Property valuations can lead to questions

While national statistics show otherwise, properties in Clay County and indeed throughout the state of Iowa have seen increases in value over the past two years. That contradiction could cause some extra headaches over this year for county officials charged with valuing your home or businesses for tax purposes. The public perception and the market realities can be very different.

Clay County Assessor John Lawson is working to finalize the notices that'll be mailed from his office starting next week.

The Jan. 1, 2009 assessments being sent are the values which will be used for taxes levied in the fall of 2010 and the spring of 2011.

What property owners are going to read in the mailed announcements is that the valuation of Clay County agricultural land and buildings, as a class of property, have gone up about 56 percent.

For residential properties, the county's total is going to be "somewhere about the same as it was last year."

Clay County commercial and industrial properties will see a bit of a decrease as a class of property.

Lawson also noted that there is a rollback amount which limits the percentage of a property's assessed value that's taxable.

"When we talk about agricultural land and buildings going up roughly 56 percent, that amount will be rolled back across the state. So, the typical taxpayer is probably going to see a 5 or 6 percent increase in their taxable valuation on agricultural property," he explained. "On residential, there's a 4 percent growth limitation. So, the rollback currently is about 45 percent."

"Even if values go down and the market value goes down," he continued, "the taxable valuation probably will go up. So, people are still going to see an increase in the taxable valuation on their property."

"There are individual parcels within each class of property which may have gone up or gone down based on current information," Lawson clarified.

Turn to your national news source each day and you hear how housing prices have fallen 40 percent.

This is not the case in Clay County. The market conditions in Spencer, for example, over the last year have remained relatively stable, according to Lawson.

"We never saw the 200 percent increases like they saw out on the coasts -- where a $200,000 house all of a sudden was selling for $600,000. Our $200,000 house maybe only went up to $230,000 or $240,000," Lawson clarified. "The other thing that's factoring into this is for 2009 we were given a new real estate cost manual by the state, and we had to put all the new costs in based on that.

"Well, in the last three or four years, the cost of ... building products in general has gone up. Which means that new house today is going to cost you more than it would've two years ago. So, if you're building that new house and had to sell it today, would you be able to sell it for what it cost to build it?"

"We've seen (home sales) up until Jan. 1, and they were probably getting that value out of houses," the Clay County Assessor answered. "In fact, there are a couple areas of town that seem to be getting more than what we thought the cost to build the house should have been."

The Villas at Stoneybrook, a new subdivision with lots located on the Spencer Municipal Golf Course, is among this group. While Lawson indicated around the Spencer Family YMCA and Deerfield areas of town are other examples which haven't seen a decrease in market values, he noted that values of properties south of the Little Sioux and Ocheyedan rivers did decrease a bit in 2008.

"When I came, Spencer was one map area. In other words, we looked at all the sales in Spencer and adjusted them accordingly for the year based on everything went up 10 percent or everything went down 10 percent," said Lawson, who commenced his duties as Clay County Assessor on Jan. 1, 2005. "We currently divide Spencer into 42 different map areas. And now, we're trying to look at sales in each map area and say, 'This area of town has gone up 5 percent' or 'This area of town has gone down 5 percent,' and make those adjustments within each area."

"I think we've done a really good job of trying to make adjustments in Spencer this year in trying to look at the different areas of town," he continued. "But, there are going to be some people who aren't going to be happy with that because they're going to see an increase in their property and their friend across town may see a decrease in their property. But, the assessments are based in part on what the market value of your property is where it sits today."

While Lawson acknowledges that assessors are oftentimes blamed for property taxes, he prefers to compare the function of a county assessor to that of the person who at the end of a group meal tallies the bill so everybody pays their fair portion.

"My job is to try and make sure, within the law, that everybody is assessed equitably," he said. "Now, with 18,000 properties and roughly 6,000 houses, we're not going to hit every property exact. But a lot of times, it's the information that the taxpayer is willing to provide that can be the difference of whether we think they had the hamburger fee or the prime rib assessment."

This valuable information comes from property inspections.

Lawson and Heidi Chapman, Clay County's deputy assessor, are the two people responsible for conducting local inspections. If neither official is allowed into a property, they are supposed to estimate its value to the best of their abilities. Their judgments are also guided by laws and rules outlined in the code of Iowa.

"For us, the best way we can compare it is to have accurate information," Lawson reiterated.

Filing an objection to newly-assessed valuations

Clay County individuals who don't agree with the property tax valuations listed on the notices that'll soon be appearing in their mailboxes may file a form with the five-member Clay County Board of Review between April 16 and May 5 stating they believe their assessment is incorrect. The five-member board will hear appeals and determine from the information provided whether the county's assessment, the petitioner or possibly somewhere in between is correct.

"After April 15, I can not change the value," Lawson said. "Even if we believe something's wrong, they'll have to go through the board process -- or with assistance from me go through the board process -- to have something changed."

What property assessments are based on

Clay County's assessor acknowledges that Iowa's current property tax system is confusing.

"If you take the same pole metal building with the exact same options and put it on either an ag, residential or a commercial property, the residential person will pay double what the ag person pays, and the commercial person pays four times what the ag person pays," John Lawson said.

Assessments on agricultural land and buildings are based on a productivity formula.

"Basically, the Department of Revenue, or the state, comes up with a dollar amount for the county -- and then we divide that back out amongst the land and buildings," Lawson explained.

Residential, commercial and industrial property assessments, on the other hand, are based on market value.

"We're taking the sales that transpired between Jan. 1, 2008 and Dec. 31 (for the 2009 market values)," he said. "And, what we saw up through about the first of December was we were probably in the 7-10 percent low range. In other words, our assessments were lower than what the market value or the prices of houses selling were."

"I think for the first time commercial property owners probably are going to see a little reduction in taxes," Lawson continued, "which should help them, at least in most cases, because you're going to see more taxable valuation out there on ag ground and you're going to see more taxable valuation on residential property. Which means less of the burden will be picked up by the commercial property owner."

While Lawson isn't necessarily anticipating a large number of protests being filed in regard to the 2009 Clay County valuation assessments locally -- the Clay County office averages approximately 50 per year -- the county assessor knows that many people will have questions about their property values as they're currently assessed.