HENDERSON — Vance County officials are beginning to get ready for a re-appraisal of local property values that by the middle of the decade likely will end up influencing the property taxes residents pay.
The county government intends at the end of August to ask contractors to bid for the right to conduct the assessments, a job County Manager Jordan McMillen and his staff believe will take nearly 16 months of labor.
Their goal is to have the new assessments in place by 2024, in time for County Commissioners to take them into account when they’re deciding on the fiscal 2024-25 budget and its associated tax rate, officials said.
Presuming the bidding goes forward smoothly, the staff should have “a potential recommendation for a firm” to present to commissioners “in November or December of this year,” McMillen said.
Like its counterparts across North Carolina, Vance County when levying property taxes is supposed to charge owners based on the market value of their holdings, or as state law puts it, the property’s “true value in money.”
Gauging that requires an appraisal, which when officials start adding up all the holdings in their jurisdiction becomes a time-consuming and expensive process. Because of that, appraisals are only done every so often.
The state requires counties to conduct re-appraisals — also known as revaluations — at least once every eight years.
Vance County’s most recent revaluation dates from 2016, so it’s coming due for completing a new one on the timeline McMillen and his staff are suggesting for the project.
But the N.C. Department of Revenue actually urges local governments to conduct revaluations every four years, to combat a problem that can develop over time as real-estate markets change.
Because markets are seldom static, the price a county thinks a property’s worth and the price its owner can actually get for it aren’t always the same.
When values are on the rise, a county can end up with only part of the revenue a true market valuation would suggest. When values are falling, it can receive more revenue than a true valuation would actually entitle it to. And the more years a county goes between revaluations, the bigger those gaps can get.
Vance County has the growing-values problem.
McMillen in his fiscal 2021-22 budget request noted the latest Department of Revenue figures suggest that the county’s only taxing properties on 81% of their actual, real-world market value.
Another Department of Revenue report, which looked at 2019 real-estate transactions, said the gap is large enough that Vance County’s government, which nominally charges 89 cents per $100 of assessed value, would need to charge only 76.51 cents per $100 if its assessment was up to date.
Aggregate valuation and revenues aren’t the only issue.
Properties in a community don’t all gain or lose value at the same rate over time. The market favors some and not others. Redevelopment in a neighborhood or a downtown can push the value of every nearby property higher. So when a set of appraisals is out of date, some people can wind up paying an unfairly larger or smaller amount of taxes.
One question Vance commissioners will have to answer as the revaluation project moves forward is how closely the appraisers should look at each property.
An option is to have contractors perform “a walk-around appraisal,” looking at the outside of a home or business and seeing how closely the actual property matches the description the county already has on file for it.
But another is to conduct what officials term a “full measure and list appraisal,” not only shooting pictures of any additions the appraiser sees but taking a measuring tape to them and “verif[ying] interior data” to boot.
State regulators have signaled a preference on that score.
Because there’s such a wide gap between the 2016 appraisal numbers and what properties in the county are actually selling for, the N.C. Department of Revenue “is recommending a full-measure revaluation,” McMillen told commissioners.
The commissioners’ Properties Committee, when briefed, was willing to consider that idea, but wants to see how much money contractors will want for the job before actually getting behind it, he added.
A revaluation by itself doesn’t mean taxes will increase in the aggregate.
Before they debate the fiscal 2024-25 budget, county officials will have to calculate and publish what’s called a “revenue-neutral tax rate” that, as the name implies, is the rate that would generate the same amount of revenue using the new appraisal as the county was getting with the old numbers.
County governments typically roll back their rates to the revenue-neutral rate or something relatively close to it. But even a revenue-neutral rate can translate into higher tax bills for people who own land or buildings that have grown in value more than others over time.
Contact Ray Gronberg at email@example.com or by phone at 252-436-2850.