Assessor won't collect back taxes on undervalued properties

After finding no "sweeping error or oversight" in property assessments, King County Assessor Lloyd Hara announced Wednesday his office will not try to collect back taxes even if it finds that some real estate has been undervalued.

His announcement came the same day The Seattle Times reported his office was looking into whether thousands of properties were undervalued and whether their owners should be ordered to pay more.

The abandoned strategy had drawn objections from some Metropolitan King County Council members, Deputy County Executive Fred Jarrett and numerous taxpayers.

"We all know King County is in a financial pinch," Hara said in a statement. "But this office, while I'm assessor, is not going to be nickel and diming every taxpayer in some crazy attempt to balance our budget. We can do better than that."

Hara said in an interview Wednesday night that he'd been advised by the Prosecuting Attorneys Office earlier in the day that the county could not collect taxes retroactively based on revised assessments.

In the statement released late Wednesday afternoon, Hara said he will continue to look into whether JPMorgan Chase failed to pay personal-property tax on artwork in the WaMu Center in Seattle after Chase took over failing Washington Mutual in late 2008.

Washington Mutual reported $5,868 in artwork, but Chase reported no art assets to the county, Hara's office said. Former Assessor Harley Hoppe — who urged Hara to look into Chase's art collection and possible undervalued real estate — told the Metropolitan King County Council last month that the corporate art collection may have been worth as much as $300 million. That number has not been verified, and Chase spokeswoman Darcy Donahoe-Wilmot said she had no information on the art collection.

Hoppe also has said collecting back taxes on personal property and undervalued real estate could solve the county's projected $60 million funding gap next year.

In an interview late last week, Hara, who took office in November, questioned whether the county could even collect from taxpayers whose properties may have been undervalued.

"Well, potentially," he said. "I don't want to make any flat statement. I want to see the data first and to see, potentially, the impact."

His office had begun looking at possible undervaluation of properties after Hoppe brought the issue to his attention and County Council members asked him to investigate.

After quickly examining records this week on 38,400 properties whose assessed values didn't change between 2008 and 2009, the assessor's staff found one-third of the properties were tax-exempt, and there were legitimate reasons that the others hadn't changed in value, according to Hara.

"The review we conducted quickly led me to conclude there was no across-the-board, systemic problem of properties being overlooked," he said.

Hara said he would not seek back taxes on the basis of another issue raised by Hoppe: properties that sold for more than their assessed values.

Hara also tried to distance himself from any suggestion that he would attempt to balance the county's budget on taxpayers' backs.

"As of now," he said, "I've told staff there will be no changes to anyone's past assessed value, no one is getting a new tax statement, but we are going to look into the Chase Bank situation."

Keith Ervin: 206-464-2105 or kervin@seattletimes.com