New Orleans could soon begin cracking down on property owners illegally benefiting from homestead tax exemptions for which they don’t qualify.
The Landrieu administration has chosen a firm that specializes in rooting out cases of fraud to go through the city's tax rolls, though the final contract has not been negotiated.
Assessure Systems, a Covington-based firm, says that there likely are thousands of fraudulent homestead exemptions in New Orleans, representing a loss of millions of dollars a year in revenue to the city and other government agencies funded through property taxes.
Taking a deeper look at whether owners are improperly claiming homestead exemptions has been a longtime goal of City Councilwoman Stacy Head, who pushed for the administration to look for a firm that could do the work.
At a meeting Thursday of the council’s Budget Committee, Head said rooting out those who are violating the rules for exemptions would indirectly benefit those who play by the rules since it would mean more money for city services without raising taxes.
“We’re working to get closer to tax equity and making sure that all our fees and fines are spread more broadly around,” Head said.
Assessure, which already is being used by other local governments in Louisiana including the St. Tammany Parish Assessor's Office, promises to audit tax rolls and find those who are getting homestead exemptions they don’t qualify for.
Among other things, it compares property tax records in New Orleans with those for other municipalities around the country, looking for evidence that owners are getting the benefit of such exemptions in more than one location, said New Orleans Acting Director of Finance Beverly Gariepy.
The homestead exemption allows residents to take $75,000 off the appraised value of their primary residence when calculating its value for most property taxes in New Orleans. On this year’s tax bill, having an exemption would cut a homeowner's bill by about $1,060.
Exactly how much money may be brought in through the program is unclear. The firm estimated it would find about $9 million in revenue in the first year, which would correspond to about 8,500 properties with a fraudulent homestead exemption. Its presentation to the city suggested that about $3 million in new revenue could be found in subsequent years.
A bit less than half of the property tax money collected in New Orleans goes to the city. The rest goes to other entities including the Orleans Parish School Board, the Sewerage & Water Board and the east and west bank flood protection authorities.
The exact terms of the deal with Assessure will be worked out over the next six to eight weeks, Gariepy said. The company typically works on a contingency basis, getting paid for each fraudulent exemption it finds, she said.
Head, who will leave office in May, said that if the program proves successful, the city should consider bringing in firms to look at other potential problems in the property tax system.
Those include another of her frequent targets: properties that are tax-exempt because their owners claim nonprofit status. Head has long argued that many of those claims are not justified.