By Jann Wiswall
In 2011, the Town of Great Valley received the results of a revaluation of property assessments of all parcels in the municipality. The last revaluation had not been done since at least 1954 when records started being kept.
Great Valley’s board had been advised for decades by the town’s assessors, county officials and others to undertake the long-overdue revaluation. Although they can be grueling, expensive and time-consuming, revaluations are important to ensure that taxpayers are not paying more or less than their share of municipal, county, fire department and school taxes. Unfortunately, they also can be unpopular among taxpayers who fear an increase in taxes. The board ultimately realized that the benefits far outweighed the risks.
The result of the revaluation, not surprisingly, changed the assessments of many properties in the town. Some went up and others went down due to changes in market trends — overall, the town-wide assessment went down by a few percentage points.
How Revals Differ from Annual Assessments
It is important to keep in mind that a revaluation is different from an annual reassessment by the local assessor.
During annual reassessments, the town assessor analyzes all the municipality’s parcels to determine which assessments need to be changed from the previous year based on market values and physical changes to the property. New construction on a property and new homes and businesses are added to the assessment roles. Demolished buildings or deteriorating conditions of a home or business might result in a reduction to its assessed value, and many other factors come into play as well.
A revaluation involves a much more detailed and long-term analysis that aims to correct over- or underassessment of property that has occurred over time by more accurately reflecting long-term market values and trends of the entire municipality. Typically, revaluations are done by consultants who have access to more robust trending and historical data that leads to more accurate assessments. New York State does not require municipalities to conduct revaluations, but most do with much more frequency than Great Valley had done.
Why are Revals Important?
According to the State Office of Real Property Tax Services (ORPTS), revaluations are important because they ensure that taxpayers are equitably treated. According to ORPTS, “The longer it has been since a municipality has updated assessments, the more likely it is that some taxpayers are paying more or less than their fair share of taxes.”
As a result, says Dan Martonis, director of Real Property Tax Services with Cattaraugus County, people in Great Valley now have a much more accurate picture of where their properties stand in terms of market value, which is especially important for anyone interested in selling or improving their home or property.
For 2013, Great Valley Supervisor Dan Brown said the state has determined that property assessments must be reduced by another 7-8 percent based on further analysis of the market in the two years since the revaluation. But this does not necessarily mean that individual’s taxes in Great Valley will go down. Why?
It is important to remember that assessors do not determine property tax rates or bills. They determine property value based on location, comparable property sales and other market factors.
The assessments they determine do, however, provide a first essential number in the complicated calculation of a property bill.
Two other numbers also come into play.
Defining Equalization Rate
The first is the equalization rate (EQ), a figure introduced by the state in the 1970s. According to ORPTS, an EQ rate is necessary for the hundreds of school districts and counties that do not share the same taxing boundaries as the cities and towns that assess properties. In order to distribute school district or county taxes among multiple municipalities, the level of assessment of each municipality must be equalized by the state to full market value.
Before the revaluation, Great Valley had a frighteningly low EQ rate of 1.7 percent. The state encourages municipalities to have an EQ rate of 100 percent — meaning the assessed value of municipal property equals the market value of that property.
In Great Valley, this low EQ rate meant that, essentially, many property owners were significantly subsidizing their neighbors’ taxes. It also was creating difficulties for property owners who wanted to take bank loans to make improvements and for potential buyers and sellers who depended on appraisals to get mortgages. Simply put, lenders did not trust the appraisals they were getting for properties in Great Valley.
“We knew we had to get our EQ rate to 100 percent, because we had to make our assessments as accurate as possible,” said Brown. “It’s all about fairness. Some people were paying woefully more or less than they should.”
County Tax Rate Affects Tax Bill
The second number that determines a tax bill is the county-established tax rate. This is calculated by how much must be raised through taxes to pay for the school district and county budgets after all other non-tax sources of revenue have been subtracted. Using the EQ rate, the county calculates how much each municipality owes based on its total assessed value, and then uses the individual assessments to calculate each property owner’s tax bill. The 2013-14 tax rates will be announced in July.
Just because Great Valley’s property assessments changed in 2011 and are coming down again in 2013, one cannot assume that individual property owners tax bills will come down by the same or any percent for a number of reasons. Great Valley’s students attend either ECS or Salamanca schools. School taxes differ by school district and both budgets have gone up by small percentages. Great Valley’s municipal budget increased 1 percent, and county taxes also are likely to increase.
While taxes can’t be predicted until all final budgets are announced and tax rates are approved in July, Brown noted that residents can at least be certain that, from a municipal level, Great Valley has worked to ensure their assessments are fair, equitable and based on reliable data.