Some residents baffled by property assessments
Posted on Tuesday, August 12, 2008
BENTONVILLE — In a market of increased foreclosures, failing banks and an inability to sell homes, it comes as no surprise that many property owners in Benton County are frustrated with the dramatic increase in their 2008 property-tax assessments.
The thing some property owners seem to be most flustered with is not the idea that their property is worth more, but the notion that — if they were to sell the property today — they simply would not receive the money that the Benton County Assessor says the property is worth.
When John Wheatley of Centerton received his Notice of Real Estate Value Change, he was shocked to see his home was valued at $ 138, 100 because the property across the street from his, with a similar lot and home size, has been on the market — unable to sell at a price of $ 119, 000 — for months.
“ I would love to say that my property is worth $ 138, 000, but I do not see it selling for that much money, ” Wheatley said. “ I do not mind paying the taxes if this is actually what the property is worth. ”
Wheatley doesn’t think his home is worth its assessed value, especially in today’s unstable housing market.
Wheatley did some research on the Internet when he received his new property assessment and found more than eight pages of foreclosures in Benton County alone.
Realty Trac, a company responsible for tracking foreclosure information in the United States, shows on its Web site www. realtytrac. com that Benton County had 64 properties in pre-foreclosure, 457 properties to be auctioned and 582 bank-owned properties as of Aug. 11. It is important to note that these numbers are cumulative; they are not reflective for the year 2008 alone.
These numbers could be off because of the way foreclosures are reported. There are two types of foreclosures — judicial and nonjudicial. Nonjudicial foreclosures, more often than not, are not reported and therefore cannot be easily tracked, according to Kathy Deck, director of the Center for Business and Economic Research at the University of Arkansas who releases The Skyline Report that tracks market changes for northwest Arkansas.
Benton County is currently working its way through housing that was built in the boom years of 2005, 2006 and 2007. This is causing a downward pressure on housing prices, Deck said.
New residential building permits for Benton County peaked in the second quarter of 2006, when 1, 350 new permits were issued. During the first quarter of 2008, only 200 new building permits were issued, resulting in a slowdown in Benton County’s construction industry, Deck said.
The decrease in building permits mark what could be the beginning of the housing market’s turnaround because less building means the county will have time to soak up all of its excess housing inventory, which will cause property values to increase, Deck said.
The second factor in turning around the housing market will be an increase in job growth for the county, Deck said. Job growth in Benton County for 2008 has been at 1 percent, whereas in the boom years, 2005 to 2007, job growth was between 3 percent and 5 percent, Deck said.
“ The prices are moving downward, which will help the quantity situation, but as far as have we seen prices go down as far as they will go, that is doubtful, ” Deck said.
What this means for assessed property values is that if Benton County stays on its current three-year appraisal cycle, these downward market trends will be seen on the county’s next property assessments — in 2011, Deck said.
This, for Beverly Bell, an agent with Hutchinson Realty in Bentonville, is a problem because it means the assessed property values do not reflect reality.
The reality of the situation is that “ property values have declined. There are 4 1 / 2 years of inventory on hand in Benton County right now without building another house, ” Bell said.
“ Apparently property is being assessed at 2005 (values ), … (but ) the values are not the same, ” Bell said.
The property-assessment situation was the subject of debate at a meeting in Little Rock on Thursday when County Assessor Bill Moutray discussed the assessments before the state Legislature.
“ I put all of the beans out on the table (Thursday ). Hopefully, (in the future ) I can do an appraisal every year. That will keep up with the market a little better, ” Moutray said.
The Legislature will not be able to change the laws surrounding the way property assessments are done until lawmakers meet in January.
Another reason Benton County property owners are upset with the increased property assessments is that the higher assessments equal higher taxes.
“ Taxes will definitely go up, obviously, if the assessed values go up, ” County Tax Collector Greg Hoggatt said.
While taxes can only increase 5 percent per year on homestead property and 10 percent on all other properties, the tax cap only protects property owners for one year. If a property owner sees an increase of more than 5 percent on homestead property, that owner can look for his or her taxes to increase by 5 percent each year until the percentage of tax increase equals the percentage of property-value increase, or until the property is reassessed in three years, Hoggatt said.
“ If the assessment goes up 20 percent, taxes can only go up 5 percent this year; then they will increase another 5 percent next year and another 5 percent the next year, he said.
“ As long as the assessed value goes up, the taxes will continue to rise, ” said Hoggatt, who admits that he saw a substantial increase in his own assessed property value.
Just where do the tax dollars go ? For each tax dollar paid to Benton County, 80 cents is earmarked for public schools, 10 cents for city government, 8 cents for county government and 2 cents for county roads.
As a side note, Hoggatt recommended that property owners apply for the homestead credit offered by Amendment 79 of Arkansas’ constitution by filling out a form in the Assessor’s Office.
“ Amendment 79 is great if you apply for the homestead credit. That is definitely a benefit that everyone needs to take advantage of, ” Hoggatt said.
One method property owners have to appeal their assessed property values is to schedule an appointment with the Equalization Board by calling 271-1037. They must set up an appointment with the Equalization Board before Aug. 18.
On the Committee of 13 ’s agenda when it meets at 6 tonight will be interviewing candidates to replace Phil Fielding on the Equalization Board. Fielding resigned from the board last week because of prior business obligations.
Three Benton County residents will be interviewed by the Committee of 13 to fill the vacancy on the Equalization Board. Those residents are Penny Lukassen, Jimmy H. Robertys and Jana Jobe. There will be a special meeting of the county’s Quorum Court immediately following the meeting of the Committee of 13 for the purpose of appointing one of the three to the Equalization Board.
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