Los Angeles Times 19/08/98

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Are county assessors fixing bug?

No Y2K compliance alarms sounded yet

By KENNETH V. SMITH, Inman News Features

Local government property tax assessors are not sounding the alarm about potential problems with Year 2000 computer bugs. On the other hand, there are only a handful of assessors reporting compliance with Y2K data handling standards or that testing is underway.

Most local government offices responsible for collecting real estate taxes are using mainframe computers with programs written in COBOL more than a decade ago. Like all government and private industry programmers, the developers of computer systems for assessors had a practice of using only two digits to indicate the year. As the year 2000 approaches, now less than 500 days away, there is a scramble to make sure that the computers will know that the day after Dec. 31, 1999 is Jan. 1, 2000 and not 1900.

The raw data files from assessors are the cornerstones for many critically important steps in a real estate transaction. Most multiple listing systems, nearly all title plants, tax impound accounts on mortgages, and records of sales for appraisals are based on data recorded by local assessors. And, of course, the COBOL legacy systems are used to mail tax bills to and record payments from property owners.

Nearly every newspaper, radio and television has had alarming news stories about the coming meltdown because of the Y2K bug. Many technical journals and magazines are downright apocalyptic in predicting hazards such as electrical power grid failures, lost passenger planes, and runs on banks, all because computers won't be able to handle the roll-over the new century.

Despite the wide spread Y2K frenzy, there has been very little written about potential problems with the Year 2000 and computers in real estate.

Apparently, there have been no specific articles or studies of Y2K hazards with property tax assessment systems.

If the Y2K hype is anywhere near reality, some real estate transactions will hit snags before closing. For example, mass appraisals for tax assessments could be way off base if the trend line analysis of real estate values cannot handle date math correctly.

To get a sense of what real estate professionals and homeowners might expect, sent an e-mail questionnaire to 75 local government property tax assessors in the United States and Canada. Most of these 75 assessors are also officers in the International Association of Assessing Officers.

The e-mail asked three questions: 1. Do you know of any surveys or studies on Year 2000 glitches in county assessor computer systems? 2. Do you know of any particular issues concerning real estate tax records and the Year 2000? 3. Is your office already Y2K compliant? If not, do you anticipate any problems correcting the source code?

Bruce Sauter, chief of valuation standards for New York State Office of Real Property Services, said his office "is currently involved in extensive Y2K revisions to all of its software" provided to local assessors throughout the state."We expect all programs to be revised and thoroughly tested prior to January 1, 2000."

Sauter said he knows of national study of Y2K and property taxation. But, there are many issues in real estate taxes such as "assessment records from calculations of age and depreciation, trending and indices, adjustments for date-of-sale or lease, and installation or retirement of reported inventory on utilities."

"We began our discussions concerning the Y2K issues about five years ago," said Wayne N. Trout, Real Estate Assessor for the City of Norfolk, Virginia. It was soon discovered that the city's tax and billing system was not Y2K compliant, and important data could not be passed through to assess real estate.

"I wish I could say that we took care of the problem at the time," Trout said. "We did not."

In 1995, Trout's office abandoned efforts to patch old code and began a search for packaged software. "The City Treasurer's office considered the available software and decided that they would prefer to have their legacy system, tax and billing, rewritten to make it compliant. That is being done at this time."

While the treasurer went one direction, Trout's study of the problem led him "to purchase a canned package that was network oriented and Y2K compliant."

"There's not much to tell you from Honolulu," said Randall T. Hiraki, Real Property Analyst for the City & County of Honolulu. "Our Y2K compliance was put in the hands of the owner of our software, Cole-Layer-Trumble of Ohio. We are presently in the process of testing the fixes that were provided."

The Gwinnett County Assessor's Office in suburban Atlanta is also relying on a vendor. "I think most county assessors are in about the same position as we are," said Gwinnett County's chief appaiser, Steve Pruitt. A vendor is in the process of installing the latest version of their software which is compliant so the license agreement can be continued.

In Boise, Idaho, Eric Cawley has no worries about assessment software, but he takes a poke at the rumors about impending power failures. "We just hope we'll have power in January 2000 to run all our Y2K-compliant software," said Cawley, an administrative specialist with the Ada County Assessor's Office.

Cawley said his office is currently re-writing the main property database, which has code more than 15 years old. "It will incorporate programming with a 4-digit year code. Because of this programming, we foresee no potential problems, internally or for taxpayers, in meeting statutory deadlines and other important functions."

"Our system has been upgraded and is Y2K compliant," said David F. Heier, Tax Audit Manager for the North Slope Borough in Alaska.