Rehoboth considers reassessment (UPDATE March 19, 2012)

Rehoboth hears presentation on reassessment

Commissioners comfortable moving ahead

By Ryan Mavity | Mar 19, 2012, Cape Gazette
Photo by: Ryan Mavity David Hickey, vice president of PTA/DelVal, talks to the Rehoboth Beach commissioners about a possible citywide property reassessment.

Rehoboth Beach — Rehoboth Beach appears to be set for its first property reassessment since the Nixon Administration.

No decision on a new assessment has been made, but city officials budgeted $132,000 in this year’s budget for an assessment, based on an estimate from Rehoboth-based assessors PTA/DelVal of $40 per parcel, or about $128,000. The last citywide property assessment was in 1968-69. Representatives from PTA/DelVal were on hand at the March 5 commissioners workshop to provide more detail on reassessment and its effect on property tax rates.

Mayor Sam Cooper said the presentation was not meant to be a sales call, but rather an information session to help the commissioners decide whether to move forward with a property reassessment.

Cooper said the total assessed value of all properties in the city on the books now is $70 million. He said if the city were to reassess, that figure could be as high as $1 billion.

Hickey said when the last reassessment was done in Rehoboth, “I was a junior in high school. Man had not even landed on the moon when that reassessment was done. Needless to say property values have changed since that time.”

In his presentation, Hickey said the valuation models used in 1968 are obsolete and do not reflect market conditions. He said reassessment will more equally distribute the tax burden.

Under the current system, Hickey said there are houses on the waterfront selling for more than $1 million but assessed at $50,000.

“There’s probably properties that are off the water that are also assessed in the $50,000 range who are paying the same amount of taxes as a person that has a property on the water. And to me, that’s a level of inequity that is tremendously unfair,” he said.

Hickey said the assessment will start by analyzing current sales information to come up with a value model for city properties.

After testing their model, PTA/DelVal would then examine all city properties with an emphasis on location and current sales information. The process would ask basic questions of the homeowner such as how many rooms are in the house, what kind of heat is used and when was the house built.

Hickey said the firm would review the value determinations and then notify property owners of their new assessment.

The tax rate will be determined by adding the assessed value of all taxable city parcels. Typically after a reassessment, jurisdictions are limited to collecting the same amount of income, Hickey said. As an example, he cited two reassessments PTA/DelVal did for Ocean View and Seaford. Before Ocean View’s reassessment, the tax rate started at 25 cents per $100 of assessed value, gaining $830,000 in revenue. After reassessment, the tax rate went down to 9 cents per $100 with revenue going down a bit to $810,000.

Seaford’s rate before reassessment was 57cents per $100, but after reassessment, that rate dropped to 26 cents per $100.

“This will assure that the tax burden is more equitably distributed, and this is the way you get the lowest possible tax rate,” Hickey said.

He added that another benefit of property reassessment is that the value of new construction can be determined using current values.

“A lot of people think that you have a reassessment my taxes are going to go up. That’s not necessarily the case. In a lot of cases, the amount of taxes you pay out of pocket will come down because we are more equally distributing the tax burden based on the worth of the properties,” Hickey said.

What’s next?

Cooper said reassessment has only recently come onto the city’s radar, largely because the price is one-third less than previous estimates. He said old standards have made assessed property values woefully out-of-date.

When Cooper looked for some direction from the commissioners, the consensus was to move forward with a reassessment.

Commissioner Pat Coluzzi said “To continue to have our properties at a 1968 rate, it just doesn’t make any sense.”

Commissioner Bill Sargent said, “It makes a lot of sense for us to go ahead.”

Commissioner Stan Mills said, “I’m comfortable going ahead for various reasons, and still am.”

Cooper, who lives on the ocean block, said, “I expect to pay considerably more in taxes. But it’s fair.”

A look at current assessments

Three properties were selected from three distinct locations: South Rehoboth, ocean block; the Pines; and Country Club Estates. City taxes and assessed value are shown for each property. The assessed value is half the appraised value, and the tax rate is $1.78 per $100 of assessed value.

Ocean Block: 13 New Castle St. – City taxes: $564.71;  assessed value: $31,725

Country Club Estates: 308 Stockley St. –City taxes: $392.34; assessed value $22,047

The Pines: 103 Henlopen Ave. – City taxes: $466.22, assessed value $26,192.


City commissioners comfortable moving ahead

By Ryan Mavity

Cape Gazette March 16, 2012

Rehoboth Beach appears to be set for its first property reassessment since the Nixon administration.

No decision on a new assessment has been made, but city officials budgeted $132,000 in this year’s budget for an assess­ment, based on an estimate from Re­hoboth- based assessors PTA/DelVal of $40 per parcel, or about $128,000. The last city­wide property assessment was in 1968-69. Representatives from PTA/DelVal were on hand at the March 5 commissioners work­shop to provide more detail on reassess­ment and its effect on property tax rates. Mayor Sam Cooper said the presentation was not meant to be a sales call, but rather an information session to help the commis­sioners decide whether to move forward with a property reassessment.

Cooper said the total assessed value of all properties in the city on the books now is $70 million. He said if the city were to re­assess, that figure could be as high as $1 bil­lion. David Hickey, PTA/DelVal vice presi­dent, said when the last reassessment was done in Rehoboth, “I was a junior in high school. Man had not even landed on the moon when that reassessment was done. Needless to say property values have changed since that time.”

In his presentation, Hickey said the valu­ation models used in 1968 are obsolete and do not reflect market conditions. He said re­assessment will more equally distribute the tax burden.

Under the current system, Hickey said there are houses on the waterfront selling for more than $1 million but assessed at $50,000.

“There’s probably properties that are off the water that are also assessed in the $50,000 range who are paying the same amount of taxes as a person that has a prop­erty on the water. And to me, that’s a level of inequity that is tremendously unfair,” he said. Hickey said the assessment will start by analyzing current sales information to come up with a value model for city proper­ties. After testing the model, PTA/DelVal would then examine all city properties with an emphasis on location and current sales information. The process would ask basic questions of the homeowner, such as how many rooms are in the house, what kind of heat is used and when was the house built.

Hickey said the firm would review the value determinations and then notify prop­erty owners of their new assessment.

The tax rate will be determined by adding the assessed value of all taxable city parcels. Typically after a reassessment, ju­risdictions are limited to collecting the same amount of income, Hickey said. As an example, he cited two reassessments PTA/DelVal did for Ocean View and Seaford. Before Ocean View’s reassess­ment, the tax rate started at 25 cents per $100 of assessed value, gaining $830,000 in revenue. After reassessment, the tax rate went down to 9 cents per $100 with revenue going down a bit to $810,000.

Seaford’s rate before reassessment was 57cents per $100, but after reassessment, that rate dropped to 26 cents per $100.

“This will assure that the tax burden is more equitably distributed, and this is the way you get the lowest possible tax rate,” Hickey said. He added that another benefit of property reassessment is that the value of new construction can be determined using current values.

“A lot of people think that you have a re­assessment, my taxes are going to go up. That’s not necessarily the case. In a lot of cases, the amount of taxes you pay out of pocket will come down because we are more equally distributing the tax burden based on the worth of the properties,” Hickey said.

What’s next?

Cooper said reassessment has only re­cently come onto the city’s radar, largely because the price is one-third less than pre­vious estimates. He said old standards have made assessed property values woefully out-of-date.

When Cooper looked for some direction from the commissioners, the consensus was to move forward with a reassessment.

Commissioner Pat Coluzzi said, “To con­tinue to have our properties at a 1968 rate, it just doesn’t make any sense.”

Commissioner Bill Sargent said, “It makes a lot of sense for us to go ahead.”

Commissioner Stan Mills said, “I’m com­fortable going ahead for various reasons, and still am.”

Cooper, who lives on the ocean block, said, “I expect to pay considerably more in taxes. But it’s fair.”

Local company offers $40 per parcel fee

By Ryan Mavity | Jan 16, 2012  Cape Gazette

Photo by: Ryan Mavity Rehoboth Beach officials are considering a citywide property reassessment. The last assessment was done in 1969. Mayor Sam Cooper said city officials want to take advantage of a local company's offer to assess all city properties for $40 per parcel.

Rehoboth Beach — The last time Rehoboth Beach had a property assessment it was the year man landed on the moon and Bobby Clarke was drafted by the Philadelphia Flyers.

But now, the time may have arrived for the first citywide assessment since 1969. The commissioners have not decided to move forward with a reassessment, but they have instructed City Manager Greg Ferrese to put the costs of an assessment into the first draft of the 2012-13 city budget.

Three factors are driving a possible reassessment in Rehoboth: updating an out-of-date assessment, the potential to get an assessment done for a very low cost and correcting inequities that have crept into the system.

The city considered reassessment before, including 10 years ago, but Mayor Sam Cooper said one reason it never moved forward was because of the costs, estimated at $300,000 to $400,000.

This time, however, Rehoboth-based company PTA/DelVal offered to reassess property for $40 per parcel, or about $128,000, Cooper said. The city was working with the company on the periodic assessment of newly constructed houses when PTA/DelVal representatives offered to do a citywide reassessment. The company has done assessments in Seaford and two years ago performed Milton's reassessment.

Cooper said the main goal of reassessment is to take a snapshot of what properties are worth. He said the major shift between the 1969 assessment and now is the price of land.

“The big disparity in Rehoboth is going to be, the land was relatively cheap the last time this was done. The buildings were relatively expensive, and that’s shifted,” Cooper said.

He said he expected to see situations where before, someone was paying $25,000 for the house and $7,000 for the land; now those amounts would be flipped, with the lot worth three times what the house is worth.

“What I don’t like is it will probably cut a big break for the people that have built McMansions because they have been paying relatively little for the land and a lot for the house, and now they are going to pay a good amount for the land and not quite as much for the house,” Cooper said. “It will be disproportionate for those who have small homes because their land is so much more valuable.”

Cooper said inequities have crept into the system, not related to sales but for renovations and additions, which the city has valued too high over the years.

For example, he said, in 1969, vinyl siding was new and valued higher than wood siding. Now, wood siding is more valued. But if one homeowner wants to put vinyl siding up and another wants to use wood, the homeowner with vinyl siding will have a higher assessed value, Cooper said.

He said with all the changes to houses and properties over the years, it's difficult to know the value of individual properties.

Commissioner Stan Mills said the city charter allows Rehoboth to piggyback on Sussex County’s assessment. However, Mills said, the county has not reassessed since 1972. He agreed with Cooper that inequities have crept into the system, necessitating a reassessment.

“I’m leaning towards favoring it now because it’s the great equalizer,” Mills said. “I think it will give us a truer assessment value and more fair values.”

Cooper said his plan would be to assemble the program in spring, start the assessment in the summer through the fall and have the new assessment ready for the 2013 tax bill.

“Obviously, everyone’s assessment is going to go way up; the city’s tax rate is going to go way down,” he said. Cooper added the city property tax rate could go down 5 cents, from $1.85 per hundred square feet to $1.80 per hundred.

While the commissioners acknowledged they could face a firestorm of criticism for what could raise people’s tax bills, all agreed that the system needed to be corrected.

Commissioner Bill Sargent said, “At some point, you have to say it’s just right that we go ahead.”