In early 2012, we posted about the extreme spike in the number of property tax appeals out of Mecklenburg County's 2011 Revaluation.  Over the last year or so, we've chronicled the fall-out caused, culminating in the replacement of the tax assessor and serious discussions about a revaluation re-do.

Effective January 1, 2012, Guilford County implemented its own revaluation and it appears that Guilford County property owners are appealing in record numbers.  As reported by Joe Killian at News-Record.com, the assessments of 507 properties have already been appealed to the North Carolina Property Tax Commission, up nearly 500% over the number of appeals for the last revaluation cycle.

Of these properties, about one-third are single-family homes.  That means the vast majority are commercial, industrial, apartments, offices - most of which are income-producing properties calling for the income capitalization approach to valuation.  The implication is that the investor-owners feel that the assessments are not reflective of the realistic returns experienced.

We've summarized in a previous post the appeals process in North Carolina.  In most cases, the North Carolina Property Tax Commission is the last stop for these appeals.  Given the number of appeals from Mecklenburg County still pending before the Commission and the new influx from Guilford County, it appears the Commission is in for a very busy 2013 and 2014.

Image Copyright Pauline Eccles.  This work is licensed under the Creative Commons Attribution-ShareAlike 2.0 Generic License

Readers who have read our post on the property tax appeals process in North Carolina know that the step that follows a local appeal is an appeal to the North Carolina Property Tax Commission.

The Commission conducts multiple-day sessions once per month in Raleigh, North Carolina, in which it hears and decides the cases brought before it.  The hearing dates for 2013 have been set.  Here they are:

• January 15th - 18th;
• February 12th - 15th;
• March 12th - 15th;
• April 9th - 12th
• May 14th - 17th;
• June 18th - 21st;
• July 23rd - 26th;
• August 13th - 16th;
• September 17th - 20th;
• October 15th - 18th;
• November 19th - 22nd;
• December 10th - 13th.

Image copyright christmasstockimages.com, licensed for commercial reuse under Creative Commons Attribution 3.0 Unported License.

As our regular readers know, Mecklenburg County is in the process of managing the fallout from its 2011 Revaluation.  First, Garrett Alexander resigned his post as Mecklenburg County Tax Assessor. Now, as reported in the Charlotte Observer, the Board of Commissioners has appointed his replacement.

Effective immediately, Bobby Sheilds will serve as the Mecklenburg County Tax Assessor.  This appointment will run until the end of Alexander's term which was set to end June 30 of 2013.  At that time, the Board will decide whether to re-up with Sheilds or find a new assessor.

Although Alexander resigned his post as tax assessor, he will remain a Mecklenburg County employee.  He has been reassigned to the County's finance department where he will serve as a senior fiscal analyst.  In that post, he will supervise county staff responsible for processing invoices for functions in the Human Services Agency.

We also mentioned in our last post that the Commissioners were mulling over whether to pursue a complete redo of the 2011 revaluation.  As reported by Fox-Charlotte, it appears they have made their decision for now.  Although the Commissioners have apparently instructed the Mecklenburg County Attorney to research the legality of a redo, they have decided to leave the 2011 revaluation undisturbed and to focus instead on getting future revaluations right.  In that regard, Pearson Appraisal Services (the firm that audited the County's 2011 revaluation) will do additional work to identify more neighborhoods with flawed revaluations, and the members of the Mecklenburg County Board of Equalization and Review will be replaced.

It remains to be seen what the Commissioners will do if the County Attorney advises them that a redo of the 2011 revaluation would be legal.  In our opinion, that is unlikely under the current law.  That said, and as we've previously discussed, Senator-elect Jeff Tarte has promised to work to pass legislation making the redo legal assuming it wouldn't be already. 

Stay tuned.

As reported by several Mecklenburg County-based news outlets, the 2011 revaluation controversy in Mecklenburg County has prompted Garrett Alexander to resigned his post as Mecklenburg County Tax Assessor.  After an apparently heated meeting last night to discuss options, Mecklenburg County Commissioners have yet to decide what to do about the revaluation. 

As reported by Davidson News, County Commissioner Bill James wants a complete redo of the 2011 revaluation to be conducted by an outside firm reporting directly to the Mecklenburg County Commissioners.  He then wants to refund any excessive tax payments made by property owners going back to 2011.  As we pointed out in our last post, this action would be unprecedented and would require legislative action.  That said, Senator-elect Jeff Tarte has promissed to work to make that legislative action a reality.

But Commissioner Jennifer Roberts has warned that there are major issues with that kind of action.  “Do we refund current owners, or former owners? Because many properties will have changed hands during that time. Do we refund those who have already appealed and got a decrease? Because what if the new value comes in as higher?”

The bottom line is that no decision has been made.  The County Commissioners are scheduled to meet again next Tuesday to determine the way forward.  If they are not able to do so at that meeting, it will likely be left to the incomming Board of County Commissioners to make the call.  The new Board is to be sworn in on December 3.

As always, we will continue to monitor the situation.

Last week, we told you that the results of Pearson Appraisal Service's audit of Mecklenburg County's 2011 revaluation were on the way.  On Tuesday, November 13, 2012, they were presented to the Mecklenburg County Board of County Commissioners.  To get the flavor of the audit results, take a look at the headlines from a few news outlets:

"Review finds major flaws with 2011 Meck revaluation" - Davidson News

"Mecklenburg 2011 revaluation was a failure, must be fixed" - The Charlotte Observer

"Report Shows Assessor's Office Misled Residents" - Fox Charlotte

You can read the 40-plus page slide presentation here(pdf). In summary, Pearson Appraisal Service examined three distinct sets of property for purposes of its audit.  It examined:

150 randomly selected neighborhoods;

The 50 neighborhoods which saw the highest land value increase per the revaluation; and

375 randomly selected properties.

Of the 150 randomly examined neighborhoods, Pearson Appraisal Service found major issues with 15 (10%) of them and minor issues with another 34 (22.66%) of them.  Just two-thirds were found to have been acceptably revaluated.  Of the neighborhoods with major issues, one-third were commercial neighborhoods.

Pearson defines "major issues" as instances of inequity or erroneous data that have a significant impact on the valuation of the neighborhood as a whole.  "Minor issues" are instances of inequity or incorrect information with respect to specific properties which did not have a major effect on the overall valuation of the neighborhood. 

Of the 52 neighborhoods which saw the highest percentage land value increases as a result of Mecklenburg County's 2011 revaluation, Pearson Appraisal Service found major issues with 20 (38.5%) of them and minor issues with another 18 (34.6%) of them.

Stated otherwise, within this subset of Mecklenburg County neighborhoods, Pearson found that only 14 were revalued in an acceptable manner.  That is an acceptable appraisal rate of less than 27%.

Of the 375 randomly selected individual properties which were examined, Pearson Appraisal Service found major issues with 44 (12%) of them and minor issues with another 45 (12%) of them.

This equates to an acceptable appraisal rate of about 76%, which is the highest of the three groups of properties examined.  Pearson concluded, however, that 76% is not good. Pearson stated that The International Association of Assessing Officers, which is regarded as the leader in assessment administration and property tax policy, says the standard is 95%.

The question is now what to do about the 2011 revaluation.  Not surprisingly, some (including Senator-elect Jeff Tarte) are already calling for the 2011 revaluation to be thrown out and to be redone - effective January 1, 2011.  Such an approach would be  to our knowledge  unprecedented.  It would also require legislative action, which Tarte says he will work to make happen. 

As always, we will continue to monitor the situation.

On January 1, 2011, Mecklenburg County's last revaluation went into effect.  Since that time, many taxpayers have argued that the revaluation process was flawed and that the resulting values were inaccurate.  Those folks were loud enough to prompt the Mecklenburg Board of County Commissioners to hire Pearson Appraisal Service to conduct an independent audit of the 2011 Revaluation.

Pearson Appraisal Service has since reviewed 200 neighborhoods across Mecklenburg County - most of which were randomly selected but fifty of which were those that saw the largest increase in land values as a result of the revaluation.  The purpose of this part of the audit was to check whether properties were assessed equitably.  Further, Pearson reviewed roughly 375 individual properties to check the accuracy of the County's records.  

Tomorrow, Pearson Appraisal Service is scheduled to deliver its findings.  As we know more about the contents of the full report, we will write about it.  For now, based upon a survey of various news articles on the topic, we expect the audit results to provide vindication for those that have been criticizing the County's process and results.

Stay tuned.

• Gates Four Community Must Pay 4 Months of Fayetteville City Property Taxes After Forced Annex and Subsequent Legislative De-annex  (July 31, 2012 article by Andrew Barksdale in the Fayetteville Observer)

• Timetable Set for Audit of Mecklenburg County 2011 Revaluation Process - But Residents are told that the 2011 Revaluation Will Not Be Rescinded No Matter the Result  (July 31, 2012 article by Carmen Cusido in the Charlotte Observer)

• Among the Various Complaints, Some Question Whether the Mecklenburg County Assessor's Office Ignored Affordable Housing Rules (August 1, 2012 article by David Boraks on davidsonnews.net)

• Is the Mecklenburg County Valuation Audit a Waste of Time and Money? (August 3, 2012 article in South Charlotte Weekly)

• Mecklenburg County is Resending 2012 Property Tax Appeal Notices After Sending Wrong Information to about 3,800 Taxpayers (August 11, 2012 article by April Bethea in the Charlotte Observer)

• Halifax County, Roanoke Rapids, and Weldon City Schools Sued for Property Tax Refund by Residents of Brandy Creek and Wallace Fork (August 25, 2012 article in The Daily Herald)

• Taxing Jurisdictions Face Dilema with Falling Values - Raise Rates or Cut Budges? (September 5, 2012 article by David Bracken at newsobserver.com)

• Jackson County gets Aggressive in Collecting Delinquent Property Taxes (September 5, 2012 article by Andrew Kasper in the Smokey Mountain News)

Image Copyright Paul Swansen.  This work is licensed under the Creative Commons Attribution-NoDerivs 2.0 Generic License.

I recently wrote about bills that passed the NC Legislature that would prohibit the use of contingent fee audits, assuming the Governor didn't veto the legislation within the requisite period. Chris McLaughlin, in his post today on the Coates' Canons: NC Local Government Law Blog, states that the legislation did in fact become law.

It is worth noting that the law does not become effective until July 1, 2013 and sunsets 2 years thereafter, absent further action by the Legislature.

I also recommend Chris' post for its summary of other legislation impacting local taxes in NC during the most recent legislative session.

Over the past week and a half, we wrote quite a bit about the North Carolina Legislature's action to prohibit counties from using contingent fee auditors.  But there were a few other things going on.  This post will catch you up on other property tax issues in the news from the date of our last "news" post through yesterday.  In that time, we found just five articles ranging in date from June 26, 2012 to June 29, 2012.  Other than the legistlative action, July has been a slow month thus far.  Here are the links: 

• The Charlotte City Council Passed the 2012-13 Budget, which Keeps Tax Rates the Same but Scraps Planned Capital Improvement Projects (June 26, 2012 article by Rad Burkey posted at wcnc.com)

• The Davidson County Board of County Commissioners Approved Property Tax Incentives for Development in Downtown Thomasville (June 26, 2012 article by Nash Dunn in The Dispatch)

• Durham County's 2012-13 Budged Reduces the Tax Rate by about One Fifth of One Percent (June 27, 2012 article by Virginia Bridges in The News & Observer)

• The Warren County Board of County Commissioners has Voted (i) Not to Reappoint Tax Administrator Eddie Mitchum for Another Term; and (ii) to Raise the Tax Rate by About 6.5% (June 27, 2012 article by Jennifer Harris published in The Warren Record)

• The Cary Town Council Adopted a 2012-13 Budget Which Leaves the Property Tax Rate the Same (June 29, 2012 article on wral.com)

 Image Copyright Paul Swansen.  This work is licensed under the Creative Commons Attribution-NoDerivs 2.0 Generic License.

We wrote a couple of posts last week about the NC Legislature considering and ultimately passing a couple of bills prohibiting the use of contingent fee auditors by county tax offices. By the time you read this, we will know whether the legislation has become law, as the Governor has until the end of today [July 13, 2012] to veto the bills. Otherwise, they will become law.

In Coates' Canons: The NC Local Government Law Blog, Kara Millonzi reviews the details of the bills. For those interested in the bills, this blog is a good read.

Of particular note is the fact that the law does not take effect until July 1, 2013, and sunsets 2 years later on July 1, 2015. In the meantime, the Legislature is to study the issue and presumably decide whether to continue the prohibition on contngency fee audits or let it expire.