You may have noticed an article on the NOW website, "Taxpayers pleasantly surprised by refunds".

About this time last year, Whitefish Bay residents were fainting at the new property tax assessments on their homes and businesses.

Everyone was worried that their new assessments would mean a huge property tax bill at the end of the year.

But today, more than 400 property taxpayers are rejoicing that they actually received a refund.

I'm happy to say, I was one of them.  But it wasn't by luck.  I successfully fought my assessment, and had the valuation of my home re-calculated and lowered 10%.  The end result, was indeed, a 10% reduction in property tax. 

Funny, I remember talking to the assessor in July .. I said that the market was very soft.  He gave me an odd "Why do you think that?".  Well, duh.  Maybe it was all the "For Sale" signs around the village.  July's market was red hot, in comparison to today.

Imagine if your community was doing a re-assessment this year, instead?  If everyone's valuation goes up 10%, all taxes generally remain equal. BUT, and there's a huge but .. the greatest chunk of your property tax goes to the School District.  Of course, the State of Wisconsin foots a chunk of the Schools' expenses. 

How is that aid calculated?  By property value wealth, of course.   If your community has high valuations, you get lower State Aid.  (For comparison's sake, the State of Wisconsin pays about 82% of the City of Milwaukee's education bill.  Wisconsin pays about 19% of Whitefish Bay's.)

The end result is, as a community, you want your property valuation increases to be lower, relatively, than the rest of the state.  Otherwise, your state aid goes down, and each individual home owner pays more.
 

The value of the East Silver Spring Drive business district has shot up, which not only counters public perception about its value slipping but frees up more money to enhance the street, village officials say. The Silver Spring business district's value jumped 49 percent in the 2007 revaluation for property tax purposes..

"It really shows how strong the economics are along Silver Spring Drive," Grassman said. Even though there are some empty storefronts at the moment, the rents are high and that is what drives the high assessments, he said.

The higher assessments mean that the village can expect to use $911,000 next year for district enhancements such as streetscaping, Grassman said.

Well, generally speaking, high value and high assessments would be a good thing. But aren't commercial properties valued, at least in part, on the revenue upon which the land/buildings can create? Why then, if Silver Spring is so highly valued, are businesses closing?

It's ironic that the logic used for high assessments is that high rents drive them. We certainly know WFB (and many suburbs) have a high real estate tax burden. Which came first, the chicken or egg? Rents are high because taxes are high. Now assessments are higher, forcing taxes higher, forcing rents even higher. Quite a cycle.

I firmly admit I'm no real estate expert. But there's something wrong when a street with an "astounding" increase in value is being vacated like a sinking ship. Did the firm doing the re-assessments notice all the empty store fronts? Did they do the valuations before or after Famous Footwear, Talbot's, Armin-Koch, and Murray's closed their doors? These businesses didn't close their doors for fun. They did it because it became less and less profitable to do business on Silver Spring.

Further, while high assessments, and therefore, high real estate taxes, benefit the residents of Whitefish Bay, it just got that much harder to do business on Silver Spring. This $911,000 isn't “new” money. It simply means the businesses along Silver Spring will be paying a larger portion of the WFB tax levy. And sure, perhaps that revenue is earmarked for streetscaping, so that's good. Unfortunately, the extra million in taxes the businesses will pay, may run a couple more of them out of business!

Plus, of course, these taxes filter to high rents, meaning all the new businesses we need will be more hesitant to locate on Silver Spring. As I said in this entry, a restaurant owner looked at the Talbots/Famous Footwear location and turned it down due to excessive rent demands.

So .. while increasing property assessments generally point to a good times, I think it just got a little tougher to salvage the street.

 Comments from villagers:

Every few years, each community in Wisconsin is required to re-assess each property within their limits. Whitefish Bay is no different. Of course, if everyone's home increases in value the same percentage, the theory goes, our property tax bill shouldn't change. However, property valuation determines state aid for education and shared revenue, as WFB's property base rises relative to others in the state, our local tax levies increase. So it does matter.

While true, your property tax may not change with an increased assessment when every house has been re-assessed, it's still important to have your house properly valued. If it's lowered 10%, your tax, which is based on a mill rate multiplied by your value, will go down roughly 10%. A decent explanation of the estimation process can be found here, although it is for New York State, which may have different rules.

Six years ago, when I'd received my new assessment, I'd just happened to have a professional appraisal of my house. Since the official assessment was 15% higher, I met with the assessor and plopped the appraisal down on his desk, thinking I'd made my case and awaited a reduction. I got a reduction all right, a whopping 1% decrease. Hardly worth the effort.

So this year, when appraisals went out, and again, I believed my assessment was about 10% high, I went in to plead my case. And I did my homework.

I went to the WFB library to look at the "open book". It turns out, the book has just one piece of data: each home's new assessment. Why this Excel spreadsheet isn't published on the web, I know not. -- It does NOT have important home features, like number of bedrooms or bathrooms or size, and if you're going to make a case to the assessor that your valuation is too high, you need lots of data like that.

So I turned to the internet. There are a couple of decent sites (domania.com is one) that list home price sales, along with bed/bath, and square footage. Also, WFB's website has a link to all tax data, although this information is not particularly helpful in fighting your assessment. (The assessor later told me that all home data is pubic. I assume I could have done further research at the Village Hall.)

When I met with the assessor this year, I had many pieces of information to make my case. I do admit, though, I'm an ordinary joe on this subject, other than paying careful attention to the Real Estate market in WFB. -- First, I brought a list of comparable homes and their sale prices, all of which supported at least a 10% reduction in value. I also had a list of what I called, "Non-Comparables."

I thought the non-comparables made the best case. I assembled a list of 7 recent home sales that matched my assessment. I then showed that a house of that value had certain features which my house did not, namely, a 4th bedroom (mine has 3), usually a family room (I have none) and a 2-car garage (of which, I do not have.) The theory went, these houses sold on the open market for a certain value, meaning my clearly inferior home should be valued under them.

I also listed a specific home, an immediate neighbor had been assessed at $7k below my value, yet had an additional bedroom, an additional family room, and a 2 car garage, again, all things my home doesn't have, which made my higher assessment questionable. The assessor took my challenge and tried to tell me why this was so. "Ah, see here, that house has a C+ grade, yours is a B-". This was due, he explained, to my house having exterior stone, and my neighbor having wood siding. How that makes up for an extra BR, FR, and GA, still makes no sense. I'd swap houses with him in a heartbeat.

One other thing I learned, was that some homes were assessed at UNDER their recent home sale price. For example, a home that was sold recently for $350k was assessed at $338k. I asked the assessor how this could happen: While it is crystal clear that a home's value on the open market is its recent sale price, the computer doesn't think so. The assessments are all computerized. The system finds 5 comparable home sales, matched by square footage, BRs, BAs, etc, and tries to compute a new value for the home in question. While recent sale price matters, it's not the biggest factor.

Personally, I think that's one place the system goes wrong. The end result is to determine actual value, and clearly, a recent home sale at an arms-length is a perfect indicator of market value. The assessor explained that actual home sales aren't the end number because, say, a home buyer over-pays. The computer will smooth out their mistake. My answer to that one is: tough cookies. At the instant you bought the house, that's what you thought it was worth. No crying about it if the Village thinks that's the value, too.

So after I left the meeting with the assessor, I thought my chances were slim and none. From what I learned in the meeting, these assessments were done by computer, and since the data about my house (square footage, BRs, etc) hadn't changed, the computer would spit out the same number.

Three weeks later, I got my new assessment: It had been reduced 10%. Hallelujah! On a $6k property tax bill, that should be ~$600 -- per year. Well worth my time.

I have a guess as to why my appeal was successful, although just a stab in the dark: When the computer picks your comparables, I'm guessing it matches by many factors, but price is one of them. So when you compare five $300k houses, guess what? Your valuation comes out around $300k. The assessor said he'd take the comps I listed (all 10% lower) and examine them. Perhaps he forced the computer to use those as comps. Presto. My value came out 10% lower. The other possibility is that he understands more about my house's marketability issues, i.e., I don't have a garage. How that factors into the computer's analysis, I know not.

I'm not suggesting the system is faulty. When dealing with an entire village's housing, you need some systematic way to valuate, for expedience sake. But I believe every homeowner should be vigilant. Take notice of sale prices of homes on the blocks around you and compare them to your house. If your gut feeling is different than the assessor's value, do some homework. It's worth your time.

Unfortunately, many of you may be reading this too late. The time to meet with the assessor has past, and I believe so has the time to file an appeal. Mark your calendar for around 2012, when it happens again.