265,600 284,100 373,000 288,700 240,000 377,000 305,000 697,000 602,200 4,282,600 Lost Assessable Base $ 217,000 84,400 50,900 32,000 36,300 62,500 53,000 3,500 2,000 142,800 684,400

6305 Atlantic Avenue 526 Cedar Hall Road 11500 Coastal Highway 4601B Coastal Highway 13 Clubhouse Drive 9823 Golf Course Road 22 Windward Court 121 70th Street 121 81st Street 2 48th Street Totals

SDAT 2012 sales records for improved, arms length, residential property produced about 476 records from which these 10 properties were randomly selected and tabulated. This is 2.1% of the total sample available for these parameters. SpecPrint, a private firm, that has purchased the Maryland SDAT assessment records for sale and redistribution reports 59,791 Public Release Data records for Worcestor County on their February 20, 2012 website. IF these figures even remotely represent the status of the Countys assessable base conditions, then it can logically be projected that even if only 1% of the Countys 59,791 records or 30

598 properties are similarly assessed; with the average of $68,440 underassessment indicated it is highly probable that Worcestor County could be losing at least $40,927,120 in assessable base each year! PAST LEGISLATIVE EFFORTS FORMER SB 395, 458, 498 & HB 204 & 881 Task Force to Review Property Tax Assessment Procedure and the Tax Assessment Appeals Process This bill has been submitted numerous times over the past eight years without ever being allowed out of committee. Somehow, we have to convince the public and our legislators that there is nothing to fear, that the cost of this study by a truly interested group of volunteers looking to solve a growing problem can only lead to the production of valid ideas that will benefit both the State and its taxpayers. It is a type of reform and maybe the word Reform or the idea of reforming the flawed system needs to be introduced. In the years that this measure has been introduced the only arguments against this study ever presented by the Department of Assessments and Taxation (SDAT) and its lobbyist have been (1) size of committee, (2) time it would take to call the committee roll, (3) SDAT is doing a wonderful job and the study is unnecessary and (4) the Committee is larger than the Mandel Commission. Not once have we heard that it would be counterproductive or not likely to produce positive results. That being the case, why oppose it and what are they afraid of ???? How can we sell the fact that the SDAT has not offered any real negative arguments? Changes must be made to give the next version some new material, ideas, approach, and appeal. It is a difficult and dry subject to try to sell but somehow we need to convince the legislature and the public that it is in everyones best interest to study this situation and come up with a methodology of deriving assessments that are automatic, consistent with current fair market value, equal, fair, without personal subjectivity, uniform, and unbiased. We have repeatedly offered comments which may help change some thoughts and wording enough to generate a new look and provide interest to our most supportive Harford County delegation and other legislators who should be invited to co-sponsor. In the past, we have had the support of Delegates Dwyer, Fisher, Smigiel, Stein, Stocksdale, Szelgia, Kach as well as Senators Pipkin and Peters. We need to convince others to step up to the plate for Marylands taxpayers to address this issue. The committee size having one member of SDAT and one citizen from each of the 24 state jurisdictions insures statewide as well as bipartisan representation with a number of the specific disciplines required assures good diversification for an excellent potential of stellar technical input from these especially qualified volunteers. Such a blue ribbon panel selected by each City/County delegation can only result in a task force that should quickly produce a well thought out and well received end product at virtually no cost. The cost benefit ratio to the State and its taxpayers would be very high. Contrary to SDAT's arguments that it is doing is doing a good job, its own figures showed last year that assessment appeals reached a record high when over 60,000 appeals were recorded. This year the number of appeals has already exceeded last year according to news reports. The system is flawed and therefore SDAT is not doing a good job. A task force of informed, interested volunteers could easily develop a study with results that could produce a system that cost effectively sets assessments fairly, uniformly, equitably, with considerable cost savings to the State and the taxpayer. We have long advocated the KISS principle, KEEP IT SIMPLE, STUPID A simple sales/index system is one possible solution that meets such criteria by setting all property assessments based on actual fair market value sales, thus most likely increasing total assessment values based on data we 31

have, that could allow the reduction of tax rates while producing lower individual taxes without decreasing overall revenues. The sales/index system we advocate would establish all property values based on the latest actual fair market sale price. (i.e. willing buyer, willing seller concept; no sweetheart deals). A computerized program would set a base index value at the date of sale using currently available area index values set by the Case Shiller Home Price Index formula. By contracting with the Case Shiller organization updated index value/assessed values would be readily available to meet current assessment periods and needs. Assessments would be current at all times, actually available on a daily basis, eliminating the current three year cycle. Case Shiller currently has four statistical areas of composite values for Baltimore-Towson, MD.; Bethesda Frederick-Rockville, MD.; Cumberland-WV, Hagerstown, MD.-Martinsburg, WV. and Salisbury, MD. available. These appear to be geographically representative of the State. We are told these could be easily expanded. The company would most likely entertain a working relationship with the State to supply whatever services were desired. For those properties without sales after a certain date, say 1990, the State could establish the property base value at the year 2000 i.e. five years before the big housing bubble with an index value attached to said property value equal to that date which can then be updated using the Case Shiller formula to set future assessment period values. By negotiating with Case Shiller to establish a working program and service to provide more comprehensive statistical index values from all Maryland properties expanded from the four areas Case Shiller now has, to the current 9 geographic areas currently employed by the Department of Assessments and Taxation and depicted in the CAMA (Computer Assisted Mass Appraisal) manual, the system would mesh well with currently used data, methodologies, and systems. While such a sales/index system would remove the current individual assessment office operating rules with their associated subjectivity and the inequality, non-uniformity, and unfairness from the current assessment process that is not commensurate with current market values and conditions, there could still be some initial discontent among taxpayers. Such discontent could be overcome by allowing a six-month appeal period where any taxpayer could appeal their assessment base value before the currently established three level appeals system, or by the PTAAB boards only, eliminating the creator of the problem, the assessor. Decisions could be made final allowing the value to become the property base value subject to future adjustments by the automated Case Shiller index system We feel this sales/index system has numerous advantages. It is solely predicated on actual market values that are highly transparent to the taxpayer as well as to the government so that each and every entity has a constant picture of real estate fluctuations upon which to base personal as well as government projections of costs and revenues. All subjectivity is eliminated. Current law states that the Director of Assessments and Taxation must set assessments uniformly. This has not been done and today is not being done as witnessed by a 2010 average reduction in State assessments of 19.7% to only one-third of Maryland property taxpayers. The Department is understaffed. Incompetent personnel exist throughout the system. They are not maintaining sales, permit, and improvement data to properly reflect market conditions and assessments especially the MVI Market Value Index in its cumbersome labor-intensive system. Physical inspections are not being completed as required by law. Assessments are being developed based on questionable construction or reproduction costs and then being defended by the State through comparison to sales data. Said sales data is the ONLY value allowed to be presented by the taxpayer in an appeal. Common sense says base the whole system on actual fair market value sales.

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One of the biggest advantages to an automated system such as we advocate would be the fact that staff can be reduced. Most of the 232 assessor could be eliminated saving $15 million annually in salaries alone. Supervisor staff could also be reduced to about three per CAMA area for a total of 27 for another $2 million in annual salaries savings. Support facilities and entities could be reduced or eliminated for additional savings. In addition, the Property Tax Assessment Appeals Boards (PTAAB) could be eliminated since the sales based property value is least likely to be challenged or argued if it meets the fair market value definition of willing seller; willing buyer. In all probability, much of the residential load of the Tax Court could also be eliminated or at least reduced due to the likelihood of reduced appeals. We feel certain there are other viable ideas out there that a properly chosen group of volunteers could bring forth. How can we convince the legislature to give us the opportunity? What is there to lose? FORMER SB 482 -- State Commission of Real Estate Appraisers and Home Inspectors This bill has only been submitted one time and was ably supported by the Real Estate Appraisers but strongly opposed by SDAT. The SDAT argued that they were not providing appraisals and therefore did not need the credentials of an appraiser. We argued they did in order to produce good viable market values or assessments upon which our taxes are based. Even though the SDAT argued they did not perform appraisals, each and every time they testify against taxpayers they use the term appraisal and label their printed documentation as an appraisal. SDAT brochures are replete which the terms appraiser and appraisal reinforcing our position that SDAT is attempting to sell the idea that the staff is composed of appraisers performing appraisals without having the credentials to do so as is mandated for Licensed Real Estate Appraisers. The point remains that the taxpayer is almost forced to hire a licensed Real Estate Appraiser to establish his/her market value when appealing an assessment to the second or third appeal level. Costs start at about $1000 per case. It is totally unfair that an assessor with education and experience that would not qualify him/her for state licensure as an appraiser is accepted as an equal in the eyes of the PTAAB boards and Tax Court. The bill should be re-introduced and the economic impact on the taxpayer both from the standpoint of preparation and appearance time, effort, and cost of appeals, cost of taxes generated from an unfair assessment, and the cost of hiring a professional to represent the taxpayer against an unequally qualified assessor that caused the problem needs to be addressed. We recently had a Property Tax Assessment appeals hearing on our Eastern Shore summer home property. Because of our activism our hearings are normally attended by a high-ranking Baltimore based supervisor or the PTAAB Administrator from Hagerstown. Fortunately, for us at this hearing Kent Finkelsen was in attendance. During the course of the hearing the assessor objected to the fact that our paid licensed Real Estate Appraiser had not furnished her (the assessor) with copies of his comparable sales 10 days in advance of the hearing. The PTAAB board was in the process of accepting her objection when we voiced the opinion that such presubmission of comparables ONLY applies to the Tax Court. Mr. Finkelsen intervened and confirmed our premise. A lesser informed taxpayer would have been steamrollered over by this incompetent assessor and Board who do not even know their own rules and regulations. Further, into our presentation we ran into a situation where value adjustments to our property allowed for the past 40 years, if properly considered now and allowed would individually add to 100%. However, this assessor could not comprehend how their multiple adjustments are calculated. We asked if she where to shop during a sale offering a 50% plus 50% off would she really expect to get 100% reduction or the correct 75%. She and the Board were of the opinion that 100% was correct 33

and since our adjustments would add to 100%, they could not allow such adjustments. They failed to understand that properly applied our adjustment would calculate to about 74% not 100%. Thats the stupidity we are up against and the result was our values set by the assessor were once again affirmed by the Board. Our appraiser had comparables that showed our value to be 1/2 the assessors value. The Tax Court ultimately reversed the PTAAB board reducing our property value by nearly 50%, close to its actual value. We need assessors who can do simple math. We need better qualified assessors and Board members. FORMER HB 1519 -- Computer Assisted Mass Appraisal System Performance Audit Ms. McComas and others introduced this bill. SDAT took the position that the audit was unnecessary since they are doing a good job and they are audited by the legislature with the last audit scheduled for the summer of 2009 that to date we have not been able to find. In addition, the SDAT started in January, 2009 using a newly updated version of CAMA. No public input was provided that we know of. We have seen no apparent changes in the published data and certainly the results of assessments increasing 40 to 50% where market conditions show market values decreasing 40 to 50% do not instill any faith or confidence in the new system. Their website contains CAMA information which is dated between 2001 and 2005 without current information. This is incredulous but typifies the arrogance and disdain the SDAT shows toward the average taxpayer. It is typical of the leadership as well as the rank and file. We need accountability and transparency. We have reports from an individual we believe to be an insider of the SDAT beauracracy who reports to us that the new system and the Department is in shambles. A meeting with a former director of SDAT confirms this premise. FORMER SB 724 -- Bill of Rights for Taxpayers The rights of taxpayers appealing assessments are being trampled every day. Many so-called rules that the taxpayer is being subjected to are unpublished and vary from jurisdiction to jurisdiction or case by case. For instance, Harford County has a hand written notice in its waiting room stating hearings are limited to 30 minutes. There is no limit published in the State procedure manuals or brochures. Other jurisdictions give unlimited hearing time. Prior to our recent PTAAB hearing we requested in writing and received written confirmation for 90 minutes for our portion of our two hearings. Upon arrival at the Courthouse, the posted schedule listed each of our two hearing for one half hour each. Needless to say, we did not get our full hearing and the result was no relief. Recording of assessor and PTAAB hearings is an unpublished rule left to the discretion of the PTAAB chairman or assessor. Since the dismissal of our Harford County case by now resigned PTAAB Chairman Stephen Lutche for our insistence on being allowed to record our hearing, we note that the word has now been passed to other jurisdictions to include words in the letter of hearing schedule notification to the taxpayer that Although there is no requirement to allow you to record the hearings, it is at the discretion of the Local Board. In all of the years, we have been appealing our assessments, notifying the Board of our intention to record, and then doing so with nary a word ever being said, this is the first time this information is showing up. The taxpayer should have a firm set of rights given him before each and every hearing; they are supposedly working for us. Recording of hearings is mandated by the Tax Court so the taxpayer is precluded from doing so. If it is important for the Tax Court to record, why is it not just as important for the taxpayer to do so at the other levels of appeal? The taxpayer can purchase a transcript of the Tax Court hearing or a copy of the tape for $10.00 The recording of the assessor or PTAAB hearing has no legal value since each new appeal is de novo or starting anew, The taxpayer is generally representing himself, does not take short hand, cannot write notes as fast as the parties are testifying and therefore the recording becomes a valuable learning tool to see where the weakness are in the arguments to better prepare for the next 34

appeal. This bill needs to be re-introduced to set forth those rights or included in the task force bill. The Right to Record bill sailed through the Senate in a previous session but failed in the last session. To avoid the previous Senate passage action by the House the SDAT lobbyist quickly passed the word that the Department would allow recording of hearings by the taxpayer at taxpayer expense. They did not want that bill to become law and they succeeded. So far we have not been stopped from recording but in one County where we did record in previous years we now have a formal pronouncement made by the Board Chair saying we will be allowed to record if it does not interfere with the Hearing FORMER SB 190 Senior Property Tax Relief Over the years, various local bills have been introduced to provide senior citizens with some property tax relief. None has ever progressed very far. In todays world where millions of taxpayers have over reached in their home purchases and are now exacerbating the housing market failure with their myriad of foreclosures, sight is being lost on the aging population faced with a failing economy, shrinking investments and home values, rising medical costs and shrinking social security benefits. There are an increasing number of senior citizens losing the family farm and homes because they cannot meet rising taxes due to increased assessments that fail to match decreased property values. Five states exempt seniors from payment of any property tax after age 80 and residency in the same home after a specific time period. It is time for Maryland to do the same. This bill should be re-introduced as a statewide measure or added to the task force charge. FORMER SB Property Tax Appeals Ombudsman Based on our jaded experiences with the property tax/assessment appeals system we would rate the overall success of the system as questionable. From experts we have hired to assist us to the hundreds of fellow taxpayers that support our organization and share their horror stories with us, we can only conclude that the system is so unfair and cumbersome that the actual numbers of appeals is kept well below what statistically would reveal a much higher level of dissatisfaction. This dissatisfaction does not get relieved because the taxpayer fails to appeal because they know or perceive his/her efforts will be wasted. Our experiences are certainly in that ballpark. An ombudsman as a truly impartial source of possible relief without the cumbersome bureaucracy and red tape would go a long way toward taxpayer relief. The total incompetency we have cited herein astounds competent appraisers, news reporters and others who have participated in or are familiar with our cases via their attendance. But where does the taxpayer go when confronted with layer after layer of such incompetence? Maybe an ombudsman is the answer .FORMER SB 215 & HB 789 Internet Access to Property Worksheets To properly prepare for and have any hope of success in an assessment appeal requires a lot of time and effort. The average taxpayer does not possess either and the SDAT knows that. It purposely makes the process cumbersome and difficult to discourage taxpayer appeals. More importantly the average taxpayer does not have the skill to obtain comparable sales data to fight the system. Once an appeal is filed, the assessment office normally sends the appellant an Area Sales Listing. This a hodge-podge list of about thirty properties that have sold within the jurisdiction in the past year. They may range from a trailer to a McMansion and may or may not contain properties similar or comparable to the taxpayers. The taxpayer may find a similar property in the list or may find comparables in the papers, real estate ads or from a realtor. But to find the details of the comparable to see if it contains the same construction, number of rooms, square footage and amenities as the taxpayers one must obtain the comparable worksheet. This can only be done after filing an appeal. SDAT has all of this information in its computer data base. It is public 35

information that is readily available for a fee if you file an appeal and request the data. It should be available online at no cost to the taxpayer When this bill was last heard, SDAT Director Robert Young blatantly testified it was inappropriate to place these records in the public purview especially at no cost. He made this argument stating he was charged with protecting the taxpayers right to privacy. We question how he could say this with a straight face when SDAT has sold these very records to a private firm (SpecPrint) who markets them at a profit to anyone with $115 to $225 to purchase said records for any of Maryland s 24 jurisdictions. Young also testified it would take Towson State, his computer source, $240,000 (Senate figure) or $940,000 (House figure) to develop a search engine to allow taxpayers to find the comparables they seek. This is an outright lie as was testified to by a private entrepreneur who did the exact same procedure for his business for a cost less than $100,000. We question all of the figures since SDAT already has such a search capability already active in its system that all of its assessors use to locate the exact same property worksheets for updating, comparison for appeal testimony and discussion with taxpayers at hearings. This bill is a vital tool the taxpayer needs to have access to if the present assessment and appeals system is to remain. FORMER SB Sufficient Notice of Appeal We have experienced difficulties with appeal schedules because SDAT apparently does not have any specific notification time allowed between the date of notice of an appeal and the actual appeal hearing. Recently we received an assessor appeal hearing notice dated July 5 with a scheduled hearing date of July 12, a mere one week notice by said dates. However, the notice was not postmarked until July 7. We spend our summers at our summer home on the Eastern Shore. Our mail is forwarded daily. That notice was processed by the Central Forwarding Office on July 13, the day after the scheduled hearing We received the notice on Saturday July 16th Even if we would have had a direct mailing overnight we would have only had four days notice of and time to prepare for said hearing. Two of those days in this case were on a weekend. The Assessment Supervisor informed us that they did not mail the notice until JULY 12 THE DATE OF THE HEARING!. When we called the Assessment Office we fully expected to be told that sufficient notice had been given and since we failed to show for our hearing the case would be dismissed. Since the Assessment Office thought they had not mailed the notice until the date of the hearing they granted us a new hearing date. The fact remains that they have no consistency and can set any schedule they care to. We have encountered a negative response in the past when given short notice of a hearing that prevented us from meeting the State schedule along with strong resistance toward allowing a change. We have experienced notices with schedules ranging from one week to over one month. There is no consistency. We suggest that a bill be introduced setting a minimum of 30 days after receipt of a hearing notice for the hearing date The bill should also address the fact that SDAT is grossly overburdened with appeals. This has resulted in the overlapping of cases in the appeals process. For instance, we were in the process of 2010 appeals just concluding the second level PTAAB hearing The results were unsatisfactory so we filed an appeal with the Tax Court. So much time had elapsed due to SDAT case load that our assessor level hearing for 2011 on the same property was scheduled. This meant, since SDAT would not postpone the 2011 hearing that we could arguing a property value in 2011 that would be change by the tax Court when it heard the 2010 appeal. The law should require SDAT to allow a taxpayer to pursue all three appeals levels for a given year BEFORE beginning an appeal process for a following year.

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NOTEWORTHY NEWS ITEMS Following are snippets of news items highlighting years of mismanagement by the Maryland Department of Assessments and Taxation. These items document decades of incompetent assessment derivation, record keeping, credit application, disdain for the taxpayer, and fair market evaluation of numerous properties resulting in the loss of millions of dollars in tax revenues. 2/13/91 MD. eyes $25 appeals fee on property assessments Schaeffer administration at request of Craig C. Biggs, Administrator of PTAAB boards, tries to charge taxpayers $25 who appeal property assessments, John W. Frece, M. Don Thompson, Baltimore Sun Advice on how to appeal your property tax assessment early grass roots efforts to combat the failing assessment and appeals system; formation of Property Taxpayers United now Maryland Taxpayers Association, North County News, David Boyd Property tax assessments: what you dont know can hurt you elation over the high value set by assessments turns to reality with July tax bills, how to fight the tax assessment process, Roy Whiteley, Prime Times Home sales fall a record 40% -- sales in Baltimore region drop 32 to 51 %, asking prices similarly drop, Jamie Smith-Hopkins, Baltimore Sun Kangaroo Court for tax assessments appeals process a scam on the citizenry of Maryland, Gary Diamond, Aegis Pipkin, Smigiel to have tax assessment meeting taxes too high, values set in 2008 based on 2006 bubble are no longer realistic, Kent News Looking for some tax relief group advocates fair property tax assessments, Aegis, Laurie K. Christoforo Pushing property tax reform introduction of Fair Property Taxation group of bills with Marylanders for Fair Property Taxation to reform the methods of assessments and reform the appeal process, Senator Barry Glassman, Aegis Tax appeals soar amid falling home pricesappeals change from 38,296 to 49,353 in one year, Larry Carson Baltimore Sun Assessment process criticized constituents say current system wasted precious time and resources, places tremendous stress on citizenry, citizens feel ignored, helpless, and frustrated, Aegis, Harford County Councilman Dion Guthrie The unappealing process of seeking a property tax assessment appeal -- taxpayer shares difficulties navigating appeals process system, Cindy Mumby, Dagger Press Got your new property tax assessment notice? Happy with it? State mailed 673,221 assessment notices, home assessments fall 19.7% but less than one third of over 2 million property taxpayers saw that level of reduction in assessment value, Cindy Mumby, Dagger Press , Property tax task force gets push from Harford County, Senator Barry Glassman and Delegate Wayne Norman introduce task force bill with ultimate goal recommend an assessment system that (a) is more uniform, equitable and transparent and (b) provides Maryland property owners with greater confidence in the States ability to conduct property assessments fairly, accurately, and consistently, Cindy Mumby, Dagger Press, Assessed values drop an average of 22% on MD. homes only one third of property owners receive new assessments, Jamie Smith-Hopkins, Baltimore Sun

2/21/02 1/19/08 2/12/08 4/25/08 12/4/08 1/23/09 1/30/09 3/15/09 7/10/09

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12/18/11 12/18/11 12/18/11 12/21/11 12/28/11 12/28/11 1/8/12

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Appealing your taxes taxpayers ignorant of what they pay in property taxes, show little interest in learning appeals process or fighting the system, Pamela Mones, Baltimore Examiner Top 10 largest homestead tax credits in Baltimore ranging from $15,900 to $22,400 on upscale properties, Jamie Smith-Hopkins, Baltimore Sun Hundreds of double dippers found, State pulls homestead credit for owners with multiple credits, 90,000 Baltimore homeowners receive credit, 25,000 homeowners not receiving the credit, 13,000 homeowners get 50% or more tax discount, $1,200 average reduction in taxes from credit, $48,800 largest credit issued, $120 million total credit shielded from city. Scott Calvert, Jamie Smith-Hopkins, Baltimore Sun City councilman presses for property tax overhaul, proposes raising 4 percent Homestead Property Tax Credit ceiling from 4% to 10%, Jamie Smith-Hopkins, Scott Calvert, Baltimore Sun Distorted Discount huge tax disparity statisticians call obvious mistakes. Jamie Smith-Hopkins, Scott Calvert, Baltimore Sun A tax breaks unintended effects -- hundreds of outsized tax breaks were caused by typographical errors, unnoticed property improvements and people receiving credits they arent eligible for. Scott Calvert, Jamie Smith-Hopkins, Baltimore Sun Loss of tax breaks means hefty bills for property owners a widespread problem of improperly collecting homestead credits, Scott Calvert, Baltimore Sun MD. home values fall 17% -- 9 of 10 are down since 2008, Jamie Smith Hopkins, Baltimore Sun Appeals can last for months, tax appeals backlogs top 9,326, Alison Knezevich, Baltimore Sun Taxes on top city property lucrative biggest paying homes and commercial sites bring in eye-popping $20.7 million, Jamie Smith- Hopkins, Baltimore Sun Our access to 10 sample properties in one of these cited the 90 properties in the Ritz Carlton revealed the following: 1. All ten samples sold between 2008 and 2011. 2. The ten properties sold for a combined total of $12,054,600 3. In 2011 these ten properties were arbitrarily assigned a value of $ 8,544,000. 4. In 2011 these ten properties were assessed for $7,505,000 5. In 2011 these ten properties left $4,549,600 of assessable base off the potential tax rolls. 6. In 2012 these ten properties will be assessed for $ 7,422,000. 7. In 2012 these ten properties will leave $4,632,000 of assessable base off the property tax rolls. Can we assume that if we extrapolate the same ratio to the other 80 properties at this site we might be looking at sales in excess of $960 million and an assessable base loss in excess of $368 million? Jamie Smith Hopkins, Scott Calvert Housing: Another down year home prices, sales slid 4% in Baltimore region, highest price change down 12%, Jamie Smith-Hopkins, Baltimore Sun Botched Federal Hill valuation highlights shrinking number of assessors -$552,000 assessment error should be $945,000, values often set without actually looking at property, 5 over generous credits resulted because assessors failed to account for renovations, Larry Giammo, former Mayor of Rockville (Property Tax Pros, homeowner appeals specialists) cites possible major problem, cites one third of Baltimore either 20% over or under assessed, SDAT Director Young cites 38

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loss of assessors from 280 to 158 responsible for 1600 properties each is stretched too thin, Scott Calvert, Jamie Smith-Hopkins, Baltimore Sun A godsend for some, a tax bonus for others 10,500 Homestead recipients get average $1,325 taxes forgiven, 4,300 homeowners receive 50% discount. Baltimore Sun Missteps cloud homeowner credit lower income Marylanders unaware of program; others seem to be taking advantage, Scott Calvert, Jamie Smith-Hopkins, Baltimore Sun Gaithersburg man goes to Annapolis to fight for homeowners, wants property tax assessment information more public, Internet access to property assessment worksheets could help taxpayers make more educated decisions, help reduce 5,868 county and 59,613 statewide appeals, Jen Bondeson, Gaithersburg Gazette Property assessment critics say review is needed task force proposed for 7th year, Harford County Executive backs bill, Jamie Smith-Hopkins, Baltimore Sun Discouraged owners shrink home choices, Baltimore buyers marketlow prices keep would-be sellers on sidelines, Jamie Smith-Hopkins, Baltimore Sun Assessment review planned after 2nd error involving consolidated property State assessment agency failed to adjust homes assessed value after a consolidation, error exists for 5 years, agency cites lack of staff for problem, Scott Calvert, Baltimore Sun Rawlings-Blake backs fine for tax-credit scofflaws backs fine for homeowners getting unwarranted homestead credits, Scott Calvert, Baltimore Sun Homeowners must apply for property tax credit or lose it tens of thousands of homeowners fail to apply for homestead credit, Jamie Smith-Hopkins Smith, Baltimore Sun City reverses courses on tax repayment after errors City allows payment over time citing error no fault of homeowner, Scott Calvert, Baltimore Sun Developer repays city $14,000 for 3-year-old tax assessment error. Scott Calvert, Baltimore Sun Baltimore property tax bills to get a makeover in a bid for greater transparency, Scott Calvert, Baltimore Sun Millions slip away from city harbor condos taxed as if theyd never been built, Jamie Smith-Hopkins, Baltimore Sun Tax cut coming in July for Citys homeowners -- $0.02 cut per $100 of assessed value, Luke Broadwater, Baltimore Sun Errors invade tax credit break for historic buildings has led to costly mistakes for almost a decade, Scott Calvert, Baltimore Sun Auditors inspecting property tax credit examining how well MD. assessments agency has managed homestead property tax credit, 550 home credits revoked, Scott Calvert, Baltimore Sun Baltimore tax credits continue to show errors investigation found city failed to collect millions of dollars in tax revenue due to chronic errors and miscalculations; 10 largest tax breaks contained errors over $2 million in uncollected taxes. Scott Calvert, Baltimore Sun Inching back up average sales prices rose in half of Baltimore region. Jamie SmithHopkins, Baltimore Sun

8/19/12

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SUGGESTED LEGISLATION A BILL ENTITLED Methodology for Establishing Real Property Values and Assessments for Taxation For the purpose of establishing a methodology and procedure for establishing an equitable, fair, unbiased, and uniform means of setting, monitoring, updating, and maintaining real property values and assessments commensurate with current market trends and conditions. SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, That: (a) the current Computer Assisted Mass Appraisal (CAMA) employed by the State Department of Assessments and Taxation (SDAT) shall be abandoned and a new system herein described shall be developed and instituted as a replacement for the purpose of establishing real property values consistent with current market trends and values. (b) all properties sold on or before January 1, 2000 and determined to have been sold at fair market values based on the criteria currently employed by the SDAT shall be valued at the actual recorded sale price. An index value established by the Standard and Poor Case Shiller Home Price Index for the Baltimore-Washington region corresponding to the date of the property sale shall be affixed to the property as the base value and base index. (c) at each succeeding reassessment year, typically January 1, the SDAT shall update the value of the property either upward or downward in accordance the value of the Standard and Poor Case Shiller Home Price index established for the close of the calendar year i.e. December 31 preceding the current January 1 assessment being set. (d) for all properties that do not have a recorded sale date before January 1, 2000, the real property value established by SDAT and officially recorded by the January 1, 2000 SDAT assessment notices shall be deemed to have been sufficiently accurate and current and shall be set as the base value for the herein described new index value derived system. The Case Shiller Home index value of January 1, 2000 shall be assigned to those properties and updated in accordance with the history of the overall Case Shiller Home Price Index value to reflect the current year assessment. (e) during the course of the year January 1, 2014 to December 31, 2014, the SDAT shall issue new assessment notices to every property owner with the value set by this new procedure, each property owner shall have a period of six months from the date of the new assessment notice to appeal the market value established by SDAT via the current three step appeals process. At the conclusion of the final portion of the three step process accepted by the property owner the value established by the Supervisor Appeal Hearing (Step One), the Property Tax Assessment Appeals Board (Step Two) or the Maryland Tax Court (Step Three) shall be deemed the current value of the property and assigned an index value matching the Case Shiller Home Price Index value matching the date of the conclusion of the appeals procedure. Updating shall then follow the established yearly procedure. (f) On or before July 1, 2013, the SDAT shall adopt and implement this process and procedural updates in accordance with XXX of the State Government Article, to the General Assembly. SECTION 2. AND BE IT FURTHER ENACTED, that this Act shall take effect on July 1, 2013. It shall remain effective until modified by the General Assembly.

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