NEWS

Hot market expected to be reflected in revaluation

By JOHN HOWELL
Posted 6/17/21

By JOHN HOWELL Homeowners who have no thought of selling and may not have paid attention to the red-hot housing market are going to be in for a surprise by the results of the citywide revaluation, which has started and will be fully completed by April

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NEWS

Hot market expected to be reflected in revaluation

Posted

Homeowners who have no thought of selling and may not have paid attention to the red-hot housing market are going to be in for a surprise by the results of the citywide revaluation, which has started and will be fully completed by April 2022. The revaluation will reflect property values as of Dec. 31, 2021.

It’s virtually guaranteed that across the board, whether in Norwood, Oakland Beach, Warwick Neck, Cowesett or any Warwick neighborhood, properties will be appraised at a higher value since the last revaluation in 2019. But as Tax Assessor Neal Dupuis observed in a recent interview, a higher value doesn’t necessarily correlate to higher taxes. In fact, as happens during reevaluations, adjusting values to the market changes the relationship of values between types of properties and neighborhoods. When it comes to taxes, those properties with a proportionally greater increases in value can expect to pay more, while those that proportionally have seen a lesser increase would pay the same or less in taxes.

A rule of thumb used by Warwick assessors over the years is that following a revaluation, a third of property owners can expect taxes to increase, another third will be unchanged and a third will see a decrease in taxes. It’s too early to know if the axiom will hold true. But just as certain as values will reflect higher market prices, the tax rate will decrease.

Dean deTonnancourt of HomeSmart Professionals cautioned homeowners not to apply the current tax rate to the newly appraised values once they receive them next year. As an indication home values have soared, he said that the median price of a Warwick home was $254,500 in May of 2020 as compared to $310,000 this May, an increase of 21 percent. In recent weeks, deTonnancourt said the inventory of homes for sale has increased and that sales are taking a “little bit longer.”

On the other hand, the demand for commercial properties has dropped with the pandemic. He said there are a number of vacant retail properties and that office space is available with the transition to online retail purchases and working from home.

If this holds true going into the end of the year, which Dupuis said is key in fine-tuning valuations, residential property owners will carry a greater proportion of the tax burden.

As it is, the property tax rate is 50 percent higher for commercial property.

Mayor Frank Picozzi said the city anticipates a drop in tangible valuations resulting from the pandemic. He noted, however, that the city is eligible to be reimbursed for a decline in tangible tax revenues under the American Rescue Plan.

While valuations are used to calculate taxes, the purpose of revaluations is to ensure that the burden of taxes is fairly and equitably shared, Dupuis says.

Rhode Island law requires a revaluation every three years with a full revaluation on the ninth year. During a full revaluation, all the properties are visited. The intervening revaluations are called statistical revaluations that use sales of comparable to establish values. Statistical revaluations like the one the city is doing this year are less labor intense. Dupuis said appraisers from the company the city contracts for the revaluation will compare online photographs of properties that are in the city’s database in a drive by of the property. They will be looking for any obvious changes to the property and may request an on-site visit to complete an appraisal.

In preparation, the tax assessor’s office has complied property sales and alterations in property as recorded by building and demolition permits. Dupuis expects the statistical revaluation will move into high gear this fall following the award of a contract. Property owners should receive value notifications that will also be posted on the city website in April. Property owners will have the opportunity to question valuations and present information that may change the appraisal at in-person meetings with appraisers. They will receive notification of any change in value that will be used as the basis for taxes for FY23. If the property owner is still in disagreement over the appraisal, they can appeal to the Board of Tax Review. That’s not the end of avenues of appeal, however. There is still the courts.

The last statistical revaluation as of Dec. 31, 2018, set the combined value of all city property that includes residential and commercial properties, tangibles and motor vehicles at $11,107,608,457. That is an increase of about $1.5 billion in valuation from the prior year.

The collective valuations for Dec. 31, 2019, that was used to set taxes for the current fiscal year ending June 30 is about $50 million more than the prior year. Dupuis explained new development and property alterations are largely responsible for the growth in the tax rolls. He also points out, however, that the growth in valuations is being offset by the ongoing phase-out of the motor vehicle tax. A combination of increased exemptions and a reduction on the rate are being used to phase out the tax. The state reimburses municipalities for the lost motor vehicle tax revenues.

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