Soaring Property Values Mean Higher Tax Bills For Homeowners

Most Sanford and Springvale homeowners got unhappy news in their property tax bills this week, as the big bump in the residential real estate market has resulted in higher tax bills for homeowners. Many commercial property owners, by contrast, saw their tax bills drop, as the value of commercial property has not increased at the same rate as residential property.

The amount in the school and municipal budgets to be raised by taxation increased in total by 1.06% this year, but that increase only accounts for a portion of the rise in property taxes. The rest of the increase seen by most taxpayers is due to the big bump in single family home prices, causing homeowners to bear a disproportionate share of the tax burden.

The net-to-taxation amount was originally expected to be higher, due in part to debt service on the road bond approved by voters in 2019, and the Capital Improvements Plan to upgrade vehicles and heavy equipment. A boost in revenue sharing and Essential Programs and Services payments from the state, as well as higher City revenues and the allowable use of American Rescue Plan funds from the federal government, negated much of the increase. The bulk of the City and School Department budgets are made up of fixed costs, including contracted salaries and benefits, and contracted services.

The average tax bill increase for a single family home in each value range is listed below.

• $100,000-125,000: $40.19 or 1.99%
• $125,000-150,000: $67.12 or 2.66%
• $150,000-175,000: $98.12 or 3.24%
• $175,000-200,000: $132.10 or 3.74%
• $200,000-225,000: $179.92 or 4.46%
• $225,000-250,000: $213.30 or 4.7%
• $250,000-275,000: $259.18 or 5.14%
• $275,000-300,000: 291.50 or 5.26%

Of the more than 5,300 homes in Sanford, the largest number (1,308) fall into the $150-175K range for assessed value. Last year, this same group was in the $125,000-150,000 range. The homes in all the other price ranges have shifted upward to the next range as well.

The assessed value of a home (or other property) is multiplied by the mill rate to determine the actual property tax. This mill rate this year is .01818, or $18.18 per thousand dollars of valuation, down from $20.16 last year.

The total assessed value of single-family homes in the City increased by 14.78% in the past year. While some of this is due to new construction being added to the tax rolls, the majority is due to the rise in property values.

Two- and three-family homes, by contrast, saw a more modest increase in assessed value, at 7.47% and 8.22% respectively, while the total assessed value of properties in the commercial category actually declined by 1.3%. Vacant land and mixed-use properties also saw small decreases in assessed value. Please note these represent the totals for the City, not the averages of individual properties. For example, the total value of vacant land in a community will decrease when more houses are built, leaving fewer vacant parcels on the tax rolls.

Sanford’s assessment rate is currently 91%, meaning that a property with a market value of $100,000 is assessed at $91,000. Leaving some room between the assessed value and the market value means that if home values decline again, the assessed value won’t be higher than the actual value.

67.9% of the total value of all property in Sanford is single family residential. That figure rises to 81% when you include multi-family homes, condos and manufactured homes. 10% of Sanford’s value is commercial property, 6% industrial, and the remainder is in vacant land and mixed-use properties.

The percentage of Sanford’s total tax base that is single family residential has also increased in the past year, while the percentage that is commercial has declined. This means that a greater tax burden is being placed on homeowners as a whole this year compared to last year, and less of a burden on commercial property owners.

The City cannot juggle the tax rates to make commercial and industrial property owners bear a greater share of the increase, as the rates are assessed according to the Maine’s Uniform Tax Code.

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