North Carolina Property Tax Monitor

In early 2012, we posted about the extreme spike in the number of property tax appeals out of Mecklenburg County's 2011 Revaluation.  Over the last year or so, we've chronicled the fall-out caused, culminating in the replacement of the tax assessor and serious discussions about a revaluation re-do.

Effective January 1, 2012, Guilford County implemented its own revaluation and it appears that Guilford County property owners are appealing in record numbers.  As reported by Joe Killian at News-Record.com, the assessments of 507 properties have already been appealed to the North Carolina Property Tax Commission, up nearly 500% over the number of appeals for the last revaluation cycle.

Of these properties, about one-third are single-family homes.  That means the vast majority are commercial, industrial, apartments, offices - most of which are income-producing properties calling for the income capitalization approach to valuation.  The implication is that the investor-owners feel that the assessments are not reflective of the realistic returns experienced.

We've summarized in a previous post the appeals process in North Carolina.  In most cases, the North Carolina Property Tax Commission is the last stop for these appeals.  Given the number of appeals from Mecklenburg County still pending before the Commission and the new influx from Guilford County, it appears the Commission is in for a very busy 2013 and 2014.

Image Copyright Pauline Eccles.  This work is licensed under the Creative Commons Attribution-ShareAlike 2.0 Generic License

As our regular readers know, Mecklenburg County is in the process of managing the fallout from its 2011 Revaluation.  First, Garrett Alexander resigned his post as Mecklenburg County Tax Assessor. Now, as reported in the Charlotte Observer, the Board of Commissioners has appointed his replacement.

Effective immediately, Bobby Sheilds will serve as the Mecklenburg County Tax Assessor.  This appointment will run until the end of Alexander's term which was set to end June 30 of 2013.  At that time, the Board will decide whether to re-up with Sheilds or find a new assessor.

Although Alexander resigned his post as tax assessor, he will remain a Mecklenburg County employee.  He has been reassigned to the County's finance department where he will serve as a senior fiscal analyst.  In that post, he will supervise county staff responsible for processing invoices for functions in the Human Services Agency.

We also mentioned in our last post that the Commissioners were mulling over whether to pursue a complete redo of the 2011 revaluation.  As reported by Fox-Charlotte, it appears they have made their decision for now.  Although the Commissioners have apparently instructed the Mecklenburg County Attorney to research the legality of a redo, they have decided to leave the 2011 revaluation undisturbed and to focus instead on getting future revaluations right.  In that regard, Pearson Appraisal Services (the firm that audited the County's 2011 revaluation) will do additional work to identify more neighborhoods with flawed revaluations, and the members of the Mecklenburg County Board of Equalization and Review will be replaced.

It remains to be seen what the Commissioners will do if the County Attorney advises them that a redo of the 2011 revaluation would be legal.  In our opinion, that is unlikely under the current law.  That said, and as we've previously discussed, Senator-elect Jeff Tarte has promised to work to pass legislation making the redo legal assuming it wouldn't be already. 

Stay tuned.

Last week, we told you that the results of Pearson Appraisal Service's audit of Mecklenburg County's 2011 revaluation were on the way.  On Tuesday, November 13, 2012, they were presented to the Mecklenburg County Board of County Commissioners.  To get the flavor of the audit results, take a look at the headlines from a few news outlets:

"Review finds major flaws with 2011 Meck revaluation" - Davidson News

"Mecklenburg 2011 revaluation was a failure, must be fixed" - The Charlotte Observer

"Report Shows Assessor's Office Misled Residents" - Fox Charlotte

You can read the 40-plus page slide presentation here(pdf). In summary, Pearson Appraisal Service examined three distinct sets of property for purposes of its audit.  It examined:

150 randomly selected neighborhoods;

The 50 neighborhoods which saw the highest land value increase per the revaluation; and

375 randomly selected properties.

Of the 150 randomly examined neighborhoods, Pearson Appraisal Service found major issues with 15 (10%) of them and minor issues with another 34 (22.66%) of them.  Just two-thirds were found to have been acceptably revaluated.  Of the neighborhoods with major issues, one-third were commercial neighborhoods.

Pearson defines "major issues" as instances of inequity or erroneous data that have a significant impact on the valuation of the neighborhood as a whole.  "Minor issues" are instances of inequity or incorrect information with respect to specific properties which did not have a major effect on the overall valuation of the neighborhood. 

Of the 52 neighborhoods which saw the highest percentage land value increases as a result of Mecklenburg County's 2011 revaluation, Pearson Appraisal Service found major issues with 20 (38.5%) of them and minor issues with another 18 (34.6%) of them.

Stated otherwise, within this subset of Mecklenburg County neighborhoods, Pearson found that only 14 were revalued in an acceptable manner.  That is an acceptable appraisal rate of less than 27%.

Of the 375 randomly selected individual properties which were examined, Pearson Appraisal Service found major issues with 44 (12%) of them and minor issues with another 45 (12%) of them.

This equates to an acceptable appraisal rate of about 76%, which is the highest of the three groups of properties examined.  Pearson concluded, however, that 76% is not good. Pearson stated that The International Association of Assessing Officers, which is regarded as the leader in assessment administration and property tax policy, says the standard is 95%.

The question is now what to do about the 2011 revaluation.  Not surprisingly, some (including Senator-elect Jeff Tarte) are already calling for the 2011 revaluation to be thrown out and to be redone - effective January 1, 2011.  Such an approach would be  to our knowledge  unprecedented.  It would also require legislative action, which Tarte says he will work to make happen. 

As always, we will continue to monitor the situation.

• Gates Four Community Must Pay 4 Months of Fayetteville City Property Taxes After Forced Annex and Subsequent Legislative De-annex  (July 31, 2012 article by Andrew Barksdale in the Fayetteville Observer)

• Timetable Set for Audit of Mecklenburg County 2011 Revaluation Process - But Residents are told that the 2011 Revaluation Will Not Be Rescinded No Matter the Result  (July 31, 2012 article by Carmen Cusido in the Charlotte Observer)

• Among the Various Complaints, Some Question Whether the Mecklenburg County Assessor's Office Ignored Affordable Housing Rules (August 1, 2012 article by David Boraks on davidsonnews.net)

• Is the Mecklenburg County Valuation Audit a Waste of Time and Money? (August 3, 2012 article in South Charlotte Weekly)

• Mecklenburg County is Resending 2012 Property Tax Appeal Notices After Sending Wrong Information to about 3,800 Taxpayers (August 11, 2012 article by April Bethea in the Charlotte Observer)

• Halifax County, Roanoke Rapids, and Weldon City Schools Sued for Property Tax Refund by Residents of Brandy Creek and Wallace Fork (August 25, 2012 article in The Daily Herald)

• Taxing Jurisdictions Face Dilema with Falling Values - Raise Rates or Cut Budges? (September 5, 2012 article by David Bracken at newsobserver.com)

• Jackson County gets Aggressive in Collecting Delinquent Property Taxes (September 5, 2012 article by Andrew Kasper in the Smokey Mountain News)

Image Copyright Paul Swansen.  This work is licensed under the Creative Commons Attribution-NoDerivs 2.0 Generic License.

Over the past week and a half, we wrote quite a bit about the North Carolina Legislature's action to prohibit counties from using contingent fee auditors.  But there were a few other things going on.  This post will catch you up on other property tax issues in the news from the date of our last "news" post through yesterday.  In that time, we found just five articles ranging in date from June 26, 2012 to June 29, 2012.  Other than the legistlative action, July has been a slow month thus far.  Here are the links: 

• The Charlotte City Council Passed the 2012-13 Budget, which Keeps Tax Rates the Same but Scraps Planned Capital Improvement Projects (June 26, 2012 article by Rad Burkey posted at wcnc.com)

• The Davidson County Board of County Commissioners Approved Property Tax Incentives for Development in Downtown Thomasville (June 26, 2012 article by Nash Dunn in The Dispatch)

• Durham County's 2012-13 Budged Reduces the Tax Rate by about One Fifth of One Percent (June 27, 2012 article by Virginia Bridges in The News & Observer)

• The Warren County Board of County Commissioners has Voted (i) Not to Reappoint Tax Administrator Eddie Mitchum for Another Term; and (ii) to Raise the Tax Rate by About 6.5% (June 27, 2012 article by Jennifer Harris published in The Warren Record)

• The Cary Town Council Adopted a 2012-13 Budget Which Leaves the Property Tax Rate the Same (June 29, 2012 article on wral.com)

 Image Copyright Paul Swansen.  This work is licensed under the Creative Commons Attribution-NoDerivs 2.0 Generic License.