Assessor Williams Used UNO Study To Guide Commercial Property Tax Reductions

Photo Credit: Louisiana Assessor’s Association

As New Orleans tourism-based economy ground to a halt last March, forcing thousands of hard-working citizens to rely on government-backed programs like unemployment and food stamps to make ends meet, Assessor Erroll Williams was closely monitoring the fluctuation of New Orleans property values.  Known to be a smart but somewhat nerdy pencil-pushing accountant, Williams has been an assessor in New Orleans for 35 years and is one of the city’s longest-serving elected officials.  

After the pandemic began, Williams hired the University of New Orleans’ Institute for Economic Development & Real Estate Research to conduct an independent study on the effects of COVID-19 closures on real estate property values. 

The study reviewed property sales in many categories – from single family homes, doubles, tri-plexes and condos to warehouses, various types of small businesses, hotels and restaurants. UNO compared the sale price per-square-foot from March 1, 2019 through June 1, 2019 to March 1, 2020 through June 1, 2020. Williams uses comparable sales figures as a major factor in setting assessments, which are often the basis in calculating a property’s true market value. 

Across the board, UNO’s research indicated that the price per-square-foot of residential properties sold during the study period increased while the selling price per-square-foot of commercial properties sold during the study period decreased. 

Williams relied on this data as well as research from the commercial real estate information provider CoStar and other sources to determine that 2021 property taxes should be decreased for dozens of hotels, restaurants and other small businesses. Some properties received a 57 percent decrease.   

Late last month on behalf of plaintiffs Rosalind Peychaud and Neal Morris, the Southern Poverty Law Center (SPLC) filed suit against Williams alleging that his reassessments were unconstitutional and illegal. Other defendants include the Louisiana Tax Commission and the Orleans Parish Bureau of Treasury. The case, allotted to Civil District Court Judge Nakisha Ervin-Knott, has not yet been set for a hearing. The SPLC has requested a jury trial.   

In the suit, the SPLC claimed that Williams improperly under-assessed a “select group of properties mostly owned by wealthy corporations” at the “expense” of everyday citizens.  “Uniform assessment ensures that all tax paying property owners in the City of New Orleans contribute their fair share to the public coffers, just not a few.” 

Affordable housing advocates and community leaders were quick to criticize Williams’ actions.

“It is unfortunate that we had to get to this point. The Assessor is not prioritizing the needs of the people and is forcing more of a burden on those who cannot afford it while giving multinational corporations a break during the pandemic,” said Housing NOLA’s Andreanecia Morris.

“The Assessor’s decision to give million-dollar tax cuts to hotel chains and shift millions in additional taxes to struggling homeowners in the middle of a pandemic is disturbing and cruel,” said Cashuana Hill, executive director of the Louisiana Fair Housing Action Center. “We need relief for renters, homeowners and small landlords.”  

“The homebuyers we serve faced steep property tax increases after the most recent assessment. The notion that the low-and-moderate-income homeowners of this City are bearing an undue share of the tax burden while large companies aren’t paying their fair share is unconscionable,” Oji Alexander, executive director of Home By Hand.  

Experts say that Williams must prove to the Court that he had a valid basis for reducing the assessments in question. “Being an assessor is not an easy job if you do it right,” said the expert.  “The question is how does an assessor measure the financial value of a property owner’s loss during Covid-19? That’s the hard part. Williams’ people put in a lot of effort to try to get the answer right.”

Williams is mandated by law to reassess all New Orleans properties every four years. Most property owners were notified of their quadrennial tax increase in 2019. About 25 percent of properties did not get reassessed until 2020. Those property owners’ adjusted tax bills landed in mailboxes in January 2021.  

“No one likes paying taxes. People often complain that their property taxes are too high. Yet when it’s time to sell a piece of property, owners want to be paid top dollar. Hence the importance of accurate assessments,” said an independent appraiser who believes that Williams should have reduced commercial assessments even more. “The activity at the New Orleans International Airport should be the guide. When no one is flying in or out of New Orleans, our economy is dead.”  

All citizens expect to pay a fair and uniform tax rate, and for the rate to be consistent across the board.  Already skeptical New Orleans affordable housing activists believe COVID-19 was the perfect storm to further increase existing inequities. 

“We can no longer contend, nor pretend, that our city’s affordable housing crisis is the result of unintended consequences of development. We have enough data, studies, and over-analysis to clearly demonstrate that our civil rights are being viciously and repeatedly violated by those who are charged with protecting those rights,” said Asali DeVan Ecclesiastes, chief equity officer, Ashe Cultural Arts Center.

The pandemic severely impacted rental properties owners because of a federal moratorium – still in place – which prohibited most evictions.  Many landlords were left with little or no income from tenants but still had to pay such expenses as taxes and insurance.  A new program is now in place to compensate landlords for lost revenue. Clerk of First City Court Austin Badon says the current moratorium will expire July 1, 2021. 

Both owners of rental properties, SPLC plaintiffs Peychaud and Morris are the right taxpayers to help the non-profit make its case to a jury of New Orleanians.   

A former state representative and deputy chief of staff to one-term Congressman Joseph Cao, Peychaud is currently an outreach specialist for the Louisiana Office of Community Housing, according to her LinkedIn profile. In 1997, Peychaud and her husband Joseph E. Peychaud Jr. formed Peychaud Properties, LLC. to manage their growing real estate holdings.  

Through his company Redmellon which is located on Oretha Castle Haley Boulevard, Morris is an established real estate developer who has completed a number of affordable and market-rate projects in New Orleans, Atlanta and Oregon. They include more than 100 offsite homes associated with the Iberville redevelopment, the 835 Julia Street condominiums, and the Eighteen Moreland Loft Townhomes in Atlanta.  He also owns and operates New Orleans Apartment Management and Marketing, LLC.  

In a January 15, 2021 letter to Lawrence Chehardy, Chairman of the Louisiana Tax Commission, Williams explained that Governor Edwards’ Emergency Declaration required assessors to review and revalue any and all property adversely impacted by the pandemic. “My office was required to estimate the impact of functional and economic obsolescence resulting from the COVID-19 pandemic based upon the best data available at that time.  While these may not be everyday terms in the government lexicon, they are widely recognized and accepted appraisal concepts.”

Many assessors around the state were not proactive like Williams and instead waited for individual property owners who wanted tax relief to come forward. Williams had a tight time frame to work within to make changes for the 2021 tax year.  The rolls opened for public inspection on July 15, 2020. 

During that period, any property owner who thought his or her building’s value had been impacted by the pandemic could have requested a reduction in taxes. Even if the assessor’s office turned down their request, the property owner could have appealed to the Board of Review and then to the Louisiana Tax Commission. According to the assessor’s records, neither Peychaud nor Morris appealed any of their 2021 property tax bills.    

Williams used much of the same criteria he previously employed during Hurricane Katrina to evaluate COVID-related losses. “We strived to quantify the impact on property values and apply changes fairly and equitable based upon what pertinent and available date indicated,” he continued. In addition to the UNO study used to triangulate their findings, Williams said his staff performed extensive internal research and solicited market data from numerous resources.  

Williams’ internal staff research from March to June, 2020 indicated that New Orleans lost 150,000 jobs including more jobs in just the second quarter of 2020 than during the entire 2008 economic crisis. The city ranked third in the nation (behind Las Vegas and Orlando) in overall hospitality job loss. 

Hotel REVPAR (revenue per available room) was also down 60 percent in 2020’s second quarter. During the week of April 12-18, 2020, REVPAR was down 89 percent, the highest level ever. Researchers also projected a 30 percent decline in office rents as businesses will continue to work remotely through 2024. 

Most short term rental (STR) had little if any income after the pandemic began. They suggested that only the largest STR management companies would be able to withstand the downturn. Relief for property owners of short term rentals was not included in Williams’ tax reductions.        

While Williams agreed that the pandemic had “unquestionably hurt our families and communities from an income standpoint,” research did not indicate that a reduction in residential real estate values occurred. 

To the contrary, the analysis showed residential property values continuing to increase. Williams felt he had no choice but to keep residential values where they were.  “To reduce residential property values has been strictly a political action and was not supported by the data analysis,” he said.

Determining the change in commercial real estate values was a different matter, Williams explained. “We found the COVID-19 related obsolescence factor impacted different commercial industries by varying degrees but with consistency among businesses by type. Every business type which was impacted by the epidemic and government closures was given equal treatment no matter if it was a large or small business and regardless of their ownership locally or nationally.”

During the past 10 years, there has been a modest increase in property tax revenues – growing from $381 million in 2010 to $652 million in 2020, according to Williams. “Real estate growth is not forever; it is constant as long as there is no adverse influence. Hopefully our city government will experience increases in real estate and sales tax revenues upon future stabilization of this pandemic,” he said.  

Though he was unable to discuss the specifics of the pending litigation, Tax Commission Chairman Lawrence Chehardy said that he thought metro New Orleans would begin to see a turn-around at the end of 2021. “Once we get the pandemic behind us and people get their jobs back, our property taxes and the economy will rebound as visitors return.”  

New Orleans is not the only tourism-dependent city that has seen a significant drop in property tax revenues. On January 14, 2021, the New York Times reported that the City of New York’s property tax revenues were projected to decline by $2.5 billion in 2022. (Like in most U.S. cities, New Yorkers pay their property taxes at the end of the calendar year rather than at the beginning, which is the law in New Orleans.) 

New York Mayor Bill de Blasio blamed the loss of income on the sharp decline in the value of hotels and office buildings. Almost half of New York City’s tax revenues are derived from real estate. New York City’s unemployment exceeded 20 percent at the height of the pandemic. A half-million New Yorkers were still unemployed in January, 2021. New York is currently developing a new plan to tax millionaires as a way to generate extra income for public services.  

Williams oversees one of the state’s largest tax assessment rolls. It includes almost 164,829 total real estate parcels and 10,899 businesses. More than 66,000 homeowners receive a homestead exemption and 16,921 property owners over the age of 70 also benefit from an age-related assessment freeze. 

In 2021, the average tax bill for an Orleans Parish parcel located on the Eastbank is $3,623.92. Westbank property owners pay an average of $1,600.60 per parcel.

Williams is also supporting HB 143 by State Representative Matt Willard which would place an annual 10 percent cap on residential property valuation increases unless the valuation change is due to renovation or sale. Williams has been trying to pass a similar bill for many years.    

Williams was first elected assessor of the city’s Third Municipal District in 1985 and elected New Orleans’s single assessor in 2011. Along with the mayor and city council, Williams is up for re-election later this year. He has not officially indicated whether he plans to run again. 

According to his 2020 annual campaign finance report, Williams has $190,538.19 cash on hand.  He has not received any campaign contributions since 2018. Previous donors include Chris Owens, Darryl Berger, Robert Lupo, Liberty Bank, Rudy Smith Services, Bobby Major, Moss Realty, New Orleans Hotel Collection, Franco Valobra and Moe Badr. 

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