(Host) An adjustment by the town of Stratton in response to declining second home values has set the town on a collision course with the state department of taxes.
How the issue plays out could make a difference of more than two million dollars in the state’s education property tax fund.
VPR’s Susan Keese reports.
(Keese) Stratton finished its last town wide property assessment in 2007, when real estate values were high.
But since the economic downturn, many of Stratton’s second home owners say their properties are worth less.
(Young) Condominiums really took a big hit during the market collapse or fall of the real estate markets.
(Keese) Kent Young is the Stratton Town Clerk. He says a lot of people decided their properties were valued above their current fair market price.
(Young)" Early on this year we were threatened with probably 750 grievances for the assessments for the properties in town. Actually that panned out to be only about 350 that came in for them. And we’ve only got 1400 properties, so it was a major issue to deal with at the town level."
(Keese) Town officials determined that there wasn’t time for a town wide reappraisal before this year’s taxes.
But they also agreed that the properties in question were now assessed significantly above their current market value.
And Young says if that was true…
(Young) "That indicated we had errors in the remainder of our grand list based on the information we received at grievances. And so we decided to apply that error to the remainder of the properties that had not grieved."
(Keese) In the end, a majority of Stratton’s property assessments were deemed "in error" and changed. Some properties dropped more than 20 percent from their 2007 value.
Stratton typically sends over 12 million dollars to the state’s education fund. Young says the changes could mean a couple million dollars less in education taxes coming from the town.
But the state of Vermont doesn’t want to let that happen.
William Johnson is Director of Vermont’s Property Value and Review Division, and he says Stratton has done more than correct a few errors and omissions.
(Johnson) "Stratton is on record I believe as saying they have changed the values for a great majority of the properties in Stratton and that is de facto a reappraisal."
(Keese) The significance of that is that under Vermont’s Education finance law, a reappraisal triggers a recalculation of a town’s Common Level of Appraisal or CLA.
The CLA determines a municipality’s state property tax rate. It goes up and down depending on how close to actual market value a town’s grand list comes.
(Johnson)" In the case of the current real estate market it can actually go up if values are declining and this is what Stratton has said, and there is some evidence to support that. What it will end up meaning is that the resulting tax rate will be somewhat higher. "
(Keese) The tax department has sent Stratton the paperwork for registering a reassessment. Stratton has responded by saying it hasn’t conducted a reassessment and therefore won’t complete the forms.
William Johnson, of the tax department, says it’s premature to speculate on what’s next if Stratton continues its refusal to comply.
For VPR News, I’m Susan Keese.