Steamboat Springs Routt County Assessor Gary Peterson had sobering news for the Board of Commissioners on Monday — the budget headaches resulting from declining property values here may not go away until sometime beyond 2014.
Foreclosures and distressed properties continue to put downward pressure on the county’s tax base, Peterson said, and he doesn’t see the trend reversing anytime soon.
Public Trustee Jeanne Whiddon reported 48 foreclosure filings in January, and “the numbers are on track to break 300 again” in 2011, Peterson said.
“Bank sales are becoming more and more commonplace. They want to get rid of it, and they’re being aggressive in their prices.”
Peterson has been cautioning all winter that the value of privately owned property in the county, taken as a whole, could be down as much as 30 to 35 percent in the wake of 30 months of steadily dropping real estate prices. He had some good news for the short term, but it’s the next round of valuations in 2013 that have him concerned.
“I might be backing off that to the good side — it might be closer to 25 percent,” Peterson said. “In the Steamboat city limits, for residential property, (my staff) is coming up with an average of 21 percent drop in residential (valuations). I thought it was going to be in the high 20s.”
His staff still is nine days away from certifying the overall valuation of the county’s tax base, and he said the numbers still are being adjusted.
Peterson and commissioner Diane Mitsch Bush were careful to say that individual property owners could experience widely varying changes in their tax notices, depending on what type of property they own and which one of the numerous tax districts in Routt County they live in. A few property owners are likely to be surprised their values actually went up.
“Things are really in flux and there’s no shorthand that can say valuations are going up or down by X percent,” Mitsch Bush said.
Local governments, with the notable exception of the city of Steamboat Springs, raise property tax revenues based on the value of property in their districts. So, it’s natural for taxpayers to conclude that if their valuation goes down, so will their taxes, and vice versa. In reality, residential property taxes here have remained fairly steady throughout 15 years as the county commissioners and other governments have budgeted conservatively and applied a mill rate sufficient to raise the amounts in their budgets.
Taxes have gone up when voters have approved new taxes.
A day of reckoning
The biggest headache of all for local governments could arrive in 2013 if the decline in real estate values hasn’t moderated when the commissioners tackle the 2014 budget process.
Peterson said he had been optimistic that the next property valuations to be finalized in spring 2013 would show property values had declined perhaps another 15 percent below 2011. But now he sees the potential for another drop of 20 to 25 percent on top of this year’s 20 to 25 percent.
The Assessor’s Office uses sales data from a fixed period to re-value the county in odd years. The sales period for the 2011 valuation, which will be used to prepare the 2012 budget, ended in June 2010. Already, Peterson said, values here are poised to decline even further.
He pointed to a modest two-bedroom condominium at Shadow Run not far from Steamboat Ski Area. It’s value for tax purposes during the 2009 revaluation process was set at $285,940, and that number has declined to $201,840 in the 2011 valuation to be used in the 2012 budget process. That’s a 29.4 percent drop, Peterson said.
But there’s more. The same condo is listed for sale at $116,000 — an additional 42.5 percent drop from the 2011 valuation that has yet to be certified by Peterson’s office.
County Finance Director Dan Strnad said the county has had the foresight to set aside a cushion of 7.28 mills of theoretical property tax it could have collected in previous years to help carry it through an economic crisis. That cushion built into the county’s general fund will keep the county whole through the 2012 budget process, Strnad said. And the county’s assessed valuation could drop a total of 45 percent before it would be confronted with a decrease in revenues.
That prospect is likely to keep all local government officials whose budgets depend upon property values watching sales trends well into 2013.
To reach Tom Ross, call 970-871-4205 or email tross@SteamboatToday.com