At the end of last month, the Vermont House passed H.480, a bill that gives the Vermont Department of Taxes control over property appraisals and valuations.
The bill was approved in time to make crossover and now sits with the Senate. The bill is an effort to address the fact that pandemic-related rapid rises in real estate sales left many towns with a Common Level of Appraisal below 85% of fair market value, which triggers a reappraisal.
This year there are over 150 towns whose CLAs have dropped to the point where a reappraisal is needed compared to 12-15 in a normal year and there are not enough appraisers to handle that and there’s not enough appraisers to undertake the work. As written, the bill would mandate reappraisals every six years and shift responsibility from local town listers working with contracted appraisers, to the Vermont Department of Taxes.
NO FANS LOCALLY
The bill has no fans locally. The consensus from local listers and appraisers is that the bill is a solution looking for a problem and that it will result in a few years of chaos before the state gets it right.
Spencer Potter, Waitsfield’s appraiser and co-owner with his wife Mary Jane Potter of Vermont Municipal Appraiser, pointed out that the bill only addresses reappraisals and said that is only part of what listers and assessors do. As written, he said, “the state has the authority to say these are the values and towns don’t get a choice of whether to take it or leave it. They’re going to have to take it.”
Warren’s lead lister Sandra Brodeur said that the proposed bill does not consider the fact that town listers oversee and work specifically with contracted appraisers on the values that are being set for town properties and that they use their local knowledge to improve and ensure the accuracy of the reappraisals.
Warren will begin a reappraisal in 2024 that will be completed in 2026.
Potter noted that when the bill was first proposed a town’s listers were not obligated to accept the proposed values and he said that under the current version, towns have to accept them.
“There are things that some towns track and assess, like ponds, which other towns don’t. The unifying factor of market value and whether or not there’s a line item for ponds, that doesn’t mean you don’t need to come up with an accurate market value,” Potter said.
NOT A LOT OF SUPPORT
He said that there is not a lot of support from his profession for this bill.
“I could probably count on one hand the local listers and assessors who are in favor of this bill. Even the Vermont Director of Property Valuation and Review is not in favor of this and it would make her a much more powerful state bureaucrat,” he said.
Potter said that Waitsfield would be in the next round of letters from the state ordering the town to reappraise. He said as an appraiser he gets at least two requests for reappraisal proposals from Vermont towns weekly.
The surge in the number of towns needing reappraisals coincided with the state tightening the statistical trigger that requires towns to reappraise and the COVID-19 pandemic and its impact on real estate sales in the state.
SOLUTION LOOKING FOR A PROBLEM
Fayston lister Doug Mosle sees the bill as a solution looking for a problem and notes that the Common Level of Appraisal, as a method for fairly and accurately determining property tax rates is still working. The CLA uses a town’s percentage of fair market value to calculate property taxes, in particular the state education tax. If a town’s CLA is at 100% of fair market value, its education tax rates are 100% of the state’s assessments. If a town is at 90%, its rates are adjusted accordingly so that those taxpayers are paying the same rate as other taxpayers.
“If the bill addressed the moratorium on ordering reappraisals, that would slow the flood of people being ordered to do it. CLA is still doing what it was intended to do. CLA is still adjusting the tax rate. The market will continue to move the CLA this way and that,” Mosle explained.
He said that the mechanisms that had previously triggered reappraisals worked and resulted in 8-12 towns a year needing reappraisal.
“Then real estate values went bonkers. Since values are tied up with the actual Grant List value, when prices go bonkers, now there were not 12 towns ordered, but 150 ordered to reappraise. Fifty of our sales averaged 49% above the assessed values,” he said.
“The CLA and COD (co-efficient of dispersion) are systems that people understood and that worked well. I don’t think anybody argued that it was inequitable or not working. Assessment is supposed to assess estimate of fair market value. If 50 houses in your town sell and there’s 1200 house sales are what set that model up. When the model goes out of whack because sales going up dramatically, a legislative solution doesn’t solve the problem,” Mosle explained.
Further, there is value in terms of equity and accuracy when local listers know their towns and can provide oversight during appraisals, he added.
MASSIVE OVERREACH
“This is massive overreach on the part of the legislators. It’s not fair to listers or taxpayers,” he said.
Fayston has also been ordered to reappraise and Mosle said he sent out 100-some requests for proposals from state-approved appraisers and received no responses since March. Fayston’s CLA hit 80% in 2022 and it dropped 9% between 2021 and 2022. It was 93% the year prior to that (2020) and 98% in 2019.
