Escalating property values recently hit the tax rolls of 15 Arkansas counties in conjunction with the annual reappraisal process.
Five counties across the northern (Benton, Madison and Fulton) and central (Faulkner and Grant) parts of the state were visited by average annual growth of more than 12.9% during the past three years.
The 2021-24 increase of 67.5% in Benton County came in a little bit over what was anticipated by County Assessor Rod Grieve.
“We were bracing for it,” Grieve said. “We knew values were rising. You can’t live here and look around and not realize what’s happening.
“This is a very, very, very active market up here. There’s a huge supply and demand imbalance of housing. Prices go up, and that’s what is happening here.
“A lot of people are moving here. They’re coming from all over. This is a very attractive place to live with low unemployment and lots of amenities.”
Home to Rogers, Bentonville, Bella Vista and Siloam Springs, Benton County saw its population climb to more than 300,000 in 2022.
The influx of residents, which spilled into Centerton, Pea Ridge and Lowell, continues to set a brisk pace of growth for the state’s second-most populous county.
While Benton County’s growth is impressive, a rural neighbor to the southeast posted the largest three-year jump in reappraised property.
At the top of the class of 2024 is Madison County, where the assessed value of residential, commercial and industrial property surged by 75% since 2021. As with most counties, single-family homes are driving the lion’s share of that growth.
“So what it looks like to me is we have a lot of new people moving here from mostly California,” said Madison County Assessor Christal Ogden. “They’re building houses. We have a lot of new houses.”
The allure of small-town or country living in proximity to Fayetteville, Springdale, Rogers and Bentonville is bringing new residents to Madison County, where the population totals less than 20,000.
“I think they like it because it’s quiet and small,” Ogden said of the newcomers.
With a population of around 4,000, the county seat of Huntsville is the biggest city in the county. New subdivisions have sprung up there as well as in two communities near the Washington County line: Hindsville and Wesley.
“Hindsville is the hot spot because you’re not very far from Fayetteville or Bentonville,” Ogden said. “People are trying to find land on the King’s River because they want scenery and the water. But it’s hard to find anything that people are willing to part with.”
In Faulkner County, about 49,000 notices were mailed out earlier this summer to property owners notifying them of valuation changes.
“It’s been crazy,” said Faulkner County Assessor Krissy Lewis. “I’ve been a household name. But I’ve been here 23 years, so this is not my first rodeo.”
The reappraisal calculated a 44.9% increase in property values for her county during 2021-24.
“It’s what we’re used to seeing around here, but the market values have shocked me on some properties,” Lewis said from her Conway office.
She reports that the heightened fussing about the continued trend of higher property taxes hasn’t correlated to a magnified number of appeals to the county Board of Equalization.
Counties undergoing a three-year reappraisal cycle are home to high-growth or tax assessment ratios that are out of compliance with standards monitored by the Arkansas Assessment Coordination Division.
Part of the Arkansas Department of Finance & Administration, the ACD oversees the cyclical reappraisal process to maintain equitable and uniform property tax treatment statewide.
Counties that maintain their tax assessment ratios in compliance have been reappraised in five-year cycles. However, that is changing to all counties going through the process in a four-year cycle.
“We’ve been pushing for that awhile,” said Benton County’s Grieve. “That five-year cycle was too long. There was some real sticker shock. Three years is too quick.”
Three counties in the class of 2024 that were reappraised as part of a five-year cycle recorded increases approaching 50%. Those were Jackson, home to Newport, 49.2%; Cleveland, home to Rison, 49.1%; and Nevada, home to Prescott, 47.5%.
“The only thing I wish people could understand more is that their property taxes are not based on the appraised value of their property but their assessed value,” Grieve said, which is 20% of appraised value.
By law, annual increases are capped at 5% for a homeowner’s primary residence and 10% for commercial and industrial property, so countywide reappraisals don’t produce a huge boom year of property tax collection.
But the resulting changes in property values will boost property tax revenue, benefiting school districts, municipalities and county governments.
The change wrought by the reappraisals sets the stage for a series of annual 5% increases for homeowners whose property values rose substantially.
Homeowners who are disabled or 65 years or older are the exceptions. Their property taxes are frozen provided they file the exemption paperwork with the county assessor’s office.
However, when real estate sells, the new owner doesn’t inherit the annual 5% cap on any property tax increase. A change in ownership triggers the property jumping to its actual valuation and corresponding tax.
This year’s June 17 special session of the Arkansas General Assembly generated the third increase since 2019 for the homestead tax credit. The real-dollar tax break on a property owner’s primary residence will rise from $425 to $500 next year.
The homestead tax credit debuted in 2000 at $300 followed by increases to $350 in 2007, $375 in 2019 and $425 in 2024.
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