Loading...
The URL can be used to link to this page
Your browser does not support the video tag.
Home
My WebLink
About
Agenda 07-08-2025; 7-a - Report on 2025 Revaluation Review Efforts
1 ORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: July 8, 2025 Action Agenda Item No. 7-a SUBJECT: Report on 2025 Revaluation Review Efforts DEPARTMENT: Tax Administration ATTACHMENT(S): INFORMATION CONTACT: Nancy Freeman, Tax Administrator, PowerPoint Presentation (919) 245-2735 PURPOSE: To: 1) Receive descriptions of the types of analyses that are being performed on the 2025 revaluation results based on different property characteristics and provide acceptable margins; and 2) Receive information outlining the actions that will be taken by the Tax Office for properties outside of the acceptable margins. BACKGROUND: On June 1, 2025, the Tax Office requested that vendor Spatialest provide a study to compare valuation data from 2024 to 2025 to determine whether specific property or building types experienced greater percentage growth, and if so, identify the corresponding growth rates. Additionally, the vendor will conduct a vertical equity analysis to assess whether lower-value homes are being overvalued and higher-value homes undervalued. The analyses includes three projects: • Residential • Non-Residential • 2024 vs 2025 Value The purpose of the Residential and Non-Residential analyses is to review the vertical equity in the 2025 Revaluation to ensure that assessment levels are consistent over the range of values, with high-value and low-value properties exhibiting similar ratio of assessment to market value. The vendor is calculating the Mean and Median Sales Ratios, the Price-Related Differential (PRD) and the Coefficient of Dispersion (COD) based on building type and land use, as well as vacant and improved, and building age. The 2024 vs 2025 Value prosect identifies the amount of increase or decrease in value of properties from the previous 2024 values to the 2025 Revaluation values. The project looks at the range by taxing district, such as the Carrboro or Hillsborough taxing district. It also compares land value changes, building value changes, and overall total value changes. 2 The vendor will provide the data in full in Portable Document Format (PDF), and will also provide individual spreadsheets in Microsoft Excel format so the data itself can be reviewed. Descriptions and examples of each type of study are included in the attached presentation. Analyses are expected to be completed by July 9, 2025. Staff will review the vendor's results immediately upon receipt, with the goal of completing the review before the Board of Equalization and Review adjourns on July 31, 2025. This timeline ensures any necessary value adjustments based on the review can be presented to the Board of Equalization and Review for approval consideration. The finalized analysis results and corresponding changes are proposed for presentation to the Board of Commissioners at its September 16, 2025 Business meeting. FINANCIAL IMPACT: There is no financial impact on the County with receiving this report. ALIGNMENT WITH STRATEGIC PLAN: This item supports: • GUIDING PRINCIPLE — COMMUNICATION AND AWARENESS We provide information and opportunities for engagement in a transparent manner so that all in our community have knowledge, understanding, and a voice. • GUIDING PRINCIPLE — INCLUSIVITY AND ENGAGEMENT We foster an environment in which all are welcomed, represented, and empowered to participate in and feel connected to their community. • GUIDING PRINCIPLE — PARTNERSHIP AND COLLABORATION We build meaningful relationships and connections that allow us to create holistic and integrated systems of support for all. RECOMMENDATION(S): The Manager recommends that the Board receive the report and provide comments and questions. 3 ORANGE COUNTY NORTH CAROLINA 2025 Revaluation Review Efforts Nancy Freeman Orange County Tax Administrator July 8, 2025 4 2025 Revaluation Review Purpose • Provide descriptions of the types of analyses that are being performed on the 2025 revaluation results based on different property characteristics and provide acceptable margins; and • Outline the actions that will be taken by the Tax Office for properties outside of the acceptable margins. ORANGE COUNTY 2 NORTH CAROLINA 5 Description of Study On June 1 , 2025 the Tax Office requested that a third party vendor provide a study to compare valuation data from 2024 to 2025 to determine whether specific property or building types experienced greater percentage growth, and if so, identify the corresponding growth rates. Additionally, the Tax Office requested that the vendor provide a vertical equity analysis to assess whether lower- value homes are being overvalued and higher-value homes undervalued. ORANGE COUNTY 3 NORTH CAROLINA 6 What is included The analyses includes three projects: • Residential Vertical Equity Analysis • Non-Residential Vertical Equity Analysis • 2024 vs 2025 Value Study by Building or Property Types ORANGE COUNTY 4 NORTH CAROLINA 7 Vertical Equity Vertical Equity Analysis of Residential and Non-Residential analyses will review vertical equity in the 2025 Revaluation to ensure that assessment levels are consistent over the range of values, with high-value and low-value properties exhibiting similar ratio of assessment to market value. The vendor is calculating the Mean and Median Sales Ratios, the Coefficient of Dispersion (COD) and the Price-Related Differential (PRD) based on building type and land use, as well as vacant and improved, and building age. Analyses conducted using sales as they are and also using time adjusted sale prices. ORANGE COUNTY 5 NORTH CAROLINA 8 Vertical Equity (continued ) Data reviewed by: • Tax Rate code • Census block data • Township • Quintile — Evenly divides properties by value into 5 groups of roughly 7,200 properties — Allows analysis on like-valued properties Outliers identified when separating properties are excluded and reviewed separately. Exempt properties have been removed from the analyses. ORANGE COUNTY 6 NORTH CAROLINA 9 2024 vs 2025 Value Study The 2024 vs 2025 Value project identifies the amount of increase or decrease in value of properties from the previous 2024 values to the 2025 Revaluation values. The project looks at the range by tax district, such as Carrboro or Hillsborough tax district. It compares land value changes by tax district and building value changes by tax district. It also includes overall total value changes. ORANGE COUNTY 7 NORTH CAROLINA 10 Performance Standards How do we know what is correct and what needs review? Price-Related Differential (PRD) is used to identify categories outside of accepted standards when reviewing vertical equity. PRD is a statistical measure used to assess the equity of property appraisals, specifically examining whether higher-value properties are assessed at the same ratio to market value as lower-value properties. It helps determine if the appraisal process is biased towards or against certain property values. PRD does not identify an issue, but points to the possibility of an issue. ORANGE COUNTY 8 NORTH CAROLINA 11 Performance Measures (continued • Median Sales Ratio and Coefficient of Dispersion (COD) are used when calculating PRD. • NC Department of Revenue provides the standard for Median Sales Ratio ➢ Standard for Median Sales Ratio: 90% - 110% • International Association of Assessing Officers (IAAO) provides generally accepted performace standards for COD and PRD ➢ Standard Ranges for COD: 5.0 — 25.0 ➢ Standard for PRD: 0.98 — 1 .03 ORANGE COUNTY 9 NORTH CAROLINA 12 Performance Standards — Sales Ratio Sales Ratio = Assessed Value / Sales Price • It is the ratio of a property's assessed value to its actual sale price ■ Ratio of 1 .00 (or 100%) indicates the assessed value is equal to the sale price. ■ Ratio above 1 .00 means the assessed value is higher than sale price. ■ Ratio below 1 .00 means the assessed value is lower than dale price. The median sales ratio represents the typical relationship between assessed values and the corresponding sales prices in an area such as countywide or in a neighborhood . ORANGE COUNTY 10 NORTH CAROLINA 13 Performance Standards — Sales Ratio • Median Sales Ratio is found by ordering all ratios from highest to lowest and selecting the middle value, which reduces the impact of outliers. • The mean sales ratio is the average of the dataset of sales ratios. • Median sales ratio is more widely used than the mean sales ratio and the standard provided by NCDOR. ORANGE COUNTY 11 NORTH CAROLINA 14 Sales Ratio — Within Standards Sales Ratio Chart — Assessment Ratios by Sale Price -- Ideal Assessment Ratio = 1.00 x 1.15 - x x x 1.10 x x x x x xx x x x x x x x Oa 1.05 x x x Inc w x x x x a M x x x x x x C: Lnx N1.00 ---------------------- ------------------------------x---------- 0 x x x x x x x x m._ in na x M L- x CL 0.95 x x x x x x x x x x x 0.90 x 0.85 x $100,000 $250,000 $400,000 $550,000 $700,000 $850,000 $1,000,000 Sale Price ORANGE COUNTY 12 NORTH CAR©LINA 15 Performance Measures — Coefficient of Dispersion Coefficient of Dispersion is used to measure uniformity in a sales ratio study. A high COD indicates a large variance between the highest ratios and the lowest ratios compared to the median . A low COD represents conformity amongst the county. COD standards vary by strata, which is the division of properties into distinct groups or categories for mass appraisal purposes. • Single-family homes and condominiums (urban and suburban) • Newer or homogenous market areas: 5.0 to 1 0.0 • Older or heterogenous market areas: 5.0 to 15.0 ORANGE COUNTY 13 NORTH CAROLINA 16 Performance Measures — Price-Related Differential (PRD ) PRD = Mean Ratio divided by Weighted Mean Ratio ❖ Mean Ratio = sum of appraised values divided by number of appraised values ❖ Weighted Mean Ratio = sum of appraised values less sum of sales prices IAAO Standard Acceptable range: 0.98- 1 .03 Results of PRD : ➢ A PRD above 1 .03: appraisal process may be regressive, meaning higher- valued properties are undervalued compared to lower-valued properties. ➢ A PRD below 0.98 appraisal process may be progressive, indicating that higher-valued properties are assessed at a higher rate than lower-valued properties. ORANGE COUNTY 14 NORTH CAROLINA 17 Price- Related Differential ( PRD ) - Equitable PR© = 1.000 — Equitable Pattern (Within Standard) x --- Ideal Ratio = 1.00 1.100 - 1.075 x x 1.050 x x x o x x � x x 1.025 x o x x x x w E 1.000 --�------------------------"---- ----------------------- x x a x x x x xx x x x x x x Q 0.975 x x x x x x x 0.950 x x x x x x x x x x 0.925 x $100,000 $250,000 $400,000 $550,000 $700,000 $850,000 $1,000,000 Sale Price GRANGE COUNTY 15 N©RTH CAROLINA 18 ................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................ ................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................ ................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................ ................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................ ........................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................... ................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................ ................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................ ................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................ ................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................ ................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................ ................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................ ................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................ ................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................ ................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................ ................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................ ................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................ ................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................ ................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................ ................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................ :.::.;:.:: .:.::.::.::.:;:.::.::.::.::.::.::.::.::.::.::.::.: .::.::.::.::.::.::.::.::.::.::.::.::.::.::.::.::.::.::.: .::.::.::.::.: .::.::.::.::.::.::.::.::.::.::.::.::.::.::.::.::.::.::.::.::.::.:: PRD -=r 1.055 — Regressive Pattern Outside Standard 1.4 X --- Ideal Ratio = 1.00 X X X 1.3 X x x x x x x x a x x 1.2 x ro X x x x x x x a� r= x x x X a, X x do x � x x x x x x .':� x 'SC' x x x x x XX x i::>: O #. 9 . x 100 000 250 000 400 000 550 000 700 000 S850,000 $1,000,000 S S S S S Sale Price .............................................................................................................................................................................................................................................................................................................................................................................................................................................. 0.............. ......lw.+'0 .............................. ......... ......... ................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................ ................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................ ................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................ ................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................ ................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................ ................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................ ................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................ ................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................ ................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................... ................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................ ................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................ ............................................................................................................................................................................................................................................................................................................................................................................................................................. 19 Price- Related Differential ( PRD ) - Progressive PRD Chart — Progressive assessment Pattern PRD 0.947 (Outside Standards) 1.3 --- Ideal Rc�tIU = 1.00 1.2 v o U_L x a °` 1.1 x x x oc -�U- x XX X >: C .i. x x x E x x x x V) m x x (1)1 1.0 ---- - ---------- --�---------------x--------------- --- ---------- Ln M Ln x x Qx x x xx Q x -- x x 0.9 X X XX 0.8 5100,000 $250,000 $400,000 $550,000 $700,000 5850,000 $1,000,000 Sale Price ORANGE COUNTY 17 NORTH CAROLIT14A 20 Action : What the Tax Office Will Do Tax Administration will follow the standards for PRD as set by the IAAO to identify categories outside of the accepted standards. PRD is an indicator of the presence of possible issues, a signal to do further review. It does not always identify that there is an issue, or what issue needs to be addressed. Once the review has been completed based on PRD for the different categories, Tax Office will look at the neighborhoods that make up categories outside the standard range. The analysis at the neighborhood level will indicate if there is an issue that needs to be addressed or if the PRD is off due to explainable reasons: new construction or a missed exemption for example. ORANGE COUNTY 18 NORTH CAROLINA 21 Action : What the Tax Office Will Do (continued If on review, an issue is determined , the Tax Office will identify the properties affected by the issue and define value changes needed . Then present the findings to the Board of Equalization and Review (BOER) and request a motion to make the appropriate changes to the property record . If the BOER agrees and makes a motion doing so, the values will be updated accordingly, and new value notices will be mailed to those property owners that are affected . ORANGE COUNTY 19 NORTH CAROLINA 22 Current Work — Request to BOEP The process of requesting that the Board of Equalization and Review (BOER) direct the Tax Office to make changes to values has been conducted for one neighborhood during 2025 BOER. The request was based on an analysis of neighborhood 6306, Chestnut Oaks, and was presented at the June 12, 2025 meeting. • During property review for an appeal, the appraiser found data errors in calculations for a property used in creating the model for valuing the neighborhood. • Correcting error and updating the neighborhood analysis revealed that other properties in the neighborhood should be adjusted. ORANGE COUNTY 20 NORTH CAROLINA 23 Current Work — Request to BOER (continued • Tax Office requested BOER to give direction to adjust down the values for the affected properties. • A motion was made by a Board member and was approved. • Value change will be reflected in decision notices sent for the properties who appealed their values. • Property owners in the neighborhood who did not appeal their value will be sent a value change notice. • Changes made to property values based on board motions are recorded in the minutes for June 12, 2025. ORANGE COUNTY 21 NORTH CAROLINA 24 Current Work — Neighborhood Reviews In addition to the study that the Tax Office has contracted out, there are reviews being conducted internally to review vertical regressivity. These reviews are being conducted based on the office's internal review of neighborhoods. Of the 1 ,000 neighborhoods in Orange County, we have identified 44 by internal review and are including 20 that have been suggested by OCPTJC. ORANGE COUNTY 22 NORTH CAROLINA 25 Current Work — Neighborhood Reviews (continued ) Steps Taken: 1 . PRD has been calculated for each of the neighborhoods. 2. For any that fall out of the standard range, the Price-Related Bias (PRB) is calculated. After discussion with UNC School of Government Representative, Price-Related Bias (PRB) is being used as a second review based on their recommendation. PRB is a statistical measure of vertical equity in property assessments. It quantifies how assessment ratios (assessed value to sale price) change with the value of the property. In practical terms, PRB represents the percentage change in the assessment ratio when property value is doubled or halved. As a general rule, the PRB coefficient should fall between -0.05 and 0.05. 3. Graphs are generated for each of the neighborhoods. For neighborhoods that are outside of PRB standards the graphs will help to identify any outliers that need to be reviewed. ORANGE COUNTY 23 NORTH CAROLINA 26 Current Work — Neighborhood Reviews (continued ) 4. The outlier will be excluded, the reason noted, and the PRD/ PRB analysis recalculated. 5. If removing the outlier does not move the neighborhood within standards, land value and Effective Year Built will be analyzed in a comparison of higher valued sales and lower valued sales. 6. The assigned appraiser will review the neighborhood for corrections and changes. ORANGE COUNTY 24 NORTH CAROLINA 27 Current Work — Neighborhood Reviews (continued ) Coefficient of Prins Related Bias Plot rx s �1 "(Average 01 Salt Price and Assessed Vahie)"(2)) �r ORANGE COUNTY 25 NORTH CAROLINA 28 Current Work — Neighborhood Reviews (continued ) In the example graph on the previous slide, there is an outlier near the top that skewed the data. • 2021 sale price was $43,772 and appraised value is $469,500. • The 2021 sale was vacant land, which was valued at $44,300 prior to the 2025 revaluation. • A house was built after the property sold, which has a 2025 value of $370,000 that contributes to the total value of $469,500. • This illustrates why outliers need to be identified, researched and excluded, rather than using the report totals as an obvious sign of issues. • Removing this outlier changes the PRB from -1 .077 to -0.29. The neighborhood still requires additional review as it is still outside the acceptable range, however the review of this single outlier exhibits why it is important. ORANGE COUNTY 26 NORTH CAROLINA 29 Current Work — Appeals C • Informal Appeals total : 3,462 Formal Appeals as of June 30: 366 • 2,561 completed • 1 ,403 of which have had some change — 30 of which were increases ORANGE COUNTY 27 NORTH CAROLINA 30 Current Work — Appeals — Orange County Property Tax Justice Coalition (OCPTJC) Information as of June 18, 2025 for Appeals made by OCPTJC, for Habitat for Humanity properties and properties in Northside District • 182 properties under appeal • 54 have been marked as complete • 15 are commercial properties • Of the 54 that are complete - 33 experienced a change • Of the 21 that were not changed: 7 single family, and 1 of those was filed by OCPTJC • Of the 54 that are complete, 40 of them are in the name of an LLC or are exempt properties ORANGE COUNTY 28 NORTH CAROLINA 31 Current Work — Appeals — Orange County Property Tax Justice Coalition (continued ) • Specifically for neighborhoods of concern to OCPTJC including N B H 7134, 7200) 7170, 7102, 7032, 7124, 71627 71047 4306, 33025713057042: ❖ 93 have been marked as complete 63 experienced a change: 60 value decrease, 3 value increase ❖ 30 experienced no change ORANGE COUNTY 29 NORTH CAROLINA 32 Conclusion • The Tax Office is committed to fair and equitable property valuations. As the results of the study provided by third party vendor are reviewed , and the internal reviews are conducted , any issues revealed will be presented to the Board of Equalization and Review as quickly as possible for resolution . ORANGE COUNTY 30 NORTH CAROLINA