Monday, July 15, 2013
An inewsource investigation into Mello-Roos taxes has prompted Councilman Mark Kersey to call for an independent audit into the tax bills of 344 of his constituents.
SAN DIEGO A San Diego councilman is asking for an independent audit of more than 300 property tax bills after an inewsource investigation raised the prospect that homeowners are paying too much — or too little — in special taxes.
Homeowners in Del Sur, an upscale development in the northeast part of the city, are among thousands across the county who pay an extra property tax called Mello-Roos. It’s a special tax levied in new developments to pay for roads, schools and other infrastructure. It can range from $35 a year to several thousand.
Last month, inewsource reported two San Diego homeowners in Del Sur were being overcharged on their property tax bills. One was paying almost twice what he should.
Homeowners identified possible discrepancies using the interactive Mello-Roos map inewsource developed and made available online. They brought their questions to inewsource, and reporters dug further and found inconsistencies in at least two dozen tax bills — among 344 — in the same Del Sur neighborhood.
But that’s not the end of the story.
Mello-Roos taxes are largely based on the size of a home, and it turns out that square footage can vary depending on the public document you consult.
And there’s a lot at stake. The range of the inconsistencies is vast — one homeowner paying about $86 a year too little, another paying more than $6,200 a year too much.
As a result of inewsource reporting, the city is reviewing every tax bill in what is called Community Facilities District (CFD) 4 in the Del Sur area. inewsource is also using tax and assessment data to conduct a similar review.
That’s how we found out about the different square footage on different documents.
The city’s review so far has found nine errors — three homeowners paying too much and six not paying enough. inewsource found 28 inconsistencies in tax bills: 12 properties appear to be overcharged, 16 undercharged.
So why do the figures not match up?
inewsource obtained the square footage of each of the 344 properties from records provided by the San Diego County Assessor’s Office and matched them to tax bills. County officials said they include “only habitable space,” which does not include areas like garages or patios, when measuring square footage. The city, meanwhile, bases the Mello-Roos tax on the square footage listed on the building permit.
So which one is right — the county record, the building permit, neither? Are homeowners paying accurate amounts in this special tax?
That’s what Councilman Mark Kersey wants to know.
Kersey, who represents all the homeowners in CFD 4, called for an inquiry by the city’s independent auditor, asking him to “review the process by which homeowners’ required payments are calculated, the accuracy of the data used in those calculations, and safeguards … to prevent and identify errors.”
“I think from a taxpayer perspective, we need to make sure that what we’re doing here is fair and that the bill that people are getting is accurate. I think taxpayers deserve nothing less than that,” Kersey said.
In fact, three of the city of San Diego’s four Mello-Roos districts encompass Kersey’s District 5. He said he may ask the city auditor look into all of the city’s CFDs.
“The City has a responsibility to taxpayers and the bond market to ensure our CFDs are administered accurately,” Kersey’s memo to the auditor said.
The two homeowners inewsource identified as paying too much in taxes received a letter last month from the city’s special tax consultant David Taussig & Associates.
“The City has brought to our attention that the special tax levied on your parcel located within CFD No. 4 … may have been calculated incorrectly due to incongruities between the home’s square footage per City building permit information (used as the basis to establish the special tax amount) and the square footage amount upon which the special tax was calculated and levied on your property. Our office is working with the City to research and resolve this situation as quickly as possible,” it stated.
The homeowners are expected to get refunds with interest.
And if homeowners have been paying too little, will they owe the city money?
One homeowner who recently sold his Del Sur home wonders if he might fall into this category.
Kevin Hunter lived in the neighborhood for four years, paying a special tax of almost $4,800 for CFD 4 each year. Hunter’s Mello-Roos taxes were based on the size of his house, and his closing documents say it measures 4,197 square feet.
According to CFD 4’s special tax table for Hunter’s neighborhood, if his house was really about 4,200 square feet, then he paid the correct amount of almost $4,800.
However, county records indicate his home measures 4,275 square feet. If the county records are correct, then that 75 square feet means Hunter has underpaid by more than $1,800 a year for the four years he lived there.
“If the city came back and said we owe money, we would probably write a check, grumble a little bit about it and move on,” Hunter said. “I wouldn’t be happy about it, but fair is fair, and … when we signed up and moved into the neighborhood we were fully aware of the Mello-Roos taxes.”
To find out whether you pay Mello-Roos tax or how much you and your neighbors have paid, visit inewsource’s searchable Mello-Roos map.
inewsource data journalist Ryann Grochowski contributed to this report.