Home­own­ers need to brace for new prop­erty tax val­ues

The Charlotte Observer (Sunday) - - Front Page - BY ELY POR­TILLO ely­por­[email protected]­lot­teob­server.com

In a lit­tle over a month, Meck­len­burg County prop­erty own­ers will start get­ting their new tax val­ues in the mail for the first time in eight years, and they could be in for some sticker shock.

County of­fi­cials say the value of both res­i­den­tial and com­mer­cial prop­erty has risen sharply since 2011, pro­pelled by a boom­ing lo­cal econ­omy and hot real es­tate market. The new val­ues will re­flect that, and will po­ten­tially shift how Meck­len­burg, Char­lotte and the other lo­cal mu­nic­i­pal­i­ties dis­trib­ute their prop­erty tax bur­den in the com­ing years.

“Ev­ery­thing’s mov­ing right along,” said Ken Joyner, Meck­len­burg’s tax as­ses­sor. The county has as­sessed more than 320,000 parcels so far, out of about 365,000 in the county. “We’re still work­ing on a lot of con­dos at this point.”

The pre­lim­i­nary num­bers are eye-pop­ping. Over­all, prop­erty val­ues coun­ty­wide are up 53 per­cent. The av­er­age home value is up 40 per­cent, while com­mer­cial prop­erty, which in­cludes apart­ments, has risen 77 per­cent on av­er­age.

This is the first reval­u­a­tion since 2011. Eight years ago, the prior reval­u­a­tion turned into a de­ba­cle for the county, as a botched ef­fort led to thou­sands of ap­peals from prop­erty own­ers over in­con­sis­tent val­u­a­tions. It took years to un­tan­gle and re­vise prop­erty val­u­a­tions, and Meck­len­burg ended up re­fund­ing prop­erty own­ers about $100 mil­lion.

Joyner, who be­came tax as­ses­sor in 2013, said the county has since cre­ated a ded­i­cated reval­u­a­tion di­vi­sion and added 46 em­ploy­ees to avoid the prob­lems that plagued 2011, in­clud­ing a qual­ity con­trol position. They’ve also taken steps to sim­plify the ap­peals process and put more in­for­ma­tion on­line to make it eas­ier for prop­erty own­ers to un­der­stand and ap­peal their val­u­a­tion.

Here are the an­swers to some key ques­tions about the 2019 reval­u­a­tion:

Q: When will I get my new tax value and my prop­erty tax bill?

A: The county will mail out new prop­erty tax val­ues in mid-

Jan­uary. But that won’t tell you how much your prop­erty taxes will be next year, be­cause tax bills won’t be sent un­til af­ter lo­cal gov­ern­ments set their bud­gets and tax rates in the spring and sum­mer. Those bills will go out in July.

Q: How much is my home’s value go­ing up?

A: Short an­swer: Prob­a­bly a lot. Long an­swer: It all de­pends. The Ob­server ex­am­ined a sam­ple of 100 homes sold this year, clus­tered in 10 neigh­bor­hoods through­out the county, from Bal­lan­tyne to Cor­nelius to Druid Hills, and com­pared the sale price to the county’s as­sessed value. Ev­ery one of them had sharp jumps in the me­dian value, rang­ing from in­creases of 36 to 133 per­cent.

But the big­gest per­cent­age in­creases weren’t in wealth­ier en­claves such as Eas­tover or Bal­lan­tyne. Val­ues rose in those ar­eas, but gen­er­ally in the 40 to 50 per­cent range. In­stead, the big­gest per­cent­age in­creases were in neigh­bor­hoods just west, north and east of up­town Char­lotte, fast-chang­ing ar­eas that have been pop­u­lar with in­vestors and new home­buy­ers in re­cent years.

In the 28208, 28205 and 28206 neigh­bor­hoods, for ex­am­ple, a sam­ple of prop­er­ties that sold this year all showed me­dian in­creases of more than 100 per­cent over their as­sessed val­ues.

Granted, this is a small sam­ple size, and the price a prop­erty fetches on the market doesn’t al­ways cor­re­spond to its tax value. But it sug­gests close-in neigh­bor­hoods ring­ing up­town could see some of the most dra­matic spikes next year.

Q: So my tax bill is go­ing way up, right?

A: Not nec­es­sar­ily. Tax val­ues are dif­fer­ent from tax bills. Here’s how it works. The county’s tax rate this year is 0.8232 for each $100 of as­sessed value. So a $200,000 house would have a prop­erty tax bill of $1,646 from Meck­len­burg County ( plus more from the city of Char­lotte or whichever mu­nic­i­pal­ity it’s in).

If that house dou­bled in value, to $400,000, and the tax rate stayed the same, the prop­erty tax bill from the county would dou­ble as well, to $3,292.

But the prop­erty tax rate won’t stay the same – each lo­cal gov­ern­ment board, such as the Meck­len­burg County Board of Com­mis­sion­ers and the Char­lotte City Coun­cil, will set its own prop­erty tax rate next year. Each could set a rate that cap­tures more taxes, lower the amount of taxes col­lected or keep it flat, at the “rev­enue-neu­tral” rate.

For ex­am­ple, in the hy­po­thet­i­cal above, the county could slash the prop­erty tax rate in half and still col­lect $1,646 worth in taxes from the $400,000 house. That would be the rev­enu­eneu­tral rate. Lo­cal gov­ern­ments are re­quired to pub­lish the rev­enue-neu­tral rate, but they’re not re­quired to fol­low it when they set their bud­gets.

Even with a rev­enu­eneu­tral rate coun­ty­wide, the taxes on an in­di­vid­ual prop­erty could still go up if that prop­erty’s value in­creases more than the me­dian amount.

And there’s an­other wrin­kle: With com­mer­cial prop­erty val­ues go­ing up much faster than res­i­den­tial val­ues, com­mer­cial prop­er­ties will make up a big­ger piece of the county’s to­tal tax base next year (right now it’s about about 35 per­cent com­mer­cial and 65 per­cent res­i­den­tial real es­tate).

That means com­mer­cial prop­er­ties will bear a big­ger piece of the tax bur­den next year, po­ten­tially spar­ing home­own­ers more of an in­crease.

Q: What if I think my new value is wrong?

A: When home­own­ers get the no­tices in midJan­uary, Joyner said de­tailed in­for­ma­tion will be in­cluded about how to ap­peal. Home­own­ers can start an im­me­di­ate, in­for­mal ap­peal via tele­phone, in per­son or on­line at www.meck­reval.com.

“If you could, re­spond to us as quick as pos­si­ble,” said Joyner. “We’ll ac­cept ap­peals in any form.”

While the county is ask­ing peo­ple to con­tact the As­ses­sor’s Of­fice within 30 days if they think there is a prob­lem with their new prop­erty value, Joyner said the Board of Equal­iza­tion and Re­view will ac­cept ap­peals through May 20.

Q: So this is it un­til 2027, right?

A: North Carolina law re­quires coun­ties to revalue all prop­er­ties at least ev­ery eight years. Meck­len­burg has stuck with that min­i­mum, which would put the next reval­u­a­tion eight years from now.

But Joyner said he’s push­ing for the county to move to a four-year cy­cle. That would place the next reval­u­a­tion in 2023. Given the real es­tate cy­cle, Joyner said that would be more fair to own­ers and lower the like­li­hood of eval­u­at­ing prop­er­ties in ex­treme boom or bust times.

“The whole pur­pose of the reval­u­a­tion is to take new market data to dis­trib­ute all of those taxes,” he said. “Dif­fer­ent mar­kets and dif­fer­ent in­dus­tries will ap­pre­ci­ate and de­pre­ci­ate at a dif­fer­ent rate.”

Ken Joyner

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