Appraising the assessor

Very few prospective homebuyers would argue that the real-estate market around Sacramento has been flat in recent years. But the Yolo County assessor, Dick Fisher, and his deputy, Joel Butler, would.

They say that West Sacramento was so slow to recover from the real-estate slump of the 1990s that a house that cost a million dollars to build in the late ’70s was appropriately valued at half that up until 2005. When a house loses half its value, its owner only pays half the property taxes.

Appraiser Bob Milbrodt, who works in the assessor’s office, recently claimed publicly that his supervisors low-balled that million-dollar house—and their own properties—to keep the property taxes down for themselves and one of the region’s most prominent developers.

Fisher and Butler deny any wrongdoing but say that appraising properties is a subjective practice and that when a property is unique, an appraiser has a lot of discretion over how to value the home.

Milbrodt recently submitted his concerns to the Yolo County Board of Supervisors as a formal taxpayer’s complaint. In the complaint, Milbrodt blasted his bosses. “The consequence of their acts is a theft of public tax dollars,” he wrote. “You should seek to recover these taxes and demand the immediate resignations of both Richard Fisher and Joel Butler.”

The board of supervisors has forwarded Milbrodt’s complaint to the Yolo County district attorney, who in turn has referred the accusations to the grand jury. So far, the grand jury has made no public statement.

Milbrodt did bring to light some quirks in the county’s tax roll, but there’s another element of the story that throws his accusations into question. He has pulled papers to run for assessor this year, and his main competitor could be one of the men he’s accusing.

The assessor’s office assumes that homes increase in value by about 2 percent every year, leading to a slight annual bump in property taxes. Property taxes usually equal about 1 percent of a home’s value. But if property owners think they’re paying too much, they can ask the assessor to reconsider the appraised value.

That’s just what developer Frank Ramos did back in the mid-’90s. The Ramos family has lived in its West Sacramento home since 1981. The home cost about a million dollars to build, according to Ramos, though the appraised value started out much lower. Over the years, it overtook the actual building cost, until, in the mid-1990s, Ramos was paying more than $10,000 a year in property taxes. When Ramos requested reconsideration, he argued that in a falling market, his house wouldn’t sell for more than $400,000 or $500,000.

It was a convincing argument. Appraisers, including Milbrodt, who reviewed the file, agreed that there probably were no million-dollar properties in West Sacramento that year.

But the Ramos property was unique, a gem. Ramos’ home, which he estimated at 6,550 square feet, rests on property that used to be a park. Fronted by 200-year-old oaks, which Ramos babies, the three-story house opens onto patios and terraces covered in red brick.

The houses that grew up around it were neither as large nor as expensive. A nearby neighbor said he paid only about $270,000 within the last couple of years for his home. Ramos’ property therefore is considered “over-improved” for its location. But Ramos didn’t build it as an investment property; it’s the family house, the house in which he raised his four sons, Ramos said by phone.

In the mid-’90s, Milbrodt agreed to drop the value by about half under a provision known as Proposition 8, which provides for a decrease in taxes when a property decreases in value. Ramos’ taxes fell from more than $10,000 a year to less than $5,500. There they stayed, with very little variation, until this year.

Milbrodt said he was obligated to check on his Proposition 8 properties every year, adjusting until the property regained its original value. He said he gradually increased the value of Ramos’ home, but when he looked into the file recently, he found that his supervisors had ignored his appraisals, keeping the value static. He was surprised to find that the house was still valued at half a million, years after the regional real-estate market had bounced back.

Whether that’s a big deal depends on whom you ask. Fisher and Butler claim that the market in West Sacramento was one of the slowest to recover and that the house was so much more valuable than the surrounding neighborhood that Ramos never could have sold it for a million dollars. As Butler explained, anyone with a million dollars would have spent it somewhere besides an old neighborhood of West Sacramento, no matter how beautiful the house.

If both Butler and Fisher believe the half-million-dollar assessment was appropriate for all those years, why did the property jump up to its million-dollar value this year?

When Milbrodt found that his appraisals had been discounted, he redid his calculations, submitted them again in May 2005 to his supervisors and expected that Ramos would be charged the extra property taxes that were missed over the years.

Neither Fisher nor Butler made any attempt to correct what Milbrodt considered a serious mistake. They did, however, accept his current appraisal: $1.16 million.

Ramos was surprised to see his taxes double in a year, and he said he’ll probably call the assessor and ask for reconsideration again.

Fisher wouldn’t be surprised.

“I think it might be slightly overvalued,” said Fisher.

“If you had that kind of money,” said Butler, “you wouldn’t buy there.”

Ramos, Butler and Fisher believe that the half-million-dollar appraisal was appropriate all these years.

Asked to speculate on why his taxes never rose, Ramos said, “Probably because I paid so much in taxes before they lowered it. We were paying through the teeth.”

To the press, Milbrodt also hinted that improvements to Butler’s and Fisher’s properties were undervalued, though only by a fraction, leading to less than a hundred dollars in savings a year—an accusation that both men deny. They claim the differences in value are due to differences in opinion about the most appropriate way to assess value.

All three of these cases, plus the case of one other appraiser, were sent to the county board of supervisors as evidence of widespread wrongdoing.

When SN&R called Butler for comment, appraisals weren’t the first thing he wanted to talk about. First, he wanted to mention that Milbrodt had pulled his papers to run for assessor. It’s an election year, Fisher is retiring and won’t be running, and Butler will be. Both men find it suspicious that Milbrodt used one unique property and their own homes in an election year to make his case.

It’s an obvious question: Is this politically motivated? Milbrodt says it’s not and that he would rather get behind a good candidate than run himself. If no one has stepped up by the end of February, however, he might throw his hat into the ring.