Despite the declining market value of most Rim Country homes, next year’s property taxes could increase.
In Payson, home values dropped by anywhere from 1 to 19 percent based on data from the past 18 months, depending on the neighborhood, according to figures released this week by the county assessor.
Many residents earlier this month received notice that their home’s market value fell for tax year 2010. However, the “limited property value” on the same home often rose.
A tax bill based on the limited property value slows down tax increases when home prices are rising, but also makes taxes less likely to fall.
Homeowners will not actually pay taxes on the valuations received this month until the fall of 2010. Instead, the tax bills homeowners will receive this September will reflect the value notices from February 2008.
Assessors use a legislative formula to calculate “limited property value,” which is usually lower than the “full cash value.” The intent, said Gila County Chief Appraiser Larry Huffer, is to protect homeowners from dramatic fluctuations in market value.
Most taxes are levied against the limited property value, does not decline unless a house is demolished or market values plummet.
This explanation offers little salve for homeowners who can’t understand why their taxes may rise despite the bruised housing market.
“We have no market value here,” said Strawberry resident Dean Knudsen. “You couldn’t sell a house up here if you gave it away.”
Knudsen says someone with leadership skills and political connections should fight to change the tax structure. “I think it’s next to criminal, myself,” he said. “This fallacy that we own our home — just don’t pay your taxes and you will know who owns your home.”
Gila Community College board member Larry Stephenson recently remarked that the school may have a public relations problem on its hands in justifying the tax levy, as home prices drop. Stephenson said his home value also danced to that inverse ratio.
Besides two types of property values, two types of taxes also exist.
The majority of taxing districts, including the county, community college and the school, assess taxes based on the usually lower limited value. However, taxes for fire and library districts and school overrides are based on full cash value, or market value. The Payson Unified School District and the Town of Payson currently assess taxes on both values.
Some taxing districts, including the county, can only increase the total amount they collect by 2 percent each year, not counting taxes on new construction. If the taxing district does not increase the total it collects, the tax rate falls as home values increase.
But entities like water and sanitation districts have no limit on total tax collection increases, so if home values rise and the tax rate stays the same, the district will collect more money.
Countywide, the net assessed valuation may decrease for tax year 2010. That figure has not yet been finalized.
In Payson, home values either declined or stayed the same for tax year 2010. The Forest Park neighborhood, near Payson High School, saw the biggest decline in home values, with a 19 percent drop, although the raw land values stayed the same.
The smallest decline, 1 percent, was in Timber Ridge Estates, off North McLane Road.
Twelve neighborhoods, including Northwoods Condos on Beeline Highway and The Knolls on Highway 260, did not change. Huffer said the full cash value stayed the same because sale prices during the past 18 months remained consistent compared to the market value from the previous tax year.
Assessors determined this year’s values by analyzing sales from 2007 and the first half of 2008.
In Payson, The Rim Club’s single-family homes were the most expensive, based on the selling prices within the past 18 months of the assessor’s analysis, with a median sale price of $1.5 million despite an overall market value drop of 10 percent.
Chaparral Pines was the second most expensive. Its median sale price was $670,000 although the neighborhood’s market value fell 12 percent.
To find the limited property value, the assessor completes whichever of the following two calculations results in a bigger increase, according to state law.
The first involves adding 10 percent of last year’s limited value to that value to find this year’s number.
Alternatively, the assessor can subtract last year’s limited value from this year’s market value, multiply the difference by 25 percent and add the figure to last year’s limited property value. The limited property value can never exceed full cash value.
Last year, a local barbershop owner helped circulate an Arizona Tax Revolt petition that advocated a proposition that limited how much a home’s value and total tax levy could increase.
A new initiative to limit property values and taxes could appear on the 2010 ballot. Proposition 13 still needs 230,000 signatures, but was filed earlier this month with Arizona’s secretary of state.