The Merrill Common Council, meeting as a Committee of the Whole, approved a contract to conduct a revaluation of residential property in the city Thursday.
The city has not done a revaluation since 2000, creating a situation where newer homes are assessed at a lesser rate than older homes, said city Finance Director Kathy Unertl. The city’s assessed value is also out of line with the state-set equalized value. For 2013, the assessed value was at 105% of equalized value. That disparity could climb to 117% for 2014.
“We anticipated that for 2014, the gap will be higher,” Unertl said.
Assessed value is the total of all property assessments in the city, which for last year was $394,235,310. The equalized value, set by the state, is an estimate of the fair market value of all real estate in the municipality. The 2013 equalized value for the city of Merrill was $374,530,100, including property in Tax Incremental Financing Districts (TID).
The state Department of Revenue can step in and force the city to do a revaluation when the assessed varies too far above or below the state’s figure. At 105%, the city is already in danger of being forced to do a revaluation, noted City Administrator Dave Johnson.
The city’s two previous revaluations were done in 1995 and 2000. Both came after assessed value had dropped to less than 85% of equalized value.
The current disparity in Merrill is due to an increasing variance between home sale prices and assessed values. When homes are selling overall for less than their assessed value, the city’s total assessed value can rise to more than 100 percent of equalized value, which considers home sale prices to determine fair market value.
The city would contract with its current assessment company, Bowmar Appraisal, to conduct the revaluation over a two-year period, 2015-2016, at a cost of $133,000.
In addition to bringing the city’s assessed value in line with equalized value, a revaluation would level the field for all property tax payers.
“We do need to make an adjustment,” said Alderman David Sukow. “It isn’t fair to taxpayers in the city. It’s unequal right now and it needs to be re-evaluated.”
Unterl said she doesn’t expect a huge increase in assessments across the board due to the revaluation.
“There’s going to be a shift,” she said. “If you have a newer home, your assessment is going to go up.”
The revaluation plan still needs to be officially approved by the Common Council.