Unwelcome mail, uncommonly early

 

by Mike Kroll

 

This past Saturday's mail held an unwelcome surprise for many property owners in Galesburg and the remainder of Knox County, their property tax bill. For the first time in years there were no problems, glitches or delays in the preparation of this year's property tax bills and Knox County Treasurer Robin Davis was actually able to send them out early. For many homeowners this property tax bill shows an increase over last year's bill despite the fact that the overall property tax rate actually declined since last year. Galesburg city assessor Darrel Lovell explains this seeming contradiction by reminding property owners that the tax bills are calculated by multiplying the tax rate by the property's assessed value and if either increase so will the amount of property tax due.

“Over the past two years property values in Galesburg actually increased by a total of nine percent, four percent in 2007 and five percent in 2008,” noted Lovell. This year's property tax bill is based on the 2007 assessed value while next year's bill will be based on the 2008 values. Lovell's data shows clearly that despite hits to the local area economy Galesburg never experienced the plummeting property values as feared and projected by many. The fair market value of property within Galesburg in 2007 was $1,073,485,131 (that's over a billion dollars). Two years earlier the  fair market value of property in Galesburg was $1,111,368,147 and the peak total property value, before 2008 which rises to $1,128,421,842.

By state statute property taxes are calculated based on one-third of a property's actual market value and this is called the “assessed value.” One of the accompanying tables shows a summary of Galesburg's assessed  property values over the past ten years as compiled by Lovell. While the table shows assessed values for farms and railroad property you must understand that those two categories of property taxes are not calculated in the same manner as residential, commercial and industrial properties. In actual fact the property tax burden on farm land and railroad property is but a small fraction of that imposed on other types of property.

As you can see in the case of residential, commercial and industrial property values the lowest point reflected in this table was ten years ago in 1998 although you would be correct in assuming that property values in preceding years were lower still. The high point for Galesburg residential property was in 2004 when total assessed value hit nearly $184 million and total fair market value was almost $552 million. The high point for Galesburg industrial property was in 2002 (before the exodus) when total assessed value exceeded $16 million and total fair market value was $48.3 million. By 2007 the assessed value of both residential and industrial properties were down from those numbers but much more so in the case of industrial property which is only 58 percent of the 2002 value compared to residential values at nearly 90 percent of their 2004 peak.

The peak assessed value for commercial property is in 2008 when it exceeds $105.3 million or a market value of almost $316 million. Much of this is a reflection of the new Seminary Square development according to Lovell and the value of commercial property should continue to increase in the coming years as that project builds out. It is also important to note that following the factory closings and the loss of those property tax dollars Galesburg's saving grace was the sale of Cottage hospital to a for-profit corporation that returned that property to the tax rolls as reflected in the 2004 commercial total value. Were it not for this offset residential taxpayers would have been forced to pick up an even larger slice of the property tax burden in the absence of Maytag, Butler and others.

Lovell points to the paucity of new home construction in Galesburg as a bad sign. “We saw a bit of an upswing in home construction in 2006 and those were mostly large expensive homes but 2007 saw only four new homes constructed in Galesburg.” During those same two year we saw demolition of a total of 42 Galesburg homes. The average price of homes in Galesburg has remained fairly steady over the past decade. “Galesburg has experienced neither the residential home bubble nor the more recent bust,” said Lovell. “But the general absence of home value appreciation has also meant that residential property in Galesburg has not been a profitable investment in most cases either.”

While Lovell deals in property values every day he had an up-close and personal experience when he and his wife sold their own home and purchased a different one here in Galesburg. “I had my old home assessed with a fair market value of $97,500 and it sold for $97,000. When people who complain about assessed property values see that I think it helps to demonstrate just how fair and accurate my staff and I strive to be in doing our jobs. Every four years we do what is called a quadrennial reassessment of every property in Galesburg. I actually go out and look at each and every parcel during that year to try and maintain conformity of assessed value across similar types of properties and to correct special conditions relating in individual properties that cause them to gain or lose market value. The uniqueness of your property tax bill is that it so accurately reflects the complexity and contradictions of the local Galesburg economy.”

The property tax bill you just received reflects an increase for most Galesburg homeowners but the amount of that increase is directly tied to the value of your home. In my personal case my tax bill went up 3.6 percent over last year. I paid more property tax dollars to all of the delineated entities on my tax bill but the only one that actually increased its tax rate was Carl Sandburg College.

 

5/01/08