Property owners shocked by reappraisals

Skyrocketing reappraisals have some Whitefish property owners wondering if they'll be able to hold onto their homes for another six years — especially older residents on fixed incomes.

One longtime Whitefish Lake property owner who is nearing retirement saw her reappraisal jump 380 percent, from a phase-in market value of $535,300 in 2002 to $2.58 million in 2008.

While the value of her single-story 1,218-square-foot ranch-style home, built in 1975 and remodeled in 1995, increased by 77 percent to $170,000, her third-acre of land with 100 feet of lakeshore frontage increased by 448 percent to $2.58 million.

The Montana Department of Revenue has posted a form online to help Montana property owners calculate their future taxes based on the new reappraisals. Plugging in the 555.275 mills Whitefish city residents were levied in 2008, the above lakeshore property owner's taxes would increase from $5,905 in 2008 to $18,756 in 2014, when the next reappraisal cycle will kick in.

In this case, the property value increased by $340,822 per year for six years. The exemption used to calculate the taxable value increases from 34 percent in 2008 to 47 percent in 2014, while the tax rate decreases from 3.01 percent in 2008 to 2.47 percent in 2014, but those adjustments didn't stop this person's property taxes from tripling.

Whitefish lakeshore property owner Jim Stack has been actively involved in property tax issues since at least 2003, when he worked with then state Sen. Bob DePratu, R-Whitefish, and other Whitefish residents to mitigate escalating reappraisals. The situation has only gotten worse, he says.

"From the early feedback I'm getting around Whitefish, the impact of this property tax reappraisal is — in a word — devastating," Stack said. "Many vacant lots have increased 200 to 400 percent — this in spite of having a 10-year inventory of vacant lots now for sale in the Flathead."

Stack said every individual he spoke with about their Whitefish Lake property has seen 300 to 400 percent increases in their reappraisal notices.

"This reappraisal will clearly have two long-term effects," he said. "First, it will assure that within the next decade, almost all lakeshore property is transferred to out-of-state ownership — how many residents can afford $20,000 a year in property taxes? And second, the impact of the reappraisal on the Flathead Valley, while not as extreme as on lakeshore, will likely keep the local real estate market severely depressed for many years to come."

The transfer of lakeshore properties to non-resident owners could also have political ramifications — as currently written, five of the Whitefish Lake and Lakeshore Protection Committee's eight members must own lakeshore property. and it's become increasingly difficult to find applicants willing to serve on the committee and able to attend year-round meetings.

Stack said House Bill 658, the property tax mitigation bill sponsored this year by Rep. Mike Jopek, D-Whitefish, helped Eastern Montana residents, whose property values didn't go up as much as the statewide average.

"Property tax mitigation has never been a Republican versus Democratic battle in Helena," he said. "It's always been 'east' versus 'west' — and this time, Eastern Montana won big."

Eastern Montana legislators have learned how to work around term limits, Stack said, so they have more experience and got what they wanted — a solution that "mitigated the average." HB 658 basically takes property tax revenue from highly-impacted properties and gives it to properties that went up less than the statewide average, Stack said.

"Not one cent of someone's property tax increase from this reappraisal goes into the schools or improved government services," he said.

One Whitefish Lake property owner said that while lobbying in Helena, he overheard several eastside legislators talk about a "mansion tax" aimed at wealthy nonresident property owners.

While HB658 provides a higher tax rate for residential properties valued over $1.5 million, properties classified as timber or agricultural are not as adversely affected, Stack notes.

"I have to wonder if a class action suit isn't coming just from the inequalities that are being created," he said. "Several owners of more than 2,000 feet of Whitefish Lake shoreline are taxed at a small fraction of this due to the 'timberland exemption.'"

Rep. Jopek, who sponsored HB658, is a local farmer who benefits from the agricultural exemption. The reappraised value of his property on Blanchard Lake Road increased about 26 percent from 2003 to 2009 to $94,140.

While his two-story, two-bedroom, 1,132-square-foot home and other "improvements' are now appraised at $87,963, his 10.65 acres of agricultural land is appraised at $6,177, down about 26 percent from the 2003 appraisal. The land is rated at 44-plus bushels of wheat per acre.

Meanwhile, two adjacent property owners saw their 10-acre parcels appraised at more than $325,000 this year, or about 52 times what Jopek's 10 acres are appraised at.

Property owners have up to 30 days after they receive their assessment notice to appeal the reappraisal. The deadline here in the Flathead is Oct. 2. Property owners can either request an informal review by filing an AB-30 form or file an appeal directly to the three-member Flathead County Tax Appeal Board — Richard Barron, Connie Gress and Ernest Hutchinson.

Property owners who are dissatisfied with the county board's decision must appeal to the State Tax Appeal Board within 30 days of receipt of the county board's decision. The state board's decision is final unless an appeal is made to the Montana Supreme Court.

There's one major hiccup, however, in the appeal process — reappraisals are based on market values of neighboring properties, but information on neighboring properties is no longer available to the public on the state's online database, http://gis.mt.gov.

Which leads to the final piece of advice for property owners — if taxes become due before an appeal is resolved, property owners must specify the grounds of their protest in writing and pay the disputed taxes under protest by the date they're due.

For more information, visit online at http://mt.gov/revenue/forindividuals/property/reappraisal/calculating.asp.