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News Counties delay revaluation, follow statewide trend

A graph showing Jackson County’s volume of valid sales from 2009-2011.After a lengthy debate over whether or not to postpone the county’s revaluation, Jackson County Commissioners unanimously passed a resolution on Jan. 17 to delay the process until 2016, instead of the scheduled 2013 date. Jackson is just the latest WNC county that has followed the trend across the state to push back property revaluations until the real estate market improves.

The county’s tax administrator/assessor, Bobby McMahan, advised board members to postpone the revaluation date during the county’s Jan. 13 work session, citing a lack of comp data (comparable home prices in a localized area) and an insufficient amount of time to complete the study as the main reasons such a decision was warranted. After the 2016 revaluation Jackson County will return to their original four year revaluation cycle. State law mandates counties to reassess property values at least once every eight years.

Jackson County conducted their last property revaluation in 2008, right before the housing market tanked. Market data from 2004, 2005, 2006, and 2007 was used for the county’s last revaluation, a period when the housing market was greatly inflated.

Last March, the county voted to delay their 2012 revaluation for another year to 2013. Finally, commissioners agreed to utilize all eight years of the state Machinery Act before reassessing property values in Jackson County again, moving the process back another three years. The county will have to go through with the revaluation in 2016, regardless of how the housing market is faring, because their eight year time frame will have expired.

Revaluations appraise all real property–land, buildings, structures, and permanent fixtures on the land–in a county. State law mandates revaluations of real property to accurately gauge values based on the current real-estate market. With the onset of the recession, marked by the subprime mortgage crisis, many counties in North Carolina postponed their revaluations because of the declining housing market.

Indeed, counties delaying revaluations has become a trend throughout the state of North Carolina, as some county leaders are reluctant to reassess property values amidst one of the worst housing slumps since the Great Depression. Some county commission boards fear losing a substantial amount of property tax revenues in the event of a revaluation, which would lead to a reduction in services, or a tax increase if the county wanted to keep their services intact. Other county boards fear that a revaluation would lead to an inequitable distribution in the county’s tax base, as higher priced units would see their values fall and smaller/medium sized real properties would be hit with higher values, and a subsequent increase in their taxes.

The economy has led to heated debates among several commission boards across the state on the topic. For example, in 2009 four counties repealed their revaluations even after the new valuations took effect on Jan. 1, 2009. The four counties were finalizing their data right as the economy was collapsing in 2008. According to the UNC School of Government, from June 2008 to January 2009, both the Dow Jones Industrial Average and the national median sales price for existing homes dropped by nearly 25 percent. The downfall reflects just how volatile the real-estate market was during the peak of the recession.

The four counties appealed to the North Carolina Department of Revenue, the Attorney General, and the General Assembly, and their appeals were approved, according to an article entitled “The Revaluation Revolt of 2009,” written by Christopher B. McLaughlin with the UNC School of Government. McLaughlin’s article sheds some light on the contentiousness of counties conducting revaluations in an economic downturn.

Why are revaluations so important? The value of real property determines how much taxes the owner will eventually pay. Moreover, Ad Valorem revenues are vital to Jackson County, as they are to every county in the state. They are the primary revenue source for all 100 counties in North Carolina. A dramatic change in the real-estate market that could be reflected in a revaluation might impact county coffers. Jackson County Commissioners used $29,369,607 of property taxes in their 2011/12 fiscal year budget, out of a total budget of $58,205,961; over half of the county’s budget emanates from property taxes.

Based on what Bobby McMahan told Jackson County Commissioners in early January, the real-state market has not seen a robust recovery since 2008. McMahan showed commissioners that if the board were to move forward with a revaluation in 2013, they would have to use a minimum amount of data to justify the new appraisals. In the past three years, only 1,330 valid sales can be used by McMahan’s team as data for a 2013 revaluation, compared to nearly 8,000 valid sales in their revaluation database from 2004- 2007. According to McMahan, the insufficient data would likely lead to a high number of appeals from citizens disputing their new appraisals in court. This would cost the county more money in the long-run.

Also, Jackson County Commissioners listened to several citizens in early January who advised the board to push the revaluation back, believing middle class residents in Jackson County would have to shoulder a higher tax burden because high income residents in the Cashiers-Glenville area would see a large drop in their home prices. The same argument was used in Macon County by tax administrator Richard Lightner, who stated that higher priced units in Highlands and other areas in the county would see a significant decrease in value in comparison to medium sized units. However, like Lightner, McMahan stated that the lack of comp data is the main reason for the postponement.

Jackson County Manager Chuck Wooten seems to agree with McMahan. “The most critical component of any revaluation is the database of property tax records,” said Wooten. “Our goal is to validate the accuracy of the data base and to include as much information as possible. This would include a visit to each parcel and photographs of all improvements. Since our last revaluation in 2008, we have tracked sales data for the entire county to identify those sales that appear to be valid and can be used in establishing market value,” stated Wooten.

Wooten continued to emphasize the importance of adequate comp data, saying that the reduction in valid sales would make it hard for the county to defend new property values after a revaluation. Macon County’s tax administrator, Richard Lightner, cited insufficient comp data as well, telling Macon County’s Board of Commissioners that the county would have a difficult time defending new values if citizens were to appeal their updated appraisals. Last October, Lightner stated that the county would spend a lot of money and time in court fighting appeals if they moved forward with their 2013 revaluation, something Macon County has not dealt with in past revaluations, according to Lightner.

“Delaying the revaluation allows us the opportunity to capture additional information over the next four years to put us in a better position to have valid data on which values can be established,” continued Wooten. Jackson County has one of the lowest property tax rates in the state of North Carolina at .2800 per $100. Only Macon County has a lower tax rate at .279 per $100. Jackson County commissioners followed Macon County’s lead in postponing their revaluation process for the maximum amount of eight years with the hopes of attaining more comp data. Macon is scheduled to conduct their revaluation in 2015. “We are cautiously optimistic that the economy will improve and the volume of valid sales will increase, thus providing adequate data to establish market values,” concluded Wooten.


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