Posted 3/27/13 (Wed)
By Neal A. Shipman
With property values escalating in Watford City as a result of a booming real estate market, it only makes sense that the taxable valuations of property would follow suit.
And last Friday, city property owners began receiving official notification from the city’s assessor office of just how large an increase that will be.
“We increased every single land value in Watford City,” states Rita Olson, city assessor. “As a result, everyone whose property value increased by 10 percent or by more than $3,000 was notified by letter of the increase in taxable valuation.”
According to Olson, the increased taxable valuations of property in Watford City are just the beginning of a process to get all property in the city to the right assessed value.
“The state requires the assessed value of property to be at the market value,” states Olson. “And with the booming real estate market in Watford City, we have a broad band of problems with our current assessed values.”
For example, according to Olson, five years ago, most home sales in Watford City were in the $50,000 range. Today, those same homes would be selling for $200,000.
“It turns out there are a lot of homes on the tax rolls in the $5,000 to 20,000 range,” states Brent Sanford, Watford City mayor. “And there are many more in the $20,000 to $50,000 range. We all know you can’t buy any house for under $90,000 right now. These were just missed over the years.”
And it is that difference between what homes were formerly assessed and what they are currently being sold for that Olson and the city of Watford City hope to bring closer together with this new increase in assessed values.
“The inequity is way out of whack on the lower end of the spectrum,” states Sanford. “People are paying one-fifth to one-tenth of the taxes they should based on the value of their home. Whereas on the higher valued homes that have been re-assessed or purchased within the last five years or so, the assessments are within 20 to 30 percent of full value.”
In trying to determine the new assessed valuation rates, Olson says that she first looked at what should be the price of the land upon which the home is located, and then the condition of the home.
“Land values in town and around the county are crazy,” states Olson. A lot of our land values used to be around $5,000 to $10,000 per lot. I know you can’t buy a lot in the city for under $40,000 today.”
And when it comes to placing a value on the actual home, Olson noted that she looked at the year in which the home was constructed, its condition, and what other comparable properties are selling for.
“The lower assessed home (those that were formerly assessed at below $30,000) are going to see the biggest percentage increase,” states Olson. “That’s because the sales for 2012 indicated this is where we needed to make our biggest adjustments.”
As a result, according to Olson, if a home was valued at $30,000 in the past, the new 2013 valuation is going to be $54,000.
While Olson says that many of the lower assessed homes will see increases, the valuation of virtually every piece of property was also adjusted upward.
“Five years ago, we didn’t have a home assessed at over $300,000,” states Olson. “Today, the majority of homes being built are at, or above, that assessed level.”
While the state requires that the city have its assessments at 100 percent of market value, Olson indicates that the city isn’t increasing its valuation to that level at the present time.
“We’re not going to increase everyone to 100 percent right now,” states Olson. “As new homes come on the market, we believe that there will be a leveling off or actually a lowering of the prices of older, existing homes.”
While Olson notes that everyone in the city is going to see the assessed value of their property go up, it does not mean that their taxes are going to go up at the same level.
“The assessed value is a basis on which taxes are determined,” states Olson. “But what property owners will actually be paying in taxes is determined by the requested mill levy by the city, county and school districts.”
According to Olson, if persons are in disagreement with the new assessed value of their property in the city limits, they will have an opportunity to share their concerns at a Board of Equalization meeting which will be held at 5 p.m. on Tuesday, April 9 at the Watford City City Hall.
“Higher values are not a bad thing,” states Olson. “It means we have a strong housing market and property is worth more.”