-- First of two parts --
Aieee, is that my new property tax?!
A 13-percent increase over last year?
Somebody should do something!
Wait, I thought someone did.
Calling, calling.
Me: "Hello, Citizens for Limited Taxation? With Proposition 2½, how did
my property taxes go up 13 percent?"
Chip Faulkner, associate director, CLT: "Barbara, is that you? Didn't
Marblehead have an override last year?"
Me: "Well, yes, but a 13-percent tax increase! Help!"
Oh all right. Calming down. I do know how it works.
Prop 2½ allows each community's overall property taxes to increase 2.5
percent over last year's levy, plus a factor for new growth, plus debt
exclusions and overrides. My town had a humongous override last year —
no fault of mine — and now that tax increase is on my new tax bill.
The teachers got another pay raise, and I get a pay cut — since I assure
you my income has not increased 13 percent.
Since the Prop 2½ levy limit applies to the city or town as a whole, not
to individual properties, some taxpayers can get a bigger annual
increase than others in the same community. This is determined by
regular revaluations to determine the "full and fair market value" of
each property.
Marblehead doesn't do classification — assessing commercial/industrial
property at a higher rate than residential — so we didn't see the
recession-caused shift from the former to the latter the way many cities
and towns did. Our adjustments, I'm told, came as local assessors caught
up with the price escalation on certain types of residential properties
or in previously under-assessed neighborhoods.
This value is always computed as of Jan. 1 of the previous year, so my
new tax bill reflects the value of my property on Jan. 1, 2005.
Marblehead assessors have determined that last January, my property was
worth $419,400, up from $376,400 the year before.
No way my five-room cottage is worth that much! Oh, wait. No one is
saying it is. The tax bill shows that my century-old bungalow is worth
just $118,400. It's the land value of $301,000 that is driving my
assessment.
So here I am, in the assessors' office, getting an abatement form. This
year, for the first time, I am thinking of appealing, and you may come
along for the experience. You can appeal your own assessment too; we
must act by the end of January.
This will be a two-part column because we first have to understand some
things.
The state Constitution requires that all property be assessed at "full
and fair market value." Once upon a time, in many communities, taxpayers
who had recently bought their homes were assessed at what they had just
paid, while long-standing homeowners were assessed at much lower values.
The former went to court and won the "Sudbury Decision," which ordered
all communities to do revaluations.
The value was the price a willing seller and a willing, informed buyer
could agree on for a particular piece of property. For awhile that
seemed to work. Most of us knew that if our home went on the market, we
could get the assessed value for it.
As the years passed, my neighborhood changed. Open space vanished.
Cottages like mine were enlarged, and some were torn down to be replaced
by much larger homes.
I used to idly wonder if these bigger homes increased my value or if my
house, with its multi-shaded shingles replaced one side at a time, and
dandelion-speckled lawn, brought their value down.
At the assessors' office, I asked a helpful Mike Tumulty, the town's
full-time assessor, who said that rule number one is to set the land
value first.
"Marblehead is a unique community historically and geographically. There
isn't enough land in town to satisfy the demand," he noted.
I get it so far. Despite the factors that are causing an exodus of
productive citizens, people still want to live in Massachusetts,
especially near the coast. Many of them want a Marblehead address, even
if the house is sitting on ledge, along a busy road, jammed in with
other houses.
So the assessors figure someone would pay $419,400 for my 6,500 square
feet, either because there's little else available that "cheap," or
because the buyer planned to tear down the five-room cottage and build a
much larger house over the watery, ledge-filled basement and dandelion
garden.
Here's where I get confused. Mike assures me that assessors decide land
value based on what it would be worth with no building on it at all. But
it seems to me that the land value has to reflect the houses nearby —
that buyers may be willing to pay more to move into a neighborhood of
McMansions.
I think the property should be assessed by what someone like me, with my
limited income, and my preference for cozy over large homes, would pay
to move into my cottage and keep it as it is.
So I would argue that I can't afford my house at its present assessment!
And I suspect that argument would lose.
This is all going to take a little more thought. Next week, I'll try to
fill out the abatement form.
--
Go to Part II
--
Barbara Anderson is executive director of Citizens for Limited Taxation. Her syndicated columns appear weekly in the Salem
News, Newburyport Times, Gloucester Times, (Lawrence) Eagle-Tribune, and Lowell Sun; bi-weekly in the Tinytown Gazette; and occasionally in the Providence
Journal and other newspapers.