Location, Location, Location

tpaofciThere’s lots of variation in property bills depending on one’s location within central Iowa.  Taxes collected in September reflect the assessments that were made in 2012 and rates that are in effect for the current budget year (fiscal year 2013-2014).

A business with the same $1 million in assessed value could be taxed anywhere from $32,000 to $50,000, and a $300,000 residence from $5,000 to $7,700.

Of course, property assessed values vary by location too, so potentially the same house in two different locations could start out with a higher or lower assessed value which would, in turn, influence its total property taxes even if the rate were the same for both.

Property taxes are computed based on the following formula: Property taxes = Assessed value (or assessed value x rollback factor of 52.8% in the case of residential) x tax rate.

The total property tax rate for a given property is a compilation of the rates for all governments that serve that property.  This can cause confusion for a property owner in knowing which local government to hold accountable for their property taxes. Generally, the school district is responsible for the largest share of the tax bill, followed by the city, the county, and then miscellaneous other smaller entities.  A property owner’s tax bill shows the allocation of property taxes among the various jurisdictions.

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While the school district typically has the largest influence on a given property tax bill, citizens often believe the city is mostly responsible.  It is possible for an individual city to have a relatively low tax rate while the total rate is high due to the school district rate.  For example, the City of Ankeny is in the mid to low range of rates compared with other cities, yet someone owning a home or business in Ankeny will see a relatively high overall tax bill because of the school district’s high tax rate.  Similarly, rates on property in any city within the Southeast Polk school district are going to be relatively high no matter how low the rates might be for individual cities in that district.

For a property tax payer, the worst of all worlds occurs when both the city and the school district have high property tax rates.  This is the case for property located in the City of Des Moines and served by the Southeast Polk or Des Moines public school districts.

The best of all worlds is when property tax rates are low for both the city and the school district. This is the case for property located in the Waukee and West Des Moines school districts, where tax rates for the districts are very low as are the tax rates for several of the cities, particularly Urbandale and Clive.  The lowest combined rate is for property located in the City of Urbandale and served by the Waukee school district.

There is a clear geographic pattern to the rankings of total tax rates.  Combined tax rates are generally higher on the eastern side of Polk County and lower on the western side.  The difference is partly a function of differences in assessed value of property (per capita), but also may be due to the presence of numerous cooperative agreements in place among western suburbs and/or school districts that have helped keep costs (and property tax rates) down.

Comprehensive tax rates and rankings may be accessed by clicking here.

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