Since this year is the first time that Concord has had to issue a third quarter preliminary bill, residents may be asking why. Every three years the Department of Revenue (DOR) requires each city and town to undergo recertification. This is a year-long process during which the DOR reviews the town's assessing methodologies and tests the proposed values. Property values are based on sales and should be at full and fair market value.
The way market value is measured is by the assessment to sales ratio, or ASR, where the total assessed property value is divided by the sales price. The median ASR for the town must be within 10% of 100% of the sales price. The sales are also stratified in several different ways based on location, size of lot and building, sales price and date of sale, and age, style and quality of the building. Each median of these stratifications must fall within 5 points of the town's overall median.
Since assessments must be divided by building and land components, a further analysis is required using the land component. This is called the land residual analysis. The indicated value of the land is derived by subtracting the building cost from the sales price and dividing that into the assessed land value. This land residual ASR must also be within DOR-defined parameters similar to the overall ASR parameters. The land component can be listed on more than one line. The primary building lot is defined by zoning. Excess land is that area of the parcel that is over the primary lot.
In recent years the rate a town uses for excess land has become important to the DOR due to its relationship to state-owned land. Although the state is tax exempt, it reimburses cities and towns for some of its land. One component of the formula the state uses to calculate this reimbursement is the local excess land rate. Concord has a significant amount of reimbursable state-owned land and has historically received up to $600,000 annually from the state for this category.
For FY08 Concord met all the standards for acceptable assessing methodologies. The sales analyses, both overall and for the land residuals, were all well within the required parameters. However, the DOR then applied new analysis techniques to analyze the land that had not been previously explained to the town. Although the proposed FY08 values were submitted to the DOR in October, the town was not notified until December 11th that there might be issues preventing certification. After several attempts to satisfy the DOR were made during that week, on December 19th the DOR denied certification. By that date the deadline had passed when the bills needed to be prepared in order for the timely mailing by December 31st, so the town had to issue preliminary bills.
This is the third year that several communities have been delayed by the DOR in receiving authorization to set their tax rate. This year 41 communities had not had their tax rate certified as of 12/30/07. Of those, slightly over half were in their triennial recertification year.
On December 27th and January 2nd members of the Board of Assessors, town staff, our revaluation consultant and DOR representatives met to discuss how to accomplish certification for FY08. The DOR representatives said the particular issue that is holding up certification is the rate the town is using for excess land. Concord has used this same rate for at least 30 years, and it was not changed for this year since all the statistics met DOR standards. The DOR stated that their detailed look at the proposed land values was "inconclusive" as far as supporting that excess land rate.
The Board of Assessors pointed out that all the traditionally-required statistics met the DOR requirements. They also stated that they were confident with the values since they seemed to be further validated by the small number of inquiries resulting from the individual notices regarding the proposed values that were sent to all property owners at the end of October. As a result of these meetings and resubmission of certain forms, the DOR notified the town on Monday, January 14, that it had successfully completed the preliminary review. The DOR has also informed the town that it must develop an entirely new land pricing structure prior to the fiscal year 2011 certification. The town will submit a plan to achieve this to the DOR, as well as yearly progress reports before setting the annual tax rates.
Now that the town has received preliminary certification, there will be a 5-day public disclosure period from January 17 through January 24. If there is a silver lining to this delay, it is that property owners will have this additional chance to discuss data corrections on their property record cards before the final values are set. The Board of Selectmen will then conclude the Tax Classification Hearing and set the tax rate. Although the fourth quarter property tax bills are not due until May 1st, the town plans to issue them earlier than the standard 30 days in advance in order to give property owners as much notice as possible. Mailing the bills early also provides additional time to submit abatement applications. Board members and staff regret the inconvenience to those who will experience significantly
uneven payments due to this delay.
| 
