Fate of 899 assessments now in hands of Chancery Court

By Lynn R. Parks

In Chancery Court on Monday, Randy Westergren defended the procedures he used that resulted in increased tax assessment values for 899 of the 2,700 properties in Seaford. But Larry Moynihan, who has sued the city over the increases, told the court that Westergren's methods were "bizarre" and "ludicrous." Moynihan, who is a certified real estate appraiser, also said that the fact that Westergren based his fee on the total increases in tax assessed values was illegal. "How can you be fair if the higher the number you come up with, the more money you make?" Moynihan asked. Westergren, a property tax assessment consultant, is owner of a Milford-based business called the Delaware Assessor. He was hired by the city of Seaford in 2004 to perform an "audit" of the city's tax rolls. He reported to the city council in December 2004 that nearly one-third of the city properties were undervalued on the assessment rolls. Corrected values would mean an additional $246,526 in city coffers, he said. For his troubles, Westergren was to be paid one-half of that amount, or $123,263. He received half of that, or about $61,000, after his presentation to the council in December. The second half was to be paid after all appeals of Westergren's assessment values were satisfied. About 99 appeals of the assessment changes were filed by city residents, all of which are still pending, awaiting the resolution of the court case. Even so, Westergen has been paid an additional $20,000. Westergren said at the December presentation to city council that he had performed similar services for other Delaware towns, including Clayton, Milford, Georgetown and Selbyville. But he said in court Monday that for the other towns, he had compared town to county tax rolls to find properties that were not paying town taxes. Seaford, where he actually changed assessment values, "was different from the others," he said. After Moynihan filed three complaints against Westergren with the Council on Real Estate Appraisers, that regulatory board notified Westergren that he needed to be licensed to continue in practice. If he continued to practice, the council threatened to forward a complaint against him to the state Attorney General's office. Vice Chancellor John Noble, who presided over the Georgetown courtroom Monday, said that complaints against Westergren are still pending with the Attorney General. Moynihan, owner of Tidewater Properties, Seaford, and Dr. Harry Freedman, a Seaford orthopedic surgeon, filed suit in Chancery Court in May, saying that the procedure Westergren used was illegal and that he was operating without a license. The suit also said that the law forbids basing a fee for real estate appraisals on the results of the appraisal, as Westergren did. Noble seemed to agree with that point. Citing the city's charter that says its tax assessed values have to be "fair and impartial," Noble asked, "How can you have impartial with this kind of fee arrangement?" Noble also challenged Westergren over his methods, saying that it sounded like he was "cherry picking." Westergren admitted in court that the procedure he used in changing the values on the nearly 900 properties involved comparing tax assessment values on the 1974 Sussex County rolls to the appraisal values in the city's 1989 reassessment. Those 1989 values that were not at least three times the 1974 values - the ratio by which property values increased in those 15 years, he said - he changed to the 1974 value times three. He changed those values without inspecting the properties, he said. He did drive by the properties and take pictures of them.

He called his methods a "mass appraisal" and argued that the procedure he used is valid when looking at thousands of properties. Westergren also admitted that the 1989 values that were more than three times the 1974 assessment, he left alone. When Moynihan's attorney Steve Ellis asked him why the larger amounts were not lowered, he responded, "People who were paying more than three times the county value had had 15 years," from 1989 to 2004, "to appeal. We agreed there was no reason to affect that population." Noble said that the case could be made that all Westergren provided the city was a "clerical act," something that Moynihan has said all along. "The city paid $123,263 to have someone multiply the county's assessment for each city property by three," Moynihan wrote in a Jan. 12 letter to the city. "Looks to me like something an $8 [an] hour clerk could do in a few days." "Why didn't you simply recommend to the city that the 1974 value should be multiplied by three?" Noble asked Westergren. "Isn't that essentially what you did? It seems that you took the 1974 number, multiplied it by three and whatever was higher, that's what you told the city to use." Harold Carmean, a certified real estate appraiser and former director of assessment for Sussex County, told the court that the purpose of an appraisal is to ensure that all property owners are fairly sharing the burden of taxes. Under Westergren's changes, "you are not distributing a fair tax burden among the citizens of Seaford," he said. "Taking the Sussex County assessment and multiplying it by three - is that a proper method to determine fair market value?" Ellis asked Carmean. "No," Carmean replied. Under cross examination by Ellis, Westergren testified that after the changes he made to the city's assessment values, all city values are three times or more the county's 1974 values. But Moynihan told the court that that is not the case. "There were a number that were not changed," he said. When asked by Ellis to guess the reason that only a third of the property values were changed, Moynihan said, "If you do just a third, you can call it an audit. But if you change a whole lot more than that, it raises to the level of a reassessment. I think that that was why only 899 of them were done." "If you were cherry-picking, I have a lot of problems with that method," Noble told Westergren. Carmean told the court that the only way to increase tax assessment values is to conduct a full reassessment, something that could be very costly. But Moynihan argued that Westergren's methods in fact cost the city more than a city-wide reassessment would have: Based on a charge of $60 per property, a charge that Moynihan said was reasonable, the city would have paid about $162,000 for a total reassessment. Instead, he said, the city paid more than $123,000 to have the assessment values of a third of its properties changed. "$123,250 for 899 properties - that's $137.10 per property," Moynihan said. Sharon Drugash, tax assessor for the city of Seaford, also testified Monday. "Do you know why 899 property values were adjusted, and others were not?" Ellis asked her. "Not really," she replied. "Would you agree that the city had no reason to be concerned about Westergren's fee?" Ellis continued. "The higher he adjusted the values up, the more he made, but it also meant more money for the city. That was a win-win for the city, but not for the 899 taxpayers." "Yes, maybe so," Drugash replied, her voice shaking. "And I will tell you that I was one of those 899 taxpayers." At the conclusion of Monday's court hearing, Noble instructed attorneys to submit written closing arguments by April 3, and responses to those arguments by April 10. He will issue a decision following that.

News tips wanted
Call us with ideas for news and features. We're always looking for good stories to share with readers. Call Bryant Richardson at 629-9788.