Taxing Investigation in Palm Beach

The Palm Beach Post's investigation of over 22,000 property records revealed systemic inequities in how the county appraiser assessed homes, with expensive properties undervalued and cheaper homes overtaxed. The database-driven series prompted widespread challenges to assessments and led to a state audit that confirmed numerous errors in the appraisal office.

Thanks to a database and a good investigation by the Palm Beach Post, a record number of challenges against the Palm Beach County property appraisers was filed this year. The Post examined more than 22,000 single-family- home records and found that, for some reason, the more expensive the house the lower its tax assessment. This meant that people in less expensive neighborhoods were carrying a heavier tax burden, or the "bad luck tax." This past September, The Post ran the series called "Property Taxes: An Unfair Burden." Amy Driscoll, a Post staff writer, said, "We had been writing stories about the taxes in Palm Beach County for years; we wanted a detailed study about the inconsistencies in the way people were taxed." With the aid of the computer, Driscoll, Staff Writer Paul Martin and Special Projects Editor Rich Gordon (now with The Miami Herald) compiled this series which revealed the inconsistencies in the way property owners in Palm Beach County were taxed in 1989.

The Post investigators, after a year of discussion with the Property Appraiser's Office, purchased a key computer tape, the Name-Address-Legal file (known as NAL). "We bought the NAL file, which basically includes (for each property) the owner, the legal description, information on assessed values and information on sales prices," Martin said in a memo regarding the series. To create an accurate sample of properties to analyze, The Post reporters had to organize the information they retrieved from the NAL tape.

The Post limited the study to warranty-deed sales and eliminated insignificant property types such as property that sold for less than $10,000. Also, on the advice of an assessment expert, the paper cut 1 percent of the sample with the highest and lowest assessment ratio. The assessment-sales ratio is calculated by dividing the property assessment by the sale price. This is the yardstick by which comparisons are made to determine the fairness of assessments.

The ratio is valid if the selling price represents the true market value of the home. If everyone's home were assessed at the same percent (of market value), assessments and taxes would be fair. After calculating the weighted mean assessment-sales ratio, the Post reporters looked for any unfair pattern of taxation. Inequitable assessments became apparent. These assessments resulted in unfair tax burdens on the owners of less expensive houses and tax breaks for owners of more expensive houses.

This phenomenon is not unknown in the business of property appraisers. Nor is it unknown among the media. The primary precedent to The Post series was New York Newsday's "Property Taxes/The Unbalanced Burden" published in May 1985 about unfair property appraisals. But The Post study had its own local impact. A state audit in the spring of 1990 uncovered numerous errors and failures by the department as it double-checked local appraisal offices, Driscoll's article stated.

The Post had started investigating this problem months before the audit. Nearly four weeks after the series ran, the Florida Grand Jury backed up the newspaper's findings. "(The grand jury) clearly bore out our original observations," Driscoll said. According to Driscoll, a record number of notices of intent to challenge the tax appraisers' findings were filed after publication. Since the grand jury's findings, the state will address this problem and attempt to rewrite the code tax appraisers use.