Reminder: business license payments due

The City of Decatur charges an occupation tax on all businesses operating within the city limits. We mailed out renewal notices for 2010 to business owners back in October, which should be paid by or before this January 31.

Although the deadline is upon us, we do provide a 90-day grace period for occupational tax payments, so businesses have until April 1 to pay without being charged late fees.

Apart from the payments, a law passed by the Georgia General Assembly in 2009 (HB 2) also requires businesses to verify their legal presence in the United States in order to receive a business license (OCGA § 50-36-1(e)). Our office mailed out affidavits this week to all active Decatur business owners for them to verify their legal status.  Affidavits are due back to us by April 1.

Update on a Bank of America check...

To recap developments from yesterday, Bank of America created a property tax check on behalf of some of their Decatur borrowers on Dec. 17 that my office never received. After several phone calls between my office and Bank of America yesterday and today, I was able to open a formal “research request” with Bank of America’s tax department this morning.

One of their tax specialists informed me that he was submitting the request to higher levels within his department to research and reissue payment for the affected customers, with an estimated completion date of February 3. Bank of America should pay the penalties and interest, and the late payment would not affect their customers’ escrow accounts.

We do not maintain lists of individual property owners in Decatur who escrow with Bank of America. So if you received a delinquent notice from my office this week, and you escrow with Bank of America, please call us at 404-370-4100 so we can update our notes on your account and remove your home from our collections list.

My apologies to any resident who has been affected by this situation. Thank you for your patience while Bank of America works to resolve it for us.

Tax notices mailed

In an effort to notify property owners of any past due property tax balances from 2009, the Revenue Division of the City of Decatur mailed out 603 notices yesterday to owners who either made no or partial payments. Penalties and interest have been accruing on unpaid balances since our payment grace period ended on January 7.

We mailed out the original bills in two installments in April and October last year.  Why do some bills go unpaid?  Sometimes it involves an unwillingness or inability to pay, but in several instances the delinquency is due to a simple, temporary oversight.  Occasionally these bills are overlooked by new owners who purchased a property within the last several months who thought everything was “handled at closing.” We also run into owners who just changed their mailing address, but we sent the bill to the most recent address we had on file.

Periodically we run into issues with our residents’ mortgage companies. For example, we have received several calls today (and a note forwarded from Geoff Koski, publisher of Decatur News Online) from property owners who received a late notice from us, but who were told by Bank of America that their taxes have been paid.

We received a large check from Bank of America on Dec. 21 that covered 119 of their Decatur accounts, and we posted that payment in December to all the accounts that the bank listed. We did not send late notices to any customer whose account was paid by that Dec. 21 check.

However, we did not receive any other major checks from Bank of America in December or January for any of their additional customers. We have been communicating with Bank of America to find out what’s going on. No check has cleared our bank with the check number, check date, or check amount that Bank of America has provided.

A final note--if you’ve received a late notice in error, please accept my apology. Your payment may have arrived just after we printed out the bills. If you believe that your lender, our office, or a bank somewhere in between, has made an error, and that your taxes are actually paid, please call us immediately at 404-370-4100 so we can start to rectify the situation. To ensure the best service possible, please have a copy of your tax bill on hand when you call.

Don’t try this at home: Trinidadians vow civil disobedience rather than pay new property tax

After the passage of a new property tax law in Trinidad & Tobago last month, opponents of the measure immediately vowed to mobilize the population in civil disobedience against the tax:

Opposition Member of Parliament for Tabaquite Ramesh Lawrence Maharaj says his constituents will not pay the new property tax, and has promised civil disobedience. He said if Prime Minister Patrick Manning 'gets back the monies that UDeCOTT [The Urban Development Corporation of Trinidad and Tobago] has (taken) from the people of Trinidad and Tobago, and use it to fix the roads, then we would consider paying property tax'.

Maharaj made the statement during a meeting in Macaulay, on Monday night in support of his campaign for the political leadership of the UNC [United National Congress].

Promising to lead protests against the Government, Maharaj said, ’I will get buses for you (constituents) and we going to sit down in Manning’s palace and wherever he goes, we going with him.’

Maharaj said, ’We will teach Manning an opposition campaign of a lifetime.’

This set the backdrop for parliamentary elections in Trinidad over the weekend. Initial results suggest that Kamla Persad-Bissessar, a member of parliament who has expressed misgivings about the property tax bill, will become the new prime minister. Nevertheless, hardline opponents of the bill have vowed civil disobedience…again…because of election irregularities.

And I thought billing property taxes in Decatur was tough!

Despite down market, medical office space owners remain “healthy”

The health care industry has weathered the recession better than most sectors. That strength appears to have carried over into the commercial property market. Last month the Atlanta Journal Constitution printed this article about the health care industry helping to prop up the health care market:

The health care sector is one of the few bright spots in an otherwise dismal market for office space.

While the recession has left entire floors barren in many high-rise office buildings, demand for space in buildings near hospitals is competitive and that has propped up rents and kept vacancies in check.

Doctors and other medical tenants have weathered the economic slowdown better than retailers and other office tenants. And for landlords, these tenants tend to stay in the same location longer than other office renters and have lower default rates.

Overall office sales are down this year, but the proportion of deals for medical buildings was up almost 11 percent, according to Chris Bodnar, vice president of CB Richard Ellis' Health Care Capital Markets Group. And the vacancy rate for these buildings is a mere 10 percent, compared to 16 for overall office buildings.

And that could go even lower in the next few years as the economy improves and baby boomers continue to age.

This got me thinking about medical office space in Decatur. Although I don’t know what commercial property owner’s vacancy rates are in Decatur, I estimate that at least 11 percent of office-based businesses in Decatur are tied in some way to the health care industry. (Our biggest sub-groups are mental health providers, physicians, and dentists.) That percentage is based off of the number of businesses that have a medical-related NAICS code.

From a business licensing standpoint, it does seem like turnover in retail businesses such as restaurants and shops is more common than healthcare businesses in Decatur, but there are no reports I can easily run in our business licensing system that would back up that observation.

Bank of America loan modifications: Decatur impact?

Last month Bank of America announced that it had modified 600,000 home loans nationwide since January 2008. From the Associated Press:

CALABASAS, Calif. – Bank of America Corp. said Monday it has provided mortgage relief through loan modifications for more than 600,000 homeowners since January 2008.

The renegotiated loans were done through its own programs and the government's Home Affordable Modification Program [HAMP], the bank said.

Bank of America has concluded more than 450,000 loan modifications since January 2008 under its own programs. That includes about 225,000 modifications so far this year.

Through the government program and others, Bank of America said it has provided $215 billion to refinance existing mortgages.

Read the whole story here.  More recently, Bank of America announced that it has modified an additional 20,000 loans through HAMP.

Whether many Decatur home owners have received these modifications is unlikely. Although Bank of America and Wells Fargo together issue half of all home loans nationwide, only about 210 property taxpayers in Decatur, or 3 percent of our total number of taxpayers, pay their taxes through an escrow account with Bank of America (usually after being routed through Home Focus then First American), according to our internal payment records.

Foreclosure freezes thaw out

Suspensions on home foreclosures by major mortage lenders during the holiday season have come to an end. Last month the Associated Press ran this holiday news story about Fannie Mae and Freddie Mac:

WASHINGTON – Mortgage finance companies Fannie Mae and Freddie Mac are suspending foreclosures and evictions for about two weeks in a temporary break for borrowers during the holiday season.

The suspension, announced Thursday by the government-controlled companies, runs from Saturday through Jan. 3. "No family should have to face the prospect of being evicted during the holiday season," Michael Williams, Fannie Mae's chief executive, said in a statement.

On Dec. 17, Citigroup, Inc. announced a slightly longer suspension:

NEW YORK (TheStreet) – Citigroup said Thursday it plans to suspend foreclosures for 30 days for homeowners with Citigroup-owned mortgages.

Under the program, which begins Friday, Citigroup will halt all foreclosure sales on first mortgage accounts nationwide through Jan. 17. The bank also will cease evictions.

Despite expectations of fewer foreclosures during the holiday season due to freezes such as these, CNBC’s Diana Olick reported last week that bank foreclosures actually increased during the month of December. According to her Realty Check blog, foreclosures surged by 14 percent.

The City does not receive or maintain records on the number of homes foreclosed on by banks, but anecdotally the foreclosure rate has remained lower than neighboring communities.

MLK weekend a “huge success” for local homeowners

Volunteer! Decatur coordinator Lee Ann Harvey reports that this weekend’s Martin Luther King, Jr. Service Project was a major success. The annual event helps Decatur’s senior residents by making greatly needed interior repairs and doing yard work that they have been unable to do, which helps the elderly to remain in their homes safely, comfortably, and affordably. I got Lee Ann’s permission to share part of an update that she emailed out last night (and I made some of her lines bold):

We may have had rain two out of three days this weekend, but it didn’t dampen the spirits of approximately 1,180 volunteers who came out to do home repairs and yard work for senior citizens during the 8th annual Decatur Martin Luther King, Jr. Service Project this weekend. This project is held by the Decatur Preservation Alliance in partnership with the City of Decatur and with the assistance of numerous nonprofit organizations, businesses, skilled tradespeople, places of worship, and other organizations.

We initially planned to do repairs on 11 homes. Since the weekend was progressing so well, we added two more homes on Monday that needed more minimal repairs. So, volunteers ended up doing repairs on 13 homes. All but a couple of those homes (one was a condo) also had yard work done.

Thanks to an eager workforce, volunteers did yard work on 37 additional homes for a grand total of 50 senior citizens’ homes worked on this weekend. In addition, volunteers did yard work for the people with disabilities who live in the PRI homes behind the Solarium. There was so much yard waste that approximately 2,500 yard waste bags were used and there were numerous additional piles of brush.

These seniors can now live more safely, comfortably and economically in their homes thanks to much needed repairs that include:

• Handicap ramp that was designed and built to allow a senior who had a stroke last year to be able to get in and out of her home. This 96-year-old woman was grateful that she no longer had to be afraid that she would be unable to get out of her home.
• An original front stoop had deteriorated so much that it was a health and structural hazard. It was repaired to look like new but to still maintain its original architectural integrity.
• Moisture infiltration issues were alleviated and damage repaired to prevent health issues from mold and mildew. 
• Completely rebuilt steps, handrails and landings outside two homes to allow back door access.
• Installed smoke detectors and carbon monoxide detectors.
• Performed numerous plumbing and electrical repairs. Many of the skilled tradespeople worked on the project the entire weekend.
• Replaced lots and lots of rotten wood. 
• Repaired and replaced caulking. 
• Replaced old light bulbs with new energy efficient ones. 
• Increased seniors’ safety by repairing and replacing doors and door hardware and locks, as well as repairing and replacing windows and fixing broken window locks.

Lee Ann also thanked many people for their hard work including all the volunteers, the Food Committee, a Girl Scouts, Southface volunteers, a large volunteer group from a homeless shelter run by an Atlanta church, city manager Peggy Merriss, the City Commission, and city staff including Paul Wells and Patrick Grier who served as house captains.

More details about the annual project are available here. Updates and photos from this weekend are available at Decatur News Online here and Decatur Metro here.

Tax news round-up

In his state of the county address last week, DeKalb County CEO Burrell Ellis said that an increase in DeKalb County’s property tax rates may be necessary. (See articles here, here, and view Ellis’s full speech here.)

It’s important to emphasize here that the City of Decatur prepares its own budget, adopts its own millage rates, and bills for property taxes completely separately from DeKalb County. Nonetheless, I think it's important to pass this news along to Decatur residents (who pay both city and county taxes) as any change could affect your overall taxes owed.

In other news, the signs from the Georgia General Assembly are that the state senate may introduce a bill to extend deadlines for homeowners to file appeals for their property assessments. The Tuesday night newscast of “Lawmakers” on GPB covered a tax assessments & appeals committee hearing on the subject. (The full 30 minute broadcast is available on GPB’s website, and the property tax appeal story is about 80 percent of the way through—sorry, but they don’t display the minutes and seconds.)

Lastly, the Journal of Accountancy has released a list of income tax provisions that expired on Dec. 31, 2009. (Thanks goes out to TaxProf Blog as well, or I would never have discovered this item!) I found several tax breaks on the list that were related to homeownership or property investment that are now expired:

1. The tax credit for first-time homebuyers in Washington, D.C.,
2. The additional standard deduction for local and state real property taxes (but the basic standard deduction on property taxes remains in effect),
3. The deduction of contributions for conservation purposes made from real estate capital gains, and
4. Qualified investment treatment for companies regulated under the Foreign Investment in Real Property Tax Act of 1980.

I suspect few Decatur residents would be significantly affected by those expiring provisions, but you may want to check with your tax professional.

Housing outlook for 2010

What does 2010 hold for home buyers, sellers, and people just staying put? I’d like to share some of the more informative predictions I’ve come across on the web.

The Wall Street Journal sees 2010 as a year of 1) higher mortgage rates, 2) tighter loan standards from Fannie Mae and Freddie Mac (which back 90 percent of all mortgages), 3) sluggish loan modifications, 4) more adjustable-rate mortgage (ARM) resets, and 5) uncertainties surrounding homebuyer tax credits. The link to the full article is here, but here’s what they have to say specifically about ARM resets:

More loan resets: Analysts and pundits have been warning for years about the coming wave of option adjustable-rate mortgages that will jump to sharply higher payments beginning this year. Those loan recasts are concentrated particularly in high-cost housing markets, such as coastal California and other areas where homes became increasingly unaffordable at the height of the housing boom. Meanwhile, more interest-only loans that allowed borrowers to avoid making principle payments for three, five, or seven years will reset to higher payments. Those loans became especially popular among borrowers of jumbo loans, which are too large for government backing and range from $417,000 in most parts of the country to as high as $729,750 in the most expensive housing markets. Many of these borrowers owe more than their homes are worth, leaving them particularly vulnerable to default if they can’t afford the higher payments. That could cause more pain for mid-to-upper end housing markets that began to show more signs of stress in 2009.

Meanwhile, CNN Money suggests one of the major issues of 2010 could be a decline of at least 3 percent in home prices (note: I found this piece thanks to Bubble Meter):

NEW YORK (CNNMoney.com) -- After four months of gains, home prices flattened in October. Worse yet, industry insiders think that they'll soon start to fall.

Prices have risen more than 3% since May, according to S&P/Case-Shiller.

But most forecasts predict price declines in 2010, with possible losses ranging from anywhere from 3% on up. Fiserv Lending Solutions, a financial analytics firm, forecasts that prices will fall in all but 39 of the 381 markets it covers, with an average drop of 11.3%.

"We've seen recent price stabilization because of low mortgage interest rates and the impact of the first-time homebuyers tax credit," said Pat Newport of IHS Global Research. "But there are really good reasons to think prices will now start going down."

There are three main reasons for the reversal: a coming flood of foreclosures, rising interest rates and the eventual end of the tax credits.

A few final insights: 1) although they aren’t talking about just foreclosures, the Los Angeles Times speculates that 2010 may be the “year of the real estate auction,” 2) the housing & economics blog Calculated Risk says short sales will rise in 2010 (and gives helpful supporting graphs), and 3) the Atlanta Journal-Constitution’s own forecast is mixed.

Another bite at the apple for property tax reforms? Georgia General Assembly convenes today

The 2009 session of the Georgia General Assembly was a significant one for property taxpayers statewide. Lawmakers enacted a three-year moratorium on assessments, attached strings to funding homeowner tax relief grants, and debated (and ultimately killed) a proposal to cap property assessments permanently. Here’s a quick rundown of what passed in 2009:

• SB 55—Requires tax assessors to factor in foreclosures when determining fair market values.
• SB 240—Allows property tax appeals to be submitted for binding arbitration.
• HB 143—Allowed for the funding of the Homeowner Tax Relief Grants for 2008 (which lowered the most Decatur homeowners’ tax bills by $252) and denied funding for 2009 (which resulted in an effective tax increase of $252, although the Decatur City Commission simultaneously increased a low income, senior exemption which reduced taxes by $230 for qualified homeowners). HB 143 leaves the door open for funding the exemption in future years if state revenues increase 3 percent above inflation.
• HB 233—Put a three year freeze on assessment increases statewide.
• HB 261—Gives a $1,800 state tax credit for buying a home.
• HB 304—Requires assessors and appraisers to give reasonable notice to property owners before site visits.

And what didn’t:

• HR 1—Would have allowed a statewide referendum to amend the station constitution to include a permanent property assessment cap.
• HB 483—Would have put a question on the ballot to vote on increasing a statewide homestead tax exemption from $2,000 up to $10,000

What’s up for 2010?

We already have a few clues. According to the Macon Telegraph, “Local property taxes in general are still a target, and state Sen. Chip Rogers, a Woodstock Republican and the Senate’s majority leader, said he’ll be calling for ‘maybe as many as a dozen incremental changes’.” The article goes on to say that most of the changes would involve limiting assessment increases.

However, it appears that no new property tax measures have been “prefiled” in the House or Senate, although there other tax proposals involving income taxes (HB 877), hotel/motel taxes (HB 903), and taxpayer funding of judicial campaigns (HB 892).

We may learn more as Gov. Sonny Perdue lays out budget recommendations this week.

Homebuyer tax credits: two views

Looking back over 2009, the first-time homebuyer tax credit is still generating controversy in political and tax circles. TaxVox, the tax blog of the Urban Institute and Brookings Institution, called the first-time homebuyer tax credit the third worst tax idea of 2009. The Tax Policy Foundation, using the credit as an example, called the “influence of the housing lobby on the federal tax code,” one of the top ten tax stories of the decade.

Today I want to share excerpts from both sides of the argument. First, the skeptic’s view from TaxVox:

The early returns are coming in on the First-Time Homebuyer Tax Credit. And it appears to be a bigger boondoggle than even I thought it would be.

At a House Ways & Means Oversight subcommittee hearing today, the Internal Revenue Service inspector general reported that the IRS is auditing more than 100,000 of the roughly 1.4 million returns that included a claim for the credit. This is a staggering audit rate for an agency that usually reviews only about 1 percent of returns.

And what the agency has found is jaw-dropping. Almost 74,000 buyers claimed the credit even though they probably owned a house over the past three years (the credit is only available to those who did not own during that period). One dead give-away: More than 12,000 of this bunch claimed the residential energy credit sometime during the past three years. Another 19,000 filed for the homebuyer credit even though they had not actually gotten around to buying a house, a fairly spectacular exhibition of chutzpah. And 580 credits were claimed on behalf of children, including at least one four-year-old—obviously a budding real estate developer.

Some taxpayers were more confused than crooked. Almost 50,000, who didn’t realize the credit increased from $7,500 to $8,000 in 2009, may have claimed less they deserved. But there was plenty of fraud too. The agency is investigating 167 separate criminal schemes associated with the credit.

And there is more. In a separate study, the Government Accountability Office concluded that in 2008-2009 more than 25,000 credits were claimed by people who reported no income and another 165,000 by those earning $25,000 or less. Care to wager how long it will be before those houses end up in foreclosure? If they were ever actually purchased, that is.

Meanwhile, supporters of the homebuyer tax credit have argued that the homebuyer tax credit has buoyed the housing market during difficult times. Georgia’s own Sen. Johnny Isakson has been a forceful advocate for the credit, and he made the following remarks on the Senate floor in November during debates on extending the credit:

We learned about 8 months ago that a tax credit for first-time home buyers worked. It worked to bring back the entry level marketplace in housing, and it helped to begin to stabilize the housing market which led us in late 2007 into the difficulties we have experienced over the last 20 months. Extending it is important, as long as everybody still understands permanent extension would be bad. Extending it to next April, which this bill does, with a closing no later than June 30, allows the American housing market and first-time home buyers to exercise their right to take tax they pay, convert it to equity in the investment and net appreciating asset, and help stimulate what is the rock-solid base of the American economy.

We also add, in addition to the $8,000 credit extension for first-time home buyers, a move-up buyer tax credit of $6,500. This is the cornerstone of the substitute before us now. It offers to any previous homeowner who has lived in their home for at least the last 5 years the opportunity to sell that home, invest in a new home, and take up to a $6,500 tax credit…

In response to the Internal Revenue Service concerns we expressed a few months ago on fraud, we put in every single request they made for fraud to see to it the HUD-1 is attached to tax statements, to see to it there is no fraudulent claim of the money, and to see to it the IRS has every tool they can to prosecute to the fullest anybody who would abuse this credit…

I urge all Americans who have always dreamed, if they are a first-time home buyer, of having a home of their own or Americans who have been gridlocked in the failure of our move-up market to actually move up and work, you have a 7-month opportunity that is good for you, it is good for the United States of America, and it is good for this economy.

The end of grace?

Second installment property tax bills were due on December 21, so the final weeks of December were a busy time for Decatur’s taxpayers and tax office.

The good news for anybody who wasn’t able to make that original deadline is that we offered a two week grace period for payments during which no penalties or interest was charged.

However, the grace period ends tomorrow. Penalty and interest will be charged against unpaid amounts after Jan. 7.

City launches new blog

A major principle of the City of Decatur’s strategic plan is to encourage community interaction and maximize communication between residents, businesses, and government.

With that in mind, the Revenue Division (tax office) at City Hall is launching its own blog right here at decaturtax.blogspot.com.  We're following in the footsteps of trendsetting City blogs from the Community & Economic Development Department (The Decatur Minute) and Active Living Department (231 Sycamore St.).

We will offer fresh, informative, non-partisan content about tax and housing developments to City residents. We'll also provide timely reminders about tax deadlines for homeowners, local and national news on property taxes and real estate, topical educational posts about your tax bill, and special announcements.

We also hope to hear back from you and keep the conversation a two-way street. We welcome your feedback, concerns, and questions about property taxes, or just suggestions on ways to improve this blog.

A few words about what this blog is not: this blog will in not be a political platform or forum about tax rates. For concerns about tax rates I would encourage you to contact your elected officials or visit privately-run blogs. Also, the information provided on these pages shall in no way constitute legal advice about your individual tax circumstances. Please seek the advice of a tax professional for dicey personal situations.

For those of you who prefer to get your tax information in person, of course we’re still open for business! We look forward to hearing from you by phone, fax, email, in person, or now through this blog.