Officials Prepare Appeal to State on Assessment Error as Contingency Plan

Ensuring they cover all possible avenues toward solving that could result in property taxes artificially swelling by 5.8 percent next year, village officials authorized an appeal to the state agency that oversees property values.

Officials say legislative help from Sen. Alberta Darling (R-River Hills) is still Shorewood’s preferred choice for resolving the matter, but having an appeal in the village’s back pocket is important if other options fail.

“Our primary goal is to have some legislation action,” Village President Guy Johnson said. “This allows our staff to prepare the appeal, if it becomes necessary.”

The error occurred when Shorewood’s assessor, Mark Brown of Associated Appraisal Consultants, Inc., recorded the value of Shorewood’s Tax Incremental Financing District No. 1, which blankets much of the business district, as $77 million instead of $77,000 and passed it along the state Department of Revenue, which then published the value. Now, Department of Revenue officials say their hands are tied as state law prohibits them from changing property values after they have been published.

As a result, the total equalized value of property in Shorewood is artificially inflated for next year and village property owners could have to fork over $2 million more on next year’s bill, a $442 increase from last year on a home assessed at $300,000. Officials have said raising property taxes next year due to the error is a worst-case scenario.

Village officials are exploring all options, but running up against the clock as the appeal to the Tax Appeal Commission, an arm of the state Department of Revenue, must be filed by Oct. 15 under state statues, and the village needs to solve the problem before Nov. 15, when it plans to set its tax levy.

The appeal would not argue that the Department of Revenue should correct the error, but that Shorewood shouldn’t be forced to harm property owners with additional taxation.

"This gives us about 10 working days to see how the legislation is going and if that isn't final by the 15th then we explore the cost of ligation and cost of the appeal," Trustee Don Ford said.

The appeal could mean extra fees for Shorewood as there might be charges associated with the appeal and the village might have to hire a lawyer who specializes in tax appeals. However, officials would ask the assessor to pay for any attorney fees.

Village Attorney Pollen previously said under the village's contract with the assessor, Associated Appraisal is required to carry insurance with Shorewood named as the beneficiary. Shorewood can withdraw the appeal if legislation comes through.

Hartford is reportedly dealing with a similar issue and has already approved moving forward with an appeal.

Another option officials are mulling is reducing the village's general levy by the amount resulting from the error, and funding the reduction by borrowing the money. However, under the new state law, it may be more complicated as the village has an imposed levy limit. Decreasing the village's levy limit next year would result in a like increase in 2013 or 2014, which would violate levy restrictions under the state law.

“The more options the better, at this point,” Trustee Michael Maher said.

At a previous meeting officials asked , which they presented to Darling.

Shorewood is asking Darling to draft special legislation to create an exception to the levy limit for municipalities in similar situations, which would allow the village to add back to its 2012 levy the amount by which it reduced its 2011 levy.