Houses go up in value but what about the tax rate?

Charlotte residents received their reappraised property values two weeks ago, leaving some to question what this could mean for their impending tax bills.

Town appraiser John Kerr emphasized that the increase in property value residents are seeing — in some cases, double — does not immediately translate to the same increase in taxes. He claims the increase in value is actually a good thing.

“It works kind of in the inverse, so if your property value goes up, the tax rate actually comes down,” he explained. “And because, as the value goes up, we need less money from every resident to cover the expenses.”

Kerr was referring to the town budget, which requires a certain amount every year to be paid from property taxes.

He said the town had done a reappraisal in 2016 and at that time had contracted for an appraisal to be done seven years later in 2023.

“You can be proactive with it and schedule one to occur seven to 10 years out,” he said. “But that doesn’t mean you have to actually do it. What drives the actual performance of it is your common level of appraisal.”

The CLA is calculated by the state annually and is the assessed value of properties compared to the fair market value. If that figure falls below 85 percent, a town is mandated by the state to perform a reappraisal. Charlotte’s CLA was 82 percent this year.

“The first place a lot of folks go is they think, because maybe we hear that real estate sales are higher or something like that, and everyone says, ‘Oh, well, we should do a reappraisal and see if our value has gone up.’ That doesn’t drive what we do,” Kerr explained. “The problem with real estate markets is they go up and down. So you could do an appraisal this year when the market might be up. Five years from now you can do it, and the market could be down.”

Charlotte was fortunate to begin their reappraisal early, because the state notified more than two-thirds of Vermont towns this year that they needed to undergo the assessment due to the tanking CLA numbers, making firms like New England Municipal Resource Corporation — the outside agency aiding in the process in Charlotte — in short supply.

Kerr explained that the reassessment process was relatively simple. Each property in town has a record or definition of the property with a sketch attached recording things like “if it’s a wooden-sided, four-bedroom home, that type of description,” he said.

“We use a national cost table to calculate the cost for those types of properties. And that rolls up to give us a value for each home,” he continued.”

The contracted firm went out to every property to perform a physical validation, including taking a new picture for the sketch and analyzing land and neighborhood values.

“We get a snapshot of new value for each property, and that’s what we published,” said Kerr.

A reappraisal booklet was sent to all mailboxes in town, but residents are also encouraged to visit nemrc.info/Charlotte, where they can find comparable property information as well as the grand list — the value of all taxable properties in town.

The grievance process for those residents who want to challenge the appraisal will be held at the town offices June 19-22.

“The outset of that is we either agree or disagree as two parties — the town and the resident — and change the value or move forward to the next steps in the proces,” Kerr said.

Meanwhile, as the clock ticks on, the town has to file the first draft of the grand list to the state by the early part of July.

“It can be incomplete, but we want to have it as complete as we can, so the state can get working on their calculations to come up with the education tax rate. And then we pass that file back and forth numerous times,” he said.

After this process, the official tax rate is set in August, so tax bills can be generated and all go out by the end of August to all residents.

“So, there is a time crunch here,” Kerr said.

He also noted that there could be some changes coming down the pipeline governing how the state will proceed with reappraisals in the coming years. Bill H.480 could see a requirement for reappraisals for towns every six years starting in 2026.

“So this common level of appraisal method that they’re currently using will change and it will just be mandated,” he said. “Every six years we’ll do a reappraisal and there won’t be a formula that drives it or anything like that.”