State’s certified values shock some Missoula home, commercial property owners
Some home and commercial property owners in Missoula are facing steep increases in the total market value of their property, and many are concerned over the potential increase in taxes that may come due as a result.
While the later half of that equation will depend on what local governments do during the budgeting process this summer, the increase in values have come as a surprise, leaving one property owner asking, “How can us small Main Street businesses survive?”
The Montana Department of Revenue sent its notice of taxable values out last week.
The total value of the building at 201 W. Broadway, which houses the Import Market, increased $363,000 this appraisal cycle, from $1.38 million to $1.75 million, according to one notice shared with the Missoula Current.
At 120 W. Broadway, which houses Bob's Sew and Vac, the building's total value climbed from $806,500 to $1.27 million. At 115 W. Broadway, home of Office City, the appraisal value jumped $430,000, from $717,000 to $1.14 million.
The increases have small businesses questioning their future as valuations increase. Landlords could raise rent on tenants to cover the increased taxes – if they manifest.
Homeowners also are facing rising values. A two bedroom home on Missoula's south side, for example, saw its valuation increase $30,000 this cycle, according to one notice.
“An increased value does not mean the same increase in property taxes,” said Sanjay Talwani with the Montana Department of Revenue. “That’s because your local taxing bodies – the city, county and school districts – can levy fewer mills to raise the same amount of money when local values increase.”
Across Missoula County, values from tax year 2018 to tax year 2019 suggest the median value of a residential property increased 12.1 percent. Commercial properties saw their median value climb 17.8 percent.
Talwani said the jump in residential properties is based on comparable properties, which are selling for more in Missoula's hot real estate market. Commercial properties are set primarily on the cost of replacing that property.
The increases don't necessary reflect a similar jump in taxes, Talwani said.
“If local budgets were to stay exactly the same, overall taxes paid to those jurisdictions would also stay the same, regardless of an overall increase in values,” he said. “Higher values do not translate to more revenue for your local jurisdictions.”
City officials received their own taxable values last week, and most reported an increase ranging from 1 percent to as much as 21 percent. The city will crunch the city-wide numbers this summer as it enters the budgeting season.
“It's just a lot of work to take someone else's spreadsheet and import all that data,” Mayor John Engen told the Missoula Current. “Our real number is certified by DOR and that happens in August.”
Last August, city and county officials in Missoula were left scratching their head after taxable values came in far lower than projected. The certified figure at one point prompted the city to postpone a budget hearing until it got a grip on the number.
But early indicators suggest that values this year will rise, even if they didn't last year.
“If our office is any indication, we're going to see revenues up,” said Ellen Buchanan, director of the Missoula Redevelopment Agency. “We've had some pretty significant increases.”
The city and county are encouraging residents who feel their values were miscalculated to contact the Department of Revenue.
“The city is not affected much by changes in property values,” said Ginny Merriam, the city's communications director. “What truly affects the city budget is the event that comes in late summer or even early September when the DOR notifies us of our certified taxable values.
“The city is greatly affected by the amount of newly taxable properties – that's what really changes the tax base.”