Slowdown in rise of property values spells tax relief for many

January 25, 1994|By Adam Sachs | Adam Sachs,Staff Writer

After watching her property assessment -- and local taxes -- spiral consistently upward for a decade, Kings Contrivance village resident Barbara Seely was pleased to see her home's value drop during the latest cycle of state reappraisals.

"To me, that's great," said Ms. Seely, a Realtor with Coldwell Banker Grempler Realty in Columbia and a Kings Contrivance village board member. "The lower the assessment, the better. You don't have to pay as much in taxes."

Many east Columbia home and business owners will be similarly relieved when it comes time to pay the Columbia Association annual charge and county government taxes for fiscal 1995, assuming neither increases its property tax rate.

The nonprofit Columbia Association anticipates the weakest rate of income growth from its annual property charge in its history because of the marked slowdown in east Columbia property values and new construction, said association President Padraic Kennedy. For many years, the association has relied on rapidly increasing property values and new construction to boost its income.

Howard properties reassessed by the state in 1993 -- one-third of the county, including Columbia east of Route 29 and a region between Ellicott City and Elkridge -- showed a mere 3.5 percent average increase in value since 1990, a far cry from the skyrocketing values of the previous 12 years.

By comparison, property values for that region increased by an average of 16 percent from 1981 to 1984, 22 percent from 1984 to 1987 and 29 percent from 1987 to 1990, said Ronald Wineholt, deputy director of the state Department of Assessments and Taxation, which reappraises properties once every three years.

Government property taxes and the association property charge are based on the assessment, which is a percentage of full market value. Government bases its levy on 40 percent of value, the association on 50 percent.

Appraised values of east Columbia district properties increased by an average of just 1.9 percent since 1990, said Howard Levenson, supervisor of assessments for Howard County. By comparison, the average increase for east Columbia properties in 1990 was 22.8 percent, according to the association, which charges property owners 73 cents per $100 of assessed property value.

The association's overall revenue from property charges increased by 13.3 percent in fiscal 1992 and 16.1 percent in fiscal 1989, the last two times east Columbia properties were reassessed.

For fiscal 1995, the association anticipates a 2.6 percent growth in income from the property charge.

"This is a year for consolidation of improvements we've made the last year or two," but not for expansion of services, Mr. Kennedy said.

The elected 10-member Columbia Council is the board of directors for the association, which manages Columbia's facilities, programs and open space lands.

Ms. Seely is one east Columbia resident who will pay less, assuming the council adopts the proposed 73-cent rate. The appraised value of her Dickinson neighborhood home dropped from $212,550 in 1990 to $202,530, or nearly 5 percent.

The Seelys' property had increased in value by 19 percent in 1987 and by 36 percent in 1990. The 36 percent jump translated into a $211 increase in the association charge -- from $586 to $797 -- at the then-75-cent rate.

Ms. Seely said she isn't worried about the potential downside of stagnating or declining property values because home sales in east Columbia neighborhoods remain strong, and buyers generally are purchasing homes for prices higher than appraised values.

"Neighborhoods have maintained market value even though property assessments have gone down in some cases," Ms. Seely said. "Columbia, being so centrally located, still is a very desirable area for people to live in."

Ken Steil, president of the Howard County Association of Realtors, agreed that Columbia has remained attractive to home buyers. Columbia home prices have increased by 2 percent to 3 percent the last two years, compared to 10 percent or more per year through the mid- to late-1980s, he said.

Mr. Levenson said the county is insulated by its location between Baltimore and Washington.

"Howard County has not really followed a lot of the Baltimore area, where values have gone way down and sales have been slow," he said.

State assessments are based largely on recent home sales prices in a neighborhood.

Mr. Levenson said appraisers couldn't keep up with the home sales market in Columbia in the 1980s because prices were rising so fast, noting the assessment office is several months behind on sales data by the time new assessments are mailed to property owners in late December.

Other jurisdictions in the Baltimore region averaged a 1.4 percent increase in property values.

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