It’s pretty much all about the land.
That's how Mayor Sam Cooper summed up the results of the first property reassessment in Rehoboth Beach since 1968. Reassessment data show the total value of property in Rehoboth now tops $3 billion.
City officials say because property values have increased so much since the 1968 assessment – which set the value of Rehoboth properties at a total of $74 million – the city's tax rate will go down dramatically. The current rate is $1.78 per $100 of assessed value, but Commissioner Patrick Gossett said the new rate will be $0.0368 or about 3.7 cents per $100 of assessed value.
While the rate is going down, that doesn't mean everyone will see a lower tax bill. Some Rehoboth property owners say the assessment of their land is too high, and the increase in their tax bill is too steep.
Hans Reigle’s family has had a home on the Rehoboth Beach Boardwalk since the 1930s. His home was previously assessed at $21,000; the new assessment is $3.6 million. Nearly all of that, $3.5 million, is land value. Reigle said a 2005 appraisal was lower; even adjusting for inflation over time, the overall assessment should be in the neighborhood of $3 million, he said.
Under the proposed reassessment, his tax rate 3.6 times the old rate, increasing from $376 per year to $1,353 per year, he said.
Oceanfront lots near his were valued, on average, at $700 per square foot, he said, but homes in the beach block were valued much lower. He said many lots near him have been redeveloped, and those higher values were reflected in his property's reassessment, leaving him feeling that he is being squeezed out.
Reigle said other oceanfront homeowners also say their assessed value was too high. He said he has met with Rehoboth’s contractor, PTA/DelVAL, about the assessment and hopes his property will be reexamined.
“Hopefully they adjust it and that’s the end of it. We’ll see,” Reigle said.
Appeals could lower some rates
The new rate could be adjusted after appeals from property owners, Gossett said. He said so far, the city has received 110 calls and conducted more than 50 face-to-face meetings from people questioning their assessment. Gossett said of the 3,229 letters sent out to each property owner, about 3 percent have responded with additional questions.
The city commissioners are expected to set the new property tax rate Friday, June 20, he said.
Gossett said some property owners will see their taxes go up, some will go down. City tax revenue will remain the same, about $1.3 million, he said. While he could not comment on specific homes or neighborhoods, Gossett said increases in property taxes would likely be affected by location, with beachfront or waterfront properties most likely to go up because of their increased land value.
“The value is in the land, not really in the building,” Gossett said.
One of those whose rate will increase is Cooper, who owns beach block property at 13 New Castle St. His home had been valued at $57,295, but his new assessment is $2.86 million, with $2.5 million of that as the land value.
Cooper said he expects his property tax to double from $2,400 per year to $4,800. However, he has maintained all along that the reassessment was necessary to bring Rehoboth’s property values up-to-date.
“This reassessment will ensure a fair and equitable valuation of all property, and equal treatment of all property owners,” Cooper said.
On the commercial side, Gene Lankford, owner of the Atlantic Sands Hotel, Celebration Mall and the Breakers Hotel, said the city's assessments on all three properties are about 10 percent to 20 percent higher than appraisals he had done last year.
The Atlantic Sands was one of the highest valued Boardwalk properties at $37 million. Lankford, whose bank did appraisals for borrowing purposes, said the hotel was appraised last year for $28 million. Celebration Mall, 20 Baltimore Ave., was assessed at $5.2 million, but Lankford said the assessment did not include the parking lot across the street, which he also owns. His bank's appraisal valued Celebration Mall land and building plus the parking lot at $5 million, Lankford said.
Of all the properties, Lankford said the assessment for the Breakers was closest to previous assessments. The city assessment was $11 million, while Lankford said his bank valued the property at $10 million.
"I'm not annoyed by that," Lankford said of his assessments. "You always like to think your property is worth more than it is."
Cooper said he expects the assessments to be adjusted for properties in the Schoolvue neighborhood and the area of Scarborough Avenue Extended because the land values in those areas were too high.
Planning Commissioner Bunky Markert, who lives in the Schoolvue area on New Castle Street Extended, said the reassessed land value at his property was far higher than what properties in the area were selling for on the open market. He said his property was valued at $1.2 million, with $960,000 of that in the land value. He said the market value is in the range of $750,000 to $800,000, given what other properties have sold for and that the neighborhood is not near the ocean.
Markert said he was not questioning the assessment because of his tax burden – it would go down – but he wanted the true value of the property to be reflected in the assessment.
However, as a percentage of all the properties in the city, Cooper said he does not expect a lot of adjustments. When adjustments are made, they will be made for the entire block, not just individual houses, Cooper said.
Rehoboth officials undertook the reassessment a year ago in an effort to update its tax base to more accurately reflect what market value of Rehoboth properties. Assessors from PTA/DelVal examined properties, with assessments based on recent sales data, construction quality and the size and features of buildings on a property.
Homeowners can look up their property assessment and see frequently asked questions online at www.cityofrehoboth.com. Those wishing to appeal their assessment can call the city’s assessment hotline, 302-227-2736 from 8:30 a.m. to 5 p.m. or via email.
Tax bills will be sent out in late June; taxes on the new assessment must be paid by Sunday, Aug. 31.