Deciding the tax value of real estate, says Joe Minicozzi, is a lot like operating the sound board at a concert. And to his ears, Buncombe County is muddying up the mix.
Lots of information and adjustments, a bit like the lights and knobs on a mixing console, go into figuring out what value the county assigns to a home — a number that in turn determines how much its owner will pay in property taxes. Minicozzi, the head of Asheville-based consulting firm Urban3, says Buncombe is assigning inaccurate, low values to more expensive homes and relatively high values to modest ones.
“Which knob is causing distortion?” he asks.
Does the system for appealing tax values, which often results in lower property appraisals, wrongly favor owners of expensive homes? Are expensive homes more likely to have taxable improvements that the county doesn’t know about? Is there something amiss in the way the county groups homes into neighborhoods, or in how it assigns values to features such as heated square footage or number of bedrooms?
After more than a year of discussions and analysis, no one can answer those questions with certainty. The answer may be: all of the above.
An action plan county staffers presented to the Board of Commissioners Oct. 18 implies that each of those factors and more may make assessments inaccurate. The plan includes steps to help owners of cheaper homes seek reductions if they think the county has valued their homes too highly, to get property owners to report when they upgrade their homes and to refine some aspects of how Buncombe’s appraisers do their jobs.
“There’s not one button we can push” to get more accurate results, county Tax Assessor Keith Miller told commissioners Oct. 18, using language that echoed Minicozzi’s analogy. The plan calls for the county to spend an additional $844,000 over the current fiscal year and the next to improve the appraisal process.
Minicozzi says Buncombe’s response since Urban3 first presented its concerns to county officials in 2021, sparking an examination of appraisals, has amounted to “token gestures, empathetic statements and empty promises.” But while Minicozzi and another Urban3 analyst have been quick to criticize the county, several of the steps they offer to improve outcomes face legal, political or other obstacles.
Xpress looked at some of the changes to the appraisal process the county plans to make and others it has set aside.
Behind the door
Miller says one of the big challenges facing Buncombe appraisers is not knowing the quality of a home’s interior. The county workers who use home sales, neighborhood ratings, mathematical models and other tools to set tax values are responsible for an average of more than 10,000 properties each.
Touring a home’s basement to see if it has a wine cellar or mold creeping up the walls is not part of the job description. Miller likes to remind people that, “99.9% of the homes in this county, I will never go inside of.”
But buyers do go inside, and their decisions set the market value of a home. The level of maintenance, quality of fixtures and finishes vary widely from home to home while being mostly invisible from the outside. A house that’s nicer on the inside than would be expected from an outside view will probably get an appraisal lower than its market value, and thus its owner may pay less than a fair share of taxes; a house that looks good from the street but has interior issues may be overvalued.
Property owners are legally obligated to tell the tax assessor if they make significant improvements to their home, but many aren’t aware of that requirement (or never bother to follow it). The assessor’s office monitors building permits to catch things like the addition of an extra downstairs bedroom or a kitchen renovation, but not everyone gets a building permit either.
The county’s action plan includes steps to seek better information on the attributes of homes. For example, all Buncombe property owners will receive a letter in December asking them to check the county’s information on their property. However, the county cannot force people to respond, says board Chair Brownie Newman.
Bring the hammer down
Urban3 has urged the county to more aggressively levy financial penalties against property owners who have upgraded their homes without telling the assessor’s office. Miller says the county is moving more quickly to update property values to reflect new features, but he did not include imposing more penalties in his plan to improve assessments.
Ori Baber, a data analyst at Urban3, says owners of high-end homes are more likely to make undetected improvements than those who own inexpensive ones. That results in an inequitable tax break for wealthy property owners.
Many upgrades only come to light when a home is advertised for sale and an assessor compares its Multiple Listing Service description with the information used to determine its tax value. Miller says his office used to look for those discrepancies only when properties sold but recently switched to examining MLS listings when they first appear.
State law sets out a process called discovery by which county assessors are supposed to collect back taxes and penalties when they learn about upgrades. But Christopher Mclaughlin, an expert on property tax issues at the UNC School of Government, says it is not typically employed “unless there’s something egregious.”
The problem, Mclaughlin explains, is that the obligation to pay stays with the property after a sale; a county’s ability to make a previous owner pay is limited. The odds are good that the new owner will be the one who gets the bill, even though it was the previous owner who made the changes.
Asked whether that seems fair, Mclaughlin says, “I don’t have an answer for that.”
Do it again
Figures from Urban3 and University of Chicago professor Christopher Berry say the county’s 2017 reappraisal was generally fairer to owners of both expensive and inexpensive homes than was its 2021 reappraisal. Those numbers have seen little attention amid criticism of the 2021 effort. Baber with Urban3 says he’s not sure why the results shifted.
Urban3, as well as a citizens committee convened by the county to look at tax appraisal issues, has suggested that Buncombe reappraise more often than its current schedule of every four years. Those groups argued a more frequent schedule would reduce the inequities that arise when the value of some homes increases more rapidly than others. But it’s unclear whether another reappraisal would produce results more like the 2017 reappraisal or the 2021 one, especially with other parts of the county’s plan yet to take effect.
Miller rejects the idea of extra reappraisals, citing the $1.4 million cost for each one. Instead, he says the county needs to improve the quality of data it uses. Buncombe County’s plan includes provisions to do that, such as the purchase of a new computer program to check the accuracy of appraisals and a reexamination of the county’s neighborhood ratings.
Help me out here
In November 2021, Anthony Williams stood before a county board. He asked plaintively, “I’d like to know how you come up with the numbers to value my house” in the West End/Clingman neighborhood near downtown Asheville.
The tax value of the small, one-bedroom home Williams owns with his wife had jumped nearly $60,000 over four years to $271,500. “I just don’t think that’s fair,” he said.
Members of the Board of Equalization and Review, which hears appeals of tax valuations, explained that the burden is on the property owner to provide information showing that a value is wrong. Saying he was “a little intimidated,” Williams did not offer comparable sales or other hard data to challenge the county’s figure. The board voted 3-1 to uphold that value.
Figures compiled by Urban3 say 6.5% of the owners of the most expensive homes in Buncombe County appealed the tax value of their property last year, while only 3.8% of owners of the least expensive homes did. Of those wealthiest homeowners, 77% won their appeals, but only 47% of appeals brought by owners of modest homes were successful.
Mclaughlin says different appeal rates are common across the state and can make values less equitable across income groups. Dewayne McAfee, a member of the county’s ad hoc reappraisal committee, said during committee deliberations that low-income minority homeowners may feel “disenfranchised to the point that they don’t believe in any system” and are less likely to appeal.
Miller says it is inevitable that the county will get the value of some homes wrong, and he wants to make it easier for homeowners to bring appeals. The county plans to make data on home values more accessible online and enlist local Realtors to help people better understand the process. Whether that will be enough to end the imbalance in appeal rates remains to be seen.