Revisiting the View Tax

laura,

For many of us in Hopkinton a view adjustment has been in place for much of the last decade. Assessments of market values have often been influenced by a view adjustment.

In the past, open space land in “current use” with “views” was assessed with an additional view adjustment on a per acre basis. It was not uncommon for such land to be valued in excess of $75,000 an acre to reflect market values for development. Since much of this land was actively engaged in qualifying “current use” activities, the current use assessments (~$450/acre for orchard land, ~$100/acre for forest land etc.) were applied instead. The resulting tax savings allowed these land resource based uses to continue for decades.

Avitar was contracted to do revaluations in our town this last year and our tax bills were issued this last month based on their most recent methodologies. All open space land (including the very valuable land mentioned above) was devalued to less than $2,800 per acre. View adjustments (in Hopkinton up to $600,000) were applied to only the footprints and curtilage of buildings, not on the acres of the parcel where the better views exist.

As an example of the above: We have a 22 acre parcel in current use with a seasonal picker cottage in the middle of the orchard with apple trees all around it. The market value land assessment on that parcel as of June 1, 2006 was $596,870 and the current use “credit” (the reduction of assessment attributed to current use) was $528,480 resulting an effective land assessment for tax purposes of $68,000. That value was the sum of the value of the footprint of the cottage plus the current use on the 22 acres.

The new assessment is $484,600 with a current use credit of only $48,933 resulting in an assessment for taxes of $435,667. The great change is primarily the result of a $128,500 footprint plus a $300,000 “vu” factor also applied to only the land not in current use under the cottage. Thus with the new methodology Avitar has added almost $480,000 of taxable assessment to this parcel in only six months!

The other two farm parcels have additional view adjustments of $400,000 and $200,000 each for a total of $900,000. Our taxes have increased over $50,000/year to a total of $72,000 – not sustainable by agriculture (that’s about $200/day - every day)

This new approach to assessing open space land totally flies in the face of the intent and spirit of the existing current use law and threatens to destroy the fabric of rural New Hampshire and its land based industries of farming, forestry, and tourism. What’s wrong with this picture?

Regards, Erick Leadbeater, Gould Hill Orchards

Does view tax include negatives to the property value?
I live in Hampton near the capped landfill, transfer station and sewage treatment. We get all kinds of nasty smells. Is their talk of deductions or credit for negative aspects to a homes location?

Thanks

Just trying to make sure I understand...

There are folks who want to take the value of a "view" out of the equation when assessing property value.

As time goes by, values are tracked/compared by looking at sales data which determines the coefficient of dispersion.

Therefore...if the view component is eliminated, the coefficient of dispersion changes (again, based on actual sales data which would include the usual supply and demand equation for a view) to reflect the difference in assessed value versus sales value. This in effect spreads the value of a view over all properties in the town or city. The little guy with no view and a property assesed at a lower value ends up paying more in taxes for his/her property than if the view was included in the assessment of the property with the view.

Yes? No? Please comment.

It's unfortunate that it wasn't until the last five minutes of the program that an extremely relevant point was raised that rendered much of the preceding discussion moot, namely, that including a view component to evaluations has absolutely no effect on the total property tax collected by a town – zero, none. In fact, no part of the evaluation affects the total tax: evaluations are used only to distribute a pre-determined total revenue goal among the townspeople. Differences in evaluation do not pit property owners against the town or state; they pit the property owners of a particular town against each other, to see who will bear a greater or lesser burden of the total requirement.

So, the procedure works as follows (as I understand it):

1. A town determines what costs it must bear (or is willing to bear). These budgeted expenses are approved at town meeting.

2. It is agreed that these expenses will be paid by the residents (and businesses) of the town.

3. It is necessary to distribute the expenses among the townspeople. New Hampshire has chosen to use property ownership as a weighting factor in distributing the burden – higher property value implies a larger fraction of the total burden. If property A has a value twice that of property B, A's tax burden will be exactly twice that of B. No matter how the relative fractions are chosen, however, the total tax collected will be the same.

4. Market value has been chosen as the means of quantifying property value, i.e. the best estimation of what a property would sell for on the open market.

5. Statistical "models" are used as predictors selling price. Such models analyze the contributions of many factors involved in a real estate transaction (using actual sales histories), with the goal of identifying which factors actually affect selling price. Evidently, "view" has been found to be a significant factor, along with many others (size, quality of construction, age, topography, etc.). As long as selling price is to be used as a measure of property value, leaving out view would be a distortion of reality. The market, it would seem, has spoken.

6. The estimates of market value are then used to distribute the tax burden among the property owners. If you have a great view compared to your neighbor's, then, all other factors being equal, you will pay more taxes and he will pay less; but this has no effect whatsoever on the total taxes collected by the town.

One might argue with point 3: does the selling price of your property actually reflect your ability to contribute to the town's expenses? Sometimes it probably does; but in other cases, such an older person with a modest fixed income living on the old family farm, it certainly doesn't. The last caller pointed out (correctly, in my view) that actual income would be a fairer measure of ability to pay than property value. There is something screwy in a system that bases distribution of financial responsibility on the hypothetical killings we could make in the real estate market if we all pulled up stakes, sold out, and got out of town!

The problem is, the mountain views did not just spring up overnight.
Why are they suddenly being taxed now?
People with modest homes at the foot of the mountains will suddenly be taxed out of their homes because of this subjective tax.

It is a scam, plain and simple.