Tax assessments baffle Dickey Lake landowners

By PATRICK REILLY

Special to The Western News

On a map, or from the frozen skin of Dickey Lake, David Guild’s and Bill Krywolt’s properties look similar.

Both are long, narrow lots about one acre in size, with a few pines and steep slopes plunging toward about 100 feet of lakeshore each. Krywolt reaches the water via a switchbacked path; Guild has a staircase.

In 2016, the Montana Department of Revenue valued Krywolt’s land at $300,000, and Guild’s at $316,900. But in last year’s appraisal cycle, their land values — and tax bills — shot in different directions.

According to the state, Krywolt’s lot is now worth $210,000. Guild’s, meanwhile, was valued at $493,000, and his property tax bill jumped by about $1,700.

This divide, and other swings in land values, have left landowners along this Lincoln County lake baffled.

“When you have two pieces of property that are identical in size, in access to the lake, and one is valued at $210,000 and the other is valued at $493,000 it absolutely makes no sense and our system is broken,” argued Guild, a 76-year-old retiree.

David and his wife, Linda, bought their property in 2001. They had seen minor upticks in its value over the years, but nothing like the $176,000 spike from 2016 to ’17.

When the state’s assessment notice came over the summer, Guild remembered, his first reaction was, “Well, if basically that is what’s happening to everybody, then that’s what is probably fair.”

But these jumps weren’t happening to everybody.

“I started doing a survey,” Guild recalled. He found the Montana Cadastral mapping project maintained by the Montana State Library. The database stores information about public and private land ownership in Montana; although in a disclaimer the library says it “provides this product/service for informational purposes only. MSL did not produce it for, nor is it suitable for legal, engineering, or surveying purposes.”

Nonetheless, it showed wild swings in land values along the lakeshore’s developed section.

The northernmost three lots have dropped between 12 and 30 percent. Guild’s had gone up 55 percent; that of his southern neighbor, Larry Spackman, 35 percent. Most properties south of theirs had dropped about 30 percent in land value, except for a string of six that had risen 60 percent, from $300,000 to $480,000.

Then there were a few outliers toward the southern end: A trio of recently divided properties, a plot classified as agricultural land that barely increased, and a tax-exempt property that soared 700 percent.

The whole situation “didn’t have any rhyme or reason to it,” said Spackman, an Alberta resident who visits his Dickey Lake home at least once a month. “That was what concerned me the most.”

“It’s not the magnitude of the increase that concerns me, as much as the inconsistency between different pieces of property.”

The Montana Department of Revenue’s Property Assessment Division used sales data from the two-year period ending Jan. 1, 2016, in its 2017 appraisal cycle, said Dawn Cordone, the division’s Area Manager for Lincoln and Flathead counties.

In an email to the Daily Inter Lake, she and Region One Director Scott Williams explained that “when valuing waterfront lots, it is necessary to analyze differences in size, shape and market trends.”

“As appraisers, we must ascertain from the market, the appropriate unit or units of comparison in determining value, as well as other variables or characteristics that are deemed appropriate from market research that add or diminish value to the lots.”

One of the state’s metrics, listed on a property record card, is a lot’s Fronting Category, which Williams described as “an identifier in our computer-assisted land valuation system that allows us to value the properties as either normal pricing or for superior attributes.”

All of the residential plots along Dickey Lake were placed in Fronting Categories 1 or 2, the latter having been created for the 2017 cycle. All Category 1 properties, except for the three newly subdivided lots and the tax-exempt one, saw a decrease in land value. All Category 2 lots saw an increase.

“Fronting Category 1 and 2 are used to distinguish what we feel are distinct differences in the market value of the properties,” Cordone and Williams stated. Williams later added that “there is nothing in statute that defines either [category] as it is user defined and simply allows us to direct the computer which table to get pricing from.”

“Those in Fronting Category 2 have been determined to be superior lots to the Category 1 lots. Potentially the reason for the decrease in value is based upon the population of lots that sold in the Category 1 area which may or may not be typical of the population and may be affected negatively by swampy conditions, steep slope or limited frontage access.”

Guild shook his head and put his hands in the air upon reading the state’s explanation. Neither the state’s current appraisal guide nor the 2017-18 Montana Reappraisal Plan mention fronting categories, leaving Dickey Lake residents seeking clarity.

“I don’t think it’s clearly defined,” remarked Shawn Sloan, who lives with her husband, Michael Gamblin, on a property that rose 60 percent.

“I could argue that some lots are, in my opinion, friendlier [to the water] than mine are ... There’s got to be something written down saying, ‘this is what makes a lot an FR1, this is what makes it an FR2.’”

The Department of Revenue allows residents to request an informal classification and appraisal review, followed by a formal appeal to the county and/or Montana tax appeal board. Guild and Spackman are currently waiting on the outcomes of their informal appeals.

But Sloan voiced concern that her lot could be revalued upward.

Asked about property tax issues, Lincoln County Commissioner Mike Cole said, “I don’t think that there have been any more or less than normal” this assessment cycle. But he has heard about similar fluctuations elsewhere in his district.

“The assessments on Sophie Lake [northwest of Eureka] are all over the place as well,” he told the Daily Inter Lake, a situation confirmed by the Cadastral’s data.

“How can that be?” Cole asked, echoing Guild and his neighbors. “What is the driving factor of these huge increases on some of these properties versus others, not so much?”

Cole told the Daily Inter Lake that, on Thursday morning, he discussed the problem with Director of Revenue Mike Kadas. “They didn’t give any time frames” on addressing the issue, he said, “they just wanted to have the information.”

Cole and his colleagues can expect to hear more on the issue from Guild at the Lincoln County commissioners’ meeting in Eureka on Wednesday, Jan. 17.

As Guild seeks answers and awaits the outcome of his appeal, he’s also worrying about what could happen next.

“I’m only a retired person living on a fixed income, and I’m hoping to be able to spend the rest of my life here, but looking at what could actually happen another two years from now,” when the state will again reappraise his property, “I could be forced out of here.”

“We only want to be treated fairly,” he said. Mentioning the drop in his neighbor’s value, he said that “when his goes down to $210,000, and yours goes up to $493,000, you’re asking, what did you do wrong?”