BOS Public Meetng on Assesments November 5, 2012

These are the RCL meeting notes from the BOS meeting that focused on the town assesment:

NOTES OF NOVEMBER 5, 2012 RYE BOARD OF SELECTMEN WORK SESSION (ASSESSMENTS)

Draft Revision A – Provided by theRyeCivic League 

            Present:  Selectmen Jenness, Musselman and Mills.  Also present:  Michael Magnant, Cindi Gillespie, Norm LeBlond (assessor).  Present from KRT:  Ken Rogers (President), Rob Tosier (Vice President).  Present from the State:  Steve Hamilton, Dept. of Revenue, Property Appraisal Division

Assessor Norm LeBlond explains reappraisal

            Norm LeBlond opened the meeting by explaining why property values were being updated just two years after the prior update.  He was hired in March 2011.  There was some concern with what he was seeing in terms of sales prices relative to assessments.  Overrides of specific amounts had been put in place when abatements were settled back in 2007 and 2008.  These had not been removed with the 2010 revaluation.  One of the properties that Selectman Mills had mentioned had an override.  Overrides are usually done to the building value.  In one case involving new construction, he went to remove an override after construction had been completed and he discovered that the value went down, rather than up, as would have been expected.  In their review, KRT found a property with a 2009 building permit that was a vacant lot.  It went from $250,000 to $900,000 in value.  Properties nearPortsmouthhad all been assessed at $1.3 million, but the harbor view changed as one proceeded along the road. 

            Hearings were held in October.  These had not been held at all in 2005 or 2010.  In 2010, 164 abatements were settled.  These occurred after the 2010 tax rate had been set.

Ken Rogers of KRT            Ken Rogers, President of KRT then spoke.  He explained that the goal was to correct disproportionality as of April 2, 2012.  They used the systematic mass appraisal approach to value.  That involves looking at sales and comparing assessments to sales.  Parameters are the median, the coefficient of dispersion and the tightness of the fit.  The median should be between 90 and 110.  The coefficient of dispersion should be less than the following:

            Land                            20

            Single family               15

            Condominium             20

            Multi-family                15

            Commercial                 20

The new median ratio is 95%.  Editor’s note:  This is an apparent reference to the assessment to sales ratio, or ASR.  This is calculated by taking the assessment and dividing by the sales price.  Thus a ratio of 95% indicates that the average property sold for approximately 5 percent more than its assessment.  Selectman Musselman asked whether the sales values were used as input.  Mr. Rogers responded that they were.  Mr. Rogers then provided the coefficients of dispersion arrived at with the new valuation:

            Overall                                    6.18

            Single family               6.53

            Condominium             1.69     (small sample size)

            Mobile home               –          (only one sale)

            Land                            11.65

            Commercial                   1.53

Selectman Musselman asked what the coefficient of dispersion was the last time.  Mr. Rogers responded that it was in the 12% range.  Editor’s note:  The coefficient of dispersion measures how much variation there is around the median ASR.   It’s expressed as a percentage.  For example if the COD is 10%, the assessment to sales ratio of the average property varies from the median by 10 percent.  The lower the number, the more accurate the assessments are (measured by comparing assessments ratios on actual sales).

            As a result of the meetings, Mr. Rogers stated that 617 properties changed values.  Those with water proximity were reduced 7 percent in land value.  They had complaints that land values were too high.  Land is at a ratio of 96 percent, with a 11.65% COD.

            Selectman Jenness asked how it was that land values appeared to be about the same regardless of lot size.

            Mr. Rogers responded that larger lots would have higher assessments.  However a lot of twice the size is not worth twice as much.  There is a premium associated with having a buildable lot. 

            Selectman Jenness indicated that, where there were multiple buildings on the same lot, such as a small cottage in back or condos, the value did not seem to be affected.  The value was similar to, or less than, single family homes in the area.

            Mr. Rogers responded that whether additional structures could be rented was not considered.

            Mr. LeBlond interjected that there won’t be a substantial difference in value between a 2 acre lot and a 5 acre lot.  There is a residual land value of $15,000 per acre.  Editor’s note:  Apparently above one acre, any increase in lot size is valued at $15,000 per acre.

            Selectman Musselman asked about qualified vs. unqualified sales.  He stated that in some neighborhoods the qualified sales were reclassified as unqualified sales, or vice versa, and the values in the neighborhoods changed.  Are they certain that the correct sales were counted?

            Mr. LeBlond responded that each month every deed is reviewed.  The deed itself may indicate that the value cannot be used.  Sales information letters are sent out to the new owners.  Most of the responses are truthful.  Most are coming back as qualified sales.  Selectman Musselman stated that there were 97 qualified sales.  Mr. LeBlond indicated that there were approximately 20 unqualified sales.

            Mr. Rogers indicated that there are unqualified sales codes.  They may be family transactions or personal property may be involved.  If a property has just been sold they measure it and try to visit the inside. 

            Selectman Jenness asked whether there was any effect from the economy.  Mr. LeBlond responded that the market was pretty strong, with over 100 transactions in two years.  That’s pretty significant with 3000 properties in town. 

Comments by Selectman Mills

            Selectman Mills stated that he was glad that this meeting was occurred.  He wishes that it had occurred before the letters went out.  Selectman Musselman agreed.

            Selectman Mills stated that he believes that this process is another way of getting education funding.  People were happy before. 

            The discussion turned to the 2010 values.  Mr. LeBlond stated that there were 40 adjustments and 160 abatements relating to those values.  Selectman Mills stated that the appraiser pushed the wrong button.  Editor’s note:  This was apparently the former appraiser, Howard Promer.  The state said that nothing could be done.  Mr. LeBlond clarified, explaining that the tax rate could not be reset. 

            Steve Hamilton, head of the N.H. Department of Revenue, Property Appraisal Division, explained that there had been a meeting on November 1, 2010, after the 2010 tax rate had been set.  The Board of Selectmen at the time prudently gave abatements to those who had paid too much.

            Selectman Mills asked whether he was saying that the prior assessor was lousy.  With the exception of the 160 who got abatements, the average taxpayer was happy.

            Mr. Hamilton continued, stating that the process should be systematic, based on what is learned from the sale of properties.  It’s difficult work.  Perfection is not the standard.  There was no documentation for the approach taken in 2010.  The assessor could not provide support.  He knew about the overrides.  The 2010 revaluation attempt didn’t hit the mark.  If information is not left, the next professional cannot apply it.  There’s no definite specification. 

            Reservations were expressed in 2010.  Every taxpayer may not like the result. Properties with special treatment have now been identified.

            Selectman Mills raised his voice, stating that he didn’t believe Mr. Hamilton.  He didn’t believe one word.  He doesn’t believe KRT either.  He’s been here 20 years.

            Mr. Hamilton asked Selectman Mills whether any of the facts that Mr. Hamilton had stated were wrong.

            Selectman Mills interrupted, asking that he be permitted to get his questions out.  He asked Mr. Hamilton why he had come.  Mr. Hamilton responded that Mr. LeBlond had invited him.

            Selectman Mills asked for the values pre- and post-hearings.  Mr. LeBlond stated that, after the reductions, the value was $1,752,828,590.  Cindi Gillespie provided the information based on the prior values.  It was $1,763,314,935. 

            Selectman Mills asked Mr. Rogers whether they had done any other New Hampshireseacoast towns.  Mr. Rogers responded that they had not, however they had done North Hampton twice, as well as Rockport, MA, Kittery, ME, Camden, ME, and Boothbay, ME.  Editor’s note:  Mr. Rogers was apparently unaware that North Hampton has a short section of coastline.

            Selectman Mills asked about particular streets within sight of the ocean, and whether the properties of people that had come in had been adjusted.  Mr. Rogers responded that they had not been.  It was done with a “D†code for the neighborhood. That dropped the ratio from 98% to 92%. 

            Mr. Hamilton continued, stating that this was exact thing he had been discussing.  A comprehensive system is needed.  The hearings are not a part of an abatement process.  It’s improper to do the adjustments property by property.  Adjustments are applied globally.  That is the right way.  Time will tell how good it is.

            Mr. LeBlond indicated that there are 300 letters changing the assessments.  They have not gone out yet.  The decision can be changed. 

            Selectman Musselman asked about the reduction from 98% to 92%.  Mr. Hamilton said that the standard is 90 to 100 percent of market value.  There’s a practical issue.  You don’t want the ratio above 100 as people don’t think that they need to apply it.  Editor’s note:  If the ratio is above 100, then the average property would be assessed above market value.  People would then believe that they could obtain abatements by challenging their assessments.  In fact, in order to obtain an abatement, the property owner must demonstrate that his property is assessed disproportionately to the rest of the town, i.e. that he is paying more than his fair share of taxes.  No abatement could be obtained by a property owner that demonstrated that his property was over assessed by 20% if the average property in the town is also over assessed by 20%.  There would be no disproportionality in that case.    

            Selectman Jenness interjected that they don’t want to have to have a reappraisal again next year.  Mr. Hamilton responded that the ratio does not cause this, the COD does.  Editor’s note:  This is the disproportionality issue described above.  As long as the properties are all over assessed or all unde rassessed it makes no difference.  There is no unfairness.

            Selectman Mills asked for an explanation ofChurch Rd.  It’s approximately the same distance to the ocean as another road.  Mr. Rogers responded that there were no sales there.  Sea Rd. is comparable, so that was used.  Someone in the audience interjected thatSea Rd. was the most expensive in town.

            Selectman Mills gave an example of a Church Rd.property that dropped by $1 million.  A vacant lot on Church Rd.dropped from $890,000 to $461,000.  Fairhill is the same distance to the ocean as Church Rd.  Editor’s note:  Church Rd. is in Rye Beach, Fairhill is near Wallis Sands Beach.  The two neighborhoods are not comparable.

            Selectman Mills gave another example of a $900,000 lot purchased in 2007.  In 2009 it was sold as a shell for $2 million.  There’s now a certificate of occupancy and it is assessed at $1.6 million.

            Mr. Hamilton continued.  It’s important to look at whether there’s a willing buyer and a willing seller with typical motivation.  InSalem, where he lives, there are bank sales and short sales behind the scenes that are not willing buyer and willing seller. 

            Mr. LeBlond stated that buyers can pay anything they want.  They don’t always get it back.

            Selectman Jenness indicated that there was a $10,486,345 decrease in the town value.

            Mr. Hamilton stated that his job is to take 30,000 sales inNew Hampshireand arrive at an equalized value so that shared community burdens (i.e. statewide and county wide taxes) are fair.  Values in 2009 statewide were high.  They were down in 2010 and 2011, 3 percent and then 6 percent. Salemwas up 35% and then down 35%.  Ocean and lake properties weathered the storm well.  Commuter locations such asSalemwent up and down quickly.

            Selectman Mills stated that people fromSalemare driving up the values when they buy inRye.  A .27 acre property is up 45 percent. 

            Selectman Mills then started shouting at Mr. Hamilton.  He stated that he had dealt with Stanley Arnold and he would deal with Mr. Hamilton.  He stated that people inConcorddid not scare him a bit with their titles.  The whole process is a mess.

            Mr. Hamilton responded that tools are available for those whose properties have risen in value, such as the elderly exemption, tax deferral and the disabled exemption.

            Selectman Mills continued shouting at Mr. Hamilton.  He stated that this generation wants to make it on its own.  They are proud people.

            Mr. Hamilton responded that he had been on the Board of Assessors of Manchester for 5 years.  If the Board of Selectmen do not want him there he doesn’t need to be there.

            Selectman Jenness responded, that no, they appreciated his presence.  They understand that individual circumstances cannot be the basis for assessments in the town.

Taxpayer input

            Mr. Driscoll ofBreakers Rd.asked what letters had gone out.  Selectman Jenness responded that no letters had gone out yet.  Selectman Musselman clarified that a first round of letters had gone out in October.

            Mr. Driscoll then asked whether there was a limit on the increase percentage under state law.  Mr. Hamilton replied that there was not. 

            Selectman Mills read a figure off of a printout that he had, and informed Mr. Driscoll that he had gotten a $65,000 reduction. 

            Ed Balmer of1643 Ocean Blvdstated that he had received a 26% increase.  The land was up 41%, by $162,000.  He stated that he had read the KRT process and it sounded reasonable.  The potential problem is with the neighborhood code.  He stated that the process was uniform.  Everyone on the strip was jacked up the same amount.  There are no comparables as there have been no sales in that section ofOcean Blvd.  Perhaps the increase is due toSea Rd.  Two nearby houses are for sale.  One is for $175,000 less than the assessment, the other for $174,000 less.  There’s no way that he would get $800,000 for his property.  There are no comps near that.  Somehow the codes are wrong. 

            Selectman Mills read a figure off and indicated that Mr. Balmer had received a $91,000 reduction.

            Bill Laverty of 1617 Ocean spoke.  His house is down in value, the land is up.  His property is only 2 bedrooms.  A lot of his land is marsh, which creates septic issues if someone wants to expand the property.

            Mr. LeBlond stated that this session was not for rehearing.  People should wait for their letters.

            Shawn Crapo, 676 Central Rd.spoke.  Editor’s note:  Mr. Crapo serves on the Town’s Budget Committee and Zoning Board of Adjustment.  He stated that most people understand that when all properties go up the tax rates go down.  But different people are being changed at different rates.  What is the benchmark?  It doesn’t seem that a benchmark was done.  Mr. Crapo asked whether non-Rye properties had been used.  The response was no. 

            Mr. LeBlond clarified that properties are valued as of April 1.  New construction starting after then is not picked up.

            Mr. Crapo compared his .57 acre lot to a 2 acre buildable lot and showed a graph in a KRT document.  He asked how there could be one set of deviations.

            Mr. Hamilton responded that the price per acre will vary wildly.  Mr. Crapo responded that the standard for a buildable lot is not the same throughout town.  Mr. Hamilton stated that for individual properties there is an abatement process.  They can request those of the Board of Selectmen and then appeal to the BTLA or the Superior Court.

            Mr. Crapo responded that only the squeaky wheels change under the process.  If 300 properties change then 3000 should change. 

            Mr. Hamilton continued, stating that appeals are different fromMassachusetts.  It’s a quasi court.  Most petitioners represent themselves.

            Selectman Musselman stated that they sit through these every June.  He has sat through probably 200, Selectman Mills probably 800.  He’s heard a couple of hundred times that you don’t talk dollars per acre.  The value is in the developable lot.  Over the years the assessor has listened.  Often he goes back out.  Although they have heard amazing things, such as the living room being too big, more often than not the taxpayer’s point is valid.  In recent years the BTLA has been busy.  It often tells the Town to hear the case again.  The three of them hear and decide the issue.  Everyone that they have met with thinks that they take this seriously.

            James Quinn,27 Cable Rd.spoke.  He said that he is on the corner ofSurf Ln.andCable Rd.and has two driveways.  He could get a $1500 tax reduction if he changed his address toSurf Ln.  Selectman Mills read off his reduction.  It was $29,900.  Mr. Quinn stated that it had been up $219,000.

            Mr. LeBlond reiterated that 7 days had been devoted to taxpayer hearings.  This is not a hearing process.  It is a work session.  If the adjustments are not enough, the solution is the abatement process.

            Mr. Crapo stated that the KRT bill will need to be paid out of the budget that we paid for.  It doesn’t appear that the system worked. 

            Mr. LeBlond responded that Mr. Crapo was hitting below the belt.  He asked what would happen if KRT was not paid.

            Mr. Hamilton stated that KRT would probably have an issue with that.  He stated that he assumed that the Town would want to set a tax rate.  Selectman Musselman responded that they wanted to do so in November.  Mr. Hamilton continued, stating that the process must be complete before then.  The ability to use the old assessments is not there due to overrides and special valuations.  It seemed to be unsystematic.  This appears to be standard.

            Selectman Mills asked what would happen if the Board of Selectmen did not accept the values.

            Mr. Hamilton responded that he had made it clear to the Board that the old values were not reliable.  They are not proportional or equitable.  He asked Mr. LeBlond whether any 2010 records had been found.  Mr. LeBlond stated that they were not compliant.  Mr. Hamilton continued, stating that the Commission can petition the BTLA, which can order a reassessment.  They want the Town to control the process.  But it can be done the other way.

            Selectman Jenness indicated that the process will need to be followed to its conclusion.  It would be a shame if taxpayers cannot be billed in a timely fashion.  The Town would get into trouble.  It would need to borrow to pay its bills.

            Tom Beamer,27 Breakers Rd.asked what walking distance to the beach meant.  What if someone is .1 miles beyond that?  Mr. Rogers responded that there are maps, but .2 miles is normally considered walking distance. 

            Mr. LeBlond interjected that the cut must be made at some point.  Mr. Beamer responded that it cannot be a quick drop.  Some people walk a mile to the beach.

            Selectman Mills stated that someone onGray Ct.was “raped†with the land value.

            Selectman Musselman asked what would happen if there’s an appeal and an individual property is abated.  Would the person need to come in the following year?

            Mr. Hamilton responded that this would not generally be necessary, however it was within the Board’s authority to change assessments each year.

            Selectman Mills stated that he had been involved since 1978.  He has never seen so many unhappy people.

            Someone from the audience asked whether there could be group abatements.  Selectman Musselman stated that that was not really possible.  Mr. Hamilton stated that abatement requests could be grouped on certain nights.

            Selectman Mills stated that he is concerned about young couples with a mortgage and two car payments.  They may obtain an abatement in April, but their bills are up in the meantime.

            Mr. Hamilton stated that he doesn’t set the assessments.  Buyers and sellers set them.  The tax is fair when its based on market value.

            Mr. Crapo asked about the map of neighborhoods, which is not in the packets.  Would there be more information in the future?  Mr. Magnant responded that this would be put on the website.