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HomeMy WebLinkAboutAgenda 04-05-22; 7-a - Report on 2021 Tax Appeals Results 1 ORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: April 5, 2022 Action Agenda Item No. 7-a SUBJECT: Report on 2021 Tax Appeals Results DEPARTMENT: Tax Administration ATTACHMENT(S): INFORMATION CONTACT: PowerPoint Presentation Nancy Freeman, Tax Administrator, (919-245-2735) PURPOSE: To receive a report on the results of the 2021 Appeals Process. BACKGROUND: 2021 was a Revaluation year, and in March 2021, the Notices of Revaluation were mailed to property owners. Due to public concerns, the Board of Commissioners approved a resolution at the June 15, 2021 Business meeting to extend the adjournment date of the Board of Equalization and Review (BOER) until September 1, 2021, extending the corresponding appeal period as well. Based on information brought to the Tax Office by community leaders, and additional research by the Tax Office, the BOER directed the Tax Office on July 28, 2021 to review the additional properties in the Northside area because of use restrictions in the area. The BOER adjourned on September 1, 2021 and held post-adjournment hearings through mid- December 2021. As of December 16, 2021, all Decision Notices for 2021 formal appeals were completed and mailed. Appellants had a 30-day window from the date of the decision notice to appeal to the North Carolina Property Tax Commission (NCPTS). This report provides the results of the 2021 appeals, and the effects of the additional time provided by the extension of the 2021 appeal period. It also provides the results of the neighborhood conservation districts review. It should be noted that a value appeal initiates a review of the property by the assigned appraiser, who will correct inaccuracies in the property record and adjust the value of the property accordingly through application of the approved Schedule of Values. Any resulting change in value may coincide with the appellant's opinion of value or be less or greater than the appellant's 2 opinion. The resulting value must reflect market value as of the most recent revaluation date, as is required by the North Carolina General Statutes. FINANCIAL IMPACT: There is no Orange County financial impact associated with this item. SOCIAL JUSTICE IMPACT: There is no Orange County Social Justice Goal impact associated with this item. ENVIRONMENTAL IMPACT: There is no Orange County Environmental Impact associated with this item. RECOMMENDATION(S): The Manager recommends that the Board receive the report and provide any comments and questions. 3 ax ea s esu s Nancy Freeman, Tax Administrator April 5, 2022 4 2021 Value Appeals Process 2021 was a Revaluation Year for Orange County Tax Office Real Properties are valued based on January 1 current market value Revaluation Notices of New Values mailed March 24, 2021 Appeals period began March 24 and ended September 1 , 2021 Informal Appeals period began March 24 and ended May 2 Formal Appeals period began May 3, with the Board of Equalization and Review (BOER) convening and ended September 1 with the BOER adjourning 5 Appeals Overview There were a total of 2097 appeals: 1682 Informal, 413 Formal Overall, the appeals rendered a reduction of 17% to the values of the appealed properties. The reduction represents approximately 1.5% of the County Tax Base. The appeal process begins with an appellant submitting an appeal, often using the appeal form provided by the Tax Office, in which the appellant is encouraged to provide an opinion of value and relevant information to support their opinion. The appeal is then assigned to an appraiser who reviews the appellant's evidence, the property characteristics on record, and relevant market data relating to the property. Based on their findings, the appraiser may correct inaccuracies in the property record and adjust the value of the property accordingly through application of the approved Schedule of Values. Any resulting change in value may coincide with the appellant's opinion of value or be less or greater than the appellant's opinion. 6 Informal Appeal Period ❖ During Informal Appeals Period, appeals are distributed to appraisers who review the properties and determined a new value or no change to value. ❖ In total, there were 1 ,682 Informal Appeals ❖ Decision notices for 2021 Informal appeals were mailed five times, beginning on i May 5 and ending on September 9, 2021 ❖ Decision Notices included: ❖ Property Identification ❖ Resulting Value/Decision ❖ Notification of Right to Appeal by September 1 or within 30 days of the Date of the Notice, whichever is longer ❖ There were 67 properties appealed formally that were also appealed informally. 7 Formal Appeal Period The Formal Appeals Period is established by the date the Board of Equalization and Review (BOER) convenes and adjourns. Property owners may submit a formal appeal while the Board is in session. Both the property owner and the appraiser assigned to the property gather information and provide it to the Board of Equalization and Review as e 'dence. At the hearing, the property owner/appellant may present evidence in person, or provide it for Board's review without being present. The appraiser presents evidence for County at the hearing. In 2021 the BOER convened on May 3, which was the last day by statute that the BOER was allowed to convene. The adjournment was extended to September 1 to allow more time for property owners to appeal their value. 8 Formal Appeal Period : Schedule of Hearings Month Number of Meetings Number of Appeals May 2 9 June 8 55 July 2 26 August 7 78 September 7 85 October 6 75 November 5 47 December 3 38 40 413 Total number of formal appeals: 413 20 Meetings Prior to Adjournment, 185 Appeals Heard 20 Post-Adjournment Meetings, 228 Appeals Heard 10 Meetings for Commercial Properties 3 In-Person Meetings 9 Formal Appeals Period (continued) As the meetings were conducted, decision notices were mailed to the appellants. Formal Decision Notices include: ❖ Property Identification ❖ Board's Decision/Resulting Value ❖ Notification of Property Owner's Right to Appeal to the North Carolina Property Tax Commission (NCPTC) within 30 days of the Date of the Notice Specific Requirements of the Appeal to the NCPTC, including the requirement to notice both the NCPTC and the County of the appeal. The first decision notices were mailed on July 12, 2021 . Notices were mailed nine more times, with the final round of notices being mailed December 16, 2021 . ❖ Minutes from the meetings are published on the Orange County website here: https://nc- orang ecounty.civicplus.com/AgendaCenter 10 Further Appeals : North Carolina Property Tax Commission Property owners who are not satisfied with the decision of the BOER have the right to appeal to the North Carolina Property Tax Commission (NCPTC) within 30 days of the Date of the Notice of Decision received in response to the BOER Hearing. The NCPTC requires that the appellant send notice of their intent to appeal the BOER de ision to the NCPTC and the County. Additionally the NCPTC requires that the appellant end them a copy of the BOER notice, and complete/return a form AV-14, which is provided by the NCPTC when the appeal is received. There were 12 appeals for 2021 values to the Property Tax Commission including a total of 20 parcels. Three properties owned by one appellant have been dismissed due to untimeliness. None of the properties appealed were in the Northside Review area. The average number of appeals to the NCPTC for the last three years is seven. In comparison, in 2017, the last revaluation year, there were 29 appeals to the NCPTS. 11 • Results of the Northside Appeals After revaluation notices were mailed, Tax Office was made aware of inconsistencies in the valuation of properties identified in Chapel Hill's Northside Neighborhood Conservation District and Carrboro's Lloyd/Broad Neighborhood Preservation District. There were 191 informal appeals and 51 formal appeals in the identified areas. 23 of the formal appeals were the result of an informal appeal. At the informal level, there was a net reduction of $7,859,135. 155 parcels had a reduction, with the average amount of $71 ,925. 31 increased in value, average of $106,100. 5 properties had no change. Of these 51 formal appeals there was a net decrease of $1 ,882,500. 35 of the properties decreased in value, 15 increased in value, and 1 had no change. The Average decrease was $86,217 and the average increase was $75,673. On July 28, the Tax Office requested that the Board of Equalization and Review exercise its power and duties as noted in NC General Statute 105-322 (g) (1 ) (b,c,d) and requested the Tax Office review the remaining approximately 472 properties in the identified areas that had not been appealed and make any necessary corrections to these properties and their values to be consistent with the actions taken on properties that were informally or formally appealed. 12 Results of Northside Appeals (continued) Reviews and field visits were made of the remaining properties in the affected neighborhoods, which included approximately 472 properties. 68% decreased in value, 29% increased in value, and 3% had no change in value. Overall change in value was a reduction of $10,695,500. After review, using data provided about the neighborhood conservation districts, data compiled based on sales in the area, and field visits to the properties, values were adjusted on many of the properties. Smaller properties that were conforming to the restrictions of the Northside Neighborhood Conservation District on average received a reduction in value of at least 20%. The average reduction in value was $71 ,901 . Larger, legally non-conforming properties were reviewed and some were adjusted to reflect an increase in value. The average increase was $79,400. 13 Results of Northside Appeals (continued ) While the majority of the Northside appeals occurred early in the appeal period, there were 42 appeals after the original deadline of June 30th. In order for staff to review all properties and provide the most consistent and accurate review, most value notices were mailed for the properties appealed in the Northside area in late August and early September, after all of the affected properties were reviewed. The involvement of the community, the property owners who appealed their value and the community leaders who provided information about the neighborhood conservation districts were key to making the changes to provide more equitable values. We look forward to continued communication with property owners, involved government entities, and community leaders to provide information on changes that will provide vital information for the best valuation of properties in Orange County. 14 Review of East 54 Condominiums On June 8, a formal appeal of a property located at East 54 Condominiums brought forth the fact that there was a notable difference in fair market values of the condo units in the referenced buildings that face the golf course versus the units that face the parking lot. The Tax Office researched the issue and found that there was a need to review a total of 92 properties to determine more equitable valuations for the properties. At the August 12 Board of Equalization and Review meeting the Board directed the Tax Office to make ecessary corrections to these properties and their values to be consistent with the action taken on the appeal from June 8. 92 properties were reviewed, with 72 properties decreasing in value, 19 increasing in value and 1 no change. Value notices were mailed September 7. The overall change in value for the affected condominiums was a reduction of $1 ,936,600. As in the case of the Northside Review, the information provided by the property owners who appealed their values and provided information previously unknown to the Tax Office was the key to making the adjustments to more equitably value these properties. 15 2021 Tax Appeals Results Real property sales increased steadily prior to the January 1 , 2021 revaluation date. This resulted in a substantial increase in valuation county-wide for the 2021 Revaluation. The function of the Revaluation was complicated throughout by the onset of the COVID epidemic. Tax Office Staff was able to successfully review and value all properties and send notices in March 2021 . The extension of the deadline to appeal provided additional time for property owners to appeal, due to the COVID and also due to the information and subsequent review of properties in the Northside neighborhood conservation district. The online appeals module put into production in March 2021 successfully provided an effective way for property owners to appeal value without an in-person visit. The final number of appeals is below the estimated number for 2021 . The original estimate was set at up to 5,000 appeals, based on the number of appeals in 2009. Continued outreach to the communities, and the continued involvement of our taxpayers to provide information about properties in Orange County will help us to continue to provide successful revaluations in the future.