Article published Aug 26, 2004

NASHUA - The hot market in residential homes outpaced commercial property sales in recent years, translating into a shift of the city’s tax base from commercial to residential properties in an ongoing property assessment update.

Commercial real estate is “just about dead,” while homes that sold for $150,000 a few years ago now sell for $250,000 or more, said Chief Assessor Angelo Marino.

“That’s very evident,” he said.

The city is to announce revised assessment values some time next month, which will be the first update since 2000. The data is still being collected, so Marino could not supply specific information about how property values would change.

The median for property assessments in the city is 69 percent of selling value, meaning half are below that marker and half above it. The update aims to position property assessments closer to 100 percent of market value.

However, manpower limitations and a changing marketplace make hitting the benchmark hard.

The state Department of Revenue Administration has guidelines for a community to have a median sales ratio - the relationship between the tax assessment and the selling price - of between 90 and 110 percent.

The city’s assessments will be reviewed as part of a state audit in 2005, which is part of the reason the city is undertaking the process this year. The other reason is one of fairness, so all taxpayers are paying the proper share of taxes, Marino said.

There are roughly 27,000 properties in the city, 2,000 of which are commercial or industrial properties. All will receive updated property values next month.

A glut of empty commercial space stretching from Boston to Nashua has forced down values in that area, while low interest rates have helped put a greater demand on homes and raised residential prices, Marino said.

Assessments are handled by the Board of Assessors, a city panel that mainly stays out of the spotlight. But the topic can become a political football, as residents complain about higher property assessments to elected leaders.

Administrative Services Director Maureen Lemieux stressed that new assessment figures are often misunderstood.

“We do not raise assessments to raise more money,” she said.

The city budget for the current fiscal year needs to raise $141 million in taxes, and that amount will not change, no matter how the assessments land, Lemieux said.

What changes is how large a slice of that pie each residential and commercial property owner has to pay.

The mayor and the Board of Aldermen have nothing to do with the process, Lemieux said.

The city last did a thorough revaluation, a lengthy multimillion-dollar effort, in the early 1990s. The result caused an uproar, which led to the adoption of a spending cap as part of the city charter. The cap is supposed to control city spending, but elected leaders have voted regularly to allow budget growth beyond the cap limits.

The city usually updates the assessments every two years. One was slated in 2002, but Marino said a hiccup in the process made it impossible.

“It wasn’t going to be uniform enough for us to go forward,” he said.

City administrators wanted to do a complete revaluation following that, and a request to the Capital Improvements Committee received a high rating.

But no aldermen were willing to sponsor a resolution for a $2 million bond to pay for it, Marino said.

This summer, Alderman-at-Large David Deane pushed for setting aside $1.5 million for a full revaluation, but Lemieux said the city instead spent $65,000 for computer software to do the analysis.

Unlike with a revaluation, the vast majority of residents will not be asked to open their homes to inspectors, city officials said.

It will largely be a process of reviewing the sale prices of properties in different segments of the community, and comparing similar styles of properties in the same types of neighborhoods.

Marino and Lemieux said they expect complaints to rain down on them.

Errors will be corrected, but when it comes to matters of opinion on home values, changes will not be made right away, Marino said.

Residents will be able to apply to the Board of Assessors for abatements.

And to help residents to understand their new property values, the city plans to have information on the city’s Web site (www.gonashua.com) so homeowners can review for themselves how their homes compare to others.