Most homeowners in Chatham County will finally receive their annual property assessments, which were approved this past Friday, after delays caused by changes in state legislation passed in April and May.
Homeowners in 44 neighborhoods will have to wait another week for their assessments, which won't be approved until after the Board of Assessors meeting on August 4. Property assessments are usually delivered each year in May.
The two acts responsible for the delay, SB 55 and HB 233, which were touted as much needed help for imperiled homeowners during difficult economic times, will have a significant impact locally.
SB 55, which was signed into law in April of this year, asks Assessors across the state to "consider" the effects of foreclosed homes on neighboring property values. HB 233 places a freeze on increasing assessed values of property, but does not prevent them from being lowered.
"From our standpoint, we wish they wouldn't have done this," says Larry Lower, the Vice Chairman of Chatham County's Board of Assessors. "The market is going to correct itself, and it's already started to correct itself."
Although the state's legislation was aimed at helping homeowners by keeping their assessments down - effectively leveling or reducing the amount of property taxes they pay - most homeowners in the state will see an increase in the amount that they owe this year, because the state has also stopped subsidizing a portion of the millage.
"Homeowners will be paying that money that the state is not funding, somewhere between $200-300," says Pete Liakakis, Chairman of the County Commission. "The state has taken away what they were paying for those property taxes."
While assessments won't go up because of the legislated freeze, there are some people who feel that values assessed by the county aren't fully realizing the impact of the recession.
Two weeks ago, Richard Lambeth, a local real estate agent with Keller-Williams, co-hosted a workshop called "How to Fight Your Property Tax Assessment." The point of the workshop was to educate the average person about tools and information available to them if they feel their property has been over-valued.
"We thought people would be upset about finding out the tax digest went up last year," explains Lambeth.
Although the digest will increase slightly this year, the inclusion of qualified foreclosure sales in calculating the assessed value of property will result in over $42 million in lost value on this year's tax digest.
The number of foreclosures more than doubled in the county between 2007 and 2008
The Board of Assessors initially expected that forceclosures would have a negligible impact on local market values, and only 1% of property was expected to be reduced in value.
"The sale of our foreclosures, the bulk of them, has been above our assessed values," Lower says. "As much as some individuals in Chatham County would like to portray the fact that our property values are the same as property values in Atlanta, they are not."
After a meeting on Friday morning, the Board of Assessors announced the increase in reductions.
Lambeth, who helps banks price foreclosure properties before they go back on the market, disagrees that property value in the county is rightfully so buoyant.
"I have not found any neighborhood that I have done an evaluation on, and that's over 200 of them, where property values have increased in the past 12 months," he explains.
Additionally, the amount of property on the market in Savannah is at a recent high, another factor which should lower price. According to the Multi-List System (MLS), a realty database of all the available property in the area, there is currently a 40 month supply of property in downtown Savannah. Anything over a six month supply is considered downward pressure on pricing in the market.
"The average downtown list price according to the MLS is around $660,000" says Lambeth. "The average sales price is around $250,000."
Freezing assessed values could potentially hurt the County's budget, which relies heavily on property tax revenue. In the county's budget for the past fiscal year, the amended total revenue from tax on real property alone represented over $87 million of the total $129 million expected from all taxes collected by the county.
In the budget for 2007-08 fiscal year, tax collection represented about 81% of the county's revenue, and in its most recent budget, 2009-10, taxes are expected to comprise around 88% of total revenue.
During the same period of time, collections of real property tax climbed from $78 million in FY 2007-08 to a recommended $90 million in the current year's budget, despite the declining real estate market, and the freeze on assessment increases.
"This year, what helped out was that there was a lot of commercial property built and the monies received from commercial property taxes helped stabilize the budget," explains Liakakis. "There were a number of tax exemptions that went away. A lot of properties that were sold, the higher cost factor for those went to the new owner."
Because of protections provided by the Stephens-Day Bill in Chatham County, homeowners are exempt from higher taxation on their primary residence, but when a house is sold, the buyer must pay the millage based on the higher value.
Lambeth has had problems with properties being over-valued in the past, and last year appealed the assessment of a property that resulted in a reduction of $11,000.
"I have battled a lot of my own assessments because I own investment property," he says. "I've seen so many homeowners coming out frustrated because they really didn't know how to fight their assessments."
For homeowners who are afraid that their property values may be too high, the new legislation could make the appeals process more complicated. If your property value is unchanged from last year, then the value can't be appealed.
"In January or February of each year, you have go down to the courthouse and strike your return," explains Lambeth. "That automatically gives you a right to appeal whether they change the value or not."
It is already too late to "strike a return" for this year. However, homeowners will be able to appeal any changes later this year.
"The biggest thing I see is that we live in a democracy, but part of living in a democracy is you have to hold government accountable and this is a way that you can do that," says Lambeth. "You can make them prove that their taxation is fair."