PITTSFIELD, Maine — Most residents should see no change in their tax bills after a new factoring system for the town’s tax assessments is put in place this summer, the town’s assessor, James Phillips, told councilors Tuesday night.
Phillips explained that a study of real estate values and sales prices over the past year revealed that houses in Pittsfield were assessed at far less than they were selling for.
This disparity could cause the town to lose some state subsidies, he explained.
“State law requires the ratio [between the sales price and the assessed value] to be above 70 percent,” Phillips said. Currently, Pittsfield’s ratio is 65 percent, up from 57 percent last year.
It has been 31 years since there was a revaluation of town property, yet Phillips said he does not recommend one now. Instead, he suggested that all town valuations be multiplied by a factor of 1.5 percent.
He said the immediate result will be a lowering of the town’s mil rate, which is at $23.20 per $1,000 of valuation.
“When values go up, mil rates go down,” Phillips explained. He estimated that by using a 1.5 percent factor, Pittsfield’s mil rate could drop by as much as two-thirds.
He said that most residents will see no change in the bottom line of their tax bills.
“Factoring also tends to expose properties that are overassessed,” Phillips said. “I can then review properties on an individual basis.”
Phillips said a study conducted on Pittsfield home sales from mid-2007 to mid-2008, showed that 27 homes were sold, compared to 81 the year before. Those homes averaged $114,000 and the sales were 57 percent of the properties’ values.
A similar study he conducted from mid-2008 to February 2009, showed 21 homes sales over an eight-month period. Those homes dropped dramatically in value, to an average of $99,000.
Phillips said using a 1.5 factor will bring the town’s sales ratio to 97.5 percent.
He admitted, “Doing this in a year when market values of property are dropping may make people uncomfortable, but I have to value properties for what they sell for, not what they don’t sell for.”
Mayor Tim Nichols said it will be important to explain the factoring plan to Pittsfield residents. “Many of them are hanging on by the skin of their teeth. They hear ‘revaluation’ and they’re frightened.”
Town Manager Kathryn Ruth said it was important to explain to residents that this is not a revaluation. “It is simply part of an equation. We will put an explanation on our Web site and in the tax bills.”
In other business, the council:
• Approved bid packages for the $1.3 million Pittsfield Public Library expansion. Bids are due by 3 p.m. Friday, May 8, and construction is expected to take place this summer.
• Approved a new contract with Constellation NewEnergy Inc. of Boston to supply electricity to the town’s streetlights for the next two years. Ruth reported that this should save the town nearly $5,000 a year.
• Renewed a special amusement permit and liquor license for the Broken Putter Restaurant and Lounge.
• Accepted bids on town-owned used equipment.
• Signed the unlicensed dog warrant.
• Accepted the bid of Bangor Savings Bank at 1.85 percent interest for the town’s tax anticipation loan for 2009.