BENNINGTON — Municipal leaders around Vermont are looking for some relief from a potential wave of required property reappraisals prompted by spiking, pandemic-era real estate prices.
Bennington and more than 150 other communities are in similar boats with the wave approaching, according to Town Manager Stuart Hurd, who is hoping for legislative help and a statewide solution to the problem.
Property value hikes based on rapidly increasing sales figures can trigger a notice from the state tax department that a community needs to do a reappraisal of all its properties.
The reason is that maintaining a common level of appraisal across communities and school districts is a key equalizing component of the Vermont’s education funding formula, ensuring that each town is paying a fair share of property tax to the state’s Education Fund.
Ideally, a community’s assessed property values would be at 100 percent of the common level of appraisal, and the state doesn’t take action until the community’s CLA figure falls below 85 percent or rises above 115 percent.
A lower CLA figure indicates that real estate is selling for more than the property values shown in the town’s grand list, and a reappraisal is required.
An equalization study by the state determined that Bennington property was assessed at 76.26 percent of the common level of appraisal, while North Bennington property was at 69.47 percent of the CLA.
Normally, that type of situation develops over a number of years, but out-of-state residents fleeing urban areas for Vermont during the pandemic have helped fuel a real estate boom since 2020.
The sharp trend has included bidding battles over properties and the purchase of homes online from afar without an in-person inspection by the buyer and sometimes at prices far above the assessed value.
Hurd, who briefed the Select Board this week, said he has contacted area lawmakers to urge them to pursue a legislative solution.
Asked what he’s heard from legislators, he said Tuesday, “There is nothing concrete right now. We’re looking at several options that need to be flushed out.”
Hurd said the easiest solution “would be to drop the [common level of appraisal] trigger to 80 percent and allow for it to be two successive years below that trigger before a reappraisal is required. That would perhaps allow for an unstable sales environment to calm.”
A reappraisal of all property values in a town – as an example, Bennington has about 6,000 parcels including undeveloped land – is required when the figure slips below 85 percent.
However, the sheer number of Vermont towns now in that same category could make the odds of all the towns taking immediate steps to comply remote at best.
Local state lawmakers contacted this week said the Legislature is well aware of the problem but no clear solution has gathered steam in the Statehouse.
“Yes, the Legislature has this on its radar,” said Rep. Timothy Corcoran II, D-Bennington. “The committees of jurisdiction of reappraisals are Ways and Means and Commerce. It’s my understanding that they are currently working on solutions, and hopefully they’ll produce something that is beneficial to the towns.”
House Ways and Means Chairwoman Rep. Emilie Kornheiser, D-Brattleboro, said in an email that the committee will next discuss the issue during a meeting Thursday afternoon.
“We have discussed it in [Senate] Appropriations,” said Sen. Dick Sears, D-Bennington. “Clearly, in my opinion, the Legislature will need to act. I’m not sure what the solution is and if the values will re-balance. It is more of a Finance [Committee] and Ways and Means [Committee] issue. But it can adversely impact the Education Fund.”
Rep. Mary Morrissey, R-Bennington, said this week, “I have heard some discussions about possible reappraisals but not a robust ‘must do’ conversation amongst legislators at this point. COVID very high selling prices of properties would probably have a real impact on a reappraisal.”
“This is a really important topic, and one that’s come up quite a bit already in the Statehouse,” said Rep. Kathleen James, D-Manchester. “The committees of jurisdiction, such as Ways and Means, are acutely aware of the challenges facing many towns with reappraisal schedules and the CLA. They are thinking about possible solutions. In the meantime, I reached out to some local folks — at the Bennington-Rutland Supervisory Union and Taconic and Green, for example — to get their ideas, and forwarded these along to the committee for consideration.”
Since property values could rebalance on their own over the next few years, and there is little chance all of the towns requiring a reappraisal can hire professional help at once, Rep. David Durfee, D-Shaftsbury, said simply waiting might be a viable option for the state and for the communities.
“With so many towns suddenly below the CLA threshold, I know that there is a shortage of people who can do this work,” he said. “So it will be several years in some cases before the reappraisals take place, by which time we may have seen prices start to regress somewhat.”
Hurd told the Select Board on Monday that one appraisal firm contacted “is scheduling out through 2025.”
He added that “technically, a reappraisal has been triggered [in Bennington and North Bennington]. Fortunately, or unfortunately, 150 towns in the state also suffered through the same situation, when during COVID property was selling for far above values.”
Bennington Assessor John Antognioni said the town last did a reappraisal of all property in 2006-08, with the town doing or overseeing much of the work, utilizing staff in the assessors office and listers, and hiring data collectors to visit and report on properties.
A reappraisal today would probably take two years, he said, and the town could follow a similar format, although that would require hiring and training data collectors and possibly other employees.
Or the town could hire a firm to take on some or all of the reappraisal work, he said. That includes preparation work and planning, data collection and in-putting data into a software system.
A town also could hire a firm to assist with the appeals process after property owners are notified of their new assessed values. He added that there are now fewer qualified firms in the region than in the past.
Funding for a reappraisal shouldn’t be a problem, Antognioni said, as the state provides towns with a set amount of funding per parcel each year to set aside for the next reappraisal.
Bennington and other towns below 85 percent of the CLA will likely prepare a work plan for addressing the situation, he said.
He said property sales figures in Bennington appear to have moderated in recent months, but “nothing is clear” about where values will go from here.