Why local governments need an anti-racist approach to property assessments – ITEP

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Ambika Sinha

When an appraiser assessed Carlette Duffys’ house in Indianapolis last year, she suspected the low appraisal was due to her race. She tested her suspicions by removing indications that she was black from her home and having a white friend replaced for a third appraisal, which then saw her home’s appraised value more than double from 110. $ 000 to $ 259,000.

Duffy’s story is not an outlier. Black-owned homes are undervalued by an average of $ 48,000 when appraised for resale or refinancing, which means they can lose value when a property is sold or have more difficulty refinancing and taking out mortgage insurance. Adding insult to injury, black homeowners are more likely to see their property’s value overvalued for tax purposes. A new report focused on property taxes in Columbus, Ohio, offers the latest evidence for this national problem.

Property taxes are among the oldest and most widely used in the form of local taxes. Revenues from these taxes fund education, firefighting, law enforcement, street and infrastructure maintenance, and other essential services. While all members of the community benefit from these public goods, homeowners of color, especially black families, pay more as a share of the home’s value in property taxes than their white counterparts.

In cities across the country, homes in black communities are rated at high levels based on comparative sales. In white communities, it is often the opposite, with valuation levels not fully reflecting resale values. This pervasive national problem has led black homeowners to pay, on average, 13% more property taxes per year compared to white homeowners with properties of equal value. Inequitable and regressive assessment practices have already been documented nationally and in specific cities such as Philadelphia, Chicago and Detroit. A new report prepared by the Kirwan Institute at Ohio State University, and commissioned by the Franklin County Auditor, exposes similar inequalities in Columbus, Ohio.

In Columbus, the Kirwan Institute reports that neighborhoods that were 70% to 90% black were overrated [in property tax assessment] compared to selling prices compared to neighborhoods that were 70-90% white and white families often also suffered slightly dumped tax assessments, meaning that homes in [white] neighborhoods are on average valued below their selling price.

The report details how the Columbus government’s assessment technology, CAMA (Computer Assisted Mass Assessment System), has an analytical process[that] appears to be hidden or put in a black box for users, let alone landowners, and furthermore is unclear in terms of what goes into the system and how this input data is processed. Such a vague and inaccessible database could mean that invisible racial prejudices are accepted and not recognized by lawmakers. Without transparency and clarity, the Columbus government left citizens vulnerable to disparate outcomes that often disadvantage black families while subsequently favoring white families by undervaluing their homes.

These systematic property tax failures affect fundamental aspects of people’s lives. For most people, their home is the most important asset they own and plays a key role in generating generational wealth. It is the epitome of structural racism, allegedly racially neutral private practices and public sector policies working in tandem to perpetuate disadvantage. It’s the harshest irony that black homeowners are sometimes subjected to appraisals, carried out by private companies, which dramatically undervalue homes they may want to sell or refinance while local governments unfairly attribute their homes. high values ​​for tax purposes.

Property tax inequalities therefore have significant repercussions on racial equity in general by exacerbating historical inequalities in access to housing and continuing inequalities in access to high quality education and good jobs. High property taxes on homes with lower resale values ​​can make these families more vulnerable to foreclosures and delinquency. The Washington Post reports that one in five black households have reported missing mortgage payments since the pandemic, compared to 1 in 20 white families missing theirs. This continues a vicious cycle that further reduces the ability of families to create wealth.

Correcting this systemic inequality requires addressing both the way in which properties are valued and valued. Local governments have the power to immediately remedy shortcomings in racist property tax policy. So what are the ways to tackle this problem? The Kirwan Institute offers solutions that will help local governments be more anti-racist in their property assessments for tax purposes. To only cite a few :

Refine the data collection manual and provide strong and clear criteria to allow room for interpretation by different assessors. Remove reviewers with outliers (especially in low-income or majority-minority communities) from site reviews and assign them to desk reviews instead. Develop a better outreach strategy to encourage black homeowners to appeal inaccurate property assessments. Collect information about the owner’s self-identified race / ethnicity to enable research into racial disparities in reviews, but do not provide this information to reviewers.

This report provides a starting point for an overhaul of assessment practices that contribute to racial disparities. By making valuation standards more detailed and transparent, governments can dismantle discriminatory standards at their source. Other measures such as relaxing time constraints can also reduce the likelihood that an unconscious bias is influencing the valuation gap. While these recommendations apply to Columbus, they are also worth exploring in communities across the country where these disparities persist. We can build a better and more responsible system that recognizes and tries to dismantle racial prejudice.

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