Property taxes don't reflect market
At what point will property taxes reflect the slumping real estate market, depressed real estate values and the overall tanking economy?
That was the question taxpayers repeatedly asked the Hubbard County Board of Appeal & Equalization Monday.
The answer was: Don't hold your breath. It could take a few years.
The flip side of the coin was how do assessors value property when there are few or no comparable sales by which to measure declining property values?
As a parade of taxpayers appeared before the equalization board, comprised of the county commission plus Hubbard County Auditor Pam Heeren, many presented property appraisals from realtors or private appraisers that were considerably lower than what is reflected on Hubbard County tax rolls.
One only needs to read today's real estate listings to see discounted properties for sale at drastically reduced prices.
Bruce Eagle, trying to get the estimated market value of his Steamboat Lake lot lowered, said, "Property around here is selling for 60 to 70 percent of its market value." He bought his lot at a bargain-basement price after it sat unsold for nearly two years. He soon learned why. It has a small wetland in the middle that he must build around, so now has the lot on the market again.
County Assessor Bob Hansen said repeatedly his office couldn't "reduce everyone's valuation because of what he think is happening" in the real estate market overall.
"It's a deflated market but we haven't seen sales catch up to that yet," said county commissioner Cal Johannsen. "It'll probably be a couple years yet."
"We can't anticipate the future and shouldn't," said commissioner Don Carlson, reflecting the board's dilemma. Property that can't sell at current listings probably isn't worth the sale price, the board agreed.
Eventually there may need to be a county-wide adjustment reflecting the drop in values overall, but that day isn't here yet. Many board members agreed that the real estate boom is over.
But that left many property owners wondering why their estimated market values were increasing nonetheless.
"Everyone else's property has decreased," said Eighth Crow Wing property owner Rick Johnson, noting that his estimated market value had increased more than 7 percent. "It's way out of line. When you look overall and property values have dropped overall I'm not sure where this 7¾ percent is coming from."
But throughout the lengthy session, county, city and township assessors demonstrated the diligence they bring to their professions, defending their valuations.
"We're dealing with people's pocketbooks so we try to be fair," said Mary Anne Maurer, assessor for Henrietta, Crow Wing and Nevis Townships.
"People know you've gotta pay your taxes so they're generally good to work with," said Dave Johnson, an assessor for 12 townships and three cities: Nevis, Akeley and Laporte.
"People always ask me if I hate my job. I don't hate my job," he said. Both Johnson and Maurer had extensive real estate appraisal experience before coming to work for the county.
Board chair Lyle Robinson cautioned the large crowd assembled not to attach too much significance to private appraisals, even though homeowners are asked to provide them at equalization hearings.
"I appreciate appraisals, but they say, 'What are you looking for?'" he said of the discrepancies in valuations.
And it was unclear what factors private appraisers considered in calculating their valuations, compared to the county assessors.
Some homeowners left unsatisfied, some left disgruntled.
"The process is arduous," said Long Lake homeowner Richard Jorgensen, who was denied a lower valuation of his property.
When Robinson cautioned him about "using words we don't understand," Jorgensen put it more bluntly.
"The process stinks," he said. "It sucks up huge amounts of time. Seasonal residents have no hope" of overturning their valuations and permanent residents are likewise hamstrung by the time and dedication it entails, he told the board.
He said the incremental additions to his valuations while real estate sales and values decline was a "very frustrating situation."
"We're valuing the whole pig, not just the feet," Robinson said, alluding to the upcoming pig races in Nevis.
Board members repeatedly reminded the audience that they need to treat everyone equally, because that's what a board of equalization's duty is.
"It doesn't make sense in this economy," said Jason Reynolds, a Lake Belle Taine property owner who failed in his attempt to get his property value lowered.
Hansen conceded that some Belle Taine property that was previously categorized as "economic obsolescence" when the rising lake levels threatened to flood many homeowners, probably needed revising.
At the outset Johannsen wondered if the day would be time well spent.
He said in years past, the board has tried to adjust valuations, only to have them overturned at the state level.
"They're gonna do what they're danged well gonna do," he said of the Department of Revenue. "I could just as well be in the hay field."