For the most part, your property’s value is staying put if you live outside the flood area

Property owners fit in two categories: Those who feel wealthier when their principal asset, their home, increases in value. And those who focus on the increase in property taxes such an increase in value nearly always means.

This year those inclined to think about property taxes first will be pleased with the news.

On Monday, assessors in Cedar Rapids, Iowa City and Linn County reported that the values will not change for the vast majority of homes, commercial properties and industrial properties in their jurisdictions in calendar year 2009 unless improvements have been made to the properties. The same is true with homes in Johnson County, though apartments and mobile home courts will see small valuation increases while office buildings and small retail shops will see small valuation decreases in Johnson County outside Iowa City, Bill Greazel, Johnson County assessor, said.

The big exception to the general trend is with the significant number of properties in the flood-impacted parts of Cedar Rapids.

Cedar Rapids City Assessor Scott Labus said he expected to send out assessment notices to about 7,400 property owners among the owners of the 54,000 parcels of property in the city. Many of those receiving assessment notices – some will be for improvements on properties outside the flood areas — will be those whose property was damaged by the flood. In the worst cases, the only value to the property is now the lot on which a flood-damaged house sits, and the value of that lot, too, may now be less than its value had been, the assessor said.

Overall, Labus estimates the city’s residential property has lost $138 million to flood damage, and the city’s industrial value another $11 million.

Labus said he continues to work on valuations for flood-damaged commercial property. Those commercial properties on the west side of the Cedar River might see valuations at 35 percent of what they had been prior to the flood. Meanwhile, those in the downtown core will see property-valuation declines depending on how close they are to the river and how many stories there are in a building. The more stories, the less the property’s decrease in value, Labus said.

Outside of the flood-impacted areas of the city, Labus said his office’s analysis of property sales has indicated that the current valuations of properties in the city have been within 98.9 percent of prices for which properties have sold.

State law requires assessors to keep valuations in line with sale prices, and Labus said the city is so close to that mark now that his office does not need to make valuation changes to most properties.

Julie Kester, Linn County assessor, noted that the Iowa Department of Revenue expects valuation changes if the value of a jurisdiction’s property is off by more than five percent from the sales prices. Kester said her office’s valuation of Linn County’s residential property is 95.1 percent of sales figures in 2008 and so does not require any changes.

Dennis Baldridge, Iowa City’s assessor, said Iowa City’s current residential valuations were at 95 or 96 percent of the sales prices in the city in 2007 and 2008, and so they, too, did not need to be changed. Johnson County’s Greazel put Johnson County’s residential valuations at about 99 percent of the sales prices.
New decisions about property valuations occur in each odd-numbered year, which are the years in which the Iowa Department of Revenue issues equalization orders in an attempt to make sure that local jurisdictions’ valuations are in line with sales prices.

Labus said the state department works with local assessors to signal where local jurisdictions’ valuations are so that the state does not have to issue an equalization order in the fall.

Labus on Monday said he intends to change his office’s practice and will begin making valuation adjustments each year and not just in odd-numbered ones. He said property owners are apt to mind a small valuation increase in each of two years less than a bigger increase every other year.

Labus and his predecessor, Rick Ellars, have divided Cedar Rapids into 173 mini-neighborhoods, each of which can be analyzed to see what sales of property have been in each mini-neighborhood.

In 2007, such a process saw some homes in one mini-neighborhood climb 23 percent in value while mini-neighborhoods saw values drop 10 percent.

As for this year, Labus said his review of sales figures and his discussions with the Cedar Rapids Area Association of Realtors indicates that the housing market in Cedar Rapids is in a period of what he called “stability,” hence the reason for keeping valuations the same this calendar year, he said.

The Cedar Rapids housing market never saw a big price “bubble” like other markets across the country and so it is not seeing a price “burst” now, Labus said.

He said his sense is that homes valued between $85,000 and $125,000 in Cedar Rapids have probably seen valuation increases because of the demand for that part of the housing market from flood victims in search replacement homes.

“I have a feeling that market is a little artificial because of the flood. But I don’t have the facts to back me up on that,” Labus said.

One route to property-tax relief for flood victims closes; still can qualify if 65 or older or totally disabled and have income below $20,031

They wanted to. They did it. But they can’t, Gary Jarvis, assistant Linn County Attorney, told the Linn County Board of Supervisors on Wednesday.

The upshot: Owners of flood-damaged property, for now, will face property-tax bills based on the pre-flood value of their properties, and they also will face a county tax sale of their property in June if they don’t pay the tax bill.

Jarvis told the supervisors on Wednesday that their decision last week to suspend the property taxes of flood victim Dana Spore of Cedar Rapids was an incorrect one. He said the particular section of state law on which the supervisors relied limits such tax suspensions to those 65 or older or those totally disabled. The intent of the longstanding state law is to not force the elderly and totally disabled to lose their property for not paying taxes. The unpaid taxes are then recouped when the person dies and the property is sold, Jarvis said.

After Jarvis’ presentation, the supervisors reluctantly rescinded the tax suspension they had granted a week before.

Jarvis recommended that the supervisors watch and wait as the Iowa Legislature finishes its session in the next couple of weeks to see if state lawmakers will provide some property-tax relief for flood victims.

Supervisor Linda Langston said the supervisors then will have time to revisit the property-tax matter to see if they want to adopt some sort of tax abatement procedure for taxes due later this year.

The supervisors are in no rush to make any big moves because the tax revenue of cities and schools as well as the county are tied to any decision by the supervisors to abate property taxes. State law puts these decisions in the supervisors’ hands.

Langston said one good thing about granting last week’s tax suspension, which has now been rescinded, is that several people contacted the supervisors who qualify for a suspension of property taxes because they are 65 or older or are disabled.

Unpaid property taxes send a property to the Treasurer’s Office tax sale in June. Investors pay the taxes, collect interest on the amount and then can assume ownership of the property if the owner doesn’t pay the taxes and interest within two years.

What Linn County gave a flood victim, it apparently must take back

The Linn County Board of Supervisors this week agreed to suspend the property taxes of a Cedar Rapids flood victim based on a provision in state law.

Next week, at the advice of the Linn County Attorney’s Office and its reading of the state statute, the supervisors are apt to rescind the suspension, Lu Barron, board chairwoman, and Linn County Treasurer Mike Stevenson said Friday.

As the supervisors recently have discussed flood victims and their property taxes, Stevenson has noted that the county suspends property taxes each year for 750 or so homeowners based on a state law that permits suspensions for those over 65 or those disabled who meet certain income guidelines.

This week, though, the supervisors accorded Dana Spore of Cedar Rapids a tax suspension because she is a flood victim, not because of age or disability.

Barron on Friday said the County Attorney’s Office now has concluded that the provision of the particular state law on tax suspensions does not allow the county to extend it to someone who does not fit the age or disability criteria.

As a result, Barron said the supervisors next week — probably at their Wednesday morning meeting — will revisit the entire tax-suspension matter and see what other state laws exist that might have some bearing the property taxes of flood victims.

“We need to address this,” Barron said. “We can’t let this go.”

For now, though, the need to rescind Spore’s tax suspension will come as a disappointment to Spore and others.

Upon hearing the news about Spore’s tax suspension this week, other flood victims called the supervisors and the Linn County Treasurer seeking like suspensions of their property taxes.

The suspension is attractive to many flood victims who face paying property taxes on flood-damaged homes they cannot live in and likely will never be able to live in again. Particularly upsetting to the victims is that the taxes continue to be based on the pre-flood value of homes. That’s because Iowa’s property-tax system bases current taxes on earlier valuations, flood or no flood.

Without a suspension or tax abatement, homeowners who can’t or don’t pay their property taxes will face interest penalties and see their homes put up for tax sale in June. They could lose the home in two years if they then don’t pay the owed tax and the interest by then.

Scott Labus, the city of Cedar Rapids’ assessor, this week said his office’s new assessments of the city’s flood-damaged residential property found that it has lost $138.5 million of its value to the flood.