Study says state reappraisal was accurate

HELENA — The residential property values determined by the state’s 2009 reappraisal accurately reflect the sales prices of those homes that have sold, even in the Flathead Valley, an independent study released Thursday concluded.

A national consulting firm based in Phoenix, Almy, Gloudemans, Jacobs & Denne conducted the study for the Montana Revenue Department.

It compared sale prices of “residential improved” property, or houses on lots, from January 2007 through September 2009 with the market values the Revenue Department set for the same properties during the reappraisal.

“Our values appear to be tracking very closely with the market,” Alan Peura, deputy director of the Revenue Department, told a subcommittee of the Legislature’s Revenue and Transportation Interim Committee.

The study came up with a median ratio through September 2009 of 0.996, or well within the accuracy measures ranging from 0.909 to 1.10 recommended by the International Association of Assessing Officers.

“The median is a reflection of the accuracy of the department’s reappraisal values compared to the actual market sales data,” Peura said.

What that 0.996 median ratio means, he said, is that if a property sold for $100, the

department had it appraised at $99.60.

The study also showed the reappraisal numbers were accurate in Flathead and Lake counties, where values rose by some of the highest percentages and where the most  values have been contested either informally or formally.

It looked at 2,610 sales in Flathead and Lake counties and came up with a “median radio” of 1.004, again well within the international association’s standards, Peura said.

What that means, Peura said, is that for a home that sold in Flathead for $100, the department had it appraised for $100 and four tenths of a penny.”

Sen. Bruce Tutvedt, R-Kalispell, said there is a widespread perception in the Flathead that the 2009 reappraisals are too high.

Peura said the study shows the perception is different than reality in the Flathead.

“The reality is that the values in Flathead and Lake counties are accurate, given what’s going on in the market,” the deputy director said.

Tutvedt replied: “If the reality is correct, and I believe you are fairly close to being [right], reality and perception are far apart.”

The Kalispell legislator asked how the department intended to correct the perception that the reappraisals are too high.

Peura said the Revenue Department has contracted with the consulting firm to do these independent studies.

He said Montana is one of four “nondisclosure” states where real estate sales prices are kept confidential and not part of the public record. In many states, the sales prices for houses and other real estate are routinely reported by newspapers.

“If people were able to read this in the paper, the revaluation wouldn’t be such a sticker shock,” he said.

Sen. Christine Kaufmann, D-Helena, agreed that Montana ought to disclose this information “so there’s more information out there to help with the perception problem.”

Tutvedt said legislative candidates campaigning door-to-door are getting an earful from homeowners in the Flathead upset with their property taxes.

These candidates are looking at major legislative fixes such as freezing or capping property tax increases or switching to an “acquisition-value” system in which property taxes are based on the price someone paid to buy a house.

Tutvedt asked the Revenue Department to look at the possibility of doing reappraisals every year instead of the current six-year cycle, while Sen. Jeff Essmann, R-Billings, suggested a reappraisal every two years.

Ed Bartlett, a lawyer and lobbyist representing the city of Billings, threw in the possibility of a three- or four-year reappraisal cycle.

Peura said Revenue Department officials already have looked into the possibility of making a change and will present a study on the topic to the committee at its next meeting.

Rep. Dick Barrett, D-Missoula, noted that Revenue Department statistics showed that a smaller percentage of Flathead County homeowners than the statewide average applied for the state’s “extended property tax assistance program.” It limits the annual increase in taxable value to homeowners who qualify for the program.

The department mailed 35,487 applications to homeowners it believed might be eligible. A total of 7,906 homeowners applied, and the department determined that 3,361 homeowners were eligible, according to a report by Larson Silbaugh, a Revenue Department economist.

In Flathead County, 10,022 property owners received forms from the department, while 1,841 applied. Of those, 1,004 qualified for the assistance program.

Distributed by McClatchy-Tribune Information Services.