LEICESTER —The town of Leicester early this year successfully appealed to the state of Vermont in the hopes of getting a more favorable education property tax rate, citing a steep decline in property sale values over the past two years.
In a relatively rare ruling, the state Department of Taxes in May approved the town’s requested adjustment to its Common Level of Appraisal, or CLA.
State tax officials assign each town in the state a CLA — a number that when multiplied by the assessed value of a property aims to equalize property tax rates from town to town throughout the state.
Towns generally reappraise their grand lists — lists of all the property in town and its owners — every six years, but the state issues each town a CLA number each year to compensate for changes in fair market value. The calculation (CLA times official assessed property value) helps to ensure that an out-of-date grand list will not advantage or disadvantage one town in comparison to another when it comes to the statewide education property tax.
While the state’s CLA calculation takes into account property sales over a three-year period to accommodate for unusual increases or decreases in sale prices, Leicester selectboard chair Diane Benware argued in a letter to the Vermont Department of Taxes that strong real estate sales figures in 2007 were distorting the calculations in her town, making it look like real estate sales in town were stronger than they actually have been of late.
“The town of Leicester has seen drastic changes in the real estate market, which we feel are not accurately reflected using the three-year period evaluation,” wrote Benware.
The state’s original CLA determination for Leicester was 106.33 percent, and following the town’s appeal, that rate was revised to 113.17 percent. This means that, in the state’s eyes, the properties in Leicester have been appraised at a higher value than their actual worth. The state divides the property values on the town’s grand list by the CLA in order to determine the town’s education tax rate.
The year-to-year real estate sales in the town reflect the national decline in the housing market, from a pre-recession real estate boom ending in 2007 to a substantial dip in property values in 2008 and 2009.
Town clerk and treasurer Julie Delphia assembled the data to back up the town’s case for CLA re-determination, highlighting total sales prices that plummeted below total appraisal values starting in 2008.
In 2007, 12 properties in the town sold for a total of $2,827,114 — higher than their total assessment value of $2,519,400. Just one year later, 12 sales in town came to a total of $2,687,964, while their total assessment value was $3,164,200. In 2009, another 12 sales totaled $2,165,500, compared with assessment values of $2,632,400.
So, the average sale in 2007 was at a price above the assessed value of the property, but in 2008 and 2009 the average sale was below the assessed value.
In April, the state responded to the town of Leicester’s request, citing the “dramatic market shift” in town property sales and proposing a sales sample of April 2008 through March 2010.
Benware credited the town’s success to Delphia’s hard work and exhaustive calculations.
“She put together a very concise and clear explanation,” said Benware. “It’s due to her diligence and her understanding of the situation that the state accepted our appeal.”
In a letter detailing the revised CLA data, Delphia emphasized that the CLA affects the education tax rate that the town must pay to the state, but that many other factors go into calculating total school and town taxes.
And Benware said she’s not yet sure if the revised CLA will lead to a decline in education tax rates over last year — the town is still in the midst of a reappraisal to evaluate the grand list, and final tax rates will not be decided until after that is done.
“Until the grand list is lodged, we don’t really know, but we would hope that (the revision) would have a positive impact on the tax rate,” said Benware.
Reporter Andrea Suozzo is at [email protected].