Property tax law has a logic all its own. You’ll find that in nearly every US jurisdiction assessed value is a percentage of market value, often a very small one. Saying it makes no sense is tilting at windmills, it’s just one of hundreds of legal fictions that sound silly out of the context they developed in. For example, most deeds to property identify the purchase price as “one dollar and other good and valuable consideration“, whatever the actual price was.

The important thing here is the injustice that was done to these people and the city’s refusal to make it right.