What Rising Property Values?

Last week, I told you about how my tax bill showed an increase of nearly 60% over last year's bill, due largely to a 30% increase in my assessment. Everyone who lives in my neighborhood knows that property values have generally been falling since 2007. So why the spike in assessments? The Star's Andrea Neal had a column on this phenomenon earlier this week that I neglected to mention and discusses how the assessors are permitted to use sales data that is several years old to arrive at assessments. As she explains this unusual rise in property values:

Expect property taxes to be back in the headlines now that November bills are due. Some homeowners are understandably dismayed their property values are rising at a time when the housing market is struggling.

One Indianapolis resident saw his assessed value jump by nearly $66,000, accompanied by a tax increase of $1,600. His story was not unusual in his historic neighborhood, where some experienced assessment increases of 10 percent or higher. The value of a $470,800 home on Broadway Street rose to $521,800. Another valued at $695,400 jumped to $775,200. "Anyone who has not been hiding under a rock knows property values certainly did not increase in the past year," one homeowner said.

In Allen County, more than 13,000 property owners received notices that their assessed value had gone up 10 percent or more, which will mean higher tax bills on their spring installments, The News-Sentinel reported. Assessed value rose for 31 percent of county residents. County Assessor Stacey O'Day said the increases were the result of several factors including a change in law that allowed assessors to update property values every year based on sales prices for comparable homes. Also, the sales data used to compute new assessments preceded the worst of the recession.
Such stories almost guarantee that property taxes will be back on the radar screen of the 2010 Indiana General Assembly. First on the agenda is SJR 1: the proposed constitutional amendment to cap property taxes at 1 percent of a home's value, 2 percent of a farm's value and 3 percent of a business' value.

Neal goes on in her column to advocate for the need to enact a constitutional amendment to make a state law capping property taxes permanent, a proposal that has so far been blocked by House Speaker Pat Bauer. But as I pointed out in my post, the property tax cap did not protect me from getting a record-breaking property tax increase bill. If the assessor's office can use sales data that is several years old as an excuse to raise my property tax assessment higher than my home's actual value, the tax cap will never protect me. The legislature needs to change the law to prevent assessors from using dated sales data as an excuse to increase property tax assessments during the worst economic downturn in modern times. Assessors are simply using this approach as a way of avoiding the economic impact of the property tax caps on local governments. According to the Marion Co. Treasurer's Office, only 1,200 Marion County homeowners benefitted from this year's property tax cap.