By Erika Cohen
Staff writer

CONCORD, N.H. -- A new state law requiring towns to keep their property values in line with market value could mean trouble for at least three towns in Southern New Hampshire.

By law, all 234 towns and cities in New Hampshire must bring their property values in line every five years, The law is in the constitution, but the state Department of Revenue Administration only began enforcing it around 2001, when the state created an assessing standards board to set detailed rules for updating property values.

Nine towns in Southern New Hampshire are among 60 in the state that must update their property values by next year. Derry, Londonderry and Windham had to update their values this year. The revenue administration set a schedule for revaluation requiring about 60 towns a year to update property values.

Sandown and Pelham may not make that deadline, and Derry will likely not finish its update by this year.

Guy Petell of the state revenue agency said most towns meet the deadlines, but he did not have any exact figures.

"It has created work for some of these towns," said Petell, the director of property appraisal. "There were towns that have been keeping up well and there were towns that were falling behind. I think this (enforcement) brought it up to a level playing field. There is no question in my mind this is for the better."

Complying with the law requires having all property assessed between 90 percent and 110 percent of market value every five years. This means that a house that could sell for $200,000 must be assessed between $180,000 and $220,000.

This generally means one of two things: a full townwide revaluation of all property every five years or regular updates of smaller sections of towns over four or five years.

Towns that don't do updates on time could find themselves before the state Board of Tax and Land Appeals. Then, the state revenue administration might do the work and send residents the bill. While most towns have complied with the law, 23 towns were taken before the tax board in the last few years for not completing property updates on time.

Towns can also find themselves before the board if residents complain about town property values. If the complaints are valid, the board will order a revaluation or property assessment update.

This happened in Sandown around 2001, Petell said.

"(Sandown) refused to appropriate money and we had to go in and do that town," he said. "This is what we're telling Pelham they don't want."

And it looks like it might happen again.

Voters in Sandown previously rejected a town proposal for a full-time assessor. Sandown recently put out numerous ads for a part-time assessor but got only one response, said Leslie Britton, chairwoman of the Sandown selectmen.

The town is currently behind schedule and might not meet the 2006 deadline.

As Britton sees it, the problem hitting the deadline involves both money and personnel.

"Money is tight," Britton said. "Also, there are a lot of things the state and federal government requires small towns to do, and what they don't understand is we're all volunteers and we usually work -- full time."

Petell understands complying with the law is important, but said the updates need to be done to keep values fair.

Keeping a level playing field

Property assessments are the basis for property tax bills, the main source of funding from residents for state, town and county government.

Petell said the importance of having these values equitable across the state was made clear by the Claremont ruling in 1997, which said that the state must pay the cost of an adequate education for all students.

At the town level, keeping property values in line ensures towns are fairly taxing residents for the costs of schools and government functions.

"It all has to do with school funding ... so I think it's important the assessments are equitable," said Karen Marchant, the Londonderry assessor.

Right now, assessment ratios in Rockingham County towns and Pelham range from 49.3 percent of market value for property in Pelham to 98.1 percent of market value for property in Hampstead.

Marchant said Londonderry property is current assessed at 78.9 percent of market value and the town is now updating those values to get closer to market value.

She said the town last did a full revaluation in 1994, but has done several updates since them.

Like Londonderry, Plaistow regularly updates town assessments.

Town Manager John Scruton said the town is now assessed at about 70 percent of market value and is in the process of finishing an update to be above the 90 percent mark by next year.

Over the last four years, Plaistow has updated a quarter of its property at a time. Scruton said this method benefits residents financially.

The regular update costs about $35,000 a year, while a full revaluation would cost between $250,000 and $300,000, Scruton said.

He said the regular updates also keep the tax rate more stable by doing smaller regular changes to values instead one larger change.

Petell also favors this method, which he calls a cyclical revaluation.

Whatever method towns choose, getting money for the project is step No. 1, and that has been a problem in Pelham.

Pelham residents rejected a town budget plan in March that included $565,000 for a townwide revaluation. That was the second time voters voted down money for a revaluation.

Hoping to find a way to finish the project on time, Pelham officials got bids from companies to finish the job in 2006. Those came in much lower, between $279,500 and $440,000.

Pelham selectmen are now considering whether to hold a special Town Meeting to raise money for the revaluation or try to get the revaluation done by 2007. G. Philip Blatsos, the commissioner of the state revenue administration, indicated he would recommend the state hold off on taking the town to the tax board if the town can complete the revaluation for 2007.

Box:

Revaluations and assessments

What: State law requires all towns to have all property assessed between 90 percent and 110 percent of market value every five years.

How: Towns can take two general approaches, a townwide revaluation of all property every five years or regular updates of different sections of towns over a four- or five-year period.

Why: Property taxes are the main source of income to fund schools and state and county government. Making sure property values are close to market value ensures that all citizens are paying a fair share of the bills.

Enforcement: Towns that do not comply with the law are taken to the N.H. Board of Tax and Land Appeals. That board addresses issues with tax abatements, tax exemptions and revaluations.

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