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Realtors: County property taxes driving people away

Jason Ferguson
Published: Thursday, June 13th, 2013

By Jason Ferguson
The ever-increasing cost of having property in Custer County is keeping young people out of Custer County, driving older people out of Custer County and causing the rest of those who live within the county to scratch their heads as to a perceived inequity as to how property is taxed.
That was the message delivered by the “Realtors Tax Force” of Lane Munger, Ramona Flaig and Patty Hauschildt to the Custer County Commission at the commission’s June 5 meeting.
Munger, an associate broker with Western Skies Realty of Custer, said the group wanted to bring the issue to the forefront with the commission and possibly exchange ideas about solutions to the problem. Munger called realtors the “windows of the community,” and said what was once an advantage Custer had in attracting new residents—lower property taxes than other Black Hills communities—is rapidly disappearing. He claimed the way assessments are done in the county leave people confused, uninformed and sometimes angry.
Munger cited many instances in the county where there are two virtually identical homes in neighboring subdivisions, but one is assessed at a much higher value than another. He said those inequities are one of the major problems with the property tax system in Custer County.
“People know what their neighbor’s assessment is,” he said, saying when subdivisions connect, the taxes should be equitable, even if one subdivision is experiencing more sales that is driving up valuations while a neighboring subdivision is experiencing little or no sale activity.
County director of equalization Allison Jensen said it is possible to have two similar properties in different parts of the county with a different tax amount because one is in an area the equalization office has been able to reappraise, while one is in an area the office has not gotten to yet. Other facts, she said, is that one has owner occupied status while another is non-owner occupied. A third reason is one is in town and the other outside of town, and the city mill levy could be the reason that the one in town is higher.
“Our office is bound by state statues in setting property values,” Jensen said. “They say our assessed value should be market value, so what people are willing to buy and sell properties for will dictate our valuations.”
Jensen said when it comes to land values for improved properties outside city limits, the first acre is the home site value. That value is typically higher than the per-acre of that area, since it reflects improvements made to the land, adding water, electric and septic and the remaining acres have a lesser per acre based on the recent bare land sales. There are properties in different subdivisions that are touching but have different per-acre values based on the sales in those subdivisions, she said.
Hauschildt, broker owner at Western Skies, said many properties are unsaleable, pointing to Boot Hill Ranch Estates as a prime example. She said while most of the lots at Boot Hill without homes on them are assessed at $41,000 to $50,000, the most two recent lots sold—both at auction—commanded an average of only around $18,000. She added that paying $10,000 or more in taxes on a home with a fair market value of $400,000 also make them unsaleable, and said the lots at Stone Hill Subdivision “will never sell” with $4,000 to $8,000 in taxes on bare land.
“We will never get any young people (to move to Custer) because they can’t afford the taxes,” she said.
She also said more people will simply throw their hands up and walk away from their land and stop paying taxes on their property because they can’t sell it, nor can they afford the taxes.
“This is not getting better,” she said.
Flaig, owner-broker at Custer Real Estate Sales and Services said from Jan. 1, 2012 to the end of May, there were 14 homes sold at foreclosure. She said such foreclosures are becoming more and more common, and the impacts of those foreclosures are far reaching. Flaig said the foreclosures affect the neighborhood the home is located in negatively, extends the housing crisis and takes a physical and emotional toll on those who are foreclosed on, often uprooting and tearing apart families.
Commissioner David Hazeltine said he agreed the issue was a concern, but said he couldn’t offer any solutions, and, furthermore, wasn’t sure there was a solution.
“It’s kind of scary,” commissioner Phil Lampert said, adding he always dreads looking at his tax assessment each year. He said when he first bought the building A Walk in the Woods is located in, property taxes were $1,000. Those have increased 10-fold in that time.
“Unfortunately, we need taxes to pay for the services we provide (county) residents,” he said. “What the answer is, I don’t know.”
Commissioner Jim Lintz said he didn’t believe the property tax issue was the lone culprit in keeping away young families, saying there was a lack of quality, high-paying jobs in the county as well. He also said much of the blame should be placed at the feet of the Custer School District, which he said gets 75 cents of every dollar in property tax money the county brings in, and “spends more money per student than any district in the state.”
“You have a school board that continually wants to spend more money,” he said.
Jensen said the director of equalization office welcomes anyone who wants to come in and ask questions about the valuation and estimated taxes based on owner occupied versus non-owner occupied, in town versus out of town and new construction versus the purchase price of an existing home of similar quality and condition that was built previously. In fact, she said, she wishes more people would come in and ask such questions before they build or buy.
The realtors offered to help in any way they can, and said they would continue to have dialogue with the commission about ways to solve the worsening problem.
“We should have been here a year and a half ago,” Flaig said.

The ever-increasing cost of having property in Custer County is keeping young people out of Custer County, driving older people out of Custer County and causing the rest of those who live within the county to scratch their heads as to a perceived inequity as to how property is taxed.

That was the message delivered by the “Realtors Tax Force” of Lane Munger, Ramona Flaig and Patty Hauschildt to the Custer County Commission at the commission’s June 5 meeting.

Munger, an associate broker with Western Skies Realty of Custer, said the group wanted to bring the issue to the forefront with the commission and possibly exchange ideas about solutions to the problem. Munger called realtors the “windows of the community,” and said what was once an advantage Custer had in attracting new residents—lower property taxes than other Black Hills communities—is rapidly disappearing. He claimed the way assessments are done in the county leave people confused, uninformed and sometimes angry.

Munger cited many instances in the county where there are two virtually identical homes in neighboring subdivisions, but one is assessed at a much higher value than another. He said those inequities are one of the major problems with the property tax system in Custer County.

“People know what their neighbor’s assessment is,” he said, saying when subdivisions connect, the taxes should be equitable, even if one subdivision is experiencing more sales that is driving up valuations while a neighboring subdivision is experiencing little or no sale activity.

County director of equalization Allison Jensen said it is possible to have two similar properties in different parts of the county with a different tax amount because one is in an area the equalization office has been able to reappraise, while one is in an area the office has not gotten to yet. Other facts, she said, is that one has owner occupied status while another is non-owner occupied. A third reason is one is in town and the other outside of town, and the city mill levy could be the reason that the one in town is higher.

“Our office is bound by state statues in setting property values,” Jensen said. “They say our assessed value should be market value, so what people are willing to buy and sell properties for will dictate our valuations.”

Jensen said when it comes to land values for improved properties outside city limits, the first acre is the home site value. That value is typically higher than the per-acre of that area, since it reflects improvements made to the land, adding water, electric and septic and the remaining acres have a lesser per acre based on the recent bare land sales. There are properties in different subdivisions that are touching but have different per-acre values based on the sales in those subdivisions, she said.

Hauschildt, broker owner at Western Skies, said many properties are unsaleable, pointing to Boot Hill Ranch Estates as a prime example. She said while most of the lots at Boot Hill without homes on them are assessed at $41,000 to $50,000, the most two recent lots sold—both at auction—commanded an average of only around $18,000. She added that paying $10,000 or more in taxes on a home with a fair market value of $400,000 also make them unsaleable, and said the lots at Stone Hill Subdivision “will never sell” with $4,000 to $8,000 in taxes on bare land.

“We will never get any young people (to move to Custer) because they can’t afford the taxes,” she said.

She also said more people will simply throw their hands up and walk away from their land and stop paying taxes on their property because they can’t sell it, nor can they afford the taxes.

“This is not getting better,” she said.

Flaig, owner-broker at Custer Real Estate Sales and Services said from Jan. 1, 2012 to the end of May, there were 14 homes sold at foreclosure. She said such foreclosures are becoming more and more common, and the impacts of those foreclosures are far reaching. Flaig said the foreclosures affect the neighborhood the home is located in negatively, extends the housing crisis and takes a physical and emotional toll on those who are foreclosed on, often uprooting and tearing apart families.

Commissioner David Hazeltine said he agreed the issue was a concern, but said he couldn’t offer any solutions, and, furthermore, wasn’t sure there was a solution.

“It’s kind of scary,” commissioner Phil Lampert said, adding he always dreads looking at his tax assessment each year. He said when he first bought the building A Walk in the Woods is located in, property taxes were $1,000. Those have increased 10-fold in that time.

“Unfortunately, we need taxes to pay for the services we provide (county) residents,” he said. “What the answer is, I don’t know.”

Commissioner Jim Lintz said he didn’t believe the property tax issue was the lone culprit in keeping away young families, saying there was a lack of quality, high-paying jobs in the county as well. He also said much of the blame should be placed at the feet of the Custer School District, which he said gets 75 cents of every dollar in property tax money the county brings in, and “spends more money per student than any district in the state.”

“You have a school board that continually wants to spend more money,” he said.

Jensen said the director of equalization office welcomes anyone who wants to come in and ask questions about the valuation and estimated taxes based on owner occupied versus non-owner occupied, in town versus out of town and new construction versus the purchase price of an existing home of similar quality and condition that was built previously. In fact, she said, she wishes more people would come in and ask such questions before they build or buy.

The realtors offered to help in any way they can, and said they would continue to have dialogue with the commission about ways to solve the worsening problem.

“We should have been here a year and a half ago,” Flaig said.



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Current Comments

3 comments so far (post your own)
s hoff
June 14th, 2013 at 09:26am

This is exactly the reason we moved out of custer. I really love the area simply just can afford the high taxes.

Warren
June 18th, 2013 at 08:03am

I guess Commissioner Lintz has not taken the time to understand school funding and taxes. The school district has nothing to do with setting property values and the state sets the mill levee the school district has to charge as long as they are receiving state funding. Higher local property tax income is just offset by less state funding. The school district until this year (we no longer are receiving state funding) did not receive extra money just because the property values went up. The school district does have some control over the Capital mill levee, but thats about it. Now that the school district is (or soon will be)totally property tax funded, increased property values will result in more money for the district. We will be in the same boat as Hill City.

Randy Torkelson
June 20th, 2013 at 10:54am

Until the legislature changes the ridiculous school funding scheme that Governor Rounds championed, nothing will get better. What a stupid system! Just because property values in Custer have improved more than the average across the state, Custer Schools end up getting less and less state aid and more and more of the cost falls on property tax revenues. The moronic plan from Governor Rounds needs to be tossed! And the sooner the better!

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