Misconceptions about a state historic preservation program combined with a shaky economy apparently have caused a drop of more than one-third in the number of Oregon homeowners participating in the program.
Property owners on two historic streets in east Medford said they are among those planning to drop out of the program, even though staying in would limit their property taxes, because they worried that an extension would come with too much red tape and higher fees.
The owners of about 30 houses on Minnesota Avenue and Geneva Street have enjoyed a state program that allows them to pay reduced property taxes for 15 years in exchange for them making improvements to their historic houses. They all signed on to the program at about the same time and their exemptions from tax increases have expired.
In many cases that meant their new tax bill doubled or tripled from a year ago as it was adjusted to what it would have been had they not entered the preservation program.
"They've shot way up," said Bob Biondini, a Minnesota Avenue resident.
But, because of what they perceive as too much red tape and up-front expense, most of the property owners were not planning to sign up for an extension that would have frozen their newly adjusted tax rate for a new 10-year period.
They are not alone in declining the extension. A combination of a weak economy and misconceptions about the program have reduced the number of properties statewide in the program from 845 in 2007 to about 550 today, said Roger Roper, deputy state historic preservation officer.
According to the Oregon Historic Preservation Office, there were 45 properties in Jackson County receiving the reduced assessment in June.
Biondini said most residents have spent a lot of money improving their homes, which date to the early part of the 1900s. But the application fee plus the new requirements now have scared the neighbors away from a state program designed to encourage them to make more improvements.
Residents have the perception the state program costs a lot, but, Roper disagrees.
"We've tried to simplify and cut the costs," he said.
Owners of homes applying for an extension on the historic preservation tax break pay a fee equal to one-tenth of 1 percent of the house's assessed value. For a $200,000 house, that equates to $200. The owner also has to commit to spending 10 percent of the real market value of just the house — excluding the land value — over the first five years of the 10-year program, or $20,000 on a $200,000 house.
There is also a higher standard for a homeowner who continues the program for a second term, requiring such potential improvements as seismic upgrades, improving disability access or producing energy savings, Roper said.
Homeowners were formerly required to have an open house once a year, but Roper said that is no longer a requirement.
Once the economy improves, Roper said, his agency would have a better idea whether the special assessment program continues to have appeal.
"Overall, we say it can still be a good program for a lot of property owners," he said.
While some residents in the east Medford neighborhood didn't realize their property taxes would increase, other residents knew they were going up, but were still shocked by how much.
"It's almost tripled," said Frann Wolfe.
She's been in her Minnesota home for three years and saw her taxes jump from $1,038 to $2,846, when the tax break expired.
Her home has been completely remodeled, so she decided there was no reason to continue with the program. After checking the program's requirements, Wolfe estimated she would have to spend about $15,000 on improvements.
"It if doesn't need the work, it doesn't make sense anymore," she said.
"The city got what it wanted — a street rejuvenated."
Besides, she said, property taxes don't seem that high to her compared with taxes in her former home state of New Jersey.
After learning more about the new fee and other requirements, John Zenz said the program might be worth a second look.
"It probably does make some sense," said Zenz, who lives on Geneva Street.
However, he said, it is still difficult to calculate what his property tax rate would be after the 10-year period is up, and that worries him.
While Zenz and other property owners are no longer in the special assessment program, he said they remain committed to maintaining the vintage appearance of their neighborhood.
"We will continue to have the spirit of keeping it an historic district," he said. "That is very strong."
Reach reporter Damian Mann at 776-4476, or e-mail dmann@mailtribune.com.