Magness Lake, in Heber Springs, is a magnet for swans
The homes of two of the wealthiest men in Arkansas are underappraised for tax purposes by millions of dollars because of assessment mistakes made at least eight years ago.
Evidence indicates the mistakes were inadvertent. The cost — in benefits to landowners and losses to taxpayers — is believed small because of the intricacies of property tax law.
The homes of Joe Ford, former CEO of Alltel, and Warren Stephens, head of the Stephens Inc. financial empire, have been underappraised since at least 2003 because of assessment office errors on land valuation. Both adjoin the Country Club of Little Rock in one of the city's most exclusive neighborhoods.
Ford's house at 2500 N. Jackson was purchased for $3 million in 1992. The 7,500-square-foot home, which sits on 2.38 acres, carries a current market value on assessor records of $691,270. At the 70.8 millage rate for that property, held in the name of Wooster Properties, the tax bill is about $9,685, not counting homestead exemption. At its purchase price, the bill could be as much as $42,048. But even if it had been properly appraised years ago, the bill would have been only a few hundred dollars higher because of technical aspects of the law on assessment and taxation.
Warren and Harriet Stephens have an 8,900-square-foot house on 1.52 acres at 1 Longfellow Place, just north of Ford's home. The property, bought in 1986, is appraised by the assessor at $966,455. But the assessor's office said a correct market value is probably closer to $3.1 million. The current property tax bill is about $15,464. At estimated true market value, the full bill would be about $42,000. But, again, because of the legal technicalities, Stephens might owe more, but perhaps no more than about $200, according to assessor's estimates.
In both cases, taxes will rise dramatically if either Stephens or Ford sells his home.
Six other properties — 12 acres owned by Demp and Paula Dempsey at the end of Scenic Boulevard adjoining the Country Club of Little Rock golf course and five parcels of undeveloped land behind homes on Longfellow Lane — also were found underappraised by the assessor. Those properties belong to Robert and Kathleen Brown, John and Julie Jones, Mary Gray Millsap and Gus Blass III.
In a rough estimate, the assessor's office calculated that it could be collecting about $10,000 more per year from the eight parcels had the mistakes not been made. But the amount would almost certainly be lower on account of property tax freezes allowed for older home owners.
The Arkansas Times learned of the issue after confirming an anonymous tip concerning the appraisal of Ford's home. In checking it, Assessor Janet Troutman Ward's office (which had also received multiple anonymous mailings about the Ford home) undertook a broad review of property tax records and turned up the seven other residential properties in the vicinity of the Country Club of Little Rock that were underappraised.
"They're wrong," said Ward. "We messed up." Finding the precise root of the problem has proved elusive.
The complicated story stems from the fact that the properties are carried as acreage (technically described by "metes and bounds") on tax records, rather than as lots in a platted subdivision.
The mistakes cannot be corrected until the 2012 countywide reappraisal, under state law, and any changes will be reflected on 2013 tax bills. No taxes lost in years past can be recouped. Furthermore, because of other provisions in the constitution on property taxation, the correct tax rate can only be imposed over an extended period of time, if at all. It will produce annual tax increases of no more than 5 percent for the property affected (roughly $700 more per year in the Stephens case, for example).
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