By Ward Peck

Editor

    Do you miss the days when home values increased by
double digits in a year? For Cape Elizabeth homeowners, fiscal year
2007-2008 will be such a year, sort of.

    Beginning this summer and continuing into next
winter, the Cape Elizabeth Assessing Department will be busy updating
the assessed values assigned to each property in the town. It is the
first such update since a major revaluation project was undertaken in
2003. According to Town Assessor Matthew Sturgis, in the four years
between the 2003 revaluation and now, home sale prices have increased
to the point where the assessed value of the average home in Cape
Elizabeth represents only 66 percent of the fair market value. Sturgis
said the state requires towns ensure assessed values on properties
represent “just value” and that the tax burden is equitably distributed
among all property owners. He said the state uses an assessed value/
market value ratio of 70 percent as the lower limit before it begins
penalizing a municipality for not keeping assessed values up to date.
If a municipality falls below the 70 percent threshold, the state will
withhold money in some revenue sharing programs such as the “circuit
breaker” property tax rebate, Sturgis said.

    While the town’s assessed value has technically
fallen below 70 percent, it has not yet been penalized, due to an
allowance in the rules that allow the assessor to declare a ratio that
is higher than his calculations indicate.

    Sturgis said, unlike the 2003 revaluation, the
increase in values has been largely proportional throughout town, with
he exception of several “hot spots” such as the northeast corner of
town and the Two Lights neighborhood. The 2003 revaluation
significantly shifted the tax burden toward the waterfront, while the
last four years home prices have largely increased at the same rate
throughout the town, he said. Sturgis said the northeast part of town,
near the Shore Road Fire Station, was largely unaffected by the 2003
revaluation and has started to catch up the rest of town in the last
few years.

    The assessment update will also differ from the
revaluation in methodology. As opposed to 2003, Sturgis said he will
not be visiting all 4,350 parcels of land. The work involved in the
update will largely be done within town hall and will involved
researching and reviewing several sources of data such as home sales
and construction costs.

    While an increase in assessed value does not
necessarily lead to an increase in property taxes, experiences for
individual property owners will vary. Those whose assessed home value
increases are disproportionately lower than the rest of town will
likely see their tax burden decrease, while those whose values increase
disproportionately higher will have the opposite experience and still
others will experience no change.

    The state maintains its own valuation assessments
and uses that data to determine education funding and revenue funding
formula among other things. According to Town Manager Michael McGovern,
Cape Elizabeth’s state valuation of $1.76 billion currently places it
fifth in a survey of 10 nearby municipalities but first among those
municipalities when the valuation is divided by population. McGovern
explained the high per person ranking can be attributed to relatively
high home prices in the town and the fact that virtually all developed
land in the town is devoted to residential use.

    As a result of the high per capita valuation
($196,879 according to McGovern), the state paid for 17.7 percent of
the town’s school expenses. Gorham, with a per capita valuation of
$88,356, received 65 percent of its education budget from the state.