Something Is Clearly Wrong With the Property Tax Appraisal System
(Source: Unsplash.)
“I understand that values and taxes will go up, but this drastic of an increase in one year is crazy and very hard to adjust our finances around.”
“My value went up over 40% this time. There have been no improvements to the home since the last appraisal.”
“In any case, the (appraisal) approach taken appears to be badly flawed. I can offer a personal example of my daughter's home in one of the "better" neighborhoods having a market value of at least $250,000 greater than mine yet having an appraised value for taxes of $32,329 less than mine. Something is clearly wrong.”
These are just a few of the comments collected from the North Carolina Buncombe County reappraisal community survey, where citizens were asked about their thoughts and opinions on the property tax appeals and appraisals process.
In counties across the nation, the property tax burden has been shifted from owners of larger and more expensive properties to people who own smaller and less expensive homes. Consequently, for many homeowners, property taxes have skyrocketed thousands of dollars and have been a near-impossible financial adjustment.
The Just Accounting for Health consortium, which includes Strong Towns, is collecting data and researching the potential causes and health effects of property tax inequities in Western North Carolina. The Just Accounting project is meant to bring about an understanding of the presence and effects of biases in property tax assessment standards, and to suggest possible solutions.
In response to the charges deeming the property tax assessment process inequitable, on August 17, 2021, North Carolina General Statutes authorized a board of commissioners to dive into this collective community concern. The goals of this Ad Hoc Reappraisal committee is to identify citizen concerns, provide guidance on future assessments, and provide input into equity concerns.
Stated in the resolution, it says the group recognizes that “legally required tax assessments of real property and the reappraisal process are confusing and largely misunderstood.”
This seems to suggest that there is nothing inherently wrong with the system, only that there is not enough digestible information or public knowledge on the processes. To many in the general public, the system does feel arbitrary and opaque. In our last article, we covered in detail Western North Carolina’s typical property tax system through this image:
Click to enlarge. Once the value of the property is determined by the local county assessor, they subtract any exemptions made by the North Carolina General Assembly. That amount is multiplied by the tax rate set by the local board of commissioners. Then we have the tax bill amount to be mailed to the property owner and collected by the local tax collector.
North Carolina isn’t the only state facing this challenge of a potentially flawed and unjust property tax system. Last year, Burlington, Vermont, completed its first city-wide property value reappraisal since 2005.
The property tax assessment resolution states, “this reappraisal resulted in taxes for residential properties increasing as a share of the 4 city’s property tax collections by over $10 million, which is an increase of almost 2% to 80.6% of the total property taxes generated.”
The Vermont board recognized within their resolution that this significant increase in property value placed a heavy burden on the community by increasing living expenses, with some experiencing the loss of their home as a result. Right from the beginning of the evaluation process, the general citizen concern was heard and recognized.
Contrary to North Carolina’s resolution, Vermont's resolution states that they understand the system is flawed and causing significant expense challenges to residents. They seem to believe that the issue isn’t due to a collective misunderstanding of the system, but rather, a problem with the system itself. Throughout their resolution document, they detail faults in the system that may be why the process is lacking in efficiency and accuracy. They note, “in press reports and constituent grievances, homeowners have raised serious concerns about the length of time between reappraisals, the process used by, and the accuracy of the City’s contracted residential reappraisal consultant, Tyler Technologies.” As the resolution goes on to talk about the appearance of arbitrary decisions and the lack of advance notice of potential increases, therein only lies the question of how to fix the system and better serve the community.
Recently, the North Carolina Ad Hoc Reappraisal committee invited SYNEVA Economics, regional economic research expert, to provide a report on residential property assessment equity in Buncombe County, North Carolina. The inquiry's purpose was to provide an objective, unbiased evaluation of residential property assessment outcomes.
The analysis evaluated 25,886 home sales from the annual tax periods of 2016 to 2021. To summarize, the report detailed through many graphs that there are no significant, or alarming, inequities. While there would be times that numbers, overassessments, and underassessments would fluctuate, this was due in part to the amount of time between appraisals, and that Western North Carolina is experiencing significant property price growth.
According to the report, “over the last six years, 2016 to 2021, average home prices in Buncombe County have risen significantly. On average, prices rose by 43.2 percent, or $118,200, an annual average increase of 7.5% per year.”
Economics expert Tom Tveidt notes that the data is subjective and can be read differently depending on its viewer.
Urban3, a participant in the Just Accounting project and the group that has spearheaded the research on property tax inequities in Western North Carolina, believes that SYNEVA Economics has missed the mark on their research by oversimplifying the inquiry and presenting inconclusive findings.
“Specifically, the study defines ‘communities’ using large and arbitrary boundaries. This approach makes it nearly impossible to detect patterns that exist at a local neighborhood level. There are 75 neighborhoods in the City of Asheville alone, but this study subdivided the entire county into only 27 areas. We know that decades of redlining and urban renewal were implemented with better geographic precision,” writes Ori Barber, analyst for Urban3 and Buncombe County Ad Hoc Reappraisal Committee Member.
The committee has invited Joe Minicozzi from Urban3 to speak on the data Urban3 has gathered regarding Western North Carolina’s property tax system. The presentation will go live on April 20; it will be interesting to see how the committee reacts to this report, as it will differ greatly from the findings from SYNEVA economics. If you are interested in tuning in to this public event, visit here.
The Just Accounting for Health project will be in motion until the summer of 2023, and over that time there will be several community summits focused on identifying actionable solutions to local tax inequities. In the end, the consortium will utilize the results and feedback from these studies to create a toolkit for local municipalities focused on bringing about more equitable tax policies.
To stay updated, sign up for email alerts at justaccounting.org. A special thank-you goes out to staff members who worked diligently on designing a new website! Be sure to check it out.
Seairra Jones serves as the Lead Story Producer for Strong Towns. In the past, she's worked as a freelance journalist and videographer for a number of different organizations. She currently resides between small-town Illinois and the rural Midwest with her husband, where they help manage a family homestead. When Seairra isn’t focusing on how to make our towns stronger, you can find her outside working on the farm, writing fictional tales in a coffee shop, or reading in a hammock.