Danville officials prepare for another drop in local tax base

Danville officials prepare for another drop in local tax base

DANVILLE — More than a dozen Vermilion County property owners filed appeals this year asking the county to lower their assessments by more than $100,000, and the majority are industrial or commercial properties in the city of Danville.

If those appeals are granted later this year, it could have a significant effect on the total equalized assessed value for the city and the Danville school district, both of which are anticipating another decline in their tax bases and preparing for the impact on their tax levies.

Vermilion County Supervisor of Assessments Matt Long is projecting a decrease of more than 5 percent in EAV, which would be the fourth consecutive year the EAV in Danville has decreased.

If that's the case, the taxing bodies would in effect have to increase their tax rates next year to generate the same amount of property tax revenue as they did this year.

City administration has been committed to keeping its rate below $2 per $100 of assessed valuation. This year, the rate was $1.97.

Mayor Scott Eisenhauer said if the city were to levy the same amount of money it did this year and the EAV decreases the projected 5 percent, the city's tax rate would jump to $2.10 per $100 of assessed valuation. That's not the route city administration supports, Eisenhauer said, so he's preparing to keep the rate at $2 or less, collect less property tax revenue and make cuts in expenses.

Long said there are multiple reasons that Danville is anticipating its fourth consecutive drop in EAV.

The city of Danville and the Danville school district include very little farm ground, and the value of farmland is going up again, Long said. That helps the more rural school districts and other taxing bodies, but not Danville.

Nationwide, property values have declined following the collapse of the housing market four to five years ago and the subsequent recession. Home prices now seem to be on the rebound, rising in the second quarter of this year compared with the first quarter and the second quarter of last year, according to the S&P/Case-Shiller Home Price Indices.

But it takes time for such increases to be reflected in property tax assessment levels.

A three-year average of property sales prices is a factor in determining assessed value of properties, and Long said this is the first time the three-year average includes three years of poor sales — 2009, 2010 and 2011. The previous three-year average included sales in 2008, which, while not a good year, was still a better one, Long said.

The city of Danville is composed of Danville Township, Newell Township and Blount Township.

The equalized assessed valuation in Blount and Newell townships is projected to decrease 4 percent to 5 percent.

But most of the city is in Danville Township, and that's where Long has predicted the biggest decline — from 11 percent to 15 percent, depending on the outcome of the appeals of $100,000 or more, the majority of which are on properties in Danville Township.

Long said the property owners that have appealed for a decrease of $100,000 or more include:

— Bunge Milling Inc., 321 E. North St.

— Flex-N-Gate Plastics, 3403 Lynch Creek Drive.

— The Danville Country Club, 2718 Denmark Road.

— Auto Zone warehouse, 800 Lynch Road.

— Visco Fan, which was previously TeePak, 915 Michigan Ave.

— Alcoa, 1 Customer Place in Southgate Industrial Park.

— The former Dynegy Power Plant in Newtown.

— Carmack Car Capitol, 3724 N. Vermilion St.

— Security Ventures Inc., which bought the former Mettam Safety building at 1222 W. Voorhees St.

— And South Lake Properties, an apartment complex at 2730 Townway Road, Danville.

Long said there are other requests for significantly lower assessments, in addition to the ones over $100,000. Some of them are for commercial properties that were purchased for far less than their assessment, and in those cases, it will be difficult to argue against a decrease, he said.

But there may be hope for commercial property in the near future.

Larry Kuchefski with Coldwell Banker Commercial Devonshire said the commercial property market in Danville has been great the last 18 months. He said the development of Kohl's and Meijer on North Vermilion Street has generated a lot of interest in that north-south retail development corridor.

"Between Wal-Mart and the Village Mall, that corridor is just exploding," said Kuchefski, adding that getting some new businesses in will add to the tax base.

Eisenhauer said it will likely be two years before the new developments come on the property tax rolls, because assessed values are calculated as of Jan. 1 of each year, and Kohl's and the other new developments will not be finished until later next year. The city will likely see sales tax revenue from the developments before property tax revenue.

Long said another factor in the anticipated EAV decline is that the three-year sales ratio study that's used to determine fair market values must now include compulsory sales, which are short sales — a mortgagor or lender sells a property for less than what's owed rather than foreclosing — and bank real estate-owned sales, which are a result of foreclosures, transfers in lieu of foreclosure or a consent judgment after foreclosure is complete. The board of review must also use compulsory sales when reviewing and correcting assessments.

Property sales that are lower than assessments are also apparent in the Illinois Department of Revenue's announcement last month that Vermilion County has been assigned a tentative property assessment equalization factor, or multiplier, of 0.9315. Last year, the county's multiplier was 0.9589. The countywide multiplier is applied by the state to achieve uniform property assessments among counties in Illinois.

The Revenue Department applies a multiplier that's less than 1 when the average level of assessment in a county is greater than one-third market value.

Currently, assessments in Vermilion are at 35.78 percent of market value based on sales of properties in 2009, 2010 and 2011, according to the Revenue Department. Danville Township is on the high end, according to Long, where the three-year average level of assessment is 40.79 percent of market value.

Long plans to make some adjustments, applying multipliers to specific townships, that could result in the state assigning a final multiplier of 1, which would mean the three-year average of assessments is right at one-third market value.

Long said that sales of properties in the last three years are not representative of all the properties in the county.

"It's being based just on what has sold," he said. "It's a snapshot of the market that's not representative of the whole market."

Danville tax base

Here is a breakdown of the equalized assessed value of property in the city of Danville by classification of property. The Vermilion County Supervisor of Assessments has told local taxing bodies in Danville that the overall equalized assessed valuation likely will decrease as much as 5 percent when the final EAV numbers are determined early next year.

Type of land 2007 2008 2009 2010 2011
Residential $184.1 million  $186.8 million  $179.9 million  $173.1 million  $164.4 million
Farm  $152,800 $167,300 $184,800 $209,400 $230,300
Commercial  $147.5 million  $150 million  $143.1 million  $136.5 million  $127.2 million
Industrial  $29.3 million  $35 million  $36.9 million  $34.1 million  $31.7 million
Railroad  $1.3 million  $1.5 million  $1.9 million  $2 million  $2.3 million
TIF areas  -$3.5 million  -$4.5 million  -$4.2 million  -$4.1 million  -$4.3 million
Total EAV  $358.9 million  $369.2 million  $357.9 million  $342.1 million  $321.7 million

Source: City of Danville

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