After losing nearly $3 million in tax revenue through appeals just in the last four years, the township is ready to stem the bleeding with a reassessment later this year.
Tax assessor Dennis DeKlerk said he sent out requests for proposal (RFP) last Friday. Bids are due by April 4 and council is expected to take up the issue again at their April 16 meeting. If everything goes smoothly, DeKlerk said reassessors could be on the ground by late May or early June.
DeKlerk and financial officer Tom Merchel . The problem: The revaluation of 2007—which used 2005 and 2006 market data to calculate assessments—occurred right at the apex of the housing bubble.
Then the bubble popped, DeKlerk said, leading to record assessment appeals—200 to 300 a year—most of which property owners have won.
“The assessments are higher than the market value supports,” he told council Monday night. “We can no longer defend them.”
Merchel said in 2008, the first year the new assessments went into effect, the township lost $1,150,000 in tax revenue through appeals. That hit, he said, “completely demolished” the township’s surplus and created major financial headaches that are still having ripple effects.
Losses of $254,000, $873,000 and $670,000 from 2009 to 2011 have exacerbated the problem. For some perspective, the township lost just $37,000 in 2007 through appeals.
Merchel noted that while the township only keeps 14 cents of every tax dollar it collects—the rest goes to the school district, fire district and county—it pays for every cent lost through appeals.
After the less-than-savory results of the 2007 revaluation, DeKlerk said he included a number of conditions in the RFP to mitigate potential problems. Among the provisions:
- Bidders are required to make data updates in the field using portable electronic devices to cut down on the risk of data entry errors.
- DeKlerk will accompany inspectors, unannounced, at various intervals during the “groundwork” phase of the reassessment.
- The township assessment office will have a “real-time link” to the reassessment firm’s computers to monitor its progress.
- After assessors are finished the groundwork phase, residents will receive a copy of their property record card, containing all the information that went into their new assessment. If there are any errors, the property owner will be able to contact the firm directly.
DeKlerk and financial officer Tom Merchel estimate the cost of the reassessment at around $200,000-250,000, spread over five years—though they narrowly avoided having to pay the cost all at once, according to Merchel.
The process the township went through in 2007 was classified, by state statute, as a revaluation, Merchel explained, where you’re “scrapping the (assessment) data and getting new data.”
What the township is undertaking now is defined as a reassessment—an updating of assessment information. A revaluation, Merchel said, is more expensive—the 2007 revaluation cost the township about $600,000—but can be paid for over a five-year period, per state statute. A reassessment, while cheaper, typically has to be paid for up-front.
Fortunately, Merchel and DeKlerk were able to work out a deal with the county board of taxation to spread the cost of reassessment over a five-year period.
“They were very accommodating to us,” Merchel said. “They agreed it was necessary and approved our reassessment plan.”