Despite down economy, property values go up - assessment notices are in the mail
The Douglas County assessor's office will send out nearly 30,000 assessment notices the last week in March.
The assessment notice is the document that advises all property owners of the valuation and classification assigned to their property for the 2009 assessment for the taxes they will pay in 2010.
Per state requirements, sales between October 1, 2007 through September 30, 2008 are used to set the 2009 assessed values. Values are set as of January 2 each year.
The tax statements that will come out soon are for taxes due in 2009 and are based on the 2008 assessed values.
Douglas County Assessor Keith Albertsen noted that a misconception exists that there will be significant reductions in market values because of the spike in foreclosures and the poor economy, and that property taxes will go down as a result.
However, while the volume of sales has slowed, the selling price of properties sold in open "arm's length" transactions in most districts are still slightly higher than the assessed values, Albertsen said.
"Short" sales and bank foreclosure sales are rejected from the state sales ratio studies and while the number of them continue to increase, they are still a small percentage of the total number of sales, the assessor added.
Since the values in each district (city or township) are compared with the sales in that district, there are some differences in what the average change will be, according to Albertsen.
Lake properties seem to be less affected by the current situation than downtown metropolitan homes.
Tillable agricultural land will actually see a $200 per acre increase.
Often overlooked is the fact that when values were increasing dramatically in the past, the limited market value - the value that the taxes were actually calculated on - helped to slow the increase, Albertsen noted.
If a property had been getting a limited market value, it continued to increase until it "caught up" to the market value, even if the market value didn't change.
The Legislature phased out limited market value for the 2009 assessment. For taxes payable in 2010, the estimated market value is used to calculate the property tax, not the limited market value.
The assessor's office is often accused of increasing values to increase revenue, Albertsen said. The reality is that whatever is budgeted by the county board, school board, and the township board or city will be collected regardless of what the values do.
The values placed on each property are only a method to allocate each parcel's share. If all values were to drop 50 percent, the tax rate applied to the values would simply double and the taxes collected would remain the same.
It is important to note that the assessor uses land and building schedules to value property consistently throughout the county and be relatively close to the sale prices.
Due to the differing motivations of buyers and sellers, it is impossible to value all properties at their sale price, Albertsen noted. Sometimes the value is higher, sometimes lower.
The assessor's first goal is to be consistent with like properties in the same area and the second goal is to have the values close enough to the sales prices to meet state requirements.
Some people think that because the values are used to distribute the property tax burden that they are supposed to be significantly low.
However, this is not the case. Albertsen explained that the Department of Revenue monitors every sale in every county of the state and compares the sales prices with the assessed values. If the assessed values are not within 10 percent of the median (middle sale when ranked in order) sales price in a district, the state will order an adjustment to the entire jurisdiction.
Each county was instructed by the Department of Revenue to review the parcels classified as agricultural. Douglas County did find instances where parcels that had been farmed were no longer being farmed and changed the classification.
The assessor's office also found parcels classed as agricultural that were linked with another farmed parcel but had no actual farm use on that parcel. According to the Department of Revenue, that linking was improper and had to be corrected.
Legislatively, there continues to be scrutiny of the "Green Acres" program (with changes likely) and the creation of a "Rural Vacant Land" classification that many will see for the first time.
Local boards of appeal and equalization will take place April 6-24. The notice will specify date and location of the meeting for each district. Appointments required. For questions call (320) 762-3884.