Another blow is being dealt to Burlington residents following the citywide reappraisal, which left many jaw-dropped at the increases in their annual property tax bills.
City officials say that state-provided property tax income credits, which about 70% of homeowners in Burlington receive, will not be calculated with the newly reappraised property values in mind. The tax credits will be calculated under last year’s home valuations, which were considerably lower, on average, across the city.
Burlington Mayor Miro Weinberger said his administration is trying to figure out how it can make up the difference that homeowners were expecting to receive, possibly through a new grant program.
“I think that is problematic,” Weinberger said of the delayed property tax credit. “That’s not the way the system is supposed to work.”
This comes after many in the city have criticized officials for the way the reappraisal was carried out. Many have expressed concerns about the accuracy of their new home values — which had not been reappraised in a citywide assessment since 2005 — because most of the reappraisal was conducted virtually during the pandemic.
Many have also criticized the city’s reassurances that taxes wouldn’t rise dramatically. But because more of the tax burden was shifted away from commercial properties and on to residences, bills for single-family homes rose an average of 11%.
Burlington homeowner Kent Cassella is one resident who receives the property tax credit. He told VTDigger it usually shaves a few thousand dollars off his overall bill. But, because of the tax credit lag, this year it won’t grow like his property taxes did.
Cassella said his taxes rose $1,600 because of the reappraisal, increasing his total bill to about $10,000. His home value more than doubled, from $231,000 to $471,000. The increase has prompted him to decide to sell his home in the next two years.
He views the lag in property tax credit as just another hitch with the reappraisal. The overall process disturbs him more — not being adequately warned about tax increases, not having enough time to appeal, and the questionable criteria his house was evaluated under.
“There’s nothing affordable anymore in Burlington,” Cassella said.
Why a lag in tax credits?
Anyone who made under $138,500 in 2020 and claims their property as their homestead — a parcel owned and occupied by the resident — is eligible for this tax credit.
Jake Feldman, a senior fiscal analyst with the Department of Taxes, told VTDigger via email that the state is using last year’s home valuations to calculate property tax income credits because the department doesn’t receive final land values until the end of the year. But cities and towns need to start printing their residents’ bills with the credit attached in July.
He said these credits are not calculated using assessed value, but rather equalized home value.
Equalized home value is found by dividing a home’s assessed value by the city’s common level of appraisal. Last year, Burlington’s CLA was 74.77% and this year it’s risen to 105.32%. These percentages show how closely a home’s assessment by the city matches fair market value, on average.
Feldman said that last year, the equalized home value in the city was much higher. This year, it’s lower.
“Mathematically, it works out that anyone in Burlington whose home appreciated by about 42% should be getting a credit that’s in line with their new property value,” Feldman said. “If their property appreciated more than that, they may see a net tax bill that’s bigger this year.”
A VTDigger analysis of Burlington’s property grand lists found that, on average, single-family home values went up 56%.
The lag will affect only this year’s tax bills. By 2022, the tax credits will reflect the reappraised home values.
Can ARPA money help?
Katherine Schad, the city’s chief administrative officer, told VTDigger that city staff are trying to figure out if a one-year grant program can be established to help homeowners pay their property taxes if they were expecting a higher income tax credit.
She said it’s possible the city could use some of the American Rescue Plan funds it’s received from the federal government to prop up a program. The $17 million the city has yet to allocate could specifically help those who have lost income because of the pandemic and are having trouble paying their property tax bills.
In addition, Weinberger said residents can set up a payment plan with the city if they can’t meet their quarterly property tax payments after the reappraisal. He said residents should contact the Resource and Recovery Center for more direction on how to do this.
Weinberger told VTDigger he knows the reappraisal process has stirred up considerable confusion and dissatisfaction among residents.
“I’m very concerned about housing affordability in Burlington,” he said. He thinks the city’s low housing supply is one of the main drivers of skyrocketing home values — a problem that his administration has attempted to address.
His office is organizing another housing summit, which was planned for this summer but was pushed back to the fall, which Weinberger says he hopes will do more to address this crunch.
Weinberger said he also wants the city to reassess some commercial properties, such as hotels, come April. It’s not uncommon for the city to reappraise certain types of properties in batches, he said. He thinks many hotels were undervalued during the pandemic when travel was severely limited. But now, hotels are seeing a boom.
“These are targeted reappraisals to ensure equity in these citywide systems,” Weinberger said. “I think it’s a smart policy and I plan to continue doing it.”
