By Scott Taylor,Staff Writer

AUBURN – Auburn homeowners have three reasons to be unsure about their taxes this year:

• Property values will increase by an estimated $703 million, raising taxes for some homeowners and reducing them for others.

• The Homestead Exemption shifts the tax burden away slightly from most single family homeowners.

• City councilors are looking to increase spending by $2.6 million next year and require higher property taxes – to the tune of $1.7 million.

Property owners won’t see the bottom line until the second or third week of June, when the city begins mailing new value notices.

“What we’re most afraid of is that people will open those notices and start multiplying their new property values by the old mill rate,” said Assistant City Manager Laurie Smith. Once the city sets the new value, the mill rate drops about $9.50, down to a rate of $19.81 from $29.38 per thousand dollars of value.

“This is a big adjustment, but people just need to look at what homes are selling for in their neighborhoods to see the difference,” she said.

Taxes should increase somewhat for most homeowners, once the valuation and the Homestead Exemption are applied.

For example, a home worth $100,000 paid $2,732 based on 2005’s tax rate and Homestead Exemption formula.

If that home is worth $155,000 this year, taxes would increase about $81, to $2,813.

Simple numbers

City assessing staff should finish the revaluation in the next couple of weeks, the end to a two-year process. Their goal is to reduce any given property’s value to two simple numbers – building value and land value.

Staff began looking at homes in 2002, cataloging things that make a home more valuable – such as vinyl siding or swimming pools. That helps them make sure similar homes get the same value, no matter where they are.

“A two-bedroom ranch in north Auburn should be worth the same as a two-bedroom ranch in south Auburn,” Smith said.

Next, assessors began looking at land values, seeing how much buyers paid for homes in certain neighborhoods and what zoning or environmental concerns did to the land prices.

“Land values are associated with street frontage, with neighborhood and restrictions on what the buyer can do,” she said.

Combine the land and building values, and you have the total property value. Add the values of all the properties in Auburn and you get the city’s assessed value. For the current year, that’s $1.26 billion. That should change to $1.97 billion next year, thanks to a growing Auburn real estate market.

“This is not about new buildings or new construction,” Smith said. “This is a property value equalization, designed to bring all of them in line with each other.”

Homeowners get a chance to review and challenge the new values once they get them in the mail. Smith said the city plans to schedule hearing with taxpayers through July and finish work on the property valuation in August.

Homestead

State efforts to tackle tax reform will have a different impact. The state has simplified the Homestead Exemption from a complex three-tiered scheme last year to a simple $13,000 exemption beginning June 29. Taxpayers subtract $13,000 from the new assessed value to figure out what’s taxable.

The state is rebating the cities only half of that, however, and City Manager Pat Finnigan said that’s responsible for about 75 cents on the tax bill.

“Ironically, we had to increase the tax rate to pay for the Homestead Exemption,” she said.

Councilors are looking at their own tax increase, as well. They’ll present a budget to the public Monday that calls for $2.6 million more in spending, bringing the proposed budget to $61.5 million for 2006.

That means more property taxes. By itself, that spending increase would increase the tax bill by $137 on a $150,000 home, based on 2006 property values.

Auburn revaluation: What it means

• Property values to rise citywide about $703 million.

• Tax rate should drop about $9.50 per $1,000 of value.

• Taxes should stay about level, before proposed city spending increase.