Suit filed against Seaford decided in the city's favor

By Lynn R. Parks

A suit filed against the city of Seaford over its audit of property tax values has been decided in favor of the city.
Kind of.

Vice Chancellor John Noble, in a decision dated Aug. 7, said that plaintiffs Laurence Moynihan and Harry Freedman did not exhaust all avenues of appeal with the city before filing the suit in the Court of Chancery. "There is no reason why the court needs to intercede on behalf of the plaintiffs and thereby disrupt the normal assessment review process," Noble wrote. "Nor is there any reason to encourage disgruntled property owners to bring claims to court without first resorting to the orderly process established by the city charter." The city charter says that property owners who disagree with a tax bill must appeal that bill through the city council. Noble did not rule on the legality of the audit, however, saying that that determination must be made through appeals heard by the Seaford City Council. And he called efforts by Moynihan and Freedman to have the audit overturned "commendable." Stephen Ellis, a Georgetown attorney who is representing Moynihan and Freedman, said Monday that he was disappointed that Noble did not rule on the legality of the city's audit procedure itself. In a motion for reargument filed Aug. 14, he asked the court to rule on the methodology and qualifications of Randy Westergren, who conducted the audit for the city. "The court was apparently operating under the assumption that we could have had a hearing with the city," Ellis said. "It is fairly clear to me that the city would not give us a hearing on Mr. Westergren's qualifications and methodology." Indeed, at an appeals night held in May 2005 by the Seaford City Council, then Mayor Dan Short cautioned the property owners there that their appeals were to focus only on the reasonableness of the property assessed value itself. When asked by property owner Leroy Fooks,"How was this audit done?" Short replied, "We are not here to discuss that tonight." "The city dodged a bullet on this one," Moynihan said Tuesday. "We feel that we are right, and we feel that the city knows that they are wrong." Westergren, a property tax assessment consultant, 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 2004. 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. So far, Westergren has been paid $92,000, about three-quarters of his $123,263 fee. Moynihan, a certified real estate appraiser and owner of Tidewater Properties, filed his suit in May. The lawsuit claimed that the law forbids basing a fee for real estate appraisals on the results of an appraisal, as Westergren did, that the procedure Westergren used in his audit was illegal and that he was operating without a license. In the court hearing held April 10, Westergren admitted that the procedure he used in changing assessment values on 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. Westergren also admitted in court that he did not change 1989 values that were more than three times the 1974 county assessment. "One cannot confront Westergren's methodology, taking the higher of two assessment (one of which has been adjusted by a factor) and not come away wondering if any semblance of fairness...was buried in an attempt to increase the city's tax base,' Noble wrote in his decision. Noble added that the city's actions seem to have been "premised on the cynical-but, perhaps, accurate-assumption that property owners would be unable or unlikely to bring effective challenges," citing an e-mail sent by Westergren to city manager Dolores Slatcher. " As far as appeals, I expect about 1 percent to file and about half of them to even show up..." Westergren wrote in that e-mail. "Most folks will just forward the tax bill to their lender anyway to pay out of their escrow account." On Tuesday, Slatcher said that the city is just waiting for the outcome of Ellis' request for reargument. "I don't think the city had any feelings about this decision," she said. "I don't mean to be blasé, but there is still a lot of work to be done, regardless of how it comes out." Mayor Ed Butler was unwilling to comment much, until the appeal is resolved. "This is not final yet," he said. "I was glad for the decision. We will see what happens from here."

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