Tax rate jumps as property values drop in South Portland
SOUTH PORTLAND — Most city taxpayers may see slight declines in their tax bills, the tax assessor said this week, because property values – with a few notable exceptions – have been reduced.
Assessor Elizabeth Sawyer told the City Council in a special July 6 workshop that, after monitoring the real estate market for the last 18 months, her department has reduced most values by an average of 5 percent.
"It's not a complete revaluation," Sawyer said. "It's an interim adjustment."
Although the city valuation will drop, the tax rate will increase, since the city still has to raise enough money to support the $84 million budget recently approved by the City Council.
When the budget was approved, the tax rate was expected to increase by four cents to $14.04 per $1,000 of value, but the rate will now be $14.70.
Since most values have been lowered, Sawyer said most taxpayers will receive tax bills similar to last year's or slightly lower.
"The impact to the average taxpayer is going to be pretty insignificant," Sawyer said.
Coastal homeowners, however, will find no cause to celebrate; their tax bills will increase, since the assessor's analysis concluded those homes were undervalued. Also, businesses with significant equipment, which are not in a tax increment financing district, will also see increases. For example, Maine Today Media, the new owner of the Portland Press Herald/Maine Sunday Telegram building on Running Hill Road, could see a tax increase of $17,000, or 4.5 percent.
Sawyer said an analysis of sale and asking prices over the last 18 months showed that properties experiencing the greatest decrease in value were those on streets with high traffic volumes, multi-family homes, larger properties and homes that suffered from deferred maintenance.
To illustrate the adjustments, Sawyer presented the council with a list of 30 properties.
The tax bill on a two-family home at 248 Highland Ave., owned by Mayor Tom Blake, will decrease by nearly 10 percent once a 13 percent reduction is made to the home's $324,700 value. That translates into a $413 reduction in taxes. Also, a three-family High Street home owned by Blake will see a $184 drop in taxes.
A three-family home at 983 Broadway, owned by Councilor Jim Soule, will see a $407 reduction in taxes, with a 13 percent decrease in assessed value to $293,000.
Sawyer said Wednesday those properties benefited from being multi-family buildings on high-traffic streets.
A $2 million home on Ledgewood Road, however, will experience an almost 2.5 percent increase, or more than $700, even though the home's assessed value dropped by 2 percent.
Sawyer said city officials were particularly concerned about commercial property values, which account for half of the city's tax base.
"One of my largest concerns is that if those (commercial) assessments are above what they should be, we could end up being exposed to appeals that are successful and the abatement amount (will) be unbudgeted," Sawyer said.
An office building at 300 Southborough Drive will experience a 17 percent, or $38,700, decrease in its tax bill after its assessed value of $16 million is reduced by 21 percent to $12.8 million.
As mayor last year, Soule held a workshop to discuss real estate values in light of market conditions. Soule viewed the market collapse as an opportunity to decrease the city's overall valuation, which could have led to a larger education subsidy from the state.
"That's where the biggest benefit will be," Soule said of the possibility for more state funding. "I don't think this is a panacea for the taxpayers."
Last year, Sawyer defended her assessments. But, as home values and sales continued to decline over the last 18 months, the assessor's office has received many calls from homeowners wondering whether their tax bills were fair.
The city's tax base is nearly equally split between residential and commercial. While Sawyer and her staff evaluated residential properties, Steve Traub, a commercial property assessor, was called in to evaluate the commercial properties, including the Maine Mall, which is challenging the city's 2006 assessment.
The city conducted a full revaluation in 2006, near the peak of the real estate bubble, to bring its assessments up to full market value. That resulted in significant tax increases for residential taxpayers. Finance Director Greg L'Heureux said that home values are beginning to dip below those levels and Sawyer said that by making adjustments now there will be less of an impact when another revaluation is done.
"One of the most important things the assessor does is to make sure that everyone pays on an equitable fair-share basis across the city," Sawyer said. "What I think we've just accomplished is to move closer to that."
Sawyer said the city would include notices explaining the assessing adjustments with the tax bills. Information will also be posted online in the coming weeks, once assessments are finalized.