Guest Editorial: Property tax appraisals don’t reflect real values

Nick Vonas, Guest Editorialist to The Golden Hammer

I wanted to highlight the sudden ridiculous increase in the 2020 appraised land values for Crighton Ridge/Crighton Woods (CR/CW). There may or may not be similar situations in other neighborhoods, but my focus was within my immediate neighborhood. In my opinion this is an unwarranted method of increasing appraisal values, which can translate into higher taxes.

If you have not experienced sudden inflated appraisal values, that’s great. My question is what happens when you do?

Montgomery Central Appraisal District (MCAD) is quick to say that they are not in the tax business, but I don’t accept that distancing. Your taxes are based on tax rates times your appraised value, with any exemptions factored in. So they provide one of the primary components of what seems to be ever increasing taxes. Bear in mind that even if the various taxing entities such as the ones listed on www.mocotaxes.org do not propose a tax increase, your tax will still increase if your appraised value has increased. And if you have an over-65 exemption that freezes some of the tax rates, same story. Your appraisal can still increase and so can your taxes. It’s going on right now – Montgomery County commissioners are proposing a 3.59% budget increase into 2021. They are also proposing a 1.4% rate decrease in the tax rate. They know that many of our appraisals are above that percentage so it’s a win for the increased budget bunch because your taxes will still go up.

There is a convenient handshake between our local politicians and the appraisal district. If the politicos keep the tax rate the same or even slightly decrease it, but the appraisals increase – you wind up paying higher taxes. The officials can make claim that they didn’t raise taxes, and the appraisal district, inclusive of the Board of Directors can be the designated bad guys. But it doesn’t matter to them because these are not elected positions. They don’t have to answer to the public and it shows.

Here we are in uncharted social and economic territory and not only are appraisals not even remaining at 2019 levels, they have actually increased. I’m classified as a “senior citizen” – my income certainly didn’t increase at the level of my appraisal. In fact it didn’t increase at all. And our local elected county officials and state reps are silent, crickets chirping. Perhaps I’ve missed it, but the primary substantive pushback I’ve seen on our appraisals and taxes has come from Precinct 2 Commissioner J. Noack. That effort is appreciated but where is everyone else?

I understand it takes tax dollars to support counties, cities and schools. This isn’t about not paying a fair share. What I take exception to in particular is the dramatic increase in our land values from 2019 to 2020. In doing research to support my appraisal protest I did some land valuation comparisons within my neighborhood. The land value is the lot your home sits on. A house, pool, garage, etc are valued separately as Improvements, not Land Value on your appraisal.

I used a sampling of 45 homes in the CR/CW neighborhood. Some of the homes were sales in 2019 to determine market value comps, but most were randomly selected. Values were taken from public information available on the MCAD website, but I’m not publishing any individual info. The point here is the result of this comparison.

  • The 2019 appraisal median average land value was $30,884

  • The 2020 appraisal median average land value was $97,855

If I did the math right, this is an average of a 217% increase in appraised land value. Not 2 percent… not 20 percent …. but over two hundred percent. I’d like to understand how MCAD has decided that land – not improvements – has suddenly turned into gold. You can verify this comparison not only in my neighborhood, but perhaps your own as well. And “evidence” is not that the appraisal district decided to apply these ridiculous 2020 assessments to every property in the neighborhood. That’s  like a store that tells you they overcharged every customer just to be fair….

There’s always an argument made that your property market value can increase (we love this when we sell property) but this level of appraisal (not market) increase goes far beyond reason. From my perspective it essentially elevates the land to development level, as if these were open lots for sale. This is not applicable as this is a long-developed neighborhood. There are no lots for sale and the land is essentially static. There’s nothing a property owner can do to justify over 200% value increase in the lot (land). Adding a flowerbed or fixing a driveway doesn’t do it. And there haven’t been any major neighborhood infrastructure renovations completed to justify such a huge valuation increase. Repairing some drainage ditches also doesn’t cause the valuation increase – that’s maintenance and repair.

Our CR/CW neighborhood is not an isolated rare entity – there are a number of other great local neighborhoods that are either established or under development that essentially provide competition to buyers. We are not the only game in town to warrant such extreme land value escalation. Something to also note is that the infrastructure development bonds (costs) for the newer neighborhoods are higher than those for this neighborhood built approximately 15-20 years ago. The cost of development has long been repaid, and current costs for maintenance are paid to the City for road repair, drainage etc.

So where is this spike in land value coming from? My opinion is that it lays a groundwork for further increases and there’s a backhanded approach to it as well. In some cases, the Improvements appraisal was decreased – combined with the Land appraisal increase, the overall appraisal increase was “only” 2-3% for example. But next year what happens if/when the Improvements appraisal spikes up? You’re stuck with inflated values for both Land and Improvements.

The 2019 median appraisal ratio for our CR/CW neighborhood appears to be 95-100%, meaning that the appraised overall property valuations are generally aligning with actual market sales. Nothing wrong with this. But my concern is that adding inflated appraisal values such as this ridiculous 2020 land valuation increase will rapidly outpace what the property is actually worth. And will absolutely impact our taxes.

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