Northwest Indiana assessors are telling startled residents their property is worth a lot more than they realized.
Property tax assessment notices are going out across Lake, Porter and LaPorte counties.
Lake County Assessor Jerome Prince said residential values are rising an average of 3.8 percent across the county. Porter and LaPorte County assessors said they are seeing assessments trend upward as well, with some reporting increases much higher.
Paul Palmer, who has lived in Lowell for 46 years, went on one of his town's Facebook pages to complain, "Lake County Assessor's notice ---- "CYCLICAL REASSESSMENT"...?? I haven't hardly done anything to the house in 3-5 years. Then they say I have a $30,000 structure improvement ??? WHAT ???"
Valerie Sucich, another longtime Lowell resident, said she has been in sticker shock since she received a notice her home has jumped 10 percent from $108,900 to $120,000.
"We have done nothing to our house other than remove a deck, so my assessment should have gone down — while one of our neighbors built a patio with a fire pit and theirs decreased," she said.
Assessors said said it is being fueled by a booming real estate market where demand is outpacing new housing construction, so sale prices have been growing since the economic recovery following the great recession. They said cyclical reassessments typically find real estate improvements that add to property values.
"We have seen increases of 6 percent to 8 percent every year for the last three or four years in St. John Township, Highland, Dyer, some areas of Hammond and the Whiting corridor where there is just a big influx of people from Illinois finding it a lot cheaper in Northwest Indiana," said Frank Kelly, president of Nexus Group, which assists assessors in Lake County.
Porter County Assessor Jon Snyder said he is seeing an "upward trend" in his county.
"I would say we are even at 5 percent," he said. "We think it's driven by high sale prices because of lack of supply of homes on the market."
LaPorte County Assessor Mike Schultz noted upward pressure in Michigan City and the town of Long Beach, where the rolling reassessment uncovers real estate improvements that factor into larger valuations that almost always result in higher taxes, although the increase is reduced by other factors going into the tax bill calculations.
"It is a fact we are in a red-hot market," Lake County's Center Township Assessor Joe Krnich said of many properties in and around Crown Point. "The sales prices are increasing, and that will probably lead to some increase in assessments."
Ross Township Assessor Angela Guernsey, who oversees valuations in the town of Merrillville, agrees.
"The market is unreal. It is really going up. Every year, we are seeing an increase in market sale prices and assessment track market values from the previous year," Guernsey said.
Are assessments real or assumed?
Some complain assessors are jacking up taxes under the cover of a rising real estate market without doing the hard work of personally inspecting each property.
Melanie Brennan, who moved to Highland's Lakeside neighborhood two years ago, is disputing her assessment of $355,000, claiming the assessor simply pegged it to its purchase price.
She contends she overpaid in her pursuit of the house and that the purchase price also included a riding lawn mower, a hot tub, a pool table and other amenities that shouldn't figure into the property calculation.
"Other houses in our neighborhood have increased only nominally compared to the sales they have pulled for comparison, and they try and claim it's not sales-chasing," Brennan said.
Sale chasing — that is, bumping up a home's assessment based only on its most recent sales price and without investigating other sales of similar homes — is considered a bad practice by the the International Association of Assessing Officials.
"We can't sales chase We can't just raise your assessment, but they do trend up, and we've noticed that things are going up," St. John Township Assessor Deborah Walters said.
Kelly, of the Nexus Group, said it isn't sales chasing if three or four similar houses are selling for the same price.
"That would be proper assessment. That is what you are supposed to do," Kelly said.
"We hear about people overpaying quite a bit. Most times it is such an emotional issue. They really want this home, but if it's a valid sale, you create an overpaid market," LaPorte County's Schultz said.
How assessing is supposed to work
Indiana has tied assessments to the rise and fall of the real estate market since 2002.
Assessors are expected to create uniform values by dividing up their territory into neighborhoods of homes with similar market characteristics.
Some are geographically continuous; others, as with Crown Point's historic homes, are spread across several sections of the city. "They are owned by some very wealthy people," Krnich said. "Many might not pay $700,000 for a 100-year-old home with creaky floors. They are rare, like antique cars."
Assessors must trend, or adjust, their assessments annually to ensure properties match the market value found in the most recent sales of similar properties.
And they must conduct rolling reassessments — reinspect a county's entire inventory of real estate parcels every four years also.
"Michigan City and the town of Long Beach were under reassessment last year," Schultz said. "Not only did the market drive the value up, some of the increases are due to artificially low assessments. In a reassessment, everything gets remeasured. They are getting more accurate.
"Homes in Long Beach are (worth) multiple hundreds of thousand of dollars, to $1 million. They are a little more difficult to measure, depending on who might have measured them last time. We noticed a lot were incorrect; story heights were incorrect, some were off on the grading portion of it, they were graded too low for the type of construction."
"I tell people that if you see an increase of more than 5 percent, there are only two things that could have happened: either a mistake was made in the data, or, as is more often the case, the prior assessment was just too low and you will see unpalatable increases," Lake County's Prince said.
Dagney Faulk and Michael Hicks, of Ball State University’s Center for Business and Economic Research, recently completed their study on assessors' job performances and found that assessors are underassessing higher-valued properties and overassessing lower-value properties.
Regardless, assessors are telling homeowners not to panic.
"If your assessment value goes up 17 to 20 percent, as it might, it doesn't mean your taxes are going up 20 percent," Krnich said.
They said an individual's tax bill is the result of a complex calculation involving their property assessment, their community's tax rate, and the deductions and tax increases generated by school referendums.
Radovan Blagojevic, of Crown Point, did more than complain and despair. He took the fight to his local assessor and won.
He said the topic of overassessment came up at a recent breakfast with his friends, so he began questioning the $256,900 assessment on his home of more than four decades.
He hired a land surveyor who remeasured his house and found it was 2,580 square feet, not the 3,620 square feet listed by Center Township Assessor Krnich. He filed an appeal.
Walters said every property owner has the right to appeal, but she cautions, "Three things can happen: It could go down because maybe we are wrong; maybe it will stay the same; and maybe it was too low, and it will go up."
Blagojevic took his appeal over Krnich's head to the Lake County Property Tax Board of Appeals at the Lake County Government Center in Crown Point earlier this month.
"I'm a citizen," he told them. "I served America in the 1960s. I have this to prove I was a hell of a soldier," he said, holding up his framed military papers. "I have here proof this is wrong."
Before he could launch further into his speech, he was informed that Krnich's office had reduced his assessment to $237,100 from $256,900.
"There was a square-foot error on his home," said Laura Keaton, a deputy Center Township assessor. "The size of the house was smaller. We reduced it."
"We receive a constant flow of appeals, but not an overwhelming amount; we probably get fewer than 100 appeals a year," Krnich said. "There are some people who think I'm only here to make their life miserable, but we don't want angry taxpayers."