BOF explains reval decision
The Board of Finance along with Board of Selectmen recently made the decision to defer Property Revaluation for one more year because it will raise residential taxes 11 percent even if there were no increase to our education and Town budgets. With 3 percent budget increases, the total increase would jump to 14 percent or $450 on the average home. Revaluation alone increases the average home assessment from $186,000 to $311,000 … a 66 percent increase. By comparison, commercial and industrial assessments only increased 20 percent.
There were a number of factors leading to the decision to defer the revaluation. Residential properties are expected to drop as interest rates rise and the Federal Reserve is expected to gradually increase the prime rate throughout 2006.
Although we have already started to see signs of residential real estate values starting to decline, they are currently still much higher than the increase in commercial/Industrial assessments. We also must not forget that we recently lost 21 million dollars in assessed value from assessment appeals on commercial industrial properties. That would have resulted in a double hit in the shift from commercial and industrial to the residential taxpayers … something I did not want to see happen.
Based on this information my recommendation to the Board of Selectmen was to defer so we wouldn't see the significant impact on the residential taxpayer in completing a revaluation on the high end of the real estate market. The Board of Finance is also currently looking at utilizing a phased approach where we can potentially phase in any impact of a tax increase to residents over a five-year period rather than take the hit with a huge lump sum increase within one year based on a newly assessed value for the average homeowner. Finally, I would encourage all residents to contact their Connecticut House and Senate legislators to enact legislation to allow for classification, which would allow local municipalities to set different tax rates for residential use properties vs commercial use properties. This would allow us to complete revaluations on a more timely and equitable basis but more importantly, it will protect residential from a devastating tax increase beginning in 2007.
Kevin McNabola is the Chairmen Orange Board of Finance