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

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.

In continuation of our last post, we are back to catch you up on property tax issues in the news.  This past news cycle was a busy one, and below are links to fourteen articles ranging in date from June 4, 2012 to June 22, 2012.  As was the hot topic last time around, most of these articles discuss various municipalities considering whether or not to raise property tax rates to meet budget shortfalls.  That said, there are some discussions about appeal extensions in Mecklenburg County, bond issues in Fayetteville, and the general trend of overassessment in North Carolina.  Enjoy the links!

• Alamance County Will Not Raise Property Tax Rates for 2012-13 (June 5, 2012 article by Chris Lavender posted in The Burlington Times News)

• Yadkin County Manager's 2012-13 Budget Plan is Free of Property Tax Rate Hikes (June 4, 2012 article by Monte Mitchell in The Winston-Salem Journal)

• The City of Mount Holly's 2012-13 Budget Plan is Free of Property Tax Rate Hikes (June 5, 2012 article by Amanda Memrick in The Gaston Gazette)

• Craven County is Cutting the Property Tax Rate (June 5, 2012 article by Sue Book published in The Newbern Sun Journal)

• Mecklenburg County Calls for Bids on Outside Revaluation Probe Relating to the Ongoing Citizen Uprising (June 5, 2012 article by David Perlmutt in The Charlotte Observer)

• The Town of Hillsborough's 2012-13 Proposed Budget Includes a Property Tax Jump (June 6, 2012 article by Erin Wiltget in The News of Orange County)

• The City of Winston-Salem's 2012-13 Proposed Budget Includes a Property Tax Jump (June 5, 2012 article by Adrianna Amato published at digtriad.com)

• The City of Graham's Property Tax Rate Will Remain Constant for 2012-13 (June 7, 2012 article by Jay Ashley published in The Burlington Times News)

• Fayetteville City Council May Delay Approval of a Parks and Recreation Bond Which Would Raise Property Tax Rates (June 10, 2012 article by Andrew Barksdale in The Fayetteville Observor)

• Mecklenburg County Residents who did not Push Property Tax Appeals to the North Carolina Property Tax Commission Based on Misinformation from the County get an Extension (June 10, 2012 article by Carmen Cusido in the The Charlotte Observer)

• The Charotte City Council Rejects Proposed Property Tax Rate Hikes, Despite Previous Reports, but the Budget is Not Set Yet (June 11, 2012 article by David Spunt on WBTV.com)  

• The City of Elon will see a Property Tax Rate Increase in 2012-13 (June 14, 2012 article by Molly McGowan in The Burlington Times News)

• Rockingham County is Decreasing its Property Tax Rate for 2012-13 (June 22, 2012 article by Charlie Glancy at myfox8.com)

• For the First Time in a Long Time, Property Across the State is Generally Overassessed (June 22, 2012 article by Doug Clark at news-record.com)

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

Over the weekend, the Wall Street Journal ran an article by Jeannette Neuman and Saabira Chaudhuri entitled "How to Lower Your Property Taxes."  The Article does a great job of summarizing some steps that taxpayers can take to make sure their assessments are in line with reality.  However, we would warn that the appeal process can differ from jurisdiction to jurisdiction, so you should probably check the rules of your jurisdiction before making a go of it on your own.

Check back in later this week, when we intend to post an article detailing the appeal process in North Carolina from start to finish.