To address the hangover from the soft real estate market of 2007 to 2009 and determine whether certain neighborhoods were affected disproportionately by the slump, Madison will conduct a property revaluation this year.
The changes that result from the process will be seen on property tax bills in 2013.
Mayor Robert Conley, , said state law requires municipalities to conduct a revaluation every 10 years in order to equalize the property values across a municipality.
The goal is to keep the ratio between assessed value and market value at 100 percent, he said. Madison’s ratio was approximately 60 percent, he said.
State law allows a county tax board to order a revaluation when the assessed to market value ratio drops below 75 percent.
“This is not a process that will increase property tax revenue,” Conley said.
The borough collected $13.173 million in property taxes in 2011, and is expected to collect about $13.43 million in 2012, according to the proposed 2012 budget. The increase would come from an increase in the tax rate, officials said.
The impact of the soft real estate market during the recent recession can be measured in the changes in net valuations across Morris County, which saw a total drop in value from $102 billion in 2009 to $98 billion in 2011. Seventeen Morris municipalities conducted property revaluations or reassessments in that period.
Madison’s net valuation initially fell $6.9 million between 2009 and 2010, but recovered nearly the same amount to record a net valuation in 2011 of $2.098 billion.
The housing market fluctuations were recorded in the changes in the median home sale price in the borough between 2007 and 2011. The median sale price peaked in 2007 at nearly $800,000, but fell to a low of $490,000 in the first quarter of 2011, before settling at $600,000 by October 2011.
The effect of those market changes were seen in the number of tax appeals.
Officials said the borough in 2011 was liable for nearly $1 million in tax appeals. A total of $68,000 in appeals were also pending from 2009 and 2010, with estimated refunds of $250,000, for a total of $938,000 in non-budgeted liability.
Borough officials said they paid those losses from the budget surplus account.
The borough hired Certified Valuations Inc. of Randolph to conduct the revaluation. The contract is for $600,000.
Cindy Sullivan of Certified briefed residents on the process at the Feb. 27 meeting.
She first assured residents the borough’s property tax rate would change following the revaluation.
After the 2000 revaluation, the last one done in Madison, the municipal tax rate fell from $3.80 per $100 of valuation in 1999, to $1.70 per $100 in 2000.
Sullivan laid out the timeline for the process.
The company is in a data collection phase now, she said. Residents may notice inspectors and photographers in their neighborhoods during this phase.
Sullivan said the company is identifying “homogenous” neighborhoods to aid in the revaluation. That means, for example, identifying a unified architectural style, such as neighborhoods of ranch homes or Colonial homes.
All Certified Valuations inspectors and photographers will carry two forms of identification, she said.
Photographs of all those conducting the neighborhood surveys are recorded at the borough’s police department.
In a letter to residents, Certified said no one should be allowed into a home claiming to be a home inspector unless they have both forms of identification.
Each homeowner will receive a letter indicating that an inspector has been assigned and will be visiting within two week of the date of the letter.
An exterior and internal inspection is required, Sullivan said. Photographers will take only exterior shots.
Sullivan said homeowners will be asked to provide some financial information about the property, including recent sales data, and information about any potential repairs.
The actual process of determining the values of the borough’s properties will take place from mid-November to January, with a target date of Jan. 10, 2013, to complete the process.
Property owners will have several chances to discuss the values assigned to their home while the process takes place, Sullivan said, and if they are still not satisfied, tax appeals may be filed starting April 2013 to dispute the findings.
More information about the process is available on Certified’s website or by calling 973-361-2701.