Rosanne Graef said she expected the city’s long-overdue revaluation process to result in a higher assessment of her West End property.
But she wasn’t expecting what she got.
The assessed value of her multi-unit building on Salem Street more than doubled from $310,000 to $826,000. She said her property taxes jumped more than 60 percent, an annual increase of about $4,000.
“I expected it to go up, but I never expected it to go up that much,” Graef said. “I had been prepared for around $600. … So, I was really surprised.”
Graef said she’s heard similar reports from other property owners, and the only ones she’s heard that actually went down are from condo owners.
“People are understandably upset,” she said. “Especially, there are some people who have multi-units, and they’ve all gone up. They’re owner-occupied units, which is a totally different story than when you have an apartment building owned by an absentee landlord.”
Graef has a tenant on the first floor of her building. Since buying the home in 2005, she has had just two tenants; the current occupant is disabled, so the unit is governed by Section 8 rules.
“I’m going to have to raise it some now, but not the full amount I could,” she said. “Because anything I do impacts my tenant. When you’re owner-occupied, it’s a different ballgame. It’s not just a business or something like that, you’re providing a home for someone. And that person is there for you as well.”
Fair market value
Portland waited 15 years to complete a revaluation of all its residential and commercial property – five years beyond the state’s maximum interval. It was also delayed by the coronavirus pandemic.
Tax Assessor Christopher Huff said there are a lot of elements in the revaluation process the city felt good about, including the rate of return on mailers sent to property owners dating back to 2019, and the traffic on the website the city deployed to get information out. But it’s not all good news, he said.
“Inevitably the worst part of the process is hearing some of the situations that people find themselves in,” he said. “It’s great when your property increased in value and your investment increased in value, but it’s only so good. If you’re not looking to sell, the only thing you’re looking at is increased tax value. And for people on fixed incomes, that’s the hardest part of the process.”
Huff acknowledged Portland was well below state standards for completing a revaluation, and this process gets the city back into compliance. The City Council also recently approved a resolution to complete a revaluation every five years instead of the customary 10. But in the 15 years since the city last performed this task, Huff said, parts of the city – particularly the peninsula – have seen property values increase significantly.
“Certainly I don’t think it was a secret that assessed values on the peninsula prior to this were the farthest away from market value,” he said. “To bring them up to 100 percent, they saw larger jumps than other parts of the city. Everybody saw an increase in their value, some saw increases in larger percentages.”
Huff said there are properties around Portland that have doubled – and in some cases tripled – in value. Accordingly, some residents’ property tax bills have doubled too.
“The old valuation was based on a number that’s 15 years old,” he said. “Now all our values reflect the current market for April 1. … So all values reflect fair market value.”
‘Tossing them into a volcano’
Wayne Valzania, president of the Munjoy Hill Neighborhood Association, said Hill residents are stressed.
He said residents from younger renters, to owners of single-family homes, and retirees who own multi-unit rentals. And those older property owners are more likely than not on fixed incomes, meaning an increase in property tax gets shifted elsewhere, even though they most likely don’t want to raise rents.
“So, what happens when there’s a massive increase in taxation in a very specific area, it upsets that ecosystem,” Valzania said. “It’s like dumping a quart of bleach into an aquarium.”
He said he’s been hearing retired property owners are “totally freaked out, in tears, knowing they can’t afford the increase,” which creates a troubling scenario: continue to try to age in place or be forced to sell in a market where housing demand is limiting availability and pushing prices to new highs.
“For them, starting over, they’re typically not in top form either,” he said. “It’s a massive thing. It’s absolutely like tossing them into a volcano.”
It places a burden on renters, too, he said. If rents go up, tenants may not be able to continue to afford to live in an already expensive city and may be forced to live elsewhere and become commuters.
“Folks in the middle like me, we took a huge hit,” Valzania said. “We’re grownups and we live and die by a budget of sorts. We’re going to see property taxes (increase by) $1,000 a month going forward. That’s huge. You can buy a lot of stuff with $1,000, and do it 12 times a year. … There’s not a lot of people happy. A lot of people are going to appeal.”
Valzania, whose home is on Merrill Street, said there was an expectation on the Hill that most homeowners would see a 30-50 percent jump in value.
“We’re seeing a lot of 100 percent (increases),” he said. “It’s a cold, hard reality that people are trying to figure out how to cope with.”
Valzania said the mood of Munjoy Hill property owners is “general discontent and unhappiness.”
“The residents are a huge part of the fabric of these neighborhoods, and to not respect their situations or take those into consideration, it’s kind of odd,” he said. “I get hiring someone to do an assessment and stuff, but at the end of the day there are people who live here who need to be considered.”
‘It’s kind of all over the board’
Ronald Gan, a real estate developer and Munjoy Hill resident, said he owns a six-unit building on the Hill that “basically tripled in value” after the revaluation.
“Which is not unusual, since it has been ridiculously low for all these years,” he said.
Gan said he also owns a couple of single-family homes, and the property taxes on those went up between 30 and 40 percent each, or an additional $2,000 and $3,000 respectively. Which he said isn’t as bad as some surrounding properties.
“It’s not a killer,” Gan said. “When I looked at our buildings compared to others like mine, single-family homes, other people got dinged much harder. It’s kind of all over the board, and nobody really understands how they came to some of these numbers. In some cases, I’ve seen valuations lower than what someone paid. And then others substantially higher than what someone paid. You’re swimming in a very dark lagoon.”
Gan said the property revaluation was “not welcome news,” but he was also surprised how many property owners around the city didn’t seem to pay attention to the issue or weren’t prepared for this possibility.
“If you’re not going to generate revenue, you need to get it another way, and this was a long time coming,” he said of property taxes. “To avoid this in the future, maybe (Portland should be) coming up with new revenue sources.”
Gan and Valzania come down on different sides of what this revaluation could mean for the future of development in the city.
Valzania, who supported the recently enacted Munjoy Hill Historic District, said new development has only served to drive up property values.
“It’s demand and development,” he said. “Developers have profit as a primary interest, and secondary is their reputation. But there’s a lot of collateral damage, in increased property values.”
The collateral damage, he said, is often people being forced to move because of these increased costs.
“I think a long, hard look has to be taken on the city’s attitude toward allowing the development of large projects,” Valzania said.
Gan, meanwhile, said the increased property values only add to the city’s already confounding attitude towards development. He said beyond just property values, the city needs to discuss land-use code, the historic district, overlay districts, and all the things that reduce the amount of land available to be developed – not just on Munjoy Hill, but around the peninsula.
“It makes it harder, it makes it more difficult,” he said.
Gan also pointed to the Green New Deal – the ordinance passed last fall that changes Portland’s green building codes, requires contractors to pay higher wages and hire a percentage of workforce employees as apprentices, and requires construction to align with the 2019 Maine Uniform Building and Energy Code – as an inhibitor for creating new housing.
“We’re stuck,” he said. “There’s no desire to create new housing anywhere in this town from any group of people because if there was, we would be doing so.”
Gan also admitted the revaluation is likely to be passed off to renters, who really have nowhere else to go. He said decisions like the Munjoy Hill Historic District, which he opposed, contribute to skyrocketing rents.
“More people want to live here in town, there’s less land, and prices go up,” Gan said. “… This has finally hit the rental market. All of the things that have been done, whether rent control to resistance to using more land for housing, those two issues converged around a barrel and now we have a worse crisis. Rents are going up, there are higher taxes, and we don’t have a desire to build more housing.”
The city’s rent control ordinance, which was one of several citizen initiatives backed by the progressive group People First Portland last fall, caps how much a landlord can charge a tenant, and prohibits rent increases beyond 10 percent a year. Landlords who don’t raise the rent in a year can bank those increases for future use.
In addition to rent control, the city also formed a Rent Board, which will hear tenant-landlord disputes and will also handle requests from landlords for rent increases.
Brit Vitalius, president of the Southern Maine Landlords Association, said there’s definitely been an element of “sticker shock” for landlords regarding the revaluation notices. He said many owners of multi-family buildings saw their property taxes increase 50-100 percent, while the same wasn’t true for single-family homeowners or condo owners.
“While we’re not necessarily disagreeing with the values, there’s a question about the different sectors in the market,” Vitalius said.
He said he plans to conduct an analysis of the value of single-family homes relative to their sale prices, and compare that to condos and multi-units, to see if there is a disparity. Landlords, he said, are not disputing that property values are up, and are willing to pay their fair share.
But landlords are in a state of confusion, he said, which is complicated by the city’s rent control ordinance. Under the new rules, he said, landlords may feel they have to take the opportunity now to raise rents, since increases are capped.
“I think this will fall to tenants more than before rent control,” Vitalius said. “It’s not creating housing or lowering rents. I think we’ll see it passed more directly onto tenants.”
He gave an example of a landlord he spoke with, a retired teacher who owns a six-unit building where rents range from $850-$950 per month. Her taxes doubled from $6,000 to $12,000.
“She knows she has to pass that onto her tenants,” Vitalius said. “Her tenants have had the advantage of a landlord who wouldn’t raise rents, and now she’s hit with a big tax increase. When that room turns over, she can only raise rent a bit. She has to take all 10 percent now. Otherwise, she’ll fall so far behind she can’t catch up.”
The appeal process
Kim Sutton, president of the West End Neighborhood Association, said taxes on properties she owns doubled from $9,000 to $18,000.
“So it’s pretty significant for some of us,” she said.
Sutton said she’s successfully gone through the appeal process, which is an avenue residents have to challenge the city’s estimated property values. She was able to get two of her buildings reduced, and encouraged other residents to appeal their assessments.
“You have to give evidence,” she advised. “You can’t just say I feel like my house is worth less. You have to have concrete examples.”
Huff, the tax assessor, said appeals will be heard through Aug. 6. As of July 13, he said 850 people had filed.
“Right now, we’re where we thought we’d be, maybe a little less,” he said. During the last revaluation process, 15 years ago, Huff said there were about 3,500 informal appeals.
Property owners, meanwhile, continue to have questions about how the city and its contractor, Tyler Technologies, came to the figures they did.
Valzania, for example, said when he had his informal appeal meeting, the assessor’s office had assumed, based on his appraisal value, that his home had waterfront views. However, at the corner of Merrill Street and Cumberland Avenue, he’s not on the water.
Valzania said he understands the city staff is just doing their job, so he didn’t want to be confrontational during the appeal. But his home is not finished, he’s continuing to work on it, and he said it was significantly overvalued.
“Ours almost doubled, we took a significant hit,” he said. “But the assumption that we are on the water says something.”
Graef, the West End resident, said she has scheduled an informal appeal and has questions about how her building was assessed.
“Nobody ever came to our house,” she said.
She added there were mistakes in the descriptions of the property, such as the quality of how the home was built and the conditions inside.
“Is this all based on square footage?” she said. “We’ve had renovations done to the house. It’s old. When they did the renovations they found dead animals in the walls that had been there for who knows how long. And is there any consideration for the quality of construction?”
Graef also questioned the city’s decision to wait so long to conduct the revaluation in the first place, and then send these notices out when people are still struggling financially from the impacts of the pandemic.
“There’s a lot of people that are really very upset,” she said. “I’m retired now, and there’s a lot of people here who are retired. Portland made this big deal of ‘we’re such a great city for retirees’ and people have come here for that, a lot of them come from places where they make a lot more money. I was a public school teacher. When you look at a pension or retirement savings, and project how much is now going to be sucked up by property taxes, you really question how age-friendly it is.”
Huff said final property values will be established after appeals are decided, which then allows the city to commit the tax roll.
“We’re expecting a 77 percent increase in the total taxable value,” he said.
The 2022 budget calls for around $191 million in property taxes. That’s divided by the new total taxable value, which is around $14 billion, up from the roughly $8 billion it was prior to the revaluation.
That will result in an overall tax rate decline for fiscal year 2022 of $9.82, to $13.49 per $1,000 of assessed value.
Munjoy Hill neighbors challenge Montreal Street condos
A group of Munjoy Hill residents has challenged a proposed Montreal Street residential project that would create nine condominium units in a four-story building.
The Planning Board was slated to hold site plan and subdivision review of the proposal for 33-37 Montreal St. last week, but the item was postponed.
City Planner Andrew Tufts said the delay was because there was “some confusion over the number of proposed units.” He said postponing gave the applicant, 37 Montreal Street LLC, more time to update materials and have them reviewed by planning staff.
The property is in the R-6 zone and within the Munjoy Hill Neighborhood Conservation Overlay District. It seeks to use provisions of the overlay to create workforce housing.
The Planning Board held a workshop in September 2019 on the project, which is subject to an older version of the city’s land-use code because the application came before Dec. 1, 2020, when the board adopted an updated version of the code.
The project calls for a 23,400-square-foot building on a nearly 11,000-square-foot parcel at the corner of Montreal and Willis streets. The property is currently developed, with three vacant single-family homes. It is bordered by the MacArthur Gardens Apartment complex to the northeast, and single-family homes to the east, south, and west. The 14-story Promenade East Condominiums Tower is 200 feet north on Walnut Street, neighbored by the Island View Apartment Complex.
The Munjoy Hill Neighborhood Association, however, opposed the project in a letter to the Planning Board and Planning Department. Wayne Valzania, president of the association, said the project is “large, it is box-like, and it is incongruous in this setting.”
“It detracts rather than adds to the aesthetic, and it forever alters a neighborhood that has grown organically and is loved by its residents,” Valzania wrote. “There will be no wood, eaves, gables, or any of that nonsense, just tall flat facades, and rooftop appurtenances that if allowed will rise forty-five plus feet above the neighboring houses.”
— Colin Ellis