Hillsboro Banner

By MICHELLE MCLEAN

Hillsboro’s housing boom comes with a down side for taxpayers.

As homebuyers pay higher prices for new and existing homes, owners of similar homes see their taxable values increase as well.

“Sales is what’s steering all assessments,” explained Merrill Meyer, half of the Portland, N.D.-based assessor team contracted by the city. 

Meyer’s wife, Janet, added, “Hillsboro has the strongest market (in the county) right now.”

Under a new state law, taxable values must reflect 100 percent of market value. By the Meyers’ calculations, the city overall is at 91.5 percent. In years past, the state allowed a 95 to 105 percent “sales ratio”  window. Without that leeway, many Hillsboro property owners saw substantial increases on their 2007 property tax bill.

Overall, the taxable value of residential and commercial property in the city increased $4,680,000. Reasons for the increase include new construction, expired exemptions,  improvements to existing property,  new development land sales and — most notably — market sales. According to the Meyers’ comparable sales report, 29 homes sold in the city in 2007. Prices ranged from $15,000 to $229,899.

In Hillsboro, 46 property owners received written notice of an increase in their taxable value of more than 10 percent — enough to fill 13 pages, the Meyers noted. The list for 2006 only filled four, they added.

Seven property owners were present at Monday’s tax equalization meeting at city hall to question the increases — Sherryl Leum, Brad and Paula Peterson, Walter and LaVonne Kozojed and Scott and Lisa Toenies.

The common complaint was “why such a steep increase in one year?”

The Meyers said the new state regulation was to blame. Two property owners — Peterson and Kozojed —  had purchased their homes in 2007 and their new taxable value was set at or slightly under the purchase price — 100 percent of market value. The result for Kozojeds was a 50-percent increase in taxes.

“ A 50 percent increase is quite a jump,”  Walt Kozojed commented.

City commissioner Lorraine Tibert said that she too received a notice of increase. “It’s a tough thing,” she said. “I’m in the same boat.”

Commission president Kevin Burg agreed, “We’re on the same list. We do feel the same pain.”

Merrill Meyer said the state’s new 100-percent rule seems to balance out the 10-percent property tax break the state offered residents on their income tax in 2007. He noted that statewide, assessors are seeing about a six-percent increase in taxable valuations to meet the new state standard.

Lisa Toenies questioned why the value of her family’s home increased more than she paid for the recent improvements to it, including a patio and deck.

The Meyers referred to the comparable sales list. Homes of the same age and style as Toenies’ had increased in value by 12 percent — as reflected in the sales of similar homes. In this case, the Meyers noted, the home’s value had not been adequately adjusted in the past three years and, coupled with the improvements, the 2007 tax bill reflected a more appropriate taxable value. It proved to be “a day of reckoning,”  the Meyers said.

“The timing is poor,” noted  Toenies, as Hillsboro residents anticipate special assessments on three years’ worth of infrastructure improvements.

“It’s a double whammy,” Janet Merrill agreed.

Toenies asked if the large increase could be spread out over two or three years. Meyers added that the state frowns on step-by-step increases when a large increase is warranted.

“We’d never catch up with current market trends” if increases were delayed, she noted.

“Homes in town tend to be undervalued,” noted  Burg. “We can’t change what’s been done in the past. This process is supposed to catch them up.”

If Hillsboro fails to meet the state’s standard by making its own adjustments, the state could mandate an across-the-board increase for all property in town, the Meyers said. That can throw valuations in town further out of line, they said.

“You don’t want the state to come in and demand an increase,” Merrill Meyers said.

After an hour-long session, the commission approved the recommendations of their assessors.