Error affected tax bills in Charles Village and Bolton Hill
By John Fritze
Sun reporter
7:03 PM EDT, July 10, 2008
Nearly
2,000 residents in Charles Village and Bolton Hill could receive small
property tax refunds because of a city error that inflated their tax
bills, Mayor Sheila Dixon said Thursday.
Dixon's announcement puts to rest a months-long dispute that began
after The Sun reported that a popular credit was not being applied to
tax bills for residents of the Charles Village Community Benefits
District and the Midtown Community Benefits District.
The districts levy a property tax in addition to rate imposed by the
city and, in turn, provide extra services, such as increased garbage
collection and security. But the city had failed to apply the Homestead
Tax Credit to those additional bills.
"You know, we made some mistakes, and they made some mistakes," Dixon
said, referring to the city and the benefits districts. "Let's just fix
this and move on."
The city will send letters to residents in the next two weeks. Exactly
how many will receive the letter is not yet clear, but a Dixon
spokesman said it will likely be shy of 2,000.
The city expects the refunds will cost between $250,000 and $300,000.
It was not clear Thursday how the city will pay for that unexpected
expense.
After receiving the letter, residents will be required to apply for a
refund. A draft of the letter shows the city will offer homeowners the
option of taking the refund or, if they believe the money was well
spent, simply forgetting about it.
"I'm trilled that the mayor is taking this step," said City Councilman
William H. Cole IV, who represents residents who live in the Midtown
district. "The city is doing the right thing."
For months, city officials have debated who is responsible for the
failure to apply the Homestead Tax Credit to the district's tax bills.
At a May 29 City Council committee meeting, Department of Finance
officials said the districts would pay for the error.
But district leaders countered that they could not afford the refunds
and noted that it is the city Department of Finance that is responsible
for calculating the bills. The city Board of Estimates also votes to
approve each district's budget. The error appears to have been made for
years, long before Dixon became mayor.
An early draft of the 1994 proposal to create the Charles Village
Community Benefits District - the city's first residential benefits
district - was changed by the City Council to make sure that the credit
would apply, documents from the time show.
"We do want anyone who's due a refund to be able to get it without much
hassle and we also didn't want it to affect our operational budget,"
said Peter M. Merles, district administrator of the Midtown Community
Benefits District. "It looks like this will solve it."
In Baltimore and other parts of the state, the homestead tax credit has
eased property tax bills for homeowners by limiting annual assessment
increases for taxing purposes to 4 percent. The credit does not apply
to business or rental properties.
City Councilwoman Mary Pat Clarke, who represents Charles Village,
introduced legislation earlier this year that required the tax credit
to be applied in the future. That legislation, which was approved,
raised questions about whether the credit had been applied in the past.
A memo in support of Clarke's legislation drafted by the city Law
Department argued that the tax credits should have been applied. The
department later revised that memo, limiting its scope solely to future
tax bills and not addressing questions about past bills.
Exactly how many people will apply for the refund is unclear. Cole and
others said they have received only a handful of phone calls from
people asking about the overbilling. In most cases, the refund will be
small.
State law sets a three-year statute of limitations on requesting tax
refunds.
"I don't think in the grand scheme of things that people are out there
waiting for these rebates," Cole said. "But if the money is due to
them, they certainly want to know what the process is to reclaim it."
