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Property tax issue before Ethics Board

December 12, 2013 - 8:30am

The county Board of Ethics, concerned that some Finance Department employees have a say about how their own property is valued for tax purposes, has scheduled a fact-finding hearing for next month.

The board on Wednesday grilled officials from the Finance Department and the Real Property Tax Division before deciding an informal hearing is needed to gather more facts, to look at county policy and to see how it all jibes with the county ethics code. The code prohibits county employees from taking any official action directly affecting areas where they have a substantial financial interest.

Board Member Arne Henricks, a retired judge, said the complainant, an employee in the division, has presented “enough of a prima facie case to determine there is a violation” of the county ethics code. That’s despite assurances by the department that there are checks and balances in place to avoid conflicts of interest.

The particular cases involve two appraisers who conduct mass appraisals and come up with a formula that applies to their particular property as well as others in the neighborhood. Finance Department officials defended the practice, saying the two appraisers make recommendations, but they don’t have the final say.

“The assessors do recommend models for neighborhoods in their zone,” Finance Director Nancy Crawford told the board. “In our view, that doesn’t constitute appraising their property in that neighborhood.”

But the transactions were still too close for comfort for the four-member board, which voted unanimously to hold a hearing Jan. 8 before deciding on whether the policy is ethical.

Board Member Douglass Adams called the situation a “Catch-22.”

“You’ve set up processes … the county charter does not allow for those processes to be enough,” Adams said. “The county charter and the code says you will not do it.”

Henricks said the purpose of the ethics code is to ensure government decisions are made with only the public’s interest in mind.

“Once they live in an area, they may have an interest that may guide their mind,” Henricks said. “We want a neutral mind.”

Real Property Tax Administrator Stan Sitko, who sets and certifies the property values for the county, said the division wouldn’t be able to function under that interpretation.

“If the ethics code is that strict, I can’t live on this island,” Sitko said.

The Ethics Board unanimously dismissed another complaint, that a third Real Property Tax Division employee had a potential conflict of interest because his wife, father-in-law, mother-in-law and sister-in-law work for a family-owned company that advertises it represents property owners appealing their assessments to the Tax Board of Review. The complaint was dismissed for insufficient evidence and because the board has no jurisdiction over people who don’t work for the county.

The Ethics Board also questioned county officials about why there wasn’t a written conflict-of-interest policy in place until June.

“The concepts are not new; the document is new,” Crawford said. “It became clear that what we thought was well understood by all employees was not understood by at least one.”

The written policy forbids employees from being involved in any official action in which they, a sibling, parent, child or household member have a financial interest. Employees may hold professional licenses such as in the area of real estate sales or property appraisals, but they are banned from using the license for personal gain anywhere in the county, unless approved in advance by the finance director and in accordance with the county ethics code.

Crawford has said procedures have always been in place to ensure there is no conflict of interest between the public duties of the 43 staff members and their professional and personal lives. Two of the employees in the division are licensed real estate agents, three are licensed property appraisers, in addition to the one with relationships to the company helping property owners fight their assessments.

One of the real estate agents, Michael Drutar, is the employee who filed all three complaints. Drutar, a Real Property Appraiser II who has been with the department about 18 months, said he was suspended without pay and is under investigation for selling real estate after he told his supervisor he wanted to disqualify himself from assessing a parcel because he had had conversations with the owner in the past in his role of private-sector real estate agent.

“The Department of Finance does not recognize the authority of the Board of Ethics,” Drutar told the board.

It’s a balancing act finding county employees to fill specialized technical positions in a small island community while expecting them to steer free of conflicts of interest. It’s an especially touchy subject when it comes to assessing property for tax purposes — an issue that literally hits home for property owners across the county.

Drutar said he believes the ethics code allows him to continue his part-time work as a real estate agent provided he disqualifies himself from any property where it may appear to be a conflict of interest. He told the Board of Ethics in September that he felt singled out for disciplinary action because other employees haven’t been suspended without pay for their own private-sector work. He said other conflicts of interest are also going on in the department.

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