DEER ISLE —The town of Deer Isle has undergone its first property revaluation since 1982.
“After about 10 years you need to do one,” said Deer Isle Town Manager Jim Fisher.
“Deer Isle was out of compliance for many years. When the town hired me, I said, ‘Let’s start putting away money for a reval.’ With inflation and properties rising, we may want to do another one in six or seven years.”
The total assessed value of buildings and land in town is just under $606 million, according to Deer Isle’s 2021 tax commitment book. That’s more than 2.5 times greater than the 2020 assessed value of $220.9 million. But because the town only needs to raise so much money to support its budget, the tax rate dropped. The 2021 tax rate was $7.65 per $1,000 of assessed value. In 2020, the rate was $20.75 per $1,000 in value.
Property values determine property tax bills. Valuations also affect how much state aid to education a town or city receives.
State law requires towns to maintain a minimum assessment ratio of at least 70 percent of market value, according to Kelsey Goldsmith, spokeswoman for the Maine Department of Administrative and Financial Services.
Deer Isle’s ratio had dropped to 47 percent for 2019, according to the Maine Revenue Service Property Tax Division’s most recent municipal valuation statistical summary.
Deer Isle has approximately 2,000 taxable properties. Fisher said that during a revaluation, a town can anticipate increases in property values for a third, decreases for another third with the remainder staying level.
“With the reval, we found there were properties dramatically undervalued,” Fisher said. “They were getting a very good deal for years. There were people in modest homes paying far too much in taxes. And theirs went down.”
As far as complaints from taxpayers, when all was said and revaluated, there were a few.
“Most people were satisfied and some were unhappy,” Fisher said. “The revaluation started over a year ago and was completed in time for our very late June commitments. I think they finished the process in June of this year.”
“We were expecting as many as 400 [complaints] and I think it was closer to 100,” Fisher said.
Approximately 100 taxpayers came in for appointments to meet with the assessors about their adjusted values.
“In most cases, nothing changed, they just wanted an explanation,” said Fisher.
One waterfront lot’s property value dropped because it looked good on paper but quite different in person.
The property had “a beach, a bern and a swamp — it was not buildable,” Fisher said.
The owner didn’t even have a right of way to it.
“It wasn’t even a nice beach,” Fisher said. That lot’s value was lowered significantly.
Doing a municipality-wide property revaluation is an investment.
“We had an estimate of $160,000 to do it,” Fisher said. “So, we started the year I was hired, putting aside $40,000 a year.”
“During those three years we were raising money, we were doing quarterly assessments, having assessors look at houses more closely,” the town manager said. “That allowed us every year to reduce our tax rates because we discovered new value. People were building things without reporting them.”
RJD Appraisal, a firm based in Pittsfield, did the work.
Goldsmith, of the state Department of Administrative and Financial Services, said a reassessment “merely adjusts property values in a town relative to one another. It is a town’s budget that determines spending, and the assessment that splits that spending proportionately based upon property value.”
The reval has resulted in Deer Isle now having one of the lowest property tax rates in Hancock County, Fisher said.
“We do have an expensive school system, that’s driving the bus,” Fisher said.
“We don’t have any way to get around that. They have their own budget. We’re a small island community and it’s expensive to run an elementary and a high school at this scale.”
“Short of a full revaluation, there are several ways that Maine towns can and do make adjustments to ensure their ratio stays high and does not fall below the threshold,” Goldsmith said. “For instance, an assessor could perform a ‘factor adjustment’ to increase everyone’s value by the same percentage, or ‘neighborhood adjustments’ to increase valuation in certain areas (neighborhoods, commercial districts, other areas) by a percentage.”
Deer Isle did do something similar in 1995, according to Fisher. There was a cost-of-living adjustment made across the board, but it wasn’t fair, he said.
“There are a number of benefits for towns to maintain high assessment ratios,” Goldsmith said. “A higher assessment ratio improves the exemptions and reimbursements available to both local taxpayers and the town. Certain exemptions and reimbursements, such as homestead and veterans, are adjusted by the ratio. For example, residents in a town with an assessment ratio of 100 percent receive 100 percent of any homestead exemption (e.g., $25,000 of $25,000) whereas residents in a town with an assessment ratio of 70 percent would receive just 70 percent of any homestead exemption (e.g., $17,500 instead of $25,000). The town would be reimbursed via the same percentage formula (e.g., 100 percent versus 70 percent).
“Similarly, a town is privy to its full Tree Growth reimbursement by maintaining at least a 70 percent assessment ratio. State law permits withholding 10 percent of a town’s Tree Growth reimbursement as a penalty for every percentage point the ratio falls below 70 percent.”