Creative Revaluation

(from Maine Townsman, August/September 2009)
By Bill Healey, Tax Assessor, Town of Cumberland
and Town of Yarmouth

Even in these difficult economic times when assessing departments face substantial budget cuts, revaluations still need to be performed. In the fall of 2006, the Town of Cumberland, Maine, began the process of updating property values with limited staffing and modest funding. This article explains how it was done, why it was successful, and the challenges encountered along the way.

In April 2006, with assessment value to sale price ratios dipping below the state minimum of 70 percent, it was becoming apparent that Cumberland assessments needed to be updated. As in many other Maine towns, the Cumberland Town Council controls how taxpayer money is appropriated. Convincing the town council to fund such an expensive project hinged on proving that a revaluation was needed. In Cumberland, however, the task was accomplished more easily than anticipated. In 2004, I began providing the town council with annual updates on assessments and ratios during its regularly scheduled, televised meetings. As a result, council members were not surprised when I pointed out that a revaluation was needed; they expected it. However, funding was still a challenge due to a substantial loss of the town’s tax base.

In March 2006, Chebeague Island and 14 other islands in Casco Bay had petitioned the Maine State Legislature for secession from the Town of Cumberland. After numerous hearings, the legislature voted to approve the islands’ petition, in large part because of the positive feedback from and support of the Cumberland Town Council. On July 1, 2007, the Island Territory became the Town of Chebeague Island, Maine. The impact of the secession on the Town of Cumberland was significant—the town lost approximately 13 percent of its tax base, or nearly $2.3 million of property tax revenue. Nevertheless, the town council believed that a revaluation would be beneficial because the town would be starting a new era with equitable property values.

Full Revaluation versus In-house Update

With the loss of property tax revenue due to the secession of the islands, the Cumberland Town Council became very apprehensive about funding a revaluation project. Cost estimates from an outside vendor were $110,000 for a statistical update and $300,000 for a full revaluation. Knowing that a revaluation was needed to improve equity, I decided to meet with the town manager to discuss the possibility of conducting an in-house statistical update. (Note that Maine statutes do not dictate or restrict what type of reassessment can take place in a municipality.) I knew the assessor’s office could perform a valuation update for less money than an outside vendor, but staffing was a concern because my services are shared with another town and an assistant is shared with two other departments. After discussions with my colleagues, I developed a plan to hire temporary staff members, retired assessors, and a consultant to help with database issues. My final estimate for an in-house statistical update was $60,000. The town manager fully endorsed the plan, and the town council unanimously approved the funding.

Two Setbacks

By early 2007, sales had been analyzed; the land and building tables had been updated; preliminary values had been calculated; and a final review was in the works. It looked like the new valuation notices could be sent in April, but then came the first of two major setbacks. First, in our haste to complete the revaluation and mail the tax bills on time, we realized that we had not provided enough public education. After the revaluation in 2002, members of the Town Council received hundreds of phone calls from taxpayers that needed to better understand the process. This is a very important element of any revaluation project. After discussions with the town manager and town council, I decided that the update should wait another year, until April 1, 2008. It was a scramble to change the values back to where they were in 2006; nevertheless, the task was completed and the tax bills were mailed by August 2007.

The primary reason the update was put on hold was to better educate the public. In discussions with the town manager and town council, it was decided that the best approach would be to hold informational televised public hearings. The hearings, held in January and February 2008, focused on the different market areas in town: the Foreside, the Center, and West Cumberland (see Table). Although the presentations were similar in format, the specific sales and assessment information presented was targeted to the particular audience. Also, other real estate professionals were asked to attend and give their perspective of the market. These hearings were very well attended, and many of the public’s questions and concerns were addressed. This effort proved to be invaluable when the new valuation notices were mailed.

The second major setback had to do with the sale prices used in the update; the sales had taken place between April 1, 2005 and December 31, 2006. By December 2007 it was apparent that the market had dropped and the sale prices used in the update were from the peak in the market. I therefore decided to discard all the sale prices and start over by using sale prices from 2007. That meant that all the tables had to be rebuilt. While it was frustrating having to re-do what had already been done, in hindsight it turned out to be the right decision.

Revaluation increases by area

Finally, in April 2008 the new valuation notices were mailed. Prior to the mailing, a dedicated phone line was installed and temporary staff members were hired to schedule informal hearings. Approximately 300 hearings (representing 8 percent of the town’s parcels) were scheduled and heard by me and the two retired assessors who were hired. The hearings were completed by the end of May, and (to the joy of the tax collector) the tax bills were mailed on time in August 2008.

Keys to Success

I think that the Cumberland revaluation project was successful because it included the following elements:

• Education and annual updating of elected officials

• Good reliable data (property cards mailed in September 2006)

• Televised informational meetings

• Dedicated phone line and staff for informal hearings

• Positive attitude.

To date, there have been only a handful of abatement requests. Given the current condition of the real estate market, I am very pleased. I strongly believe that the decision to delay the update to better inform the public was the key to the project’s success. A full revaluation will be needed at some point in the future, but Cumberland’s experience proves that an update can be successful with limited staffing and funding.

Summary

Whether required by statute or on the jurisdiction’s own volition, revaluations, reassessments and updates will continue to be an important and necessary function of the assessment office. Given the current economic climate, it is imperative that assessment professionals find creative ways to overcome budget and staffing issues to achieve a successful outcome. Cumberland’s revaluation shows that it can be accomplished.

Bill Healey has been the tax assessor for the Town of Cumberland since August 2000, and for the Town of Yarmouth since March 2004, in a shared services agreement between the towns. Bill is a former president of the Maine Association of Assessing Officers. This article was originally published in the May 2009 issue of “Fair & Equitable”, published by the International Association of Assessing Officers. It is re-published with permission from the author.