President of the CT Association of Assessing Officers and Groton Assessor Mary Gardner answers our questions about how property values are assessed and how those values can impact the mill rate in your town.
Mike Hydeck: Remember earlier this year when homes were selling in a matter of hours above the asking price? Well, that red hot real estate market is cooling a bit now, but not before our home values were boosted in a big way. So does that also mean our property taxes will go through the roof too? Mary Gardner is the president of the Connecticut Association of Assessing Officers, also the assessor of the Town of Groton, to give us some perspective. She joins us this morning. Ms. Gardner, welcome to Face the Facts.
Mary Gardner: Thank you. Thank you for having me, Mike.
Mike Hydeck: So as you remember, city dwellers came to Connecticut in droves at the height of COVID, paying cash or above for asking price. Assessments were boosted. How does this compare to other years in your career, when you saw a surge in value? Is this the highest you've seen? Or does it compare, you know, from year to year?
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Mary Gardner: So I've been in Groton on and off since 1986. And I would say this is the highest. The next highest would have been 2006 -2007 ramp up to the Great Recession.
Mike Hydeck: 2006 was right before the 2008 recession that happened and then I guess then homes plummeted again. So should homeowners, we're all excited. Oh, we can take a home equity loan out and finally redo the bathroom, or we can do another way to shorten our mortgage life. If you want to get a 15 year loan, we can change the way we do things. That's a great, that's the upside. But should we expect a huge increase in real estate taxes moving forward, would you say?
Mary Gardner: Not necessarily. It really depends on the last time that your town conducted a revaluation. So in Connecticut, towns are required by statute to reappraise all the real estate once every five years and depending on where you are in that cycle, your taxes may or may not change with this increase in value. Groton conducted our revaluation last year, so October 1, 2021. We reappraised everything. Market values were up as compared to the 2016 revaluation, which was the last time we conducted that project. We did see increases in certain segments of the market. We saw it in apartments, we saw it in residential. We had very little movement in retail, we had a little bump up in industrial. So it depends on the property type. But if you performed a revaluation in 2020, and you don't need to reappraise again until 2025, and the market stabilizes in 2025, you might not see a big shift in your real estate value. And taxes are of course, based on the overall grand list that the town creates the assessor's office creates. And that's bounced against the town's budget every year to set the mill rate. So the mill rates fluctuate every year, in addition to the grand list fluctuating every year.
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Mike Hydeck: So what metrics does an assessor use when it comes to determining how much a property is worth? Say a single family home, four bedroom, two and a half bath on like a half an acre as a standard? What do you use in assessment? Is it really just the property surrounding it? Is it the dwelling itself? Is it all the above? Does a new road change things?
Mary Gardner: So we are appraisers and we would appraise that property, you know, land and building, using the same method that fee appraisers use. We just happen to be mass appraisers. You know mass, meaning we're going to do 10,000 properties within a year where a fee appraiser will focus on one property. But we're going to use the same appraisal methods that they use. We'll use the comparable sales approach, which is always useful, very useful, and mostly used for residential property. We would use for commercial properties, we might use a cost approach to value or we might use an income capitalization approach, but they all include land and building, and they all take into account whatever the current state of the market is, telling us costs are, sales are coming in, you know where the sales are coming in, in value. So we we basically are, we are appraisers, we just go about it a little bit differently.
Mike Hydeck: So last time, you just mentioned a few moments ago, that in the last revaluation for Groton, the property values did go up some. Oftentimes, the mill rate ends up getting adjusted down to try to compensate for that a little bit. Is there a true formula on how it gets adjusted down? Or is that just a political conversation?
Mary Gardner: When we deliver the abstract to the town, the grand list, it includes real estate and motor vehicles, and business, personal, property assets. All three grand lists can change in different ways every year. One may go down, one may go up. The end result is a taxable list that we provide to our our finance department. In the process of us creating the grand list, the finance department has started the budgetary process. So they're starting to look at what revenues they will need to pay their expenses. When the town has gone through the whole budgetary process, they will take the town's budgetary needs divided by the grand list and come up with a mill rate. So the budgetary process is where it's decided what the needs are of the town, what they need to spend, what they need to fund. The Board of Education is usually a big piece of your town budget. And yes, there is a there is a calculator, or excuse me a calculated process, but revaluations are revenue neutral. So when we conduct a revaluation, we're not looking at how much money does the town need? We're just looking to redistribute the property tax burden appropriately across all the taxable property in the town so that it's uniform, you know, at the same level of taxation and same level of value.
Mike Hydeck: Last question, I got about 30 seconds. When's the last time you ever remember revising the numbers downward?
Mary Gardner: Oh, 2020. Could have been 2020, could have been 2019. But you know, if your grand list goes down your town, all things else stay the same, will probably have to increase your mill rate. If your grand list grows, all things considered, odds are your mill rate will drop.
Mike Hydeck: Mary Gardner, president of the Connecticut Association of Assessing Officers, thanks so much for joining us on Face the Facts this morning.
