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HomeMy WebLinkAboutAgenda 10-03-23; 7-a - 2025 Countywide Property Tax Revaluation Update 1 ORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: October 3, 2023 Action Agenda Item No. 7-a SUBJECT: 2025 Countywide Property Tax Revaluation Update DEPARTMENT: Tax Administration ATTACHMENT(S): INFORMATION CONTACT: PowerPoint Presentation Nancy Freeman, Tax Administrator, (919) 245-2735 PURPOSE: To provide an overview and update on the 2025 revaluation process. BACKGROUND: Counties in North Carolina are required to conduct a revaluation of all real property at least once every eight years. Orange County, like many other counties, has adopted a resolution to advance the cycle to once every four years. The last revaluation of real property in Orange County took effect January 1, 2021, and the next is scheduled for January 1, 2025. FINANCIAL IMPACT: There is no financial impact is associated with this presentation. 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 presentation and provide any comments and questions. 2 2025 Property RevaluationUnrlate r ,%mm Nancy T. Freeman Orange County Tax Administrator _ _ 3 What is Revaluation or Reappraisal ? Revaluation purpose stated by In Re Allred, 351 NC I (1999): ". . .purpose of a revaluation for tax purposes is to attain equalization of values, and throughout the Act there are procedures and controls for the timing and calculation of property valuations which help to ensure that equalization. Examples ... 105-284 (establishing uniform assessment standards), 105- 286 (establishing scheduled octennial valuations and horizontal valuations based on uniform geographic or category adjustments), 105-287 (limiting valuation adjustments between general valuations) and 105-317 (requiring uniforms schedules of values, standards and rules be applied countywide).The rules outlined in these sections are designed to promote horizontal equity between owners of similar properties, limit discretionary valuation and ensure reliability to the ad valorem tax process which allows taxpayers and counties to plan and budget accordingly. " 4 What is Revaluation or Reappraisal (continued) ? Revaluation re-established the fairness of the tax burden between properties, which typically change in value at different rates by location and property type. Required by North Carolina General Statute 105-286 at least once every 8 years. Orange County conducts a revaluation every four years, based on resolution signed on May 7, 2013. The last countywide reappraisal has an effective date of January 1 , 2021 . The next reappraisal will update real property values to reflect fair market value as of January I , 2025. 17 L 5 Importance of Reappraisal Cycle Required by North Carolina General Statute 105-286 at least once every 8 years. However, Orange County chooses to conduct a revaluation or reappraisal every four years. Keeps real estate value levels more equitable with current market conditions. Keeps personal property, public utility companies and real estate assessment levels more equitable since personal property and public utility values are updated yearly. 6 NCDOR Reappraisal Standards North Carolina Department Of Revenue (NCDOR) adopted the International Association of Assessing Officers' (IAAO) Standard on Mass Appraisal of Real Property in 2017 and determined reappraisal standards for all counties. The main requirements of the Reappraisal Standards are: Frequency of Reappraisal, or Revaluation Requirement statewide is every eight years, recommended is at least every four years Median Sales Ratio of Real Property determined by NCDOR indicates if a county must conduct a reappraisal sooner than planned 1 7 NCDOR Reappraisal Standards (continued) Type of Reappraisal Based on Review of Random Sample using I% of Improved Properties For Counties on a four-year cycle,a Data Review conducted by NCDOR is required three years prior to the planned Revaluation Orange County's Random Sample Review was completed in September 2022, Results: Square Footage Data:NCDOR Standard —95%,Orange County—95.41 Objective Data:NCDOR Standard —95%,Orange County—98.71 Subjective Data:NCDOR Standard —90%,Orange County—93.89% Recommendation made by NCDOR :Minimum Desktop Reappraisal Required Reappraisal Plan Orange County submitted plan to NCDOR in January 2023 Plan includes: Budget,Staffing levels,Outsourcing Needs,and Timeline 8 Current status 2023 Informal appeals resolved Formal appeals for the 2023 tax year are near completion; final Post-Adjournment Board of Equalization and Review meeting scheduled for November 29, 2023 Work is in progress for the January 1 , 2025 Revaluation Analytical Consultants has been contracted to assist for Commercial Reappraisal Sales continue to be reviewed and qualified to build our sales bank Temporary appraisal staff assisting in completing revaluation projects Neighborhood delineation is being reviewed, land valuation is in process _ f17 9 2025 Revaluation Timeline January 2022 —June 2024: Neighborhood Delineation and Field Visits January 2023 — December 2024: Sales Analysis February 2023 — December 2023: Land Valuation March 2023 — Data Validation Forms Mailed to all Residential Improved Property Owners September 2023 — November 2024: Commercial Valuation May 2024 —August 2024: Building of Schedules of Values September 2024 — December 2024: Public Hearing and Adoption of Schedules of Value February — March 2025: Notices of Value mailed January 2025 —June 2025: Appeals X 1 10 Revaluation Process Properties are appraised at 100% market value at the time of the revaluation. Data is reviewed from the most recent qualified sales leading up to the revaluation date. The Schedule of Values is a manual to describe and document the methodology and procedures for appraising real estate at market value at the time of the county's most recent revaluation. In order to reappraise all parcels at the same time as of the same date, mass appraisal is used. It is the process of grouping uniform or similar properties together to ensure fair and equitable property values, and is used by all North Carolina counties to conduct a reappraisal. Real property values remain the same until the next reappraisal, unless physical changes are made to the property during non-reappraisal years. New buildings and other improvements are appraised according to the percentage of completion on January I of each year and are valued according to the Schedule of Values to reflect the value as of the most recent revaluation date. = / f 11 Market Sales Statistics — NCDOR Annual Report Sales ratio expresses the relationship between current assessed values and current market values. Counties with populations of 75,000 or more that have a Sales Ratio of under 85% or over 115% must conduct a revaluation of their real property within three years if a reappraisal is not already scheduled within that time period. See North Carolina General Statute 105-286(a)(2). 2021 Sales Ratio Median = 98.66% 2022 Sales Ratio Median (provided by NC Department of Revenue) = 81 .97% At this point,the average Sales Ratio for 2021 Reappraisal Counties was 89.14% 2023 Sales Ratio Median (provided by NC Department of Revenue) = 69.49% First Quarter 2023 Sales Ratio Median = 65.90% Second Quarter 2023 Sales Ratio Median = 64.8% fr. iI, j 1 •, 1 •. 12 Market Sales Statistics — NCDOR Annual Report (continued) What does this mean? • To quote Chris McLaughlin, University of North Carolina School of Government Professor: "in 2022,the country is a couple of years into its recovery from the"COVID Recession"and real estate prices are BOOMING.Home prices in North Carolina increased 45% from March 2020 to March 2022 and continue to pick up steam." (from Blog:Sales Assessment Ratios Plummet,5/17/2022 https://canons.sog.unc.edu/2022/05/sales-assessment-ratios-plummet/) • As is evident by the significant change in Sales Ratio from 2021 at 98.66% to our current estimated 64.80%, sale prices continue to climb in Orange County. If the trend continues, properties could experience a substantial increase in values county-wide in the 2025 Revaluation, similar to what was experienced in the 2021 Revaluation. • Since Orange chooses to reappraise every four years,we are not required to advance the 2025 reappraisal. However,we could not choose to postpone the revaluation because the 2022 sales ratio is below 85%. - r, 13 Lessons Learned: Northside Neighborhood Conservation District and others Current plan: recognize all neighborhood conservation districts as their own separate neighborhoods. Field reviews will be concentrated in areas with previously high levels of appeals. Values continue to increase in Northside Conservation District, mirroring what is happening throughout the entire County. There have been 44 Qualified Sales within the three neighborhood codes that include the Northside District since the 2021 Revaluation. Since 2021 the Average Sale Price is $482,444, Median Sale Price is $420,000. One example of how values are changing within the Northside Conservation District: PIN 9789204198 has a current assessed value of $772,200. The property has sold twice since January 1, 2021: June 14, 2021 for $875,000 September 6, 2022 for $970,000 The current assessed value is 79.60% of most recent sales price r 14 2025 Revaluation Community Initiatives Continued Online Offerings Comper for Citizens - simple, convenient way to find and compare sales; available to anyone, anywhere Online Property Record Card (PRC) and Change Request - easy-to-understand format to review property characteristics and a way for an owner to electronically submit a change request to appraisal staff Appraisalest — online option for property owners to submit appeals; first used successfully in 2021 Revaluation, now majority of appeals are submitted online ,r F ``fes / I _� _ - _ _ - I _ _ - ., •.' - _ 15 Revaluation Projects The Tax Office planned several projects as part of the 2025 Revaluation. Below is a partial list of those projects.The projects are worked by appraisers, temporary appraisal assistants, and other assessment staff. Apartment Cleanup — In Progress Conservation Districts — In Progress Flood Zones Review Land Size Inaccuracy — Completed Mobile Homes — In Progress Valuation of Exempt Properties — Completed 16 2025 Revaluation Community Initiatives (continued) Orange County Revaluation Webpage: nttps://www.orangecountVnc.gov/878/Revaluation New video now available on Tax Administration website: What is Revaluation? Additional videos in the works: How to Appeal What is Market Value? Information on Tax Office Websites Community meetings and workshops Preparing Community for Revaluation Appealing Your Value Social Media Promotion 77 77 , f r• % iI 1 ., 1 17 Questions?