Valuations - Part 3
The only dumb question is the one you don't ask
The City of Belfast met on Tuesday, October 16, to discuss among other things, valuations. These were discussed for over a half hour. Fast forward to item 10.A on the agenda at 34:00 if you want to see the assessing discussion.
There were two questions/comments by councilors about waterfront properties that have lost some land due to erosion (and how this affects valuations).1 It was not lost on me (no pun intended) that this is a question that benefits which properties? Waterfront properties. Like this one for sale for $3.8 million.2
You know what was not asked? Any questions about our methodology and why it overvalues modest homes and undervalues high-end homes. This is the biggest problem with our valuation system, not waterfront property issues.
We were told that Facebook is a cesspool. While social media is no substitute for in-person engagement, and although there are real anti-social problems exacerbated by social media, and despite our national willful ignorance when it comes to effectively regulating monopolies, the place where people vent their frustrations shouldn’t matter if their concerns are justified. It does not matter if people do not speak valuation language — they know that something is wrong when long-term residents are getting taxed out of their homes and wealthy residents are getting large tax breaks. So, I laid my argument out on Facebook, because I don’t have a bully pulpit to reach people otherwise.
My concerns are not secondary — they speak to the process that is used to value our properties in Belfast, and this process is broken. These concerns are well-studied. You can do your own research here, and to start you can try these discussions with Urban3 or the Lincoln Institute of Land Policy. The further you dig, the more you can find the scale of the problem — the history, the complicated math, and what I did, just simply figuring out if your community has this problem.
I didn’t just assume that we have this problem - I did the legwork to prove that we have this problem. This problem is so well-established that it has a name, lack of vertical equity. The Lincoln Institute created an easy-to-use tool for communities like ours to evaluate their valuation process — so communities like ours could evaluate if their methodology was, in fact, regressive against modest homes by simply inputting two columns of data (sales prices and assessed values). Belfast failed the test in 2023 and then got even worse marks in 2024. We’re going in the wrong direction here and it did not even register in the discussion. But the plight of waterfront property owners did. Twice. The lack of vertical equity is the largest problem in our valuation system, and nothing was said about it. That speaks volumes to me.
It seems self evident that, if land is lost then value is lost, because land has value (if it didn’t we wouldn’t be taxed on it). I don’t get why it is necessary to bring up the plight of waterfront property owners.
I am not suggesting this specific property has lost land and is looking for a valuation adjustment. This is just an example of a waterfront property in Belfast. Compare it to your house, if you like. By the way, this property’s valuation is only $2.2 million. Yes, the sellers of this home would need to take an offer of $1.6 million less than their asking price for this valuation to equal the sales price. If this property sells for $3.8 million, the new owner will be the beneficiary of a nearly $25,000 property tax break.