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Rockland revaluation prompts fear of further gentrification

By Stephen Betts | Jul 23, 2020
Mechanic Street in Rockland is experiencing the sharpest increases in valuations.

Rockland — Many Rockland residents are expressing shock and concern over their new proposed property valuations, which are likely to hike their tax bills this fall, some by thousands of dollars.

City leaders say they too are concerned about the threat of people being unable to continue to live in the community.

"We were stunned," Phyllis Merriam said when she and her husband, Kendall Merriam, opened up the letter from the revaluation firm about their proposed new value. "The family has been trying to keep the house in the family."

The house has been in the Merriam family since 1944.

She said they planned on rehabbing the house, but that project might have to be out off because of the increased valuation.

The valuation for the Merriams is increasing 68% from $203,900 to $342,900 — a 68% increase. While the tax rate has not been set, their tax bill is likely to rise about $1,800 from about $4,500 to more than $6,300.

"A house is a home not an ATM for the city," she said.

Gaye Best, also a Mechanic Street resident, saw her valuation jump from $171,600 to $299,500 — a 74% increase. Her tax bill is likely to increase more than $1,700.

Best said at the same time that the city is doing a revaluation, it is offering loans to businesses and waiving fees to businesses to use city property.

"Not only is this reevaluation unfair but it will exacerbate our housing problem. There are no reasonable rentals because the city has not regulated the Airbnb business properly. There seems to be no planning involved," Best said.

Best and the Merriams said at the same time that they received their new valuations, the city approved the Sail Power and Steam Museum's plan to build a new building across the street from them, blocking their views of the harbor.

"Just because some people from away have bought houses in the South End and then had so much money, they tore them down and rebuilt the houses...mind you, these are second homes for them, is no reason to try to squeeze money out of the locals," Best said.

Revaluations almost always generate considerable concern from those property owners who face the steepest increases.

The last full revaluation in Rockland was done in 2005 when the city hired Vision Appraisal. That revaluation included interior inspections of properties as well as exterior viewings and market analyses.

In the 2005 Rockland revaluation, the neighborhoods that felt the brunt of the increases were Dodge Mountain, Bog Road, Waldo Avenue and Samoset Road. Those homes saw their valuations skyrocket 50 to 100%. The 2005 revaluation was the first full revaluation Rockland did in 29 years.

In 2005, South End homes saw increases well below the citywide average, which meant those property owners paid a smaller share of the property tax burden.

But the 2020 revaluation — done by exterior inspections, reviewing of city building permits, and market analyses — resulted in South End properties facing the steepest hikes with 50 to nearly 100% increases common.

The Maine Constitution says that property shall be assessed at its "just value." The state  points out that courts interpreted "just value" to mean fair market value, or in other words, "what the property is worth." A property’s worth is commonly looked at as "what a willing buyer would pay a willing seller" for a particular piece of property.

The Rockland City Council agreed in June 2019 to have the revaluation performed by including money in the 2019-2020 budget. The city contracted in October with KRT Appraisal of Haverhill, Mass., for $74,000.

"There have been many changes in the market since 2005, including the real estate bubble, the bursting of that bubble, and now the rebounding from the crash," states the budget request message from the spring of 2019.

KRT is basing the values on two years worth of residential sales — April 1, 2018, through April 1, 2020.

Sale prices of homes and land locally have increased significantly over the past few years, particularly in the South End.

Properties on Mechanic Street, for example where the Merriams live, is seeing some of the steepest hikes, ranging from a 21% increase to a high of 91%.

There are neighborhoods, however, in which the valuations for most homes fell. Those include the Samoset Road and Dodge Mountain. Those homes will see taxes decrease by varying amounts.

There are neighborhoods where values remained nearly the same.

A revaluation does not increase overall taxes in a community, but shifts the costs to properties that are determined to be more valuable based on prior similar sales.

Assessor Roxy LaFrance said the average residential increase in Rockland is 19%. The commercial and industrial valuations have not been completed.

If the overall city valuation increase ends up at 19% that means that taxes will increase only if the individual property value increased by more than the 19% average increase. That would be because the tax rate would drop by 19% which means Rockland's rate would fall to about $20 per $1,000 of assessment versus last year's rate of $24.76.

Year-round residents also are eligible for the $25,000 homestead exemption which is deducted from an assessment before the tax rate is applied to the property. The exemption is set by the state and is an increase from $20,000 last year.

Councilors expressed their concern about the increases.

"I'm concerned that this revaluation is going to hasten the trend towards gentrification in some areas of the city," Councilor Nate Davis said.

"I need to learn more about the laws and practices governing revaluations before figuring out how to respond, and I'm going to suggest that Council hold a discussion on this in August. But concern, like talk, is cheap, and I'm going to try to propose specific policies and programs over the next few months to keep Rockland accessible to people of a range of economic circumstances."

Davis' home in the South End had its valuation increase 44%.

Councilor Ed Glaser said he hopes the Council will have a public meeting on the revaluation in August.

"We have a real problem here — as a city that has become a desirable place to live, house prices are growing beyond the ability of many that live here to afford them. And that increase in prices drives up valuations," Glaser said.

He said state law doesn't give the City a lot of tools to lower assessments or taxes for people of lesser means, or who have lived in their houses for years.

"If we can find a way around the state's rules, we may be able to alleviate some of the pain, but for now I'm not hopeful. We also have to work through the process of what the individual increases or decreases do to the final mill rate, and how much that affects each piece of property. As you know, both city and school taxes in Rockland aren't really slated to go up this year, so any change will be attributed, not to raising more money, but in shifting property values. We need to air all of that out publicly to see if there are any solutions we haven't thought of," Glaser said.

Glaser's home on Old County Road dropped 18%.

Councilor Valli Geiger reiterated that the tax rate would decline under the revaluation and that many homes that had some increase in value would not see an increase in taxes. She said the letter sent out by KRT to homeowners with the new proposed valuations did not point out that fact which caused property owners to be needlessly frightened and upset.

"As always, a revaluation is a double edged sword. It is great after decades of very slow increases in property values, that people are seeing a real increase in the value of their homes. But, if you have no interest in selling, a sudden dramatic increases in your house’s value means you are looking at much higher property taxes. This is the result of the clear gentrification we are seeing in walkable parts of town and in the South End," Geiger said.

Geiger's home off Broadway had its valuation drop 5%.

Mayor Lisa Westkaemper did not respond to an email request for comment on the revaluation.

Westkaemper's properties on Broadway saw increases of 12% and 20%.

Councilor Ben Dorr's home off North Main increased 16%.

Property tax in Rockland, and many coastal communities, is a sensitive subject as those communities receive less state education aid because the state funding formula provides less money for property wealthy communities. If a community receives less state aid, it is more dependent on property taxes to pay for its schools.

A March 9 article by Tracy Gordon of the Tax Policy Center Urban Institute and Brookings Institution discussed whether the property tax is a regressive tax that places an unfair burden on people with lower incomes.

"The first goal of the property tax is to generate revenue for local governments to do stuff — like providing schools, roads, parks and police protection," Gordon stated.

"But that’s only one goal of tax policy. Another is equity, and this is where the property tax gets tricky. The fairness of the property tax depends on what kind of tax you think it is.

"Is it a tax on consumption (your cost of living in a house)? If so, the tax is regressive, because housing costs take a bigger bite out of low-income household budgets. Especially if the property tax gets passed on to renters as well as burdening homeowners, we also need to consider what counts as income. Are students or seniors with low current earnings but higher lifetime incomes really 'poor'? Or is the property tax a tax on capital (your return to owning a house)?

"This kind of tax would be progressive on average (because capital owners tend to be wealthier), but places with higher-than-average property tax rates may see these higher taxes reflected in lower land prices or reduced wages, and that would dampen progressivity.

"What about the entry fee theory that says the property tax is the price of admission for living in a community and consuming all those services, like K-12 education and police protection, the local government provides?

"Progressivity is complicated here, too. Low-income families with lots of kids consume more in government services (such as K-12 education) than they pay in taxes. Yet a high-quality K-12 education system benefits many others besides students, including employers and, by increasing property values, higher-income homeowners," Gordon stated in her article.

The most recent property tax review by the Maine Bureau of Revenue Service found Rockland had the 32nd highest tax rate in Maine when all properties are adjusted to 100% of their value.

That review, however, does not take into account income. Rockland's household median income in 2018 was estimated at $41,308 compared to a state median of $55,425, and a national median income of $60,293. This means Rockland residents are paying a larger share of their income for property taxes than residents in many more Maine communities.

This year, both the City Council and Regional School Unit 13 Board approved budgets that will require slightly less property taxes for property owners. Knox County's budget resulted in Rockland paying slightly more for county services.

Rockland is projecting to send out bills totaling $19.1 million for 2020-2021. Of this amount, $10.6 million (56%) will go to the school district. Another $7.3 million (39 percent) goes for municipal services. $1.1 (5%) will go to Knox County.

RSU 13 officials have repeatedly pointed out that if the state education formula factored in a community's median income, the district would receive millions more in aid, thus reducing the property tax rate in communities including Rockland.

For every $771,000 in additional aid, the property tax rate would drop $1 per $1,000 of assessed valuation.

(Correction: The original article incorrectly stated that Mayor Lisa Westkaemper's properties and Councilor Ben Dorr's property decreased in values. They, in fact, increased. Westkaemper's properties on Broadway saw increases of 12% and 20%.Councilor Ben Dorr's home off North Main increased 16%. It was a reporting error).

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Comments (29)
Posted by: ananur forma | Aug 01, 2020 19:58

Perhaps each new homeowner in the South End would like to help out by picking a resident and paying their property tax increase to be neighborly?



Posted by: ananur forma | Aug 01, 2020 18:41

terrible infestation of wharf rats in the South End, is this a bad rumor. or true?



Posted by: Richard McKusic, Sr. | Aug 01, 2020 15:09

Many of us, here in the Southend of Rockland, have lived in our homes fifty plus years and to see taxes go up this way is excruciating for those of us who would like to spend our remaining time in them.  Not sure if that will be possible for many of us.  Hope that a resolution can be found that is equitable and helpful.



Posted by: Stephen K Carroll | Jul 28, 2020 07:42

I don't know about you, but I often find reading the comments far more entertaining than the story, which can be cluttered up with useless facts.  I many times base my literature on what I learned from famed journalist Emmett Merra who said: "never let facts interfere with a good story"  and by the way Mr. Marshall announcing a decrease in councilors property values did come from the story before Steve corrected it.  Bottom line residents are pissed off by their new valuations, as they should be, however not much can be done as our town becomes a sea side resort and more attractive to the 1% ers.  So I say let the dancing peasants rebel, the lords and lasses care little about listening to their commotion.



Posted by: Valerie Wass | Jul 27, 2020 06:57

Do not use the city of Rockland's website to email anyone.  It does not work.  Ed and Nate did not receive my emails.  I am letting this issue go.



Posted by: James Clinton Leach | Jul 26, 2020 07:25

Hey Steve no worries about the $74,000.00 that’s exactly how much our taxes when up..



Posted by: Stephen Betts | Jul 25, 2020 13:33

Thank you Jeanne. You are correct. I reversed the numbers for Mayor Lisa Westkaemper's and Councilor Ben Dorr's properties. I have corrected those numbers. Both their assessments increased. Thank you for pointing it out to me.



Posted by: THOMAS MARSHALL, JR | Jul 25, 2020 12:43

From Jeanne Marshall - I can't believe the bad facts that get printed and the bad facts in the comment section and how people just make things up!  Some just inaccurate and nasty.  Unless I am looking at the wrong table Mr. Betts, three of the City Counselors values went up!  Make a note of that Mr. Carroll and check your facts.  Perhaps in any future comments, because I'm sure there will be many,  you can back up your comments with the real facts.  The two properties for the Mayor went up.  The left column of values is the 'old value' and the right column is the 'new value' .  Old value - 113,500, new value - 125,600.  Old value - 186,800, new value - 221,000.  Last time I looked at our numerical system, that new value is a bigger number than the old value.  The four counselors now - old value 192,000, new value 278,300, so that one is up; old value 159,000, new value 184,600 so that one is up.  I count three that went up Mr. Carroll.  So if there are five on the City Council and three went up how do you get four that decreased.  (5 take away 3 = 4?).  I don't think so. The other two went down by small percentages - old value 185,500, new value 176,600, that one is down, oh my, by 5%; and the last - old value 197,600,  new value -161,400 down by a whopping 18%.  Next time you complain about your increase in a public forum maybe you should get proof that it is a justified complaint and provide a list of the criteria used to compare properties for your property vs. Mr. Glaser's and stop thinking it is all location or lack thereof.  Being able to throw a stone to his place I doubt is part of the criteria.  And, by the way, how many other people in this city had decreases of 5% and 18% to make you think that it is so unfair to have city counselors fall into those same decrease values? First figure out the 'old value' column vs the 'new value' column before trying that exercise.  Any other whining comments below should make note of the facts and this assignment too.



Posted by: Valerie Wass | Jul 25, 2020 08:47

Still waiting to hear from the city councilors..........

 



Posted by: THOMAS MARSHALL, JR | Jul 24, 2020 14:02

In early 2019, the Council supported Ordinance 48 which would have increased residential units in Rockland. The landed gentry came out to fight it with postcard lies and threats of lawsuits, so the Council withdrew 48 to take it up the battle another day.  Meanwhile the real estate market has a raging price growth rate of 17% annually, so values went up but housing units did not — a perfect storm for gentrification by supply and demand.  At the same time, the RSU 13 budget increased to $31 million and now approved by RESIDENTS for $32 million.  Residents fought the Council and then voted in increased taxes.  Now people are unhappy. Am I missing something?



Posted by: Francis Mazzeo, Jr. | Jul 24, 2020 10:54

Valerie...might as well email one of my dogs as a councilors... you'll get the same response.



Posted by: Francis Mazzeo, Jr. | Jul 24, 2020 10:53

We shouldn't be taxed out of our homes. As far as what people will pay for a property is usually between the buyer and seller. I am extremely positive that nobody on this planet is going to pay the assessed value for this property, especially since a rundown house abuts mine.People can write in and explain what I already know about taxation of properties but that doesn't make it right that people are forced to leave their long time homes. This is just another way to appease these monied people that can afford to live in one place. Reevaluate and divide  the total among those that have it to spend.



Posted by: Valerie Wass | Jul 24, 2020 09:32

My apologies to the city officials in my previous comment about them putting money into their own pockets.  This re evaluation had nothing to do with them and it was not fair to them for me to post such a mean comment.



Posted by: Valerie Wass | Jul 24, 2020 09:32

My apologies to the city officials in my previous comment about them putting money into their own pockets.  This re evaluation had nothing to do with them and it was not fair to them for me to post such a mean comment.



Posted by: Nathan Kroms Davis | Jul 24, 2020 08:30

Ms. Merriam, I resigned from the Board of Assessment Review once I was elected to City Council, and the vote to engage KRT happened before I was elected.



Posted by: Amy Files | Jul 23, 2020 19:09

I'm a little surprised at some of the comments here re: Council and staff. Re-evaluations must be done -- periodically -- to ensure that values are based on up-to-date and accurate numbers. That is really out of Council's hands. It's not their fault the evaluation was needed and it's not their fault that the results are what they are. No one on staff or Council is "pocketing" money -- it's wildly irresponsible to suggest this. Council is barely paid and they certainly aren't going to profit off of a reevaluation. It shouldn't be "curious" that some councilor's properties went down in value -- you can look more closely at their properties/neighborhoods to better understand the particular property's circumstances or call KRT yourself to find out why -- but the reason has to do most significantly with how the land is currently valued in different neighborhoods. Let's not start conspiracy theories based on nothing. It's not helpful or productive. And lastly -- Davis was to be on the board of assessors (sitting Councilors can't continue to serve on boards). There is no "conflict of interest" in having volunteered on any particular board and then participating in a decision that may cross over with that board as a councilor -- serving on a prior board creates more educated and informed councilors. A conflict of interest is when a Councilor serves to personally gain from something. Having had experience on a board and then serving as a Councilor afterwards isn't a conflict of interest by any definition. If you are concerned about this issue -- focus on solutions -- pointing fingers and suggesting somehow that Council wants to increase our taxes ( the same council who -- for the first time in years -- has cut our taxes! ) is not helpful or accurate. They are doing their job by having this evaluation done. The final numbers and resulting tax increase have not been set or approved yet. And I believe that ALL of the councilors are interested in finding solutions to help offset large increases to households not in a position to afford it -- we should all be supporting them in finding these solutions. They are simply volunteers who we've elected. They depend on our community to provide feedback, research and ideas.



Posted by: Kendall Merriam | Jul 23, 2020 17:31

Mr Weinand: Reverse mortgages have a number of risks. While the senior home owner can get money out of their home's equity while living there until their death (which few home owners are able to do), reverse mortgages are often predatory, with compound interest that can balloon out of control, meanwhile the home owner must continue to pay the property taxes, maintenance and insurance. Then, their heirs find that the home's actual value has diminished due to the home equity loan. A loan is a loan no matter how its characterized.

Mr. Davis: You are on the Rockland Board of Assessment Review and also, as a city counselor, voted to have all city properties re-assessed by KRT Assessors. I think I detect a strong conflict of interest in your dual roles.

-Phyllis Merriam.



Posted by: Gerald A Weinand | Jul 23, 2020 17:14

One thing the City could do to ease these shocks to perform a re-evaluation on all properties on a much more frequent basis. While I was a renter in Camden in 2005, I recall the same outrage from the new assessments at that time, as it had been something like 20 years since the last one. I see no reason why this work couldn't be performed every five years, on a predictable schedule.



Posted by: Gerald A Weinand | Jul 23, 2020 17:07

Mrs. Palvakis:

The idea of delaying the increase in taxes due to increased valuations on primary residences of seniors has been thought of before. This would allow seniors to live in their homes until their passing, at which time the increased tax would kick in. This places a burden on other, younger property owners, but my guess is that many would be willing to do so.

Of course, the increase in your assessment means that there is an increase in the value of your home, which you or your heirs will benefit from on the sale of your home. Some seniors even take advantage of reverse mortgages to take the value out of their homes now.



Posted by: Nathan Kroms Davis | Jul 23, 2020 16:46

Valerie, it doesn't appear that I have received the e-mail you referenced in your comment. Could you please try sending it to me again? I'm afraid I don't have your contact info. Also, feel free to call me at 691-5864.

Kendall, it's a tough problem, and I'm still working on it. I'm sorry I haven't made more progress. The revaluation has motivated me to move faster to try to address issues of affordability and equity. I will do my best.



Posted by: anne pavalkis | Jul 23, 2020 14:00

Thanks Steve, for writing this wonderful article. I am the winner of the evaluation increase at 91%.It was quite a shock as I have only won 1thing in my life,a cookbook. We moved here when the South End was undesirable.I taught at South School, raised a family and have lived in this old house for 42 years. Now, I am a widowed retired teacher on a fixed income thinking I was secure in my home. I understand reasonable evaluations and tax increases. I’d like to see property taxes take in account household income levels. This would make it more equitable for all Rockland residents who are not at the same income level as that of the new part time residents of the South End.



Posted by: Valerie Wass | Jul 23, 2020 13:52

We can complain here on Village Soup all we want.  Call the number in your letter to set up a phone conference.  I did yesterday morning and the young lady, she sounded young, was so polite and patient.  Email your city councilors and let them know your concerns.  Yes, I complained on here but I have call the company and have a phone conference set up and I just emailed (nicely) the city councilors.  Good Luck



Posted by: Gerald A Weinand | Jul 23, 2020 13:39

The City has little control over the increase in real estate prices that occurs via supply and demand. As is made clear in this piece, assessments are based in large part on the amount buyers are willing to spend on neighboring properties.

One thing that the City can address is the likely loss of apartment stock. Many de facto apartment buildings in Rockland are in fact single family homes that have been cut up into two, three or more units. My own house had at one time been converted into an over-and-under duplex, and then unconverted before we purchased it. These "unconversions" are likely to increase as demand for single family homes increases - this very thing happened in Camden 15 to 20 years ago.

The City can change zoning to allow for developers to construct apartment buildings, ones actually designed for the purpose. The Council could adopt the Neighborhood Business Zone, which has been sitting collecting dust for eight years in the Manager's office, and apply this zone to Maverick Square (where it was intended), and the south side of Park Street between Union Street and Broadway. This zone allows for 3-story buildings, with the first floor to be used for commercial and retail space, and two floors of apartments above. And I'm not talking about subsidized housing, but so-called work-force housing. With the rents I've seen advertised, I would think the numbers now work.



Posted by: Valerie Wass | Jul 23, 2020 13:33

Here are the email addresses for our skunky smelling city personnel:

lwestkaemper@rocklandmaine.gov

vgeiger@rocklandmaine.gov

bdorr@rocklandmaine.gov

eglaser@rocklandmaine.gov

ndavis@rocklandmaine.gov

or general email:   info@rocklandmaine.gov

 

 



Posted by: Valerie Wass | Jul 23, 2020 13:28

Plain and simple, we, as tax payers are getting kicked in the purse while our city officials are still putting money into their pockets.  If it is a sunk, it will smell like a skunk!!!

 



Posted by: Kendall Merriam | Jul 23, 2020 11:46

City councilors' comments of "concern" about Mechanic Street's long time residents and natives homes' sky-high re-assessments don't pass the straight-face test. And Davis: How is your plan for "affordable housing in Rockland" going?



Posted by: Stephen Betts | Jul 23, 2020 10:11

Steve, Here is the first article concerning the revaluation. https://knox.villagesoup.com/p/rockland-mulls-updating-property-values/1812261

And then there was a line in the budget passage article about the revaluation money. https://knox.villagesoup.com/p/rockland-oks-budget/1820778?cid=1800726



Posted by: Cindy York | Jul 23, 2020 09:53

Thank you Mr Betts for this informative article.

 

 



Posted by: Stephen K Carroll | Jul 23, 2020 08:42

Steve Betts:  could not locate courier story on City Council authorizing city wide Re-valuation.  Would like to know the vote.  Todays story seems more like political posturing after the fact.  If the Council supported spending $74,000 to hire a firm to re-val the city, it seems a little foolish they could not have known the expected result.  I find it curious that four of the five councilors saw a DECREASE in their valuations.  I can throw a rock and hit Eds house from where I live yet my property saw a 25% increase in value and ED's went down. I also have a convenience store across the street ( so of course my house would be worth more).  Difficult to discuss closing the barn door as the horse is running down the road.  Think we are all screaming into the wind at this point.  Councilors have opened Pandora's box and now must face the results.



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