OCEAN CITY – With the tri-annual reassessment of property values ongoing in Ocean City, resort business leaders this week got a primer on a variety of bills related to tax assessments that either passed, failed or were withdrawn in the General Assembly session this year and also learned a little more about the process used to determine the values.
Robert Smith, director of the state’s Department of Assessment and Taxation for Worcester County, on Wednesday delivered a presentation to the resort’s Economic Development Committee (EDC) on as many as 37 pieces of legislation related to tax assessments that circulated in the General Assembly this year. There were a handful specific to Worcester County including legislation enabling local governments to provide tax relief for amusement parks faced with soaring assessment values such as Trimper’s and Jolly Roger’s.
Those bills were enacted into law, although the amusement park owners later decided not to pursue tax relief at this time given the current economic situation, but the passed legislation did raise questions about how commercial property would be handled during the current reassessment. Last time around, the amusement parks were assessed at their highest and best use and not on how much revenue they produced, meaning their values would be much higher if they were redeveloped with condominiums, for example.
EDC Chairman Dr. Lenny Berger on Wednesday asked Smith if income would be considered as a factor for other commercial properties in the resort during the current reassessment, given the perceived drop-off in the economy.
“Are you looking at cash flow in the reassessments this time around?” he said. “We would hope you would consider that because of the decline in the business cycle.”
Smith said his office typically assesses a property on its highest and best use only, but there would be some consideration given to the revenue a property generates during the current reassessment cycle.
“We’re going to be looking more at income this time around,” he said. “What’s going on with the market will dictate that somewhat.”
Berger voiced concern assessing a property for what it could become rather than what is currently on the ground could lead some commercial property owners to reconsider the use of their property.
“Going strictly by highest and best use, all of the hotels and restaurants in town would be torn down and condos would be built,” he said. “This would become one big residential community.”
Smith agreed, saying the situation occurred during the resort’s most recent redevelopment boom. “That’s what’s happened already to some degree,” he said.
Another assessment-related issue that got a lot of play during Wednesday’s discussion was the Homestead Tax Credit, which Worcester lowered to 3 percent last year. Commissioner Louise Gulyas said lowering the cap cost the county a significant amount of revenue this year.
“There was a $10 million abatement for the Homestead Cap this year alone,” she said. “That’s a lot of money we didn’t get, but it went back to the property owners.”
Smith acknowledged the abatement represented a large amount of lost revenue for Worcester, but said it was small potatoes compared to other jurisdictions.
“That’s a pretty big number, but it’s small compared to some places,” he said. “I think the Homestead abatement in Montgomery was close to $10 billion this year.”
Another bill that failed in the legislature this year would have frozen tax payments for properties whose assessments were under appeal until the issues were resolved.
“We’re glad it failed,” said Smith. “If everyone appealed, nobody would pay their taxes until it was resolved. How would Ocean City do a budget if 35,000 property owners appealed their assessment?”