Real Estate Show with David Arrasmith Jackson County Tax Assessor 

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Real Estate Show County Tax Assessor

Alice Lema: [00:00:00] Well, Hey, Southern Oregon, welcome back to the real estate show. So glad you could join us today. We have Dave Arrasmith from Jackson County tax assessor's office coming on the show, because you know what it is tax time. We're so happy he could join us. He's going to talk to us, not only about what's going on in the market he's going to talk a little bit about how taxes are calculated and maybe give us some historic perspective about property taxes in Jackson County. Dave Arrasmith from Jackson County Tax Assessor is going to be joining us here in just a quick minute.

In the meantime, I want to touch on the local statistics for all three counties because we have a tiny bit of good news. Are you ready? Let's start with Josephine County. This is single family home residential only. Prices year over year in Josephine County are up 19 percent. Congratulations. Josephine County, the average residential home, now costing 488, [00:01:00] 905. That's for residential in Josephine County, the number of homes sold in Josephine County year over year are down 45%. And that means we had 11 home sell in Josephine County this week, compared to year over year, a number of listings year over year in Josephine County are down 11%. We had 345. Residential homes on the market this week in Josephine County.

Now, Klamath County was also up this week. Prices year over year, that's two in a row. Year over year in Klamath County are up 18%. The average residential home now costing 397, 540. The number of sold year over year in Klamath County are down 46%. Thank you for watching. We had 14 closings in Klamath County this week for [00:02:00] residential. The number of listings in Klamath County are up 20%. We had 285 active listings in Klamath County this this week.

Jackson County prices were stable. They weren't up. They weren't down. So folks, that means we had two counties up and one county stable. We've been waiting. We've been waiting for this. So year over year prices, Jackson County are the same as they were this time last year.

The average single family home now costing 507, 473.

Jackson County number of solds a year over year are down 22%. We had 46 closings in Jackson County and the number of listings in Jackson County are down 10% year over year. We had 743 active listings. Stay tuned. We have a quick break and we're going to have Dave Arrasmith from Jackson County Assessor on next.

Well, top of [00:03:00] the morning, Southern Oregon, and welcome back to the real estate show. Boy, we have an exciting show for you today. We have Dave Arrasmith, our Jackson County assessor on with us today to talk about Jackson County, Taxes. Welcome, Dave.

David Arrasmith: Well, good morning. Thank you. And welcome to you.

Alice Lema: This is a very interesting topic. Taxes are people ask questions about them all the time, especially with real estate. And then our county has a different way of calculating. And that's a common question with people, whether they own homes already or they're just purchasing. How does all of that work?

David Arrasmith: Well obvious, you know, the simple math is it's the assessed value times the tax rate. And depending on where people live in the county, they could have a tax rate different than than some someone in another part of [00:04:00] accounting. The tax rate is a composite, a total of, of, individual taxing districts within that area. So in Medford, you'll have the Medford school district.

You're not so the people in Medford aren't going to pay a tax rate to this Ashland school district. So in Medford, we would look at what what services are available in that in the area they live in, there would be, you know, there would be a city tax and a county tax road Valley transportation tax and a numerous, individual taxing entities and we add them all up and you get a tax rate of, you know, say 12 per thousand or something. And then when you multiply that total tax rate times the assessed value.

Alice Lema: Okay. And so it's very hyper local. I think a lot of people don't realize what you just that comment you just made about the different school districts.

David Arrasmith: Exactly. So[00:05:00] you know, people on out in the outlying areas may not be in so many, you know, like, like way out in the boondocks may not may not be in so many taxing districts. They wouldn't be in any city taxing district. So that wouldn't be in their bill and they would be in the county. They may not be in a vector control or Rogue Valley Transportation District. So their, their rates could be less than what you might find in downtown, people who live in downtown Central Point or Ashland or Medford.

Alice Lema: Well, that's really interesting. So is that why the taxes in the county and the outlying countryside are less than in town?

David Arrasmith: I, yeah, I, I would suspect you know, mathematically, if you had a 100, 000 property in Medford, and you had one out in the boondocks, if the Medford rate was [00:06:00] say 15 per 1000, then you take 15 times 100 and you get a tax bill of, let's say, 1500 where if they're out in the boondocks and they're not paying to the city of Medford and maybe they're not paying to the Rogue Valley Transportation District or Vector Control or something. Then maybe their rate is 12 per thousand.

So in Medford, the rate, they would come up with a 1, 200 tax where that same 100, 000 value in Medford would have a 1, 500 tax. Well, that's really, really fair, isn't it? That's, that's really, I think people don't realize how how detailed the assessments are.

Well, that makes it pretty fair that the the arguments that we hear where it's not fair is the assessed value in most cases is based on not the value that the property would sell for but it's based on another number called maximum assessed value.

Alice Lema: [00:07:00] And what is that?

David Arrasmith: And that's a number that was created in 1997 when measure 50 passed. And it, for those of you who were around, you were probably remember during the nineties, there was a kind of a taxpayer revolt in Oregon that would kind of follow what was happening in California during the seventies and eighties.

And we passed two measures in the 90s, one around 1995, a measure 5, where they capped, tax rates were capped so much, like 10 per thousand for cities and 5 per thousand for schools, and that, and that law was, taxpayers didn't get enough relief out of that, so then they passed a measure measure 50 was passed.

And so we calculate the tax. Really, you know, they don't see it on their bill, but we are we calculate a tax based on measure five. And we also calculate a tax based on measure [00:08:00] 50 and whichever the two is the lowest is what shows on the tax statement.

Alice Lema: Oh, that's awesome. Yeah. Yeah. I don't think people realize that either. We usually just hear a lot of griping about taxes, but that's why it's so good that you're here today. So when, when those measures passed were, were there any repercussions profit wise for the counties? Like, do you guys did you have enough money when that passed? And then do we now, you know, decades later, do we have enough funding for what we need to do?

David Arrasmith: You know, my memory doesn't go back that far. I was around then. But when Measure 50 passed, they they, they permanent rate was created based on I think what the, what the taxing districts were getting at that time. So, whatever rate they were getting at that time, they were, it, it became their rate going [00:09:00] forward.

And then, as property, as assessed value goes up, that fixed rate is multiplied times a number that's climbing every year. And, and maximum assessed value was created then to make that climb about 3 percent a year. So if the tax rate is fixed and property the assessed value in general is going up 3 percent a year, then there, people could calculate a 3 percent increase in taxes and I think, you know, that that formula pretty much stabilized tax the taxes that were, could be received by the districts.

And, but it also limited their growth potential to 3%. And that's the theory. It, I don't know that it always works that precise, but, so I'm, you know, Jackson County, for instance, we get they [00:10:00] get a lot of public recognition. I, Yeah. That we're in very good financial shape. I don't know that we were in that good of financial shape back in 1997. And the, the I think the, I think the cities and other districts are, are doing okay. Maybe school districts aren't, but I don't believe they get most of their funding from property tax. They get some state grants and stuff like that.

Alice Lema: Yeah. They have a little different mix, but that the word you use stabilizing, stabilizing the tax base that, that does seem to, to be what we have here in Jackson County, some predictability.

David Arrasmith: Exactly. And the other, the taxpayer revoked going back in the seventies and, and, and eighties. I think 19 78 California passed for your viewers who come up from California, they might remember measure 13 was passed.

Alice Lema: Yep. Proposition 13

David Arrasmith: power property tax[00:11:00] constitutional change that limited assessed value to a 2 percent growth. Well, in Oregon, we we were having the same revolt, and in This is where I'll say it's our property tax system I think it's pretty fair and and at least acceptable compared to before measure 50. In 1997 and up until then, this office was handling about 2200. Petitions appeals every year, keep property owners would file an appeal to get their property yeah. And then after map was created and limited the property assessed value, basically, to about a 3 percent growth is made a drastic drop in appeals. And this, like, the last few years, we've been averaging like 30 a year.

Alice Lema: That's wow. County wide?

David Arrasmith: [00:12:00] Countywide, but the bop, the board only basically opens up for partial for 1 day and maybe not even for the whole day and they're done. They can hear all they can, you know, all those maybe 2 days. They can hear all those cases. 1997 when we had 2221, 2200 appeals the Board of Equal the Board of Property Tax Appeals, they, they would open somewhere in, say, mid February, go Monday through Friday for eight hours, all the way to, like, May.

So we don't have a lot of frustration, a lot of anger out there, like we did. And that's good news. I think our property tax system does some people as well received around here. Not I'm sure they'd like it better, but they're not appealing like they used to.

Alice Lema: Yeah, well, and nothings for free and we have a lot of really great services in Jackson County. For folks that don't know what the appeals [00:13:00] process is we in a couple of minutes we have left before a break. Can you speak to what that is and what it looks like?

David Arrasmith: I will, you know, back before 1984, 1997, it was called the Board of Equalization because real tax bills were based on a real market value. And it was very important to have, you're if you're on the same street with me and you have the same house, except and the same floor plan and everything you would expect are our real market value to be the same.

In other words, both properties would sell for the same amount. So equalization went out the window in 1997 with measure 50. Because R and V no longer is the drives the tax bill. It's the MAV number and the MAV number can deviate from your, you could be across the street from me and have a different MAV number then.

Alice Lema: And what's MAV again?

David Arrasmith: Maximum Assessed Value and it's abbreviated M A V for Maximum Assessed Value. So the [00:14:00] board they changed the appeal board from board of equalization, the board of property tax appeals. And just this last legislative cycle, they changed that name again. And next year we'll be calling it something else.

But when the tax bill comes out, the appeal process is spelled out on the on with the tax bill and the county clerk Jackson County clerk, chris Walker's office is the access the secretary for the I'll say secretary, but or the administrator for the board property tax appeals. And Actual petitions appeals are filed with the county clerk's office and then the county clerk contacts the people who are appealing and sets up a hearing and hearings are usually very informal and lately they've been the last couple of years since Covid they've been done over by phone. So you don't even have to show up.

Alice Lema: Oh, interesting.

David Arrasmith: Do it right from your house. Yeah, it's no attorney required. [00:15:00] And it's real. And it's made the board members or three members made up out of the public usually.

Alice Lema: So we got to take a quick break. I'm sorry, Dave, hold that thought. This is really, really amazing stuff. We'll be right back after a quick word.

Well, hey, Southern Oregon. Welcome back to the Real Estate Show. I'm Alice Lema. I'm a broker here in Southern Oregon with John L. Scott Real Estate, and we're talking to one of my favorite people, Dave Arrasmith from Jackson County Assessor. He is the Jackson County Assessor, and we had to take a break just a quick second ago, and we want to go back and finish talking about the appeals process for your property taxes. You were just beginning to, to say about the the commission and that they're, they're local people.

David Arrasmith: Right? The board members, there's three that set and at the hearing. And then there's a couple of some one or two alternates that can fill in. But they need a three person quorum and the board. So then when they they'll hear, they'll take [00:16:00] testimony, they'll take evidence. And then they'll, they'll vote on how to, how to, how to address, how to solve whether they should sustain the county value, whether it should be reduced.

They, they have no authority to raise it. The county assessor can't come in and ask for a higher value.

Alice Lema: Oh, that's good to know.

David Arrasmith: Yeah and the the board is not made up of anybody out of the assessor's office or counties or staff member. It's made, it's volunteers like yourself. And as far back as I can remember, they've been all 3 of every year have been realtors or retired realtors.

Alice Lema: Oh, really?

David Arrasmith: Yeah. So they know, or maybe once in a while, we'll get an appraiser in there who just wants to yeah. You know, do a civic duty and, and and, and help out. So they people who are appealing, they're coming in, they're getting a hearing from, from a realtor, somebody who knows this area, who knows, who's worked in it a long time, probably [00:17:00] even knows their property. And they get a very fair hearing.

Alice Lema: So I've, I've been to some of those hearings and they're really quite interesting. Are there standard reasons to lower somebody's taxes or how, how individual is it? Like, what would a reason be?

David Arrasmith: Good evidence, good market evidence. If You know, we have 100, 000 accounts and every year we have to change the value. We have to update those values every year, so maybe 4 or 5, 000 of those values come from new construction, so appraisers, our appraisers, go out and and visit that new construction, measure up the square footage and set a value for it. Now, the other 95, 000 accounts that aren't new construction, we, we have to change, update their value too.

And we do that by trending. We do a statistical analysis of [00:18:00] what properties were selling for last year in the year 2022. And compare those sales values with our 2022 tax role. And if those sales are higher, then we, we realize we need to bring them we need to bring the tax role values up. If the sales prices are below the individual sales below their tax role value, then that's an indication that maybe the that their neighborhood needs to trend down. So that trending process allows us to do mass appraising. But with mass appraising, it's not it, it can have some issues where maybe we would come up with a different value if we, we actually had a few sales on that street and compared it to the property we were appraising to those sales.

So. So what could happen at an appeal that the taxpayer, the property owner could come in with [00:19:00] and say, look, here's 3 sales of similar homes on my in my neighborhood. And so that that would indicate that my value should be more like their value and their value is less. So my property should have a reduced value and staff would agree with that.

Our staff would look at that. So that's really good evidence that tech that appraisal technique is better than a mass appraising trending technique. And we won't fight it. We, you know, it's good evidence. If a, if a property owner comes in with no evidence and their, their argument is simply their taxes too much and, and they can't afford it you know, we, the, we, the board can sympathize with that, but that's not evidence of what the real, what the value should be. And, yeah. So ethically, they have to set a value, adjudicate a value of what the property would sell for, not what they think a reasonable [00:20:00] tax should be.

Alice Lema: And it's interesting because people want their value lower. When they're living in their home, but then they want it higher when they sell it, you can't have it both ways. But it brings another question that the real estate agents get asked all the time is when they're buying houses that have features like extra rooms or more square footage or a little bit better upgrade, but it's not documented in the taxes. Should they go and have the assessor come out and authenticate that it's different than what it says? Because it causes a problem if you don't when you sell it.

David Arrasmith: Well, really they if our value is not right we all want to get that correct. So if they, if they think our value that it would sell for less than what we have it on the [00:21:00] tax roll, then I mean, even though, even if they might've added square footage, even if they might've made some improvements. If after all of that work, the values less than what we have on the role, we, you know, they stand a chance to have it reduced.

Alice Lema: Yeah. Well, and that and that makes sense. It was the opposite. Yeah. Like, added a room and didn't tell anybody.

David Arrasmith: It depends on how you add, or I'll say it depends on how how a person adds a room if they, if they took a large living area. And and make two rooms out of it, or took a large bedroom and made two rooms out of it. I guess you could say they added a room. But, and that wouldn't, that wouldn't probably change the value. But if they add square footage obviously a bigger house usually sells for more. So whether they added a room or, or if, or if our square footage is in there [00:22:00] and they tell us that it's their house is bigger, well then what that would tend to cause a bigger value.

Alice Lema: And it only causes a problem for the real estate agents later when they go to sell.

David Arrasmith: But let me throw this in there. Because I said, and I, and I think this is a general statement that's true. And you know, I'll just throw out a high number, like 99%, but maybe it's 98, but it's still a high number. The tax is not based on real market value. It's based on maximum assessed. So if someone added a room and the cost of the, like say a laundry room or a deck or a mudroom in the back or something, I guess kind of a low cost addition. Yeah. Okay. Then that would up their real market value. The property would sell for more because that's [00:23:00] an added feature.

I guess like adding a fireplace or something, however, probably wouldn't change MAV and because their tax bills based on MAV, there'd be no increase in MAV beyond the normal 3%. Yeah, the one of those, one of the nice things about MAV when I created it, they said, Oh, new construction, new additions, new remodel, anything, anything like that, that adds value because it's new.

If it's under 10, 000, we don't increase, that's not a reason to increase MAV. And I can't and so, but it can't be like, 10, 000 every year. They put up, they put another limit on it. It can't 10, 000 per year or 25, 000 in a 3 year period. so [00:24:00] 3 years, if you did 10, 000 each year. The first 10, 000 wouldn't go on, wouldn't be in addition to the MAV.

The second year, that 10, 000 wouldn't be in addition to MAV. The third year, you did 10, 000. Well, half of that, five, would be in addition to MAV because they're limited to 25, 000 over a three year period. So basically, if someone wanted to take a real, you know, they had a long time ahead of them to build their house, as long as they didn't have more than 25, 000 in a three year period, they could put that house up and not have a tax bill.

Alice Lema: Well, yeah, if you do the math, but goodness, that's a long time to stay with your in law.

David Arrasmith: But I have, you know, I've had... I can, you know, I generally, I get questions like and, you know, and not the the lady of the house will say, you know. I want my I want some landscaping put in or I want a fence or [00:25:00] put up, but my husband won't let me.

I mean, it could work the other way. It could be the husband wanting to do it. Want the landscaping and and the missus doesn't has the argument against it. But 1 of them will argue against it because it will raise their property tax. Okay, well, if they keep that fence addition or the landscaping under 10, 000, it it won't if we raise their real market value and said, yes, so property should sell for more now. But if they kept , all those additions under 10, 000, it wouldn't be added. That value wouldn't be added to MAV maximum. So there'd be no increase in tax.

Alice Lema: Wow, that's I didn't know that. That's really interesting.

David Arrasmith: The lady of the house will say. Oh, wait a minute. Wait a minute. We're having a discussion.

Alice Lema: Honey, we're getting a new pool. 10, 000 at a time. No water the first year. No [00:26:00] water the first year. That's so funny. So we only have a couple minutes left before our break. And I wanted to kind of circle back to appeals. Cause you were talking about if neighborhoods went down and the last time neighborhoods went down significantly was during the housing crash. 07 to 09, depending on your neighborhood. So how did the taxes work during that time, because we did have a decline in value.

David Arrasmith: Yes. And it was very confusing to the public and to realtors and to you know, real estate professionals, even attorneys. We got, we took took a lot of field, a lot of calls because remember the assessed value is the smaller of real market value or maximum assess, whichever those 2 numbers is the smallest. So from 1997 until say, 2008, real market value was growing, let's say. 5 to 10 percent a year [00:27:00] or or more, but the maximum assessed value was only growing at 3%. They're every year the spread got bigger and bigger between Max real market value and maximum assess.

So, for instance, you have 100, 000 value in 1997 if the real market went up 10 percent that real market the next year would would go from 100, 000 to 110 and maximum assess value was set at 90 90% Of the real market value at 1997. So if you had a hundred thousand dollar house at 90 percent is 90, 000. So MAV started at 90, 000 and would grow to a hundred, like 96, 000 the next year where real market value went up.

Alice Lema: Well, hold that thought. Dave Aerosmith, Jackson County assessor. Great, great info. We'll be right back. Do not go away.

Well, good morning again, everybody. Welcome back to the Real Estate Show. We're talking to [00:28:00] Dave Arrasmith Jackson County Assessor, and we just can't get enough of this information. We had to go to a break again. So let's have you finish your thought about how things were transitioned during the housing crisis of 07, 08, 09.

David Arrasmith: I think that's interesting because if we get out in the future, if we had another housing crash it would, this would repeat itself. So, in 1997, Mav was created at 90 percent of real market value.

So, if real market value was 100, 000, say, a piece, a bare lot or some, MAV would have been created at 90, 000. That's 90 percent of real market value. 100, 000. The next year, that 100, 000 real market value could go up 10 percent to 110. The 90, 000 MAV value could only go up 3%. So it would climb the next year from [00:29:00] 90, 000 to about 93, 000.

Excuse me. Not quite 93, 000, but somewhere if you did the 3 percent it to it go up 2700. I think not 3, 000. So it would be from 90, 000 to 92, 700. So the spread between real market, the second year is not went from the difference between 90 and 100. The second year. Now the difference is between 93 and 110.

The next year, the difference would be from 96 to 120. So that difference between real market value and maximum assessed value was growing. That spread was really growing, but in 2000, and so for all of those years, the tax bill was based on on MAV maximum assessed value because. That number was smaller.

In 2008 the market started crashing. Real market values started dropping. However, that MAV number [00:30:00] kept going up 3%. So people would call in and say, why is my tax bill going up when property values are falling? And that that continued to happen for for several years, 3 maybe 3, 4 years, maybe until real market value fell below MAV.

And when that happened, then the tax bills were based on real market value not MAV. And that could happen again if we had a, a crash. And, of course, when the market recovered, if real market value was down considerably below MAV, Because there's no restriction on real market say in 2012 real market could start climbing at 10 percent again.

Well, then they can see a 10 percent increase in their tax bill because their real market that their, their assessed values net has is based on our envy as long as it's below the MAV number. And there's no limit on, how, how much RMB can [00:31:00] change. From one year to the other was it was confusing, and we tried to put a graph out with the tax bills that showed how real market value drops and how MAV value keeps going up and during a recession.

Alice Lema: Yeah, it's a very interesting economical anomaly and we hadn't had it before and I thought you guys responded well, it was a confusing situation and now we have precedent. So right now in 2023, some people think that we've had some decline in values. The tax bills are coming out. Do you have any comments about values in Jackson County for this, this tax year?

David Arrasmith: I, you know, we have about 110 I'll say neighborhoods. We divide the county up into areas that are kind of homogeneous and figured that those areas will rise or fall at about the same rate. And a good example, if an area, if we just had 6, [00:32:00] you know, if we just included like the cities, we'd have a Medford area and a Butte Falls area and a and we wouldn't think those areas would climb or would appreciate or decline at the same rate, you know, as each other.

Yeah, they're different neighborhoods. So we get, we try to fine tune it a little more. We have about 110 neighborhoods. And we analyze the sales in every one of those. And I think this, I think it averages out this year that on average, the trend will be around 5%.

Alice Lema: 5%. Which way?

David Arrasmith: High, high higher than the previous year. I said, that's an average because it keeps, I, I get you, I get 10%, one area and zero on another, and you'd have an average of five.

Alice Lema: But the fact that we have an average of plus anything is different than what a lot of us were thinking december of 2022. A lot of us were looking at 2023 ahead thinking we were gonna have a decline.[00:33:00]

David Arrasmith: Well, you know what our, our our analysis really falls behind lags what's happening in the marketplace. Because we're looking, you know, realtors are looking at today's sales and comparing them to last year's sales. Well, I can't use this year's sales to set a January. First 2003 value and that's the value that's going on the road right now.

We're looking to set a value hypothetical value of that if if your property, my property sold on January 1st, 10 months ago, what would its value be? Well, to set that sale, I mean, to set that opinion of value. We have to look at sales maybe during the last half of 2021 and through 2022. I and then we don't compare those to other house sales. So a sale to a sale, which is what you look at. [00:34:00] We're arc our trend is a comparison of a sales price that could have happened a year ago to a tax roll value, not a previous sales price. So we're looking at how the tax, how to increase the tax roll value where realtors look more at what was, you know, ideally the same house sold this year as last year, and we can compare those two sales.

Well, we're comparing a year old sale to a tax roll value. Which is different. Yeah. Yeah. But that's not apples to apples.

Alice Lema: Yeah. Now I understand. And I really like how you explain and you're really good at this, Dave, of, of taking these complicated concepts and articulating them in a easy to understand way. And we we really appreciate that. We only have a couple of minutes left and I still have a lot of questions. Can we just zip back to the fire? The fires like how, how is all that going? A lot of the [00:35:00] rebuild is done. I think.

David Arrasmith: Oh, I, I agree. I think there's been a lot of rebuilding, but I think there's still a lot of vacant land out there. And again, we you know, we have, we'll have, we'll have to get some sales before we can something. The property that didn't say didn't have fire damage and they're in that area. Is that good? Is that fire going to affect them? I don't, you know, I don't know. We have to have more sales, current sales, to see how that's going to go.

And then for new property, new construction well the, the old value goes away. You know, the house value that was on there before goes away on the A new improvement, a new, goes on the tax roll, so there's really no way to, how many people would expect an increase.

Alice Lema: I think, well, and this is why we should have you on more often. So we could talk about this. Dave Arrasmith, Jackson County Assessor. Thank you so much for your time. It was so educational.

David Arrasmith: [00:36:00] Well, I appreciate being on and I enjoy talking to you and. And any of the public that's listening.

Thank you. Yeah, you guys are always great. They answer their phone. You can call.

Alice Lema: You can ask questions. You can go in. Excuse me. So that's all we have time for today, folks. Have a beautiful Southern Oregon weekend. This broadcast will repeat tomorrow on this same station, KCMX 99. 5 FM. And it'll be at six o'clock tomorrow. Have a great rest of the weekend. Bye now.