Revaluation in Mecklenburg County is source for complaints

Part 3 of a 3-part series
By Vicki Hyatt | Sep 06, 2013

A group of Haywood County citizens is pressing for another look at the 2011 property revaluation process, with some calling for the process to start anew as is happening in Mecklenburg County.

Some base their case on an appeal to the N.C. Property Tax Commission; others refer to flawed "neighborhood" groupings in Haywood and still others complain about the market adjustment percentages as reasons the local mass reappraisal done two years ago was flawed.

Under state legislation that authorized a revaluation do-over, several steps must first occur.

Senate Bill 159 specifically addresses mass appraisals done between 2008 and 2012.

The law stipulates if the county has independent evidence there are significant issues of inequity in a majority of commercial neighborhoods, if erroneous data had an impact on a neighborhood as a whole and if the evidence comes from an independent qualified appraiser sampling no less than 375 properties, a reappraisal must be done.

If new values are assigned, whether they are higher or lower than they would have been in the year the faulty reappraisal was done, then the county must reimburse property owners for taxes erroneously assessed, along with 5 percent interest. On the flip side, if property is found to be more valuable than it was assessed, the county could collect back taxes due.

Christopher McLaughlin, professor of public law and government with the UNC School of Government, concluded that while the law is not technically a local bill, the requirements necessary to authorize retroactive changes to tax values are intended to limit the law's effect to Mecklenburg County only.

Mecklenburg woes

Fred Pearson, secretary-treasurer of Pearson’s Appraisal Service, has been involved in the Mecklenburg process since the beginning. His company was retained to assess the county’s reappraisal and found that 49 of 151 randomly selected neighborhoods had at least minor flaws and found 15 neighborhoods had major issues.

Furthermore, customer service was lacking in the tax office when citizens pointed out issues with how their property was valued, he said. These results prompted the state bill allowing for a do-over, and Pearson is involved in that process in Mecklenburg, as well.

The initial problems arose from numerous complaints the commissioners received from property owners, Pearson said, and that led to the independent review his company conducted.

“You don’t expect customer service to be good anytime you deal with taxes, but this was worse than what we anticipated,” Pearson said.

Since the problems in the tax office in Mecklenburg, both the county manager and county assessor have left.

The cost of a Mecklenburg reappraisal was estimated between $4.5 and $9 million, depending on how much was done in-house, and how much of the work is contracted out.

Part of the problem in Mecklenburg was that the neighborhoods used for comparison values were too large, Pearson said. The recommendation was to create smaller neighborhoods, similar to Wake County where there are 3,000. Haywood County has 900 neighborhoods where like properties are grouped.

Pearson said it is standard practice to apply a market adjustment factor, such as occurred in Haywood, to bring properties in a neighborhood in line with recent sales.

In a typical revaluation, between 5 and 10 percent of the property owners can be expected to appeal the new values assigned. Customarily, those problems are first handled administratively, and if not resolved satisfactorily, can be addressed with the local appeal process.

In Haywood, 49,759 properties were part of the 2011 appraisal process, said David Francis, county tax administrator. In 2011, there were 1,606 tax appeals, or 3.3 percent.

The goal in any reappraisal process, Pearson stressed, “is property that is appraised at market value and is consistent.”

Since the amount of each sale in a county is recorded, it can be compared to the tax value of the land, home or business. In Haywood real estate values are shown to be tracking within 1 to 3 percent of qualifying sales prices.

Pearson said the sales ratio factor is an important one that is generally a good indicator of a mass appraisal's accuracy.

In Haywood, county leaders took no action to address the reappraisal complaints at the August meeting.