ROCKPORT, Maine — Unlike other coastal communities where the price of waterfront properties are still on the rise, owners of such properties in this town will see a significant tax cut — some in excess of $10,000 — as a result of a recently completed revaluation.
A revaluation of Rockport properties that began in February found the town had been assessing waterfront land well in excess of its market value. The adjustments shaved $41 million off the town’s overall valuation of slightly more than $1 billion, according to Rockport Assessor Kerry Leichtman.
The revaluation of the community, done by KRT Appraisal of Haverhill, Massachusetts, was based mostly on property sales over the past two years, though appraisers had to go back three years to examine waterfront property transactions because there were so few, Leichtman said.
The last time Rockport had a revaluation was in 2005, before the real estate bust of the Great Recession, which began in 2007. But an official with the company that performed this year’s revaluation said that the assessment on waterfront land in Rockport was too high even before the recession.
Rob Tozier, vice president at KRT Appraisal, said waterfront land has been overvalued here since the last revaluation a decade ago. He said that back in 2005 there had been no recent sales of waterfront land in neighborhoods with large lots. Because of that, the revaluation firm at that time used sales in the Rockport Harbor area of town to help set values for other waterfront land. That led to values that simply have proven to be too high.
He said that a lot of the larger residential waterfront land in Rockport has been in the same families for generations and never put on the market, which is why there have been few sales.
“This was just a real unique situation,” Tozier said.
Leichtman disputed Tozier’s characterization of the situation, stating that not all Rockport waterfront properties had been overvalued since 2005. The assessor said there were four sales in the past four years — two for much less than their assessed value and two well above assessed value. He said these sales showed how difficult it was to make valuation decisions.
Efforts to reach Leichtman and Tozier to clarify previous statements on Tuesday afternoon were unsuccessful.
Leichtman said that a parcel of land on Beauchamp Point illustrates the reason for the decline in values. The undeveloped waterfront parcel, slightly larger than 1 acre, has been assessed by the town at $2,315,000. The property has been marketed for sale for more than two years but there have been no takers and the asking price has dropped to $995,000. That parcel has been re-assessed by the town for taxation purposes to less than $1.4 million.
That reduction in assessment means the property owner will see a tax cut of $11,000 — with the property tax bill plummeting from $30,071 to a projected $19,099.
Another parcel with a home on Calderwood Lane will see its assessment drop from about $3.1 million to less than $2 million. That person will see an expected tax bill drop of nearly $14,000 — from $40,904 to $27,185.
The biggest drops are for properties along Calderwood Lane, Beauchamp Point Road and Hayfield Way.
The anticipated sale of a 45-lot, 116-acre oceanfront development at Brewster Point earmarked for a subdivision also will cause a reduction in local valuation, according to town officials. The property has been on the market for $8 million, but is assessed for taxes by the town at $30 million. An unnamed buyer is close to purchasing the entire property to create a single family estate, according to town officials. Since the buyer is seeking to dissolve the subdivision to revert the land to a single parcel, the valuation likely will go down, according to Leichtman.
Tozier said last week that the reduction in valuation of waterfront properties will shift some of the property taxes from the waterfront to inland lots, particularly west of Route 1. The KRT official said, however, that waterfront landowners have been paying more than their share for the past 10 years.
Even with the shift, Leichtman said his analysis shows that 72 percent of property owners will pay less in property taxes and 9 percent will see no change. The remaining 19 percent of property owners will see some increase. Leichtman said he has projected that 495 taxpayers will see an increase of less than $100 in their annual tax bill, another 367 will see an increase of between $100 and $200, and 877 property owners will see increases of $200 or more.
The formal tax rate will be set in late August. But the rate is expected to rise, at least by 4 percent, because of the loss of valuation. Municipal, school and county budgets already are established for this year.
KRT began sending notices of the new values to property owners on July 15. The new proposed Rockport values also are posted on KRT’s website.
Taxpayer meetings will be held in the Richardson Room of the town office during the last week of July. The date will extend into August if necessary, the assessor said. KRT will schedule the appointments and meet with the taxpayers. KRT also will offer email meetings, according to the town.
Michael Rogers, municipal services supervisor for the Maine Bureau of Revenue Services, said that based on his review of assessment information from Maine communities, the sharp drop in Rockport waterfront land is an aberration compared with other coastal communities.
He said valuations are recovering from the recession, particularly in southern Maine up through Lincoln County. Sale prices for waterfront properties have not returned to the price levels they were at before the recession but have slowly risen at other locations along Maine’s coast. He said sale prices go in cycles and that recoveries in sales prices and values generally start in southern Maine and move north.
Bob Gingras of Russell/Parker Appraisal Co., based in Kennebunk, said that of the 29 towns that he assesses, he has not seen such a sharp difference as is being experienced in Rockport. The towns he works with include the waterfront communities of St. George, Bristol and South Bristol.
“Generally in good times, the price of waterfront land will go up more but when there is a drop it generally is consistent across the towns,” Gingras said. He said the valuations of the communities he works with along the coast all have continued to rise in the last several years.
“Sales are sales. You have to hang your hat on them,” he said.