Tax rebellion II: the outcome

Over a year ago, more than 100 Camano Island residents loosely organized themselves into a modernday tax rebellion.

They banded together to protest increased property taxes in the face of withering home values. Doug McLaughlin, one of the meeting’s organizers, shot it to them straight: The burden of proving the county’s assessment was incorrect rested solely on the homeowners.

McLaughlin and the other organizers jumpstarted the process by supplying forms and information on comparable real-estate values. These comparables formed the crux of the group’s argument.

“Finding comparables which are closer aligned to reflect the value of your property and then being able to present that to the board is the key to lower your assessed valuation,” said William Maxwell, a Country Club Lane homeowner, at the meeting in July, 2008.

Fast forward a year and a half.

Island County Board of Equalization turned down all 100 plus appeals.

Three residents appealed again, this time to the state. Two of their appeals were rejected. The third received a $100,000 reduction in property value.

Maxwell’s appeal was one of the final two rejected at the state level.

Which, as far as Maxwell is concerned, raises a question.

“We (three) are all immediate neighbors, arguing the same comps, and one person got a $100,000 reduction,” Maxwell said. “The only difference is that his appeal was looked at by a different person.”

The end result suggests that homes are valued differently depending on who assesses them, Maxwell said, which is problematic on several levels.

First, tax rates are set by comparable sales. Officials assess several homes and extrapolate those averages over a large area.

“The county sets everyone’s rates with very little individual information,” Maxwell said.

Second, Maxwell and the others weren’t balking over small increases – the assessed value of Maxwell’s property leaped $200,000, and these significant increases, he said, put incredible pressure on people.

“It’s not merely an academic question. I am borrowing money to pay for a property tax increase I didn’t see coming,” Maxwell said.

David Mattens, Island County assessor, explained that the situation isn’t as simple as one may think.

The assessor’s office, he said, isn’t actually responsible for establishing tax rates; they only supply information regarding the value of property in Island County. That information, he added, is based on comparable sales, but with several stipulations.

One, properties are physically inspected every six years.

Two, state law requires that appraisals be based on “true and fair market value,” which is defined as the “amount of money that a willing and un-obligated buyer is willing to pay a willing and un-obligated seller.”

In a poor real-estate market flooded with bank-owned homes, short sales, and foreclosures, true and fair market value may be higher than what houses are currently selling for, but it’s illegal for the assessor’s office to base property values on anything except true and fair market value.

Three, Madden said, the assessor’s office is always looking “in the rearview mirror.”

This means, for example, 2009 assessments of value, gathered during the 2008-2009 year and due Jan. 1, 2009, are then used by the treasurer to calculate 2010 tax rates. Logistically, “real-time” calculations are impossible – there are too many properties to take into consideration.

For homeowners, this has unique ramifications. If the real-estate market is ahead of appraisals, a home may assess at less than its current market value. If the market dives, though, as it has in recent years, there will come a point where the trend reverses. A homeowner may receive a change of value notice reflecting the previous year, when the market was high, even though the home’s current market value has plummeted.

In the end, however, it all evens out, he said.

Finally, Mattens said, “this is my fourth year as assessor, and we’ve done a lot of cleanup the past three years. We found some properties way under value.”

Gary Bur, chief deputy assessor, and Ron Telles, chief appraiser, agreed.

Bur added that, while the real-estate market is down, “the overall value of Island County may decrease, but some individual values may go up.”

Pockets of prime real estate, such as beachfront properties with views, may not suffer the decreases in value that other properties experience.

Matten said he understands the system may appear complicated, but if only one out of 100 property owners was granted a reduction in value, the process is working.

“One out of 100 is typical of what we see. Based on that info, my appraisers are doing a good job,” he said.

Staff Reporter Jeremiah O’Hagan: 629-8066 ext. 125 or ohagan@scnews.com.