It’s the single word that property owners fear the most.
No, it’s not “property taxes.” (That’s two words, and it’s a close second.) It’s “revaluation.” Revaluation is a reassessment process for periodically measuring and capturing changes in property values. It takes place in every municipality across the country, and it’s underway now in Portland.
A higher assessed property value is usually good news for property owners – it means the value of their investment is going up. Many fear it also means their tax bills are going up and, for some, that could be the case. But does an increase in assessed value from a revaluation always mean a higher property tax? No, it does not. Some properties that come out with a higher assessed value will see their taxes remain flat, and others will even see a decrease.
This is because there are two important numbers to know when determining property taxes: the total taxable assessed value of property, and the total annual amount required to be collected from property taxes in the city budget. The Assessor’s Office determines the value of all real property across the city based on a variety of factors such as the property’s age, location, size, improvements and the value of recent nearby sales of a similar type and style. When the city plans its budget for the year, the amount it needs to collect from property taxes (revenues) is based solely on the services it plans to provide (expenditures). In the current budget, this amount is $186 million. No matter how much property values go up or down, the city plans to collect $186 million via property taxes to do its job.
The two processes come together when the city sets the tax or millage rate. Dividing the needs of the budget by the city’s total taxable value is the calculation that determines each property’s share of the cost to run the city that year. When the total city assessed value goes up from a revaluation, the tax rate goes down to compensate. In fact, the last two revaluations caused the millage rate to drop by over $10 per $1,000 assessed value. The opposite is true if values decrease. But in the end, only the same $186 million is collected. A revaluation does not raise any new revenue or taxes for the city.
Revaluation is a time to not only make sure all property is assessed to its market value, but also to make sure assessments are spread equitably among similar property types. It’s also a perfect time to take stock of all property and confirm property characteristics, especially those that affect value.
This is the part where you can help the most. Residential property owners have been sent a mailer that lists the data points that our office has on your property. We ask that you make any changes or corrections needed and use the included postage-paid reply envelope to return these to our office.
The last citywide revaluation was in 2004. State law requires municipalities to meet minimum assessment requirements, and Portland is currently right at these minimum levels. Without a revaluation, we would fall below these standards next year, opening the door to possible administrative actions by the state. One of the biggest effects of being at minimum standards is the Homestead Exemption, which more than 8,700 Portland households receive. Instead of the full $20,000 in exempted assessed value that the law allows, approved Portland homeowners are currently realizing only $16,800 in exemption. After the revaluation, this amount will increase to $25,000, providing the full value of this tax relief the Legislature intended.
Around April 2020, property owners will receive a new value notice. This starts the process of informal hearings, where every property owner has the full opportunity and right to contest their new value. Instructions for how to initiate the appeal process will be included in your notice. New property values will be effective for fiscal year 2021, which starts next July 1.
Between now and then, you will see me and my staff throughout the community at neighborhood and stakeholder meetings so we can help answer questions. We are here to serve you. Please visit www.revalueportland.me for the latest information or call 207-874-8763.
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