This week the County Assessor, Charles Zalmanek, sent out postcard notices of revised property evaluations to several homes in the neighborhood just west of the Orcas Airport.
Our property’s value had gone up almost 70 percent from its previous assessment three years ago, with the land assessment increasing by over 100 percent. Like many islanders, we moaned and marveled at the increase, but we didn’t comment within the 30-day comment period. So we were surprised to get a notice that the valuation had decreased by nearly $27,000.
In a call to Zalmanek, he explained “Sometimes in the process with concerns about value, we learn information that we hadn’t previously known that can impact a neighborhood… for example a sale or a sale price is incorrectly stated.”
John Kulseth, the county appraiser who’d calculated the value of properties in our neighborhood, said that when three nearby property owners commented on their valuation, it was determined that a sale in the neighborhood hadn’t gone through, resulting in a $400,000 change. The county assessors felt that properties nearby should be adjusted downward. (Please see further explanation from John Kulseth posted in the comments.)
With over 1,000 properties assigned to each appraiser, “There’s a whole bunch of different pieces that come together in assessments,” Kulseth said. The 30-day comment period “gives us a chance to re-evaluate what we may have missed. We hope that property owners will call.”
In our case, we benefited from the activism of our three neighbors who called the assessor’s office to challenge the valuation.
Zalmanek said he misses the days when he was out in the field doing appraisals. “That’s the fun part of the job.”
**If you are reading theOrcasonian for free, thank your fellow islanders. If you would like to support theOrcasonian CLICK HERE to set your modestly-priced, voluntary subscription. Otherwise, no worries; we’re happy to share with you.**
On Dec. 15, John Kulseth wrote Bullwings to comment: “The ‘$400,000 change’ was not so much a change as a sale that did not close. The sale price was reportedly $410,000, and I anticipated that it would close from all indications, including the seller packing his belongings and moving out. When the sale did not close, I could not rely on the price as a firm indication of value and had to revalue the neighborhood more conservatively. The total effect of the failed transaction was not $400,000 because there was still some value there–some value less than $410,000. You might note, as I have, that if the sale is later negotiated for something near the $410,000 price, I will be proven wrong in being conservative.”
On Dec. 15, John Kulseth wrote Bullwings to comment: “The ‘$400,000 change’ was not so much a change as a sale that did not close. The sale price was reportedly $410,000, and I anticipated that it would close from all indications, including the seller packing his belongings and moving out. When the sale did not close, I could not rely on the price as a firm indication of value and had to revalue the neighborhood more conservatively. The total effect of the failed transaction was not $400,000 because there was still some value there–some value less than $410,000. You might note, as I have, that if the sale is later negotiated for something near the $410,000 price, I will be proven wrong in being conservative.”
Here’s where it gets complicated. The new assessments will affect taxes for the next three years (2009-2011), but the increase, whether you measure it by percentage or dollar amount, does not directly relate to the amount of taxes that will be owed next year. The tax amount due is based on each property’s value, as a percentage, compared to the total taxable value in the county. That percentage of value is multiplied by the total budget revenue the county is allowed to collect to determine taxes that are owed. When the calculations are done, the sum of all the taxpayers’ percentages of value will be 100%, and the sum of all the taxes owed by all the taxpayers will be the total amount of the county budget.
Because only part of the county is revalued each year, each taxpayer’s percentage of value changes relative to the other parts of the county, so each person’s percentage is recalculated every year. When Orcas property values increased compared to what they were in 2005, but Lopez and San Juan values did not (because it was not their turn for revaluation), Orcas’ share, or percentage of ownership, in the total value of the county increased, so taxes will increase; San Juan and Lopez shares decreased, so taxes will decrease. Each revaluation area generally has a drop in taxes in the second and third year following a revaluation.
There was an article published in the Islands’ Sounder on 10/29/08 that attempted to explain the process:
Understanding San Juan County Assessed Values and Taxes
Based on several phone calls made to the assessor?s office and more than one letter to the editor, there is a misconception among some taxpayers about the relationship between assessed values and taxes. San Juan County will not receive more revenue because of higher property values.
The assessor?s office could double, triple, and then quadruple assessed values and it would not change the amount of taxes paid to the government by a nickel. It will shift who pays the taxes if certain values increased and others remained the same (as happens under San Juan County?s three-year revaluation cycle), or if others increased at a lesser percentage (as sometimes happens when comparing different neighborhoods), but it would not change the total tax revenue.
Tax revenue in Washington is limited to a one percent increase per year.
Some districts receive an additional amount of taxes based on the value of new construction in the district, and that amount is equal to the value of the new construction in the district multiplied by the previous year?s tax rate for the district. The value of new construction increases tax revenue where the construction occurs, but otherwise the amount of property tax paid to the government can only go up one percent per year.
The large increase in taxes for most taxpayers occurs because of the three-year revaluation cycle adopted in San Juan County. The number of tax parcels (there are over 18,000 tax parcels in San Juan County) makes it impossible for the assessor?s office to inspect each parcel more than once every three years. Only one-third of the properties is revalued any given year while the other two-thirds remain at the value from the previous year. Taxpayer?s whose values went up will pay more in taxes during the first year following their revaluation.
Higher values on Orcas compared to Lopez and San Juan will create a shift of the tax burden that will result in higher taxes for Orcas taxpayers in 2009. The burden was shifted to Lopez taxpayers in 2008 and San Juan taxpayers in 2007. A review of your taxes will undoubtedly show that your taxes have gone down in the second and third years following a revaluation. If every property in San Juan County were revalued every year, and the value of each stayed the same relative to the others, everyone?s taxes would only increase one percent because the amount of revenue that can be collected can only increase one percent.
The assessor?s office did not ?choose this time to increase . . .property taxes?, as suggested by a recent letter to the editor. This time of year occurs every year for one of three groups of taxpayers. The revaluation process was established to maintain equity among all taxpayers, which means your assessed value is adjusted for fairness relative to all your neighbors every three years.
State law requires the assessor to set the assessed value at 100% of the true and fair market value at the time of the revaluation based on reliable evidence of market value. There has been increased demand for property in San Juan County in recent years. It is a desirable place to live and work. The demand translates to a strong investment position, though that is generally only realized when the property is sold. One burden of property ownership is the payment of taxes, and that is the foundation of the assessment system. Every employee in the assessor?s office is a taxpayer that shares the burden. We all work diligently to perform our duties in a responsible and ethical manner. We invite any questions or comments at either assessor@sanjuanco.com or 378-2172.
The sale of a property does not trigger a new tax amount. Sales prices are used to indicate the market value of property, not to determine taxes to be paid. The market value is important only every three years, at the time of revaluation.
Every state handles tax revenue differently. California is probably the best example for using sales price to set taxes. I believe it was called Proposition 13, and I believe it freezes assessed values until the property is sold, at which time the sales price becomes the new assessed value for the new owners. In Washington, we refer to multiple sales in any given area to determine market values as of a certain date (January 1st of the revaluation year) only once every three years, so taxes will be adjusted on that three year cycle whether a person sells or not. One particular sale may be high or low compared to other sales in the area, so a sales price does not necessarily determine the new assessed value.
Here’s where it gets complicated. The new assessments will affect taxes for the next three years (2009-2011), but the increase, whether you measure it by percentage or dollar amount, does not directly relate to the amount of taxes that will be owed next year. The tax amount due is based on each property’s value, as a percentage, compared to the total taxable value in the county. That percentage of value is multiplied by the total budget revenue the county is allowed to collect to determine taxes that are owed. When the calculations are done, the sum of all the taxpayers’ percentages of value will be 100%, and the sum of all the taxes owed by all the taxpayers will be the total amount of the county budget.
Because only part of the county is revalued each year, each taxpayer’s percentage of value changes relative to the other parts of the county, so each person’s percentage is recalculated every year. When Orcas property values increased compared to what they were in 2005, but Lopez and San Juan values did not (because it was not their turn for revaluation), Orcas’ share, or percentage of ownership, in the total value of the county increased, so taxes will increase; San Juan and Lopez shares decreased, so taxes will decrease. Each revaluation area generally has a drop in taxes in the second and third year following a revaluation.
There was an article published in the Islands’ Sounder on 10/29/08 that attempted to explain the process:
Understanding San Juan County Assessed Values and Taxes
Based on several phone calls made to the assessor’s office and more than one letter to the editor, there is a misconception among some taxpayers about the relationship between assessed values and taxes. San Juan County will not receive more revenue because of higher property values.
The assessor’s office could double, triple, and then quadruple assessed values and it would not change the amount of taxes paid to the government by a nickel. It will shift who pays the taxes if certain values increased and others remained the same (as happens under San Juan County’s three-year revaluation cycle), or if others increased at a lesser percentage (as sometimes happens when comparing different neighborhoods), but it would not change the total tax revenue.
Tax revenue in Washington is limited to a one percent increase per year.
Some districts receive an additional amount of taxes based on the value of new construction in the district, and that amount is equal to the value of the new construction in the district multiplied by the previous year’s tax rate for the district. The value of new construction increases tax revenue where the construction occurs, but otherwise the amount of property tax paid to the government can only go up one percent per year.
The large increase in taxes for most taxpayers occurs because of the three-year revaluation cycle adopted in San Juan County. The number of tax parcels (there are over 18,000 tax parcels in San Juan County) makes it impossible for the assessor’s office to inspect each parcel more than once every three years. Only one-third of the properties is revalued any given year while the other two-thirds remain at the value from the previous year. Taxpayer’s whose values went up will pay more in taxes during the first year following their revaluation.
Higher values on Orcas compared to Lopez and San Juan will create a shift of the tax burden that will result in higher taxes for Orcas taxpayers in 2009. The burden was shifted to Lopez taxpayers in 2008 and San Juan taxpayers in 2007. A review of your taxes will undoubtedly show that your taxes have gone down in the second and third years following a revaluation. If every property in San Juan County were revalued every year, and the value of each stayed the same relative to the others, everyone’s taxes would only increase one percent because the amount of revenue that can be collected can only increase one percent.
The assessor’s office did not “choose this time to increase . . .property taxes”, as suggested by a recent letter to the editor. This time of year occurs every year for one of three groups of taxpayers. The revaluation process was established to maintain equity among all taxpayers, which means your assessed value is adjusted for fairness relative to all your neighbors every three years.
State law requires the assessor to set the assessed value at 100% of the true and fair market value at the time of the revaluation based on reliable evidence of market value. There has been increased demand for property in San Juan County in recent years. It is a desirable place to live and work. The demand translates to a strong investment position, though that is generally only realized when the property is sold. One burden of property ownership is the payment of taxes, and that is the foundation of the assessment system. Every employee in the assessor’s office is a taxpayer that shares the burden. We all work diligently to perform our duties in a responsible and ethical manner. We invite any questions or comments at either assessor@sanjuanco.com or 378-2172.
The sale of a property does not trigger a new tax amount. Sales prices are used to indicate the market value of property, not to determine taxes to be paid. The market value is important only every three years, at the time of revaluation.
Every state handles tax revenue differently. California is probably the best example for using sales price to set taxes. I believe it was called Proposition 13, and I believe it freezes assessed values until the property is sold, at which time the sales price becomes the new assessed value for the new owners. In Washington, we refer to multiple sales in any given area to determine market values as of a certain date (January 1st of the revaluation year) only once every three years, so taxes will be adjusted on that three year cycle whether a person sells or not. One particular sale may be high or low compared to other sales in the area, so a sales price does not necessarily determine the new assessed value.