A hot real estate market and soaring home values have prompted Biddeford to update its property tax assessments, a process that has caused  sharp increases in tax bills in other communities.

But property owners are not likely to see the same sticker shock experienced by residents in Portland and South Portland, where long-delayed full revaluations led to large increases in assessed value and, as a result, taxes. In fact, once the Biddeford’s tax rate is adjusted for the rising valuation, some home owners should see minimal or no changes in their tax bills.

“You may be frightened by what (the city’s tax update) means, as you have probably read about the huge spikes in tax bills in Portland and South Portland,” Mayor Alan Casavant said in a message to residents last week. “We are very, very different.”

A revaluation is a community-wide update of assessed property values that are tied to market values and are the basis for annual tax bills. Generally, property owners whose new assessed values have increased more than the average will see their tax bills go up, while property owners whose values have increased less than the average will see their tax bills drop.

“The goal is to adjust properties to get the assessed values to market as fair as possible so the tax burden is distributed fairly across properties,” said Nicholas Desjardins, the city assessor.

In Portland and South Portland, where revaluations had not been done in 15 years, some property owners were upset when the assessed values of their properties shot up, doubling or tripling in some cases. That has led to huge increases in some residents’ tax bills.

But Biddeford, where demand for housing was already increasing during the city’s downtown revitalization, is avoiding such drastic changes because of the periodic market updates in recent years. Biddeford’s last citywide revaluation was in 2014, but the city did market updates on commercial and residential properties in 2017 and 2018.

Even with those recent efforts to keep assessed values in line with sales prices, the current pandemic-fueled demand for homes is pushing up real estate prices fast enough that values once again need to be adjusted. Overall assessed values that were reported at 98 percent of market value in 2019 have fallen into the 70s and by next year could be below 70 percent of market value, the major legal trigger for revaluations.

“We’re in a very, very unique market now. The whole region of southern Maine is experiencing unique market conditions,” Desjardins said.

The city recently began sending out letters to the owners of multi-unit buildings to notify them that their property values would be going up an average of 20 percent, the greatest increases seen as part of the market update. The citywide average for other buildings is a 10 percent increase.

Casavant’s update to residents last week cautioned them against assuming they’d see their taxes go up by 20 percent. That’s because the mil rate – the amount of taxes owed per $1,000 of assessed property value – will be reduced from the current level of $18.40. The new rate, which the council is expected to set in the next couple weeks, must be lower so that the overall amount of tax revenue collected by the city is the same before and after the property assessments are updated.

“Some of you, this year, will see no change in your tax bill. Some may see a decline, while others might see an increase. That increase is dependent on how great your property value increase happens to be,” Casavant wrote.

During the market update, Desjardins looked at recent sales in the city and analyzed market activity to develop formulas to predict what each property is worth, or its “just value.”

Desjardins said the market update ensures that all residents who receive statewide property tax exemptions, including the homestead exemption, will receive the full amount. The state reimburses municipalities for revenue lost due to those exemptions, but has set standards for exemption amounts to ensure they are being fairly applied.

In order for Biddeford residents to get exemptions applied in full, the city needed to increase property values a minimum of 10 percent on average across the city, Desjardins said. Without this adjustment, Biddeford residents would qualify for only 90 percent of full state reimbursement.

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