This is a printer-friendly version of an article from Zip06.com.
12/06/2011 11:00 PMFor many Westbrook homeowners, the letter from Vision Government Solutions announcing the new valuation of their property was a welcome relief. That's because overall, town property values declined an average of 15 percent as of October 1, 2011 compared to the prior year's values.For the full story, see the Dec. 8 issue of Harbor News and go to Zip06.com.
The new assessed property values were calculated as part of the state-mandated full re-valuation of all town properties that must occur once every ten years. A full re-valuation is based on visual inspections and measurements of town properties interiors and exteriors as well as an evaluation of sales of similar properties in similar locations.
Any property's assessed value is set at 70 percent of its market value which in turn is calculated based on a comparison of the sales prices of similar properties in similar neighborhoods in the prior year. The sum of all assessed values of real estate and personal property as of Oct. 1st then becomes the town's new Grand List of Taxable Property.
Town property owners received the Notice of Assessed Valuation Change in the last week of November. The letter informs the owners of their property's new value and offers the option of scheduling a meeting with Vision representatives, should the owner wish to discuss or dispute the new value.
In the first three days after the letters were received, about 45 property owners had called the Assessor's Office to schedule an informal meeting to discuss their new property value. Informal meetings with Vision representatives will continue through the end of the year, according to Pam Fogarty, the town's assessor.
For property owners who are still not satisfied after their informal meeting, another option available is to seek relief through the Board of Assessment Appeals process. The formal assessment appeals hearings will start early in 2012 once the informal meetings with Vision representatives have concluded.
Town Assessor Pam Fogarty said that the revaluation confirmed a decline in the value of land for properties right on the shoreline. But not all shoreline or shoreline area properties declined in value: some actually increased in value. And not all properties located north of Route One declined in value either: some of those properties also increased in value.
With most Westbrook homeowners seeing an average of a fifteen percent decline in their property's value compared to five years ago, many assume that their property taxes will also go down. But this may not be – and usually is not – the case.
If all town properties' values declined by the average of fifteen percent, to collect the same dollar amount of property tax revenue this year, the town would have to increase the property tax rate known as the mill rate. The following example helps to illustrate this principle.
In 2010, the town's Board of Finance set the mill rate at 16.96 mills per $1,000 in assessed property value. For a residential property with an assessed value of $300,000 in 2010, that meant the homeowner paid $5,088 in property taxes.
Now consider what happens if the same property's assessed value in the revaluation dropped by 15 percent from $300,000 in 2010 to $255,000 in 2011.
In this hypothetical scenario, if the Board of Finance in June 2011 were to increase the 2010 mill rate by 3 mills to 19.96 mills, how much would this homeowner pay in 2011? Would the higher mill rate mean that their 2011 property tax bill would rise?
The answer is no.
Using the formula for calculating property taxes, the value of $255 is multiplied by the new 19.96 mill rate to find the 2011 taxes this homeowner owed. Comparing the two tax years' tax bills, the new 2011 tax amount of $5089 due is equivalent to the $5088 due and payable in 2010.
So even though this hypothetical property's 2011 value is fifteen percent below its 2010 value, even a rise of 3 mills in 2011 to 19.96 mills would not change the property's tax bill between 2010 and 2011.