Concord city councilors question property assessment methods

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Questioning last year’s increase in commercial property values, Concord city councilors expressed skepticism last night about the city’s assessing methods.

“It just logically doesn’t make sense to me how we see such wild swings for assessments,” Mayor Jim Bouley told Kathryn Temchack, the city’s director of real estate assessments.

The total assessed value of commercial and industrial properties increased 13.77 percent in 2012, according to the city’s assessing office. Bouley said he has heard from frustrated property owners who received increases in their assessments ranging from 50 percent to 90 percent.

The council held the first of two public hearings last night that are required under state law before the city can begin its 2013 property assessments. The hearing will continue next month, followed by a vote to authorize the annual reassessment. After the mayor and city council authorize an appraisal, they have no further involvement in the assessment process.

The city has completed assessments annually since 2005, but last night councilors questioned that practice.

“Is it actually worth doing the assessments every year if you’re going to get these large spikes?” Councilor Dan St. Hilaire asked. “Is it worth taking the time to get the data you need?”

Temchack said she can’t predict changes in the real estate market but waiting to reassess properties may only lead to larger spikes in value when an assessment is completed.

“I understand that people are concerned because they obviously, in this particular case, the commercial (and) industrial people saw an increase in their tax bills,” Temchack said.

While many commercial and industrial properties increased in value, the total assessed value of residential properties decreased 2.64 percent last year.

News reports about the economy indicate that the residential housing market is improving more than the commercial market, St. Hilaire said, questioning why only commercial properties increased.

“I think that one of the things that people have a hard time understanding is that when you get your assessment in the fall, it represents what the market value of the property was that April, and so we are looking at sales that occurred over the past year,” Temchack said. “There are still a lot of (residential) foreclosures, short sales, and sales in lieu of foreclosures happening in the city.”

Meanwhile, Temchack said, capitalization rates have decreased for commercial properties. Capitalization rates are based on factors such as interest rates and expected returns on investment, she said, and are multiplied by a property’s net income. She bases commercial property assessments on income and expense data provided by property owners.

“Remember, what I set the values on was information that people returned to me,” she said. “I didn’t make up any data. I didn’t go to San Francisco or some other big cities to find the data. I used the information that those property owners returned to me.”

But sharing information with the assessing office is voluntary, and Temchack said only about 25 percent of property owners provided it last year.

When councilors asked why the Smokestack Center on North State Street increased nearly 99 percent in assessed value, Temchack said the property had previously been assessed as a warehouse. But she learned from the property owner’s self-reported data that it is now used for retail and office space, which has a higher value.

Councilor Mark Coen said the Smokestack Center’s situation might discourage property owners from providing information to the city.

“And so if I had a property . . . I would think twice about sending the assessing office this information, because I can get whacked,” Coen said. “I may not, but I may. So to me, the system – not the assessing office – but the system of how the information is gathered is flawed.”

Temchack said property owners who receive assessments for a different use of their property, or who don’t report changes, simply wouldn’t be paying their fair share of taxes.

“I’m not trying to make anyone pay any more than what they should, but on the other hand nobody should be paying any less than they should, either,” she said. “Because if someone’s paying less, everyone else is paying more.”

City Manager Tom Aspell said it’s important to look at each individual property when considering changes in assessment. He said the board of assessors will do that in the coming months for property owners seeking tax abatements.

The city has received more than 250 tax abatement applications this year, most of which came from commercial property owners.

Bouley said he’s “never seen it like this.” in his 16 years on the city council.

“And I guess when we’re done with this process, what I would like to do, is I would really like the board of assessors to come back and report to the city council and to the community to say, ‘Is there anything we can do to avoid this in the future?’ ” Bouley said. “And when they go through this abatement process, maybe explain to us a little bit about what is going on here.”

(Laura McCrystal can be reached at 369-3312 or
lmccrystal@cmonitor.com or on Twitter @lmccrystal.)