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Revenue details issues with Assessor’s Office for second year

MONTESANO — The state Department of Revenue is once again coming down hard on Assessor Rick Hole after his office missed deadlines again for completing the revaluation of properties around Grays Harbor.

And, because of last year’s delays and technical glitches, it’s very unlikely that the Assessor’s Office will complete its work by the state-mandated deadline of June this year. For one thing, Hole still doesn’t have the software he needs to start doing the work. He’s hoping a “Band-Aid” fix built by the county’s programmers will still let his appraisers do their jobs this year — but all of that remains up in the air and the fix still needs to be made.

“I’m looking to put the issues behind us, looking for a great year this year and hoping things work out,” Hole said.

After a showdown in December with the county commissioners, Hole was denied the funding he says he needed to complete a custom software package. The commissioners said at the time they had a whole lot of doubts that the program Hole wanted to create would even work. They insisted Hole purchase a pre-built, out-of-the-box software system that would be more reliable and less dependent on county-funded programmers.

Asked what he needs to do this year so he’s not so late and can accomplish the multitude of challenges, Hole replies, “I need to be left alone. Is that a good answer?”

Hole says that despite all of the challenges he’s faced in the past year or so, he will push forward and seek a second term as assessor. He’s currently holding office as a member of “Neither Party.” A challenger has not yet emerged.

“I think I can convince the voters that I’ve been doing the best I can,” Hole said.

But if anyone plans to run against Hole, County Commission Chairman Frank Gordon says he will do all he can to ensure that Hole loses. Gordon previously demanded Hole’s resignation, has submitted the name of one of Hole’s consultants to the State Auditor’s Office for potential fraud charges and, in January, Gordon went before the Aberdeen City Council and encouraged all of the residents in the city to appeal their property revaluations because of the “failures of Rick Hole.”

In December, Gordon even tried to completely de-fund the Assessor’s Office, zeroing out the office’s budget and was considering moving their employees to be under the Treasurer or Auditor.

Gordon admitted to the tactic after the Grays Harbor Democrats turned up emails on the subject in a public records request. Deputy Prosecutor Jim Baker advised against the budget move because it could have created a constitutional crisis and put the county at risk.

A Jan. 14 letter from Kathy Beith of the state Department of Revenue to Hole points ot the issue that Hole still needs to deal with:

• Approximately 100 parcel inspections were carried forward into the 2014 inspection cycle. … The Board of Equalization will likely need to reconvene to address the 2013 assessments of these parcels.

• Valuation notices were not mailed to property owners until mid-December, leaving little time for those disputing the valuation to have appeals heard and decided before property tax is due.

• You were unable to complete the reports needed for the Department of Revenue to calculate the assessment ratio for the county. Therefore, the real property ratio was estimated again this year.

• Neighboring counties that share taxing districts with the county were unable to complete their levy work until you had finished your revaluation work, certified values to the Board of Equalization and certified values to these other counties.

The state Department of Revenue issued a scathing criticism of the Assessor’s Office in May of last year with a formal report and recommendations for change, but Hole didn’t meet the state’s expectations.

By state law, the report notes, the assessor must complete inspection and valuation of property by May 31 for all property in the revaluation area — a deadline not met since May of 2007. It’s been particularly late these past two years.

“I am concerned about the late completion of required work for the 2012-2013 assessment years and the late submission of certain reports to the department,” Beith writes. “Therefore, my staff will work closely with you during the coming months to ensure improvements to your processes are made.”

Hole says he’s heard the criticism and is just trying to move forward this year. He expects Revenue officials to do another report criticizing his office.

Hole met with Revenue officials as well as County Commissioner Wes Cormier on Jan. 22 and Hole is now required “to submit weekly progress reports with detail of the status of work completed” for real property inspections, personal property processing, new construction inspections and progress on the county’s conversion to a new computer assisted mass appraisal system.

Commissioner Gordon says he would really rather see the state Department of Revenue just take over the office altogether.

“The morale in that office, right now, is crap,” Gordon said. “Everyone knows Rick Hole needs to go except Rick Hole.”

In November, most of the appraisers in the Assessor’s Office signed a letter refusing to do a “professional approval or endorsement to any property values in the . . . school district areas, as we were not allowed to perform or assist in developing a proper sales analysis to arrive at a professional opinion of market value.”

Hole admits that nearly half of the revaluation notices mailed out in December had no appraiser number on them. The appraisers only put their number on valuations that they felt were completely accurate.

Moving forward, Hole says he wants to move away from appraisers putting their numbers on the valuations anyway.

“In the past we would put an appraiser number on it when we sent the revaluation notices,” Hole said. “Going into the future that practice will decline. We will look at it as an office number. The work is changing a little bit.”

Despite the assessor missing the state’s deadlines, Grays Harbor Treasurer Ron Strabbing says that the plan is still to mail out the county’s tax notices by the end of the month. Strabbing says the mailing will only be a couple days later than it has been in the past.

“We’re doing pretty good on our side,” Strabbing said. “I don’t think many people will really notice.”

REVALUATIONS MAILED

Hole said that property revaluations were issued by the end of last year to residents across McCleary and Aberdeen.

In the Aberdeen School District, the total property values went down about 7 percent from $1.32 billion in 2012 to just under $1.23 billion. Those in West Aberdeen saw the property values go down, on average, 20 percent. The Belaire Hills saw their values go down 13 percent and those on the south side saw their values go down, on average, 8 percent. On the commercial side, values actually increased by 1 percent, but Hole notes that the south side values went down, while they stabilized and went up on the other side of the river. One hole in the picture is that since the Grays Harbor Historical Seaport doesn’t pay taxes, their newly-acquired saw mill, which used to be owned by Weyerhaeuser, came off the tax rolls.

In McCleary, the property tax base came down 13 percent from $211 million in 2012 to $183 million in 2013.

Property valuations for the Satsop School District and the Mary M. Knight School District were unable to be done by the end of last year and were set to be completed this year. Projections showed that Satsop values went down by 7 percent, Hole said.

Hole said that despite Gordon’s plea for residents to appeal their valuations, only about 90 appeals were received. That compares to about 86 received last year.

SOFTWARE ISSUES

The big unknown for the Assessor’s Office remains on the software side, which appraisers need to correctly do statistical analysis of the county.

Once every four years, the appraisers have been going to all corners of the county to figure out if properties had gone down or up in values. This is called the revaluation process. The Assessor’s Office had broken up the county into four quarters and has been visiting each quarter once a year.

However, the state Legislature passed new laws requiring all counties go to an annual revaluation process. That change takes effect this year. That means the county either needed to hire four times as many appraisers or, the more logical approach, invest in a software package to do statistical mapping of the county. The new requirement this year has appraisers visiting properties in person every six years while still doing the statistical modeling.

The county has used an in-house software system to help model its existing properties. But the in-house software didn’t have the capability to do the annual adjustments.

That meant the county either needed to buy a system created by professionals or create its own. The decision was entirely Hole’s. Most other counties, including Thurston and Lewis counties, have used the professionally-designed boxed software.

Hole tried to get a new software system built from scratch — but two consultants failed at the effort and the third consultant ran out of time and money to do the work.

Hole is hoping that the county’s existing software can somehow be patched together so that it’s usable for another year. He says he’s in no rush to buy an out-of-the-box system.

The Assessor’s Office spent $180,546 on a customized software package that ended up being full of flaws and is unworkable. That money from a state grant is now all gone and there is really nothing to show for it. Hole is confident it would have worked out if the commissioners would have approved his request for additional funds to fix the problem. There was another $125,000 in state funds to tap. But, because the commissioners and Hole couldn’t agree to move forward on the customized package, those funds simply went away at the end of last year.

The commissioners had hoped to use the extra state funds to help them purchase an out-of-the-box system. However, the county couldn’t get its request in to the state before the end of the year drew close and all of the funds that the state had set aside for revaluation systems went to other counties on a priority list ahead of Grays Harbor, Hole said.

That now means the county is on its own to purchase an out-of-the-box system with absolutely no help from the state.

Gordon says the county will tap a one-time $350,000 payment from the Summit Pacific Medical Center in Elma. It’s the last payment the public hospital district is paying the county for the old 22-acre Oakhurst site in Elma, which is now home to the new hospital.

“Is this what I want to spend the money on?” Gordon muses, talking about rails to trails projects and other needs the county has. “No. But what other choice do we have?”

Hole showed an email from the state Department of Revenue to bolster his position that had the commissioners moved forward to approve his supplemental budget request in December to improve the existing customized software rather than scrap it entirely, the state funds could have been spent by June of this year. That could have saved the county from spending its own funds.

But the commissioners didn’t trust the software in place and it was a big gamble that it could have ever worked. Had Hole gone with an out-of-the-box system from the start, then the funding might have been there to buy it years ago.

“If we didn’t stop it when we stopped it, then we’d be even further behind,” Gordon said.

“I still don’t think it’s necessary,” Hole said. “The commissioners have decided we need an integrated approach of the three offices — auditor, treasurer and assessor that has less reliance on the programming resources out of the county’s Central Services.”

Nevertheless, Hole, the commissioners and other staff have narrowed down the out-of-the-box software packages to two companies, which will visit the county to demonstrate their wares over the next month. Then, the county will conduct field trips to other counties to see how the software works “in the trenches,” Hole says.

Meantime, Department of Revenue officials are beginning to train appraisers on how to do statistical models so they can do their job this year.

“This is all going to take a lot of time,” Hole said. “It won’t be done over night.”

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