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Board: Appraiser violated code of ethics

January 8, 2014 - 9:45pm

The county Finance Department violated the ethics code when it allowed staff appraisers to set the tax value of their own property, the Board of Ethics said Wednesday.

The board voted 4-0 that county appraiser Marilyn Veincent violated the section of the ethics code that prohibits county employees from taking any official action directly affecting areas where they have a substantial financial interest. In doing so, the board made it clear that it wasn’t recommending sanctions against the employee, and it urged the Finance Department to revise its policy so that appraisers aren’t assigned to appraise their own neighborhoods.

Finance Director Nancy Crawford and her top Real Property Tax Division staff told the board that property appraisers conduct mass appraisals of neighborhoods, adding the appraisers’ role is “diluted” because their job is one small step in the process of assessing property for tax purposes.

“They’re not directly affecting the value of their own property,” Crawford said.

In addition, they said, property appraisers put values on entire neighborhoods, not individual properties, so they have no direct say about how much their own property is worth.

That wasn’t enough for the Ethics Board, which said setting values on neighborhoods directly affects the appraiser’s own property, and property values could be manipulated either up or down for the purposes of raising resale values, getting refinancing or simply saving a few dollars on a tax bill.

“You can’t be almost pregnant. You either are or you’re not,” said board member Arne Henricks, a retired judge. “It either does affect it or it doesn’t affect it.”

Board member Douglass Adams agreed.

“The number they choose for the land value is what appears on the tax statement,” Adams said.

The Ethics Board has no power to institute penalties. Instead, it makes recommendations to the agency head, in this case, to Crawford. A written order and recommendation will be drafted for board approval at its next meeting.

“The county should take the next step and disperse the assignments,” said Vice Chairman Bernard Balsis.

Only two of the department’s appraisers have a hand in their own property. In addition to Veincent, who assigns values to a Hilo neighborhood of 1,995 parcels that includes her own, Mary Ann Todd-Waller assesses a Kona neighborhood of 97 parcels including her own. The complaint against Todd-Waller was dismissed, because her property value is frozen under an old county program begun prior to her employment with the county, and her actions do not affect her property value.

Wesley Takai, a former Real Property Tax Division administrator who started with the department in 1969 and has since retired, told the board that the practice of having appraisers do mass appraisals in neighborhoods that include their own property has gone on since the inception of the program, first under state authority and then, in 1981, when the responsibility was transferred to the counties. All four counties follow the same practice, he said.

“It has withstood the test of time,” Takai said.

Michael Drutar, a Real Property Appraiser II who has been with the department almost two years, filed the complaints after coming before the board to ask for a ruling on his own case. Drutar 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. That case is still ongoing.

“Just because something’s been done wrong over the course of years doesn’t make the practice correct,” Drutar told the board.

Board member Glen Hisashima stressed that the Finance Department has an obligation to not require employees to perform tasks that can run them afoul of the ethics code. He offered several recommendations on how the department can tighten its policies and procedures.

“What systems are in place to protect the assessors?” he said. “Supervisors should protect their employees at all costs.”

Adams took Crawford to task for a letter saying her department had investigated and determined there were ethics breaches by an employee following Drutar’s complaints. He told her it is the job of the Ethics Board to investigate and determine ethics code violations, not her department.

An apparently abashed Crawford apologized for her choice of words.

“We never meant to be stepping on the board’s toes,” she said. “I apologize if it appeared that we were doing ethics investigations.”

Crawford said after the hearing that her department will take the recommendations to heart, and determine the best course of action after the written order is finalized.

“I certainly respect the board and what their findings are,” she told West Hawaii Today.