2017-09-27 / Front Page

Falling real estate values won’t bring cuts in local taxes

Because homes were undervalued before, rates will hold steady now

Home values are falling here, but a drop in tax assessments like the one that has hamstrung local taxing districts is not likely to occur again next year, officials and real-estate agents said.

Most of the drop in assessments this year was attributable to unmined minerals evaluated by the Kentucky Department of Revenue when mining declined. With unemployment up, and some people moving away, home values are declining, but home tax assessments were already below market value, Property Valuation Administrator Richard Brown said.

“They (tax assessments) haven’t been raised in so long in Letcher County,” said Brown, who was appointed to the office earlier this year. “If they had gone up in the past, they might have been too high, but houses are probably about where they should be.”

Between July 2016 and July 2017, mining jobs here fell to 28 from 89. For the same quarter three years ago, 410 miners were employed. As mining fell, so did the property values of unmined coal.

Taxing districts across the county are losing money this year because of the loss of assessed tax value of coal. The Fiscal Court and Letcher County Board of Education have had the greatest losses, since their budgets are larger than the cities and other taxing district.

The county school board chose not to raise the tax rate and make up for that change. As a result, it will lose $806,000 on its real and tangible property tax. Combined with the loss of severance tax, the total lost is nearly $1.5 million, school officials said. If home values decline next year, it would make it much more difficult for school boards and other taxing districts to catch up.

While Brown said many tax assessments aren’t changing because of historic low evaluation, realestate agents said the real values are declining. Mark Holbrook, an appraiser at Mountain Real Estate in Hazard, said home sales in Letcher County are “really slow.”

“If you’ve got a good home in a good area, it’s still going to sell, but it’s selling probably for what it sold for 10 years ago,” Holbrook said.

He said lower-priced homes are selling, if they’re decent homes in a decent area.

“Once you get over $100,000, it really drops off,” he said.

But, Holbrook said, Letcher County is a slower housing market than some of the others in the area, and it is “hard to get a trend.”

“ There are definitely more sellers than buyers,” he said.

Randy Blair, a real-estate agent at Mayking, said he’s seen a drop in the number of calls about retail property rental, but interest in homes has stayed about the same. He said the trouble has been in getting people approved for financing.

“We have people wanting to buy, but you start getting to 20 or 25 percent down payment, and that’s a big task for most people,” he said.

Blair said there is a low supply of quality housing here, so the demand for “decent houses” stays pretty high.

“We have good luck selling a decent house, and I feel like I get a decent price,” he said, adding that a decent price isn’t nearly as high as some people think.

Blair said he’s seen people holding onto property, expecting the value will go up with construction of a prison at Roxana. Blair said he’s not convinced that will happen, though he said he does expect an increase in demand for residential rentals if or when construction begins.

The declining coal tax base hit the Jenkins Independent Board of Education this week, when the board received its assessments from Frankfort. The falling assessment forced board members choose between raising taxes to more than a dollar per $100 of assessed value, or cut its budget.

“We lost around $15 million on our tax assessment,” Superintendent Mike Genton said. “That’s a big hit.”

If the board had chosen to increase to the so-called compensating rate, which is the rate at which revenues would be the same as last year, a person owning a $100,000 home would have had to pay $1,010 a year in school taxes alone. By leaving the rate the same, that same resident would pay $833 in school tax. Instead, the board chose an 87.3 cent rate, which will result in a $100,000 per year loss. At that rate, the same homeowner will pay $873 a year in school property taxes this year.

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