Data shows widening gap between Ada County’s commercial, residential property taxes

As debates over property tax relief have continued in the Boise area, legislators, city officials and residents alike have pointed to an increasing shift of the tax burden to residential homeowners over commercial properties.

A dataset of residential and commercial property taxes obtained from the city of Meridian and reviewed by the Idaho Capital Sun backs up that assertion, particularly in the past few years.

According to the Idaho Statesman, the median price for homes sold in Ada County in March on the Intermountain Multiple Listing Service was $467,325, the highest it has ever been. In March 2011, the median price was $137,000.

Those increasing values are complicated further by a legislative action in 2016 that capped the homeowner’s exemption at $100,000, rather than an amount indexed to the current median home value. Now that there are few, if any, homes left for sale in Boise and around other parts of the Treasure Valley selling for less than $200,000, the exemption does not provide as much tax relief as it used to.

Ada County Clerk Phil McGrane said that change disproportionately affects people whose homes are rising from approximately $200,000 in value to $300,000, because the exemption used to cover half the owner’s property tax bill and now only covers one-third. 

Rising residential tax bills are exacerbated by the relatively slow increase in valuation for commercial properties versus residential. According to data tracked by the city of Meridian, a Key Bank on Fairview had an assessed value of $990,100 in 2015, and a value of $1.19 million in 2020 – a 20.1% increase in five years. A central Meridian house valued at $203,100 in 2015 was assessed for $336,800 in 2020 – a nearly 66% increase. 

2021 property tax numbers likely to see big inflation

The most recent data from 2020 is skewed because Idaho Gov. Brad Little’s Public Safety Initiative greatly affected property tax bills. In October, Little chose to use $125 million of CARES Act stimulus funds to cover local public safety personnel salaries to allow cities and counties to pass the savings on to property owners. That action resulted in a 10% to 20% reduction in property taxes for residential and commercial property owners alike, but it was a one-time reduction. 

In Ada County, that $16 million budgeted for public safety salaries will return, said Anthony Lock-Smith, performance analyst for the county. And that will come on top of property values that continue to rise. 

“For us … the elephant that’s just around the corner is how we deal with that, because everyone’s property taxes will shoot up a lot when you compare year over year,” Lock-Smith said.

Residences see double-digit increases year over year

For one south Meridian home tracked within the city of Meridian data, taxes year over year went up 12% from 2017 to 2018, up another 12% from 2018 to 2019, and down more than 17% from 2019 to 2020 with the Public Safety Initiative cut.  

By contrast, an Albertsons grocery store in the same area of Meridian saw a .68% decrease from 2017-18, another 4.6% decrease the following year, and a 21% drop from 2019-20.

In north Meridian, one home’s taxes went up 18.5% in 2017, down nearly 7% the following year, up 4% from 2018-19, and down 16% from 2019 to 2020. Conversely, a Home Depot in north Meridian saw its taxes go down nearly 4% in 2017, down another 5.3% in 2018, down 7.3% in 2019, and down nearly 23% in 2020.

A central Meridian home’s taxes went up 3.6% in 2017, up 17.75% in 2018, and up nearly 24% in 2019. In 2020, the property taxes fell 18.7% with the public safety initiative cut. 

On the commercial side, RC Willey furniture store saw its property taxes fall 3.8% in 2017, rise 8.6% in 2018, fall 1% in 2019, and fall 21% in 2020.

How does property assessment play a factor?

Todd Lavoie, chief financial officer for the city of Meridian, said he thinks the state’s formula for property assessment contributes to the problem because commercial properties are fundamentally different than residential. Since those properties are not sold regularly like homes, it’s difficult to assess comparable values in the same way.

“How do they comp the Wahooz (Family Fun Zone), how do they comp the Zions Banks of the world? They don’t. And I think that’s where they’re lagging,” Lavoie said. “… The city levy rates are all going down exponentially, but it’s not enough to help the residentials. (Commercial has) paid less every single time.”

Rep. Lauren Necochea, D-Boise, said the Idaho Legislature has failed to address the problem this session after narrowly killing one bill and denying hearings to bills that attempted to address the homeowner’s exemption and other property tax-related issues.  Rep. Bruce Skaug, R-Nampa, attempted to introduce a bill that would have returned the homeowner’s exemption to 50% of the median sales price. Skaug’s bill had at least three cosponsors, including Republican Reps. Rick Youngblood, Doug Okuniewicz and Ben Adams. The bill didn’t even clear the first procedural hurdle of being introduced to the House Transportation Committee. 

As the legislative session winds down, another property tax relief bill has not been introduced, even though other legislators expected it would be in early April. 

“It’s pretty hard for homeowners to hear that commercial properties are actually seeing their taxes go down while theirs go up,” Necochea said. “No one’s trying to hurt commercial (owners), we’re just trying to get back to that fair balance of the load. … What my goal is, is that homeowners and commercial property owners see their taxes move in tandem. Right now, it’s a V-shape.”