Property Tax OverviewLane County Budget Committee

May 2, 2013Roxanne R. Gillespie, MAI – Chief Deputy Assessor

Lane County’s Property Tax Revenue

Overview of 2012 Tax Roll Property Values Levy amounts Collections & Foreclosures Legislation and other potential issues

October 2012 Tax Roll Data

$44.8 Billion Market Value Decline of 12.5% overall from 2009, and

3.7% decline from 2011

$25.6 Billion Taxable Value Increase of 6.25% from 2009, but only

1.8% increase from 2011

$406.6 Million in taxes billed Slight drop from 2009 and 0.6% less than

2011

Market Values compared to Taxable Values

2012 “Gap” = 37.5%

0

10

20

30

40

50

60

199019951997199819992000200120022003200420052006200720082009201020112012

RMV TVR

Assessed Value as % of Real Market Value by property type

0102030405060708090

100

Residential Commercial Multi-Family Industrial

2004 2005 2006 2007 2008 2009 2010 2011 2012

Residential Market

Sales activity indicates an overall increase of 2.0% between January and December 2012 compared to the decline of -5.0% for 2011 and -5.5% for 2010.

Property values declined significantly in 2011 during the peak of the recession.

Individual market areas will have different changes relevant to sales that occurred there.

Sales volume has seen a steady increase during the past 12 months with 3,367 closed transactions, or 13.2% increase from 2011. This indicates a slightly improving market.

Residential Market

Even though transaction volume is steady, the median sales price has stabilized and shown a slight increase of 2.0% overall. The market appeared to start to stabilize in the last quarter of 2011.

We are back to 2005-06 median values (pre-bubble). Approximately 24% of the 2012 sales were short or bank sales,

down from 30% in 2011. Bank listings of foreclosure homes has decreased to 21% of the

available inventory. This is down from 30% in 2011. Tightened lending standards continue, which contributes to a lack of

buying power for the real estate market. Reluctance of Homeowners to put houses on the market (unless

they have to) during current market conditions contribute to the stabilized market.

Low Interest rates continue to be a positive force in the market.

Commercial market

Sales in the commercial market also are indicating a stabilization for most areas of the county. Commercial land values have remained steady.

Multi-family housing continues to be developed although in many cases they may be exempt from taxation initially through incentive programs.

Multi-family values experienced a 3% increase in 2012, being driven up by the continuation of higher rents and lower vacancy rates.

Public sector construction with UO and LCC continues.

Industrial

Dept of Revenue indicates a continued decline in values for large manufacturers of 10-25% on top of 25-30% decreases we saw in the two prior years

Very little new construction on industrial accounts, however some wood products companies have invested in new equipment in anticipation of future market rebound. A few manufacturers have consolidated properties, as the economy stabilized.

Several properties will be coming out of the Enterprise Zone exemption program and back onto the tax roll in 2013.

Hynix remains closed. County won tax court appeal on disqualification and back taxes have been paid, however, they have appealed their 2012 value.

Industrial land values are holding steady and small industrial accounts experienced a slight uptick in values for 2012

Taxes by Property Type

Residential65%

Commercial/Industrial18.5%

Industrial M&E2%

Farm/Forest3%

Recreational/Other0.5%

Multi family5%

Personal Prop2.5%

MS1% Utilities

2.5%

2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13

Lane County Operating Levy

Add'l Tax Operating Levy Total

Lane County’s Compression Loss due to Measure 5

$ Amount % of levy

2000-01 (322.90) -0.0015%

2001-02 (189.96) -0.0008%

2002-03 (1,739.15) -0.0074%

2003-04 (3,554.05) -0.0146%

2004-05 (2,736.29) -0.0106%

2005-06 (1,086.22) -0.0040%

2006-07 (763.45) -0.0027%

2007-08 (704.85) -0.0024%

2008-09 (5,695.71) -0.0183%

2009-10 (862.50) -0.0027%

2010-11 (1,089.09) -0.0033%

2011-12 (2,419.40) -0.0071%

2012-13 (5,021.79) -0.0146%

Measure 5 “Compression”

The total amount of taxes that a district is not able to bill due to the Measure 5 cap

Calculated on an account by account basis Based on market value of property; as values

decline compression is more likely to occur and as values increase it is less likely.

99.5% of compression loss is in the Education category.

95.90%96.35%

97.00% 97.00%97.60% 97.60%

97.20%96.80% 96.65%

97.10%96.72%

89.49%

85.00%

87.00%

89.00%

91.00%

93.00%

95.00%

97.00%

99.00%

2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13

Lane Co Tax Collection Rates2012-13 as of 2nd trimester payment

Measure 50 impacts Most residential & commercial properties had a 3% increase in

Maximum Assessed Value and had a taxable value lower than their market value on the 2012 tax statement.

However, 16% of accounts in 2012 had a market value less than assessed value which dropped their taxable value. I expect the number of “upside down” accounts to grow slightly for 2013.

When the market comes back, those accounts will see their taxable values increase at the same rate as the market trends which could be more than the traditional 3%.

During the “boom real estate market”, Measure 50 protected property owners from spikes in taxes.

During the slowdown of the real estate market, Measure 50 provides stability to district revenues.

Example of "Upside Down Acct"

500,000

600,000

700,000

800,000

900,000

1,000,000

1,100,000

1,200,000

2005 2006 2007 2008 2009 2010 2011 2012

Market Value MAV=Higher of PY Assessed*1.03 or PY MAV Assessed Value = Lower of MAV or Market

Legislative changes – what’s new HB3640 (2010) – sunsets in 2014

Taxes are cancelled on low value manufactured homes through 2013-14

4,516 accounts qualified in 2012 $508,500 in tax cancelled, but 20% of these accounts

are delinquent and have not been paying SB1529 (2012)

Effective the 2012 year Changes method to calculate the new taxable value of

industrial and commercial properties. Industrial rate went down, commercial rate went up.

This was requested of the legislature by Portland area industrial property owners as an economic development tool to compete with Vancouver, WA

Legislative changes – what’s newSenior and Disabled Deferral Program changes State did not have enough money to pay these taxes

in 2011 HB2543 (2011 session) changed eligibility criteria

which eliminated some existing participants and prevented others from entering program.

HB4039 (2013 session) allows people that were inactivated from the program for having a reverse mortgage to remain in the program.  Approximately 1,400 people are affected statewide per the DOR.

Preliminary look at 2013 tax roll Residential values have stabilized, and appear to be

increasing slightly. Large Industrial values continue to decline, but small

industrials have flattened out and started to experience a slight upward movement.

2012 new building permit activity shows a slight increase for the 2013 tax year.

Property tax revenues for most districts will see a slight increase but still below 3%.

Conclusion for Lane County

Property tax revenues are maximized under the current law absent an aggressive collection effort, and reappraisal studies to find property that is not on the tax roll.

The 20% reduction in assessor staff on July 1, 2012 made any enhanced effort to increase tax revenues impossible. We are focused on getting the current tax roll finished by the state deadline and statements mailed out on time.

Property tax will continue to provide stable base funding to the General Fund, but it will not keep up with expense increases.