Portland $548 million school bond: No, but . . . .Part II

Last week, we talked about what the Portland Public Schools need ($370 million) and what was requested ($548 million) from Portland property taxpayers.
Here's a brief synopsis.
Portland Public Schools have an urgent need to upgrade 8 campuses for a total of about $370 million.  But after paying $21,600 to research firm Davis, Hibbits and Midghall, they concluded that property owners would be more likely to vote "yes" if all 85 campuses were upgraded, and upped the ante to  $548 million.
By adding $178 million to the construction bond issue, PPS and its research firm ignored Portland's:

• High (9.9%) unemployment rate
• Comparably low (just over $70,000) household income
• Comparably high cost of home ownership (compared to renting)
• Home prices that have fallen 12%+ last year.

I could bore you to tears with my version of where we are in the economic cycle, using 21 indicators reflecting one of many determinants of financial heath.  But I wouldn't be telling you anything you don't already know.
We had a BIG financial scare a couple of years ago, and we're creeping with fits and starts from potential disaster.  But we're nowhere near healthy.
That is an accurate description of the economic situation the people from whom PPS is asking for and extra $178 million for non-essential school construction.
So what are the "extras" we'll get for that additional $178 million?

• Doors that open with key cards
• Covered playgrounds
• Outdoor learning environments
• Upgraded science labs

Not one teacher will be added.
PPS' research firm concluded that Portlanders are concerned about education and unemployment, and therefore would happily pay an extra $178 million for non essential construction upgrades to accommodate some temporary construction jobs.
We could very well end up with covered playgrounds in schools with no physical education programs.

But it's only going to cost the average property taxpayer about $300
I used to have a financial planning business, where I did all my own macro and micro economic research.
I ignored financial pundits and analyzed the financial statements of potential investments for my clients myself.  I taught financial planning students how to analyze financial statements at UCLA as well.
Here is a perfect example of why I insisted upon doing my own research.
1.  It's $300 for six years, plus. . .
From PPS: "The estimated bond rate for six years is approximately $2 per $1,000 of assessed property value. It then drops to an estimated 15 cents per $1,000 for no more than 20 additional years. The median assessed home value in the school district is $147,480."
In plan English?
It's $300 times 6, plus $22.12 times 20 years, or almost $2,250.
2.  The $548 million bond is really a $625.5 million bond
Oops!  PPS forgot to include the $75.5 million cost of interest payments and the $2 million bond insurance expenses.  So, it's really costing the "average" property taxpayer about $2,500.
And that $75.5 million interest cost is very likely understated.  Most of the financing, in their own words,  would be in short-term bonds that mature in one, two or three years
As anyone who has not spent the last three years in a cave knows, the Federal Reserve Bank has spent trillions of dollars to keep interest rates low to stimulate the economy.  Everyone knows it won't do that forever.  So, everyone knows rates are going up.
Everyone except PPS.
Instead of locking in a low long term 20 year rate now, PPS is going to finance short term loans that are ASSURED to be renewed at higher rates over the term of the bond.
So, you can be almost certain that the $2,500 will almost certainly be higher.
3.  What's an average property taxpayer?
Probably not you.  First of all, from a mathematics perspective, PPS is using the word "average" incorrectly.
We should expect more from those who supervise our math teachers.
What they should say is "median."  The median assessed value for a PPS home is now $148,480.
That means that 1/2 of assessed values are more than $148,480.
Look here to input your street address, and find your assessed value.  If it is more than $148,480, you'll be paying more than $2,500 for this bond.

More next week.

Until then, give this some thought and discuss it with your friends and colleagues, and certainly anyone representing PPS and this bond issue.  Every assertion in this series of articles is based on hard facts, and I welcome discussion about any of them.

Next week, we'll review a local professor's analysis of how many residents are likely to be forced to move out of Portland because of the increase in homeowner expense if this bond issue passes.

And, how PPS "Superintendent Carole Smith says her goal is to persuade voters to approve new construction until all the the district's schools have received the overhauls the district says they need."

kittyok@earthlink.net

Portland $548 million school bond: No, but . . . .

Nothing worthwhile in life is simple. 
Your job isn't simple.  Your love life isn't simple. 
Neither is the Portland Public School (PPS) $548 million bond.  It's not a choice whether you're "for kids and jobs" or not. 
It's a choice of whether to cover playgrounds before you fund physical education programs.
In this "School bond: No, but . . " series, you'll see that one can be "for the kids" in a way that will actually result in improved learning, not new buildings. 
You can tell PPS that the best way to spend your money is to fix what is necessary, then improve education before you improve more buildings.
First, a little background.  Here's an economic "look in the mirror" for Portland.
1.  Unemployment (December, 2010)- 9.9% 
According to the Bureau of Labor Statistics, the Portland metropolitan area has an unemployment rate nearly 9% higher than the national average.
2.  Average household income (2008) - $70,000
According to Greenlight Greater Portland, Portland's average household income is ninth lowest of ten western metropolitan areas surveyed.
3.  Cost of renting versus buying a home - Cheaper to rent
According to Trulia, it is more cost effective to rent rather than buy a home in Portland.  Homeowner costs are high, and, one out of every 44 of our homes got some type of foreclosure notice in 2010.
4.  The bottom line
Our unemployment rate is high, our average household income is comparably low, and the cost of home ownership is comparably high.  Clearly, any additional cost to Portland property owners should be limited to what is absolutely necessary, and not a cent more.  That's fair to both homeowners in difficult times - and the kids.
The Portland Public School construction bond
1.  What is needed - $370 million
Two-thirds ($370 million) of the PPS bond is based on legitimate need for urgent repairs.  Marysville K-8 School suffered significant loss in a recent fire.  Jefferson, Cleveland and Roosevelt High Schools, and Laurelhurst, Faubion and Rigler K-8, and Markam Elementary are also in desperate need of repairs.
These are necessary repairs, and they're necessary now.
I urge you to be "for the kids" and vote "yes."
2.  What is proposed - $548 million
That's right.  We need $370 million and we're asking for $548.   To be paid by home owners in a city with 9.9% unemployment.  And comparably low household income.  And an already high cost of home ownership.
So, this other $178 million is urgent, too, right?
Wrong.
The simple answer is that, in order to get everybody to vote "yes," all 85 campuses - not just the 8 that need it - will receive some kind of upgrade.   As we've seen, nothing is simple.
My personal favorite construction project in the $178 million unnecessary repair portion of the bond issue is providing covered playgrounds for schools with very uncertain physical education program funding.   Yes for protected playgrounds.  Maybe not for physical education teachers.
Talk about this with your friends and colleagues.
$370 million - yes.  $548 million - no.
More next week.
Until then, I sincerely invite anyone who can justify the additional $178 million to reply.  I'm for the kids, too.
kittyok@earthlink.net

Do Not Start With the Redhead Having a Hot Flash

The first thing that caught my eye was Senator McCain's assertion that a "$300,000 . . study whether . . yoga can be . . effective . .to reduce the severity of hot flashes in breast cancer survivors" is "waste."  Then, I find that the total for the100 stimulus projects that he and Senator Coburn describe as having "questionable goals," that are "being mismanaged or were poorly planned" and are even "costing jobs and hurting small businesses,"  is 1/2 of one percent of the Federal Stimulus package. 
Being a woman in her 50s with 20 + years of moderate to severe hot flashes has made me somewhat of an expert in what is, and is not effective in reducing them.  Your opinion of my expertise aside, I can assure you with some conviction that it significantly exceeds that of both Senators McCain and Coburn.  When I read that the Senators thought it wasteful to study yoga as an effective methodology to reduce the severity of hot flashes in breast cancer survivors, I thought perhaps the honorable gentlemen would have found the study less wasteful had studied reducing symptoms of discomfort for prostate cancer survivors. 
No matter, Senators.  You have my attention.
And I have a calculator.

• FLASH - Whether you agree or not with their conclusions of wastefulness, the totality of the programs in their 55 page report is one-half of one percent of the total Federal Stimulus package.
• FLASH - If I were running a business with gross revenues of $200,000, and wasted 1/2 of 1 percent of that money, that would be $1000, or $83 per month.  I do not actually have gross revenues of $200,000, but I do waste $20 per day, and consider myself a very non-wasteful person.
• FLASH - From another perspective, if Senators McCain and Coburn were to write a 55 page analysis for every $7 billion in the stimulus package, their report would be 9,428 pages long.   62-year-old Coburn may live to see the publishing of that report, but I don't believe it could be completed in the remaining lifetime of soon-to-be 74 year-old McCain.
• FLASH - This is a mid-term election year.  Voters may be polarized, angry, out of work and disappointed, but, by enlarge, can tell the difference between something of real importance and of a politically motivated attack.  There are plenty of relevant political issues that differentiate the parties.  This is not one of them.
• FLASH - Do not tell women that a study to minimize the discomfort after breast cancer surgery is wasteful.  We are more than 50% of the population and it may infuriate us.  Those of us over 40, actually having these symptoms (who choose not to take hormone replacement therapy because it has a statistically significant increase in instances of breast cancer) will not only not vote for you, but may actually become quite vocal and tell others what you have done.  You can't afford to lose have the voters.  THAT is a significant number.
• FLASH - Some of us have calculators.  And we know how to use them.

Why the European Bank Stress Test is Almost Meaningless

European banks just completed a "stress test" designed to indicate whether a bank could survive a further economic downturn.  The primary measurement in this test is whether the bank is adequately capitalized, another way of saying whether its assets can absorb losses that may occur in such a downturn. Therefore, the definition of capital assets, in this case "Tier 1 Capital," is critical.
The Test
Assume a cumulative two-year probability of a

1. Default rate of 15 percent on property and corporate loans, 
2. 10 percent loss on mortgages and 
3. Stringent "haircuts" (write-downs) on their sovereign debt 

would the bank retain a 6 percent core Tier 1 ratio?
 
Tier 1 Ratio Defined
Included in the European bank stress test's definition of Tier One capital is

1. Deferred tax assets.  These are primarily losses taken by a bank that are in excess of the amount that can be deducted in a particular year, and are carried forward to future years, which cannot absorb new losses
2. Hybrid bonds.  These are loans to the bank that are convertible to common stock, which, again, cannot absorb losses.
3. “Silent participation” stakes, which resemble sovereign debt rather than cash, which has been injected into banks. Nevertheless, it counts this towards its core Tier 1 capital.

Which Banks Would Have Failed Without Using These Items in Tier 1?
According to Reuters, almost all big European banks would have passed.  It's a different story for the
smaller state-owned banks. Germany’s landesbanks, for example, have an average core Tier 1 ratio of only 5.9 percent but a total Tier 1 average over 9 percent, according to KBW. Using a stricter definition of Tier 1 capital would probably mean taxpayers having to stump up much more in the event of an economic decline as described above.

What Was the Purpose Performing the Test Using Such Lax Standards?
Had core Tier 1 capital been applied without including deferred tax assets, hybrid bonds and sovereign debt, the number of banks that would not have passed the test would have been significant enough to cause panic and further economic downturn.

But, by concluding that  only 7 of 91 banks failed the stress test, most people will be reassured that a further European economic downturn won't result in widespread bank insolvency.

Don't bank on it.

The Case Against Goldman Sachs: Epilogue

Last April, I outlined the case against Goldman Sachs.  In that discussion, I posed the following questions:
1.  Should rating agencies rate securities on their own merit (not by considering who may or may not be investing in them)?
2.  Since ACA chose the securities in this investment from a list given to them by Goldman (from a Paulson list), was it a misstatement that ACA was "Portfolio Selection Agent?"
3.  Since banks and pension funds are defined as "sophisticated" investors, should they analyze the investments they are considering on their own merit (not by considering who may or may not be investing in them)?
Those questions have been answered by the Security and Exchange Commission in their settlement with Goldman.
In that settlement, the SEC found that Goldman omitted the material fact that Paulson & Co. was on the other side of the trade.  That finding assumes that ACA would have selected securities differently had it known that Paulson was taking a position against, rather than investing in the securities it was analyzing.  Stated slightly differently, that is analogous to saying that I would report findings on the financial health of Johnson and Johnson, the Washington Post, Moody's and Kraft Foods differently if I knew Warren Buffett was selling them than if he was buying them.  That doesn't say much for me as an analyst.  There's always someone selling when another is buying.  When must that be disclosed?  When the person is well respected?  Smart?  Well known?
The SEC additionally noted that material facts need by disclosed whether or not investors are "sophisticated" or not.  Again, that doesn't say much for banks and pension funds, which generally have staff analysts who review the financial health of potential investments.  Does the SEC feel that these analysts will conclude differently if someone they know is selling, rather than buying a security?  I taught Security Analysis and Advanced Security Analysis at UCLA, and focused upon balance sheets, cash flow statements and other fundamental measurements of financial health.  Not once did I recommend researching whether other people were buying or selling a stock when making a determination of its financial viability.
Put into perspective, the fine against Goldman was approximately three days' earnings, so even though it was the highest fine assessed so far by the SEC, it will not materially effect Goldman's earnings.
Further, Goldman admitted no wrongdoing in its acceptance of this agreement.  Consequently, those lining up to recoup losses from their investment will have a much higher burden of proof.
My assessment of this settlement is that of a business decision by Goldman to pay a fine rather than engage in a protracted battle with the SEC.  But the more meaningful message is this:  The SEC has little confidence in either analysts or rating agencies.
Should you?

Financial Regulatory Reform: A Mixed Bag

What's In It
Before you listen to pundits and talking heads, you may want to read a review by someone who's actually read the bill.  It's a mixed bag.  Some things are good.  Some things are not so good.
Let's take a look.
I.  What's In It
A.  Creates Consumer Protection Agency under the Federal Reserve Bank
B.  Increased capital requirements for financial institutions
C.  Creates a council to identify and address systemic risk
D.  Regulates most derivatives, asset-backed securities, hedge funds, mortgage brokers and payday lenders
E.  Streamlines bank supervision
F.  Provides shareholders with a non-binding vote on executive compensation
G.  New rules for credit rating agencies
II.  What It Says
A.  Consumer Protection Agency
The rationale for creating this agency was because "the economic crisis was driven by an across-the-board failure to protect consumers."  With this I disagree.  The economic crisis, in my judgment, was caused by

1. The belief that historic national upward trends in housing prices would continue, regardless of the effect of  increasing demand by those whose credit would not have previously qualified them for a home;
2. Granting a AAA rating securitized in part by these so-called sub-prime loans; and
3. Allowing those who made these loans to completely offload their risk to purchasers of securitized loans.

While I agree that the buyers of mortgage backed securities whose brokers assured safety needed protection from reliance on a AAA rating by rating agencies, the problem was rooted in the fact that the rating agencies did not do their job.  In other words, it was not lack of consumer protection, but a complete lack of competence by rating agencies, paid by the issuers of these securities, that resulted in brokers selling them and consumers buying them.  Further, borrowers who bought $500,000 houses with a $50,000 annual income did not need protection.  They needed to be honest about their ability to afford a home.
I am not saying some level of consumer protection in finance is inappropriate.  I am saying, however, that to say that a lack of consumer protection caused the financial crisis is an overstatement.  Had ratings agencies done their job, mortgage backed securities would have been unsaleable, and no crisis would have occurred.
B.   Increased Capital Requirements
Banks now need to put aside more money as a cushion against risk.  The more risk taken, the more money that must be put aside.  So far, so good.
In the current economy, banks, as most businesses know all too well, are reticent to lend money.  They got clobbered in the economic meltdown, and are now erring on the side of caution.  It's a good thing that banks are more cautious, but a bad thing that they're too cautious because without credit, business expansion is all but impossible.  So, the more money they must put aside for capital, the less they'll have to lend.  And that will delay economic expansion, including new hiring.  Are new capital requirement bad?  No.
But there will certainly be an effect, and that effect will be that businesses will find it hard to borrow.  And expand.  And hire.
Also, the largest banks will be required to fund a $50 billion fund dedicated liquidating to "too big to fail" banks which are insolvent.  Taxpayers will be on the hook only for working capital collateralized by bank assets, and will be first in line for repayment.
Again, on the surface, a good idea, but these funds will not be available for lending either, and will further exacerbate the difficulty in obtaining business financing.
C.  Financial Stability Oversight Council
A new council will be formed that will be responsible to identify and respond to emerging risks throughout the financial system.  As a last resort, they'll be able to break up any company, bank or not, that threatens US financial stability.
A good idea, but, as with anything, it will be as good as its members.  Chaired by the Treasury Secretary, it will also include regulators from the Federal Reserve Board, SEC, CFTC, OCC, FDIC, FHFA, the new Consumer Financial Protection Bureau.
D.  Regulates Derivatives, etc.
During the height of the mortgage boom, financial institutions collected fees for guaranteeing each others' mortgage portfolio.  As long as everybody was repaying their loans, that was fine.  When things went south, though, these so-called insurance promises were called in.  AIG, Bear Stearns and Lehman Brothers had issued lots and lots and lots of these promises, and you know what happened when the banks started experiencing mortgage losses.  Bear and Lehman went bankrupt, and taxpayers rescued AIG, which had made more promises than they could possibly repay.
Now, most derivatives will be traded on an exchange, so we'll all know about how many are issued and can theoretically stop problems based in making promises that can't be kept before they become too large. 
Banks must trade most derivatives in subsidiaries (which are not insured by FDIC, and therefore not available for taxpayer bailout), except interest-rate swaps, foreign exchange swaps and instruments deemed as “hedging for the bank’s own risk.”
As always, the devil is in the details.  FDIC, under this bill, will be on the hook for interest-rate swaps, foreign exchange swaps and "hedging for the bank's own risk."  We'll need to make sure somebody's watching these exceptions closely, or the taxpayers will find themselves on the hook for a hedge that the bank convinced regulators was "for its own risk."
Hedge funds are now officially investment advisers (making one wonder exactly what they were before).
The big (if boring) news is that there is now an Office of National Insurance under the Treasury Department.  Hopefully, this will be the first step in regulating insurance on a national, rather than State level, which will encourage more competition and - hey, that might even serendipitously bring down health insurance costs.
E.  Streamlined Bank Supervision
State chartered banks and thrifts under $50 billion will be regulated by the FDIC.
All nationally chartered banks and federal thrifts, and the holding companies of national banks and federal thrifts with assets below $50 billion will be regulated by the OCC.
Banks and thrift holding companies with assets of over $50 billion will be regulated by the Federal Reserve.
While technically, this will preserve the state banking system that governs most of our nation’s community banks, the reality is that small community banks are likely to put themselves up for sale now that they have 2000 pages of regulatory compliance to deal with.  I used to do that job, and speak from experience.  A community bank with 75 employees would need to dedicate 10% of its staff to compliance.  Not feasible.
F.  Provides Shareholders Non-Binding Vote on Executive Compensation
Non-binding is the operative word here.
G.  Credit Reporting Agencies
I blame the majority of the economic meltdown on credit reporting agencies.  Had they done their job, mortgage backed securities would have been rated as what they were - risky.  Few would have bought them.  Investment bankers would not have been able to sell their risk in extending loans to people who couldn't afford them, and would have stopped making those loans.
Now, there will be an Office of Credit Ratings at the SEC.  Yes, the same SEC that was responsible for overseeing Bernie Madoff. Analysts will now have to pass exams, compliance officers will be forbidden to perform sales, and the SEC can deregister an agency for providing bad ratings over time.
My reaction to this is probably about the same as yours.  Too little.  Too late.
III.  Brace Yourself
Bank loans will be harder to get.
Bank fees will go up.
Watch for the exceptions in this legislation to be the source of the next financial meltdown.
There will be another financial meltdown.
Fear and greed cannot be legislated out of the financial system, but this legislation is better than nothing.

The Saga of Property Tax Appeal: A Mini-Series

Some people want the government to run almost nothing because of its inability to do so without a mountain of red tape, layers of bureaucratic nightmares and regulations that are nearly unintelligible.  Here's one woman's journey through a property tax appeal, and why, at certain times, she found herself sympathetic to anarchists' point of view toward government.
Part I - A beautiful new home
While renting a sweet little cottage long enough to make certain that we were planting our roots in a neighborhood we would love, a serendipitous real estate meltdown occurred that brought the price for the home of our dreams within reach.  We found a buyer for our rental, and everybody was happy.  One of the best selling points for our dreamy new home was the seemingly low property taxes.  Emphasis on "seemingly."
Imagine our surprise when we received our property tax statement nine months later with a 40% tax increase.
Part II - Follow the yellow brick road
After numerous calls to the Assessor's Office, we found that the first step toward  rectifying this situation was an appearance in front of BOPTA (that's Board of Property Tax Appeals, for those of you who speak non-acronym-ish).  Okay, fine.
We assemble a plethora of data that includes the fact that the Assessor's Office January 1 RMV (Real Market Value) for this home was 8% higher than our independent appraiser determined 55 days later on the following February 24.  The basis for thier valuation was the Assessor's Office in-person appraisal on the previous November 24.  Among possible reasons for the miscalculation was the fact that the assessor determined that there was a 1120 sq. ft. fully finished basement, when the actual finished area was 336 feet.  But the burden of proof was ours.
Prior to scheduling the appearance before BOPTA, we spoke to the Assessor's Office (many times) and were pressured (many times) to allow another in-person appraisal.  We were reticent to do so, thinking that the inflated appraisal may get even worse, but did agree to let them see the basement, which was apparently the basis for the problem.  "No can do," said the Assessor's Office.  They are an "all or nothing" kind of group, and wanted to see everything or nothing at all.
With their repeated requests, were admissions that "we didn't have to" let them in.  Okay.  We would take our chances with BOPTA.
Part III - BOPTA
The Board of Property Tax Appeals is a group of three persons who listen to your case for about 15 minutes, and make a determination of whether your property taxes are too high.  We assembled our data (appraisal, arm's length sale, pictures of the basement, etc.) and made our case to three elderly, slightly confused people who clearly never bothered to review the information.  They shared the one copy we had mailed to the Board three months ago, had difficulty locating the Addenda ("Addendum III?  Let's see here," flip, flip, flip.  "Oh, okay, I found it," said the BOPTA triumvirate leader, with obvious pride). 
Some pertinent quotes included, "This appraisal of yours isn't very long," "How do we know when these pictures of the basement were taken?", and "Property values dropped precipitously after the first of the year."  No evidentiary weight was placed on the fact that the appraisal was complete, the date on which the pictures were taken was noted by the camera at the bottom of the picture and RMLS data showed that property values increased 14.8% from January 1 to February 28.  "Your fifteen minutes are up," they said after ignoring our responses.  "If you disagree with our findings, here's a booklet that shows you the next steps you can take."
Two weeks later, BOPTA informed us by letter that they lowered our Real Market Value by 3.7% and kept our taxes just the same.
Would we care to critique the experience?
Part IV - The Magistrate
Tearing the critique form into tiny pieces, we moved along to the next step.  This required a $75 filing fee, completion of new forms enumerating (again) the reason(s) that we disagreed with the Assessor's Office, and mailing a copy to the Assessor and the Magistrate.  Our booklet noted that the basis of taxation in our state is "complicated," and gave several cites proving that description to be one of the great understatements of history.
We dutifully mailed off our paperwork, and received, almost immediately, a response from the Assessor's Office.  They agreed that we owned the house at the given address, and that it was indeed residential property.  They disagreed that the taxes were incorrect, and the burden of proof was ours.
Part V - Measure 50
Our state, possibly in a drunken stupor, enacted a property tax measure in 1997 called Measure 50.  Briefly, it goes something like this.  All property will be assessed at 90% of its current value on the tax rolls as of 1997.  From that point forward, property taxes can increase 3% per year UNLESS there is an exception, such as, your house burns down or you fix it up.  The value of the exception is the value that the market places on improvements (or loss), and will be assessed in addition to the 3% annual increase.
You pay taxes on the MAV (Maximum Assessed Value), but that value is based on the RMV (Real Market Value) of the property.
Okay.  Well, we bought a house from people who bought it in 2007, fixed it up and sold it to us in early 2009.  The value of the improvements, then will be the difference between what they bought it for and what we paid, less the change in general property values in the area.  Easy enough.
Ha.
Part VI - The Case Management Hearing
Before you go to court, the Magistrate mandates a Case Management Hearing.  That means everybody gets on the phone and says what they think.  I wrote out our case ver batim in order that it was concise, to the point, and relevant.  Evidence was mailed (again) to both the Magistrate and the Assessor's Office.  Six months after our BOPTA appearance, the phone rang for said management hearing.
I told His Honor that we entered into an arm's length sales transaction to buy our house, for which an independent appraisal was effected on February 24.  The value of the home was clear, therefore, the value of the repairs was clear.  We pointed out the errors in the Assessor's Office appraisal.  We concluded by thanking all participants for their valuable time.
The Assessor's Office responded by saying that they needed to see the property.  We responded that they had seen the property, that our primary point of contention was the size of the finished basement and that we had been repeatedly told we were not obligated to let them in.
The Assessor's Office said, "Our appraiser never saw the interior.  He just walked around the house."
WHAT?  The burden of proof to refute some guy walking around the house and guessing how much it was worth - was MINE?
The Magistrate may have interpreted my shocked silence correctly, and said, "You need to let them in."
Jesus Tapdancing Christ.
Part VII - The Appraisal
The Assessor's Office appraisers came by at 9AM the day following our return from my step-son's wedding.  Groggy, but not unpleasantly, we let them in.  Yup, the basement isn't completely finished, they noted, as they measured the 336 sq. ft. we'd photographed, measured and presented last November.  They walked quickly through the house, measured nothing else, took a few notes, and left.
"We'll be in touch," they said.
Part VIII - The End
We had a detailed accounting of the expenditures made on the house from the previous owners, and applied the percentages of market value for each upgrade suggested by Century 21 on its website.  The market value of the repairs, according to these calculations, was $45,170.
When the appraiser called with his findings, he said, "Your exception value is $50,000."  "Really?" I responded.  "How did you determine that value?"
"We have a complex matrix . . ."  blah blah blah.  "The majority of the adjustment was the basement."
I refrained from saying, "The basement you didn't want to see last November?"
I paused, and instead said "I have a less complex matrix,  I applied the actual value of the repairs to the amount a national realty company suggests they are worth.  My value is $45,000."  Silence.
"We can't go any lower than $45,000," the appraiser snapped.
My thoughts then were inappropriate for writing here.  You could, however, describe them as "Expletives deleted."
We haggled about the square footage, and the real market value of the home, which they continued to think was 2.4% higher than the purchase price, but since it had nothing to do with the amount of taxes, I relented.  Close enough for government work, I guess.
"We'll send you a statement to sign, and will refund your overpayment,  Thank you for your cooperation," he ended.
"You're welcome," I responded, deleting more expletives.