Ed Parker thought he was moving to a quiet, pleasant neighborhood when he bought his home in Arnold 15 years ago, but it never occurred to him that he had purchased the winning ticket to a real estate jackpot.
Then, he opened his letter from the state Department of Assessments a few weeks ago. It said that his home, purchased for about $200,000 in 1989, is worth almost $400,000. It also said his land was three times more valuable than just three years ago.
"Yes, yes, it's turned out to be a good investment," Parker said. "I just bought it because I didn't like the traffic noise in our old neighborhood."
Parker, a 71-year-old retiree, was one of many residents around Arnold who saw big increases when they opened their latest assessments. Property values in Anne Arundel County rose about 49 percent since the last assessment in the area three years ago, the largest increase of any county in Maryland, according to state figures.
And though higher assessments make many people think of bigger tax bills, most Anne Arundel residents can enjoy the increased equity without having to worry about a large tax increase because the county caps the amount of additional revenue it can collect from property taxes in a given year.
County law also says the taxable value of owner-occupied property can't go up more than 2 percent a year.
Though county officials and real estate agents said the numbers were hardly a surprise considering the booming home sales market of the last three years, residents of former middle-class communities such as Arnold said they were shocked.
"I'd just like to know how they came to that number," said Parker, who will probably pay less than $100 in additional taxes despite the fact his property gained about $150,000 in assessed value.
Bill Smouse, who supervises the tax assessments office in Anne Arundel, said his department does a careful inspection of how much buyers have paid for land and different types of houses in a given area and tries to pick a number that would represent a reasonable sale price.
"The basic question we ask is: When you work down all the factors, what do people in an area seem to be paying?" said Smouse, who has assessed properties in Anne Arundel for more than 30 years.
This year's survey area -- the state assesses one-third of the properties in each county every year -- included the Broadneck Peninsula, the eastern side of the Severn River, Harundale, Pasadena and Riviera Beach.
Smouse said that in previous years, the booming value of waterfront property drove the county's steady increases. The high-end market remained strong this year with 3 percent of homes gaining 90 percent or more in assessed value, but values were also up across the board, Smouse said.
"This time, people did pretty well whether they had purchased a house right on the river or a townhouse or condo farther in," he said.
Though the even spread was unusual, the size of the jump was not, Smouse said, noting that assessed values were often immediately outdated in the 1970s and that three-year increases averaged close to 50 percent in the late 1980s.
Anne Arundel trailed only Howard County in the average price of home sales, about $318,000 in December, in a survey released earlier this month by the Metropolitan Regional Information Systems Inc., the Rockville-based listing service used by area real estate professionals.
"That's not unexpected," said Ron Anderson, former president of the Anne Arundel County Realtors Association. "We've watched prices keep spiraling year after year."
Some county leaders and activists say they worry the high prices are making Anne Arundel housing unaffordable for many first-time and moderate-income buyers.
"People are very happy when they go to sell their houses, but maybe not so happy when they go to buy or when they go to pay their tax bills," said Nancy Wright, president of the Broadneck Federation, which represents thousands of homeowners on the Broadneck Peninsula.
Despite such concerns, Wright said she had heard only a few complaints about the assessments. She said the assessed value of her home in St. Margaret's went up but that she took the figure in stride.
Under county law, people such as Parker and Wright, who occupy the properties they own, cannot face an increase of more than 2 percent a year in the taxable value of their properties.
That rule and the overall cap on property tax revenues have limited the county's ability to capitalize on the rapid rise in property values. The county can count on its property tax revenues growing at a steady rate every year, but could collect millions in additional revenue in boom years if it did not have to stay within the cap.
Other Maryland counties with property tax caps are Wicomico, Prince George's and Talbot. Montgomery County also has a tax cap, but the County Council can override it.
The Anne Arundel tax cap was passed by voters in 1992. It states that the amount of revenue the county collects from property taxes cannot grow from one year to the next by more than the Consumer Price Index -- an inflation gauge -- or 4.5 percent, whichever is lower. Revenue from new construction is excluded.
In effect, the tax rate must be adjusted each year to ensure that revenue doesn't grow faster than allowed by law.
"If you look at other jurisdictions without a tax cap, they have seen a much greater growth in revenue from property taxes over the last few years," said John Hammond, finance officer for the county.
Hammond said he does not expect the county's property tax rate to increase much from its current 95.5 cents per $100 of assessed value when the next fiscal year begins in July, though he won't be able to calculate the final numbers until the end of next month.
Property owners are allowed to appeal their assessments to state officials. Smouse said calls about appeals have come at a normal rate this year.
The department gets about 3,600 appeals a year out of the 60,000 properties it assesses. About one-third of those appeals result in some adjustment, he said.
Anne Arundel assessments
Areas included in assessment of Arundel properties: Broadneck Peninsula, Harundale, Pasadena and Riviera Beach.
Average increase over three-year assessment period: 49 percent
Average property value in assessed area: $293,400
Method of appeal: By mail or online at www.dat.state.md.us.
Appeal deadline: Feb. 13