Department of Housing and Urban Development Unresponsive to Multifamily Housing Real Estate Tax Problems
CED-77-125: Published: Sep 27, 1977. Publicly Released: Sep 27, 1977.
- Full Report:
Although the Department of Housing and Urban Development (HUD) has been able to reduce real estate taxes sporadically through local appeal actions, it has been unresponsive generally to real estate tax problems of multifamily housing projects. The lack of a program to verify that taxes assessed on HUD-insured projects are fair and equitable has resulted in payment of excessive taxes and approval of unnecessary rent increases.
A review of the Chicago, Detroit, and Dallas area office operations indicated that HUD has not effectively reviewed and appealed tax assessments on projects it owns, insured proper and timely payment of taxes on these projects, or concerned itself with real estate taxes in its review of financial operations of insured projects. These problems were caused, in part, by a lack of needed tax information at the local offices and the absence of a headquarters policy on servicing insured-project tax problems. In Detroit, HUD was overassessed in several cases, paid taxes on projects it did not own, and paid $35,000 worth of late charges. In other cases, HUD paid unnecessary taxes by not taking advantage of State relief laws, and did not appeal a known overassessment. Although area offices are required to evaluate the fairness of tax assessments, they do not have the data available to them. HUD believes that tax assessment review for insured projects is the owners' responsibility.
Recommendation for Executive Action
Comments: Please call 202/512-6100 for additional information.
Recommendation: Real estate taxes should be included as one of the items to be dealt with in monitoring problems of insured projects. Procedures should be established to assure that real estate taxes assessed on both HUD-owned and -insured multifamily projects are fair and equitable. A multifamily tax payment system should be developed which insures proper and timely payment of real estate taxes. States and other taxing authorities which have enacted tax relief legislation should be noted, and HUD-insured project owners should be instructed to take advantage of such programs.