WHITE RIVER JUNCTION — A new state law is requiring townwide property assessments in nearly two dozen towns on the Vermont side of the Upper Valley to ensure that property values accurately reflect the changing real estate market. The law also requires all towns to conduct future reassessments on a regular schedule; at least 11 of the area towns have not conducted a revaluation in more than seven years.
Surging home prices since the start of the COVID-19 pandemic in 2020 are largely responsible for market values escalating well above where many properties are assessed for tax purposes.
The law passed this spring — H480 — introduces a new phrase into the state’s property tax lexicon: “coefficient of dispersion.” H480 requires a town to conduct a reappraisal if its average change in property values deviates 20% or more from the median change — a measurement known as coefficient of dispersion, or COD.
At a practical level, COD is meant to measure how fairly distributed the property tax burden is within a municipality. “A high COD means that within your town, many people are paying more than their fair share and many people are paying less than their fair share,” according to the Vermont Department of Taxation website.
Orders to reappraise based on COD were mailed this summer to 11 towns in the Upper Valley — Barnard, Bridgewater, Hartford, Hartland, Royalton, Weathersfield, Woodstock, Corinth, Newbury, Thetford and West Fairlee.
In addition to its focus on COD, H480 also creates a requirement that Vermont municipalities reappraise their properties every six years. Under the previous law, towns did not adhere to a set reappraisal cycle.
According to the Vermont Department of Taxes, 50% of Vermont’s roughly 250 municipalities have not conducted a reappraisal since at least 2014, and 107 communities have not completed a reappraisal in a decade or more.
In the Upper Valley, 11 towns have not completed a revaluation in at least seven years — Bethel, Chelsea, Fairlee, Pomfret, Randolph, Sharon, Strafford, Tunbridge, West Windsor, Windsor and Vershire.
With so many Vermont municipalities needing to complete reappraisals, town officials are worried about finding available assessing professionals to perform the work.
Hartford was already planning to do a revaluation in 2025 before receiving an order from the state, according to Town Assessor Rick Vincent. Because H480 gives towns some leeway as long as they are moving toward reassessment, Hartford will not have to change its timeline, Vincent said.
Vincent said he plans to request bids for professional services in the next 30 days, nearly two years before the work will begin.
“If I wait until a year from now, all the assessors will be booked,” Vincent said.
Jill Remick, state director of Property Valuation and Review, said that some towns are reporting that many assessing services are booked until 2027.
A major issue, Remick explained, is the lack of professional assessing services in Vermont — which is largely due to a lack of regular assessing work. The scarcity of vendors, added to the sudden backlog of towns needing services, has created “a perfect storm” scenario.
This is why H480 instituted a six-year revaluation cycle, which is largely aimed to make Vermont more appealing to reappraisal vendors by creating a regular and ongoing demand for services, Remick said.
The new Vermont law is similar to New Hampshire’s, which requires municipalities to reassess every five years. The International Association of Assessing Officers, an organization of appraisal professionals, recommends municipal revaluations every four to six years.
Most Upper Valley towns were already having to do reappraisals before receiving the recent state orders. Weathersfield, which began seeking contract bids a few months ago, awarded a contract on Aug. 7, to New England Municipal Consultants. The reappraisal will begin in January 2024 and conclude in June.
Woodstock plans to begin its reappraisal in 2026, according to town Lister Tim McCarthy. The town has contracted two assessing firms. NEMC will conduct the town reappraisal, and Sansoucy Associates will focus on the complex case of the Woodstock Inn.
Galen Mudgett, a lister in Sharon, said the town would have received an order to reassess under the previous state law, which required towns to reappraise if the differential between the town’s overalls assessments and the actual market values or properties reached more than 15%, a measurement known as common level of appraisal, or CLA.
H480 eliminated the CLA requirement because too many towns that reappraised recently would have been forced to do another revaluation because of the recent surge in home prices, Remick said.
Importantly, CLA only measures the percentage differential between a town’s total assessment and its actual market value. COD drills down and measures how that differential is distributed between individual properties, which helps determine which properties are being overtaxed or undertaxed due to outdated assessments.
What determines the tax impact of a property value change is how that individual change compares to the town-wide average. For example, while the average property value in a town could increase by 10%, those increases aren’t equally distributed. One home could have increased by 15% in value, while another home may have seen its market value only increased by 5%. COD measures these deviations.
Sharon still plans to perform a revaluation in 2025 because its last reappraisal was 12 years ago. Mudgett said the town listers will conduct the reappraisal rather than rely on an outside firm.
Norwich, which last was ordered to do a revaluation in 2021, is already in the process of doing it again. The town has contracted with KRT Appraisal, a firm in Haverhill, Mass., to conduct the work, which started last month.
Interim Hartland Town Manager Martin Dole said the town plans to start bidding for vendors by December in hopes of doing a revaluation within a couple of years.
Vincent, of Hartford, emphasized that state has been very flexible in regard to when towns complete their revaluations, as long as they begin the process. “As long as you have a plan, they are fine with it,” Vincent said.
Patrick Adrian may be reached at padrian@vnews.com or 603-727-3216.