Shorewood Enlists Help of Financial Consultant to Address Valuation Error

Raising property taxes by 5.8 percent next year is at the bottom of a list of solutions to offset an , officials said Tuesday.

Village Manager Chris Swartz laid out a few options to fixing an error which he said came to light after Shorewood’s assessor, Mark Brown of Associated Appraisal Consultants, Inc., added three extra zeros to the value of the village’s Tax Incremental Finance District No. 1, which includes much of Shorewood’s business district.

The value was recorded as $77 million instead of $77,000 and then published by the state Department of Revenue, which cannot change figures after that point under state statute.

And, as a result, the total equalized value of property in Shorewood will be artificially inflated for next year.

If not fixed, Shorewood property owners could have to shell out an estimated $2 million extra on next year’s bill, or $442 more on a home assessed at $300,000, based on this year's tax rate. The money would then roll over for 2013, where property owners will pay $2 million less.

“This is really a worst-case scenario,” Swartz said.

But, Swartz said there are better options and has asked the village’s financial consultant, Ehlers and Associates, to develop a case, which the village can bring to elected officials. A contract with Ehlers will be officially considered at a Sept. 16 Village Board meeting.

Shorewood has reached out to and received responses from both state Sen. Alberta Darling and state Rep. Sandy Pasch, who have agreed to meet with officials and help solve the assessment issue.

Once officials have the case from Ehlers, they will present it to legislators like Darling and Pasch and officials at the state Department of Revenue.

The top option may be what cities like Milton and St. Francis have used in the past to address a similar issue, Swartz said. Both cities reduced their general levy by the amount resulting from the error, and funded 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.

Fixing Shorewood's error could mean a change in the law or some sort of legislative action, but there might be some nuance in the law that could be read in Shorewood's favor, Swartz said.

"There are other ideas that are more complicated ... but the easiest one is to have the levy limits change," Swartz said.

Meanwhile, Swartz said the village's assessor has remained quiet. When asked whether Shorewood's assumption about three extra zeros being added to the value of its business district was correct, Associated Appraisal has chosen to remain silent, according to Swartz.

“I’ve asked them (Associated Appraisal) many times to provide the information, and I haven’t gotten information,” Swartz said.

The village has asked the assessor to pay for Ehlers' work.

Village Attorney Ray Pollen is looking at possible legal action against Associated Appraisal; however, it likely wouldn't be resolved by Nov. 15, when Shorewood is required to set its levy.

Pollen said under the village's contract with the assessor, Associated Appraisal is required to carry insurance with Shorewood named as the beneficiary.

The state Department of Revenue says it noticed the value of the tax district was too high when it received data in an electronic file, but was reassured by the assessor that the numbers were correct.

Swartz said he has contacted three different representatives from the Department of Revenue, and all have said they can’t make the correction until next year and would oppose any legislation that would change the rule.

However, the village will continue to work with the state to possibly correct the error this year, Swartz said.