As Deschutes County property tax bills start arriving in homeowners’ mailboxes, many accustomed to seeing their taxes drop in the face of a market downturn will see higher bills this year, thanks to higher property values.
“When it first happens, there will probably be a lot of calls for tax appeals,” said Donnie Montagner with Bratton Appraisal Group.
Property taxes are assessed on the lower of either real market or maximum assessed value. Maximum assessed value is based on Measure 50, an Oregon constitutional amendment passed in 1997 to keep property taxes at a steady 3 percent annual increase. When the housing market tanked in 2009, many homeowners saw their real market value fall below their maximum assessed value, and therefore saw their property taxes fall.
Now that the market is rebounding, property taxes for many are also on the rise.
“Some home values bounced way up, but their real market value is still below the assessed market value,” said Deschutes County Assessor Scot Langton. “That means if the market continues to recover, those people could see another jump in their property taxes next year.”
Langton and his staff developed a tool to help property owners understand why they may see a sharp increase in property taxes this year. The “Graph It!” page can be found at www.deschutes.org in the Assessors Office section. It allows visitors to view their property values, how they’ve fluctuated since 2009 and how the values relate to the assessed market value.
Langton appeared before Redmond City Council on Tuesday to explain why the city saw a 10.4 percent increase in property tax revenue this year over last. Most of the council members are also homeowners.
“I really hope people visit the website so they can understand what is happening,” said Councilor Jay Patrick. “My bill went up by about 8 or 10 percent. I didn’t know what to expect, and I didn’t really understand why it was happening, but the website and video really helped explain it to me.”
In Redmond, 83 percent of homeowners saw their property values decrease sharply. With home values recovering over the course of the last year, several of those people are getting slapped with a significantly higher property tax bill this year — some as much as 30 percent higher than last year, according to statistics from the Deschutes County Assessors Office.
“It’s a question of how much a particular property value went down and how far it fell below assessed market value,” Langton said. “Each property is different, even ones that are right next to each other can have very different property tax bills depending on when they were built.”
For example, two northwest Redmond properties — one on 10th Street and one just around the corner on Poplar Avenue — look very different when the addresses are plugged into the Graph It! function. Both are five-bedroom homes with about 2,100 square feet of living space. The home on Poplar Avenue is significantly newer, and during the height of the housing boom in 2009 had a real market value of about $258,000. The 2009 real market value of the house on 10th Street peaked at about $190,000.
In 2012, when property values were at their lowest, both real market values dropped to the mid-$120,000s. The difference is that the real market value of the 10th Street home never dropped below the maximum assessed value, so the homeowner saw a steady 3 percent increase in the tax bill each year.
Around the corner on Poplar Avenue, the real market value fell more then $40,000 below the maximum assessed value in 2012. This year, with property values on the rise, the real market value rose above the current maximum assessed value of about $165,000. This means the Poplar Avenue homeowners will see a significant jump in their property tax bill.
“There are several homes in Redmond that bounced way up but are still below the maximum assessed value,” Langton said. “It will depend on how quick the market recovers and how far the house fell below the maximum assessed value, but some property owners could see another big jump next year.”
Because so many Redmond homeowners saw an increase in their property tax bill, the city is seeing a big jump in unexpected revenue. This Tuesday the City Council will hold its first work group to discuss options for how to best use the money.
“Everyone has an idea of what they’d like to do and how they’d like to spend it,” Patrick said. “I’ve been on the council for 14 years and Redmond has always been very conservative about how we spend our money.”
He said options include improving public safety and public works projects that need attention.
“We are going to look at the funds very closely and consider what we need to do,” he said. “We don’t want to put money into something ongoing that we might not be able to afford in the following years.”