Property-Tax Winners, Losers -- Initiative 559 Could Bring Relief, Grief On Same Block

By all accounts, the statewide property-tax initiative on next month's ballot should be money in Helga Brecht's pocket.

She and Elden Sandlian live in a splendid $748,500 house in the same luxurious Madison Park neighborhood as Marijcke Clapp, sponsor of Initiative 559. And this measure, after all, is supposed to provide tax relief - especially for owners of high-cost residential property, whose tax assessments have risen at a higher rate than the average in King County.

Yet, if the initiative passes, Brecht and Sandlian were surprised to learn, they will count themselves among the biggest losers: Their property-tax bill would jump an estimated $3,000 next year, as opposed to the $4,700 Clapp could expect to save.

While most taxpayers won't see such large changes in their tax bills, all can count on refiguring their taxes. And, as the Madison Park example suggests, the new calculations could be surprising.

To help people determine how Initiative 559 would affect them, The Seattle Times, with the help of the King County assessor's office, the state Department of Revenue and the state's House Revenue Committee staff, has figured the probable tax bills on more than 30 properties, including houses, apartments, commercial buildings and industrial land.

The one thing that can be said with certainty about the results is that in rich neighborhoods and poor, in the tallest skyscrapers and busiest industrial parks, approval of the initiative Nov. 5 would create winners and losers.

Initiative 559 would roll most property assessments back to their 1985 level, adjusted for inflation. For the thousands of King County homeowners who were stung by skyrocketing assessments - and tax bills - over the past two years, that sounds like sweet tax relief. And for many it would be.

The hitch is in the initiative's requirement that all property sold after Jan. 1, 1985, be reassessed at its selling price.

In King County, where residential property values have climbed the fastest, that stipulation would shift the tax burden from longtime homeowners to the most recent purchasers.

In the Madison Park example, that's the difference between the tax bills for Brecht, who purchased her home in 1990, and Clapp, who bought hers before 1985.

Generally, because the initiative has the biggest effect in the high-cost areas where property values have grown the most, wealthy homeowners would most likely get a reduced tax bill while middle-class and poor homeowners - along with owners of commercial property, including apartments and condominiums - would be most likely to pay more taxes.

One of the biggest complaints by opponents of the initiative is that it could result in identical property being assessed and taxed much differently.

A good example is in Bothell, where in the solidly middle-class 18800 block of 89th Avenue Northeast, a pair of twin 30-year-old homes stand side by side.

Each was built in 1961. Each has five bedrooms, spread over two stories in virtually the same floor plans.

Because of slight differences in the lots and in upkeep, their assessed values have differed, but not by much. Six years ago, the base year for Initiative 559, one house was valued at $65,300, the other at $61,300. By last year, the values had climbed to $110,800 and $102,000, respectively.

The biggest difference between the two is that in June the second home sold for $136,950 (slightly less than the average selling price in the county) while the first has had continuous ownership since the early 1980s.

Here's how their property-tax bills would differ.

The longtime owners have been paying steadily more: $1,221 in 1990 to $1,521 this year to an estimated $1,624 in 1992, without the initiative. If it passes, however, that home's tax bill would drop to $1,373 - $251 less than the owners would otherwise expect to pay.

Next door, the initiative wouldn't be so kind. There, the taxes also have been climbing, from $1,087 in 1990 to $1,400 this year to an estimated $1,495 in 1992. But if the initiative passes, that last $95 jump becomes instead a whopping $856 rise, to $2,256.

The reason? While the first home's assessed value would fall under the initiative to $83,323, the new homeowner would pay taxes on his selling price of $136,950.

The result? Taxes on identical homes, next-door neighbors, would be $1,495 for the longtime homeowner and $2,256 for the newcomer - a difference of $761.

Clapp, the initiative's sponsor, says the hit on the new home buyer isn't as bad as it looks. Under the present system, if the assessor's office is doing its job right, the assessed value will grow to reflect the selling price within a year or two anyway.

The true cost of Initiative 559 for the homeowner, Clapp says, is the slightly higher tax rate the measure would create.

Because Initiative 559 would decrease revenues through lower assessments, officials would raise tax rates to bring revenues back up to current levels.

In King County, the average rate increase, according to the state Department of Revenue, would be $1.50 per $1,000 of assessed valuation. What that means, Clapp said, is that the recent purchaser of a $100,000 house could expect to pay $150 a year more if Initiative 559 passes than if it fails.

The Times study found many homeowners would gain a real benefit from the initiative.

In the 13700 block of Northwood Road Northwest, in Seattle's North Beach area, the assessed value of one handsome four-bedroom home doubled between 1989 and 1990, from $181,200 to $366,400. The tax bill almost doubled as well, from $2,463 in 1990 to $4,014 this year.

That is just the sort of spike the initiative aims to correct, and it would in this case. If Initiative 559 passes, this North Beach homeowner would get a more recognizable tax bill for 1992: just $2,640.

But not all longtime homeowners could expect a significant savings if the initiative passes.

In the West Campus area of Federal Way, for example, the owner of one three-bedroom home valued at $111,700 could expect to pay $1,505 in taxes next year without the initiative. If it passes, this owner's taxes will fall, but only $5, to $1,500 a year.

Down the street, meanwhile, Steven and Karen Kness learned that the taxes on their similar house could swing from $1,501 next year without the initiative to $2,044 if it passes. The difference: the Knesses bought in 1990, for $134,950.

"I didn't know it would be so drastic of a change," Karen Kness said.

As her reaction suggests, many property-tax payers don't know how the initiative would change their tax bills.

And the confusion isn't limited to homeowners. Sheri Pollack, a spokeswoman for Seafirst Bank, said the company hasn't yet calculated how Initiative 559 would affect its landmark holding and the state's tallest building, the Columbia Seafirst Center in Seattle.

When the bank's number-crunchers get around to it, they'll learn the initiative could cost the bank $1 million next year.

Likewise, Helga Brecht hadn't stopped to think about the would-be taxes on her $750,000 Madison Park home. When told her taxes likely would range from $6,900 next year without the initiative to $9,840 with it, she was stunned.

"Mercy," she said.