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| John Burgiss |
Members of the Forsyth Board of
Equalization and Review debated how they should address deep cuts to property
valuations in Monticello Park and other predominantly African-American
neighborhoods of Winston-Salem on Thursday.
The volunteer citizen board, which is comprised
of real-estate professionals appointed by the county commission, is tasked with
hearing appeals to property valuations and making mass adjustments if they find
systemic problems in the recent reappraisal by the county tax department.
“In aviation there is a concept called ‘slope
line’ to where when you slow the air speed down to the point where the controls
get kind of dysfunctional and mushy,” he said. “And it sort of likens to a
valuation problem with no sales. I think we are victim of general economic conditions
and few sales. But I don’t see any compelling reason to do anything different. I
think you’ve got to follow the sales. I don’t see significant problems with it.
I know it’s not what everybody wants to hear. I do have some concerns about a
shoot-the-messenger reaction.”
John Potter, real estate division manager
for the tax department, reviewed sets of qualified sales used to set appraisals
for properties in Monticello Park, Konnoak Acres, Shalimar/Salem Village and
Reynolds Park.
Due to the wild fluctuations in the real
estate market between 2010 and 2011, Tax Director John Burgiss told board
members that staff relied on sales from 2011 and 2012 to compile qualified
sales lists, commonly known as “comps,” for each neighborhood. Neighborhoods
with high numbers of foreclosures, which are excluded from consideration, also
had low numbers of qualified sales. Narrowing sales to 2011 and 2012 further
winnowed the list.
There were only three sales on the comp
list that were used to set values in Monticello Park.
In one, a woman represented by a power of
attorney sold a brick ranch house under a generous tree canopy that had been
previously valued at $114,300 to a couple for $32,900 in September 2011. In
November 2011, seven heirs of William Nelson Knight sold a handsome,
split-level ranch house previously valued at $184,000 to Carrboro couple for
$82,000. And in November 2012, an investor from Maine picked up a house for
$27,000 in a second estate sale. The property had previously been appraised at
$120,000.
Chair Richard N. Davis challenged the use
of estate sales to determine values for the neighborhood, noting that in his
professional experience heirs often sell below market value.
“The heirs didn’t put any money into the
purchase of the house, so everything they get is gravy,” he said. “And some
people want money. And if it’s a $150,000 house, they get an offer for $65,000
or $75,000 and they say, ‘Let’s sell.’ In a case where it’s multiple heirs, you
can’t say it’s majority wins. Everyone has to agree. They put pressure on the
one who is holding out, and say, ‘We need the money.’ So I don’t personally
think an estate sale should be an indication of a market-value sale.”
Burgiss interjected that, in fact, the
tax department does consider estate sales in its comps, in accordance with the
state law governing tax appraisals.
“I don’t mean to be in conflict with you,
but we are in compliance with Department of Revenue standards,” Burgiss said.
“I just want to make sure we’re on the same page.”
Vice Chair David Shaw said he doesn’t
relish hearing individual appeals from property owners in Monticello Park.
“What disturbs me is we’re going to have
to make decisions based on such limited information,” he said. “In that one
neighborhood we’ve only got three sales, maybe one or two are questionable as
estate sales. It’s going to be real tough to work through this.”
Board members approved a proposal by Burgiss
to front-load the individual appeals from Monticello Park and other troubled
neighborhoods so that the board can make any mass changes deemed necessary
before a June 28 deadline.
Potter said the dearth of qualified sales
presented challenges to appraisers in Monticello Park.
“It’s not something that was easily done
all the time,” he said. “Our objective is to show you how it’s done. But that’s
what an appraiser has. And when he walks away he’s got to match that to a sale
that’s out there. So whether it’s up or down, or way down, that’s what the
appraiser is charged to do.”
Davis inquired about a number of sales in
neighborhoods such as Reynolds Park and Shalimar/Salem Village that had been
cited to him by concerned property owners. Potter said that they were bank
sales and were appropriately excluded from the comps.
Board members also looked at how close
the recent 2013 reappraisal tracked with market sales in several of the
neighborhoods flagged for review. Staff presented average sales ratios, which
compare appraised values to actual sales, for that purpose.
“Konnoak seems to be right on the money,”
Davis said in reference to the sales ratios presented by staff. “It impressed
me as being more accurate than any of the others.
“Some of the others I had problems with,”
he added.
Davis cited a decision by the Mecklenburg
County Commission to bring in an outside firm to review the 2011 tax
revaluation and asked Burgiss if he saw the situation in Forsyth County as
comparable. In Mecklenburg, some property owners in the Cornelius area
complained that their assessments were too high. The outside review
commissioned by the county found instances of erroneous data that had “a
significant impact on the valuation” of whole neighborhoods, including sales
that should have been excluded from comps and misapplication of grades to
individual properties.
“Eighty-five percent of the public
regarded public relations [by the Mecklenburg County Tax Department] as poor,” Burgiss
said. “I can’t speak for the public, but we don’t have that problem here.”
Davis expressed disappointment that staff
was unable to report how many informal appeals in the troubled neighborhoods
had resulted in valuations being changed.
“In my opinion the whole idea behind this
is to find out where we were, how we stood,” he said. “And I would hope one of
the objectives of the effort would be to. ‘Okay, we did this. Here’s how we
came out. We adjusted some higher.’ I mean, what’s the use of doing this study
if you don’t know the outcome? This is the thing that disappoints me: We did
this to put our hands on the problem, and yet we don’t know the results of it.”
Shaw and White suggested that the board
take a look at sales after Jan. 1, 2013 — the legal cutoff point for the
revaluation — to see if they’re relatively aligned with those used to set
values, particularly in neighborhoods such as Monticello that are challenged by
limited samples. The two board members acknowledged that only sales from 2009
to 2012 can be legally applied for the purpose of setting values.
“I would feel more comfortable in that
neighborhood if we knew how many houses are on the market and how many sold in
the last six months,” Shaw said. “I think it would certainly be an indication,
and it would make me feel good that, hey, these valuations are right.”
Burgiss responded that he can provide any
information board members want, but added that the values are assumed to be
correct and the burden is on appellants to prove that they are incorrect.
Davis said as he reviews individual
appeals he will be mindful that overall values dropped by 11.9 percent across
the county, and measure some of the troubled neighborhoods against that metric.
“Some of these homes that dropped 65 or
75 percent just because they happened to be in a neighborhood where there was a
problem, we ask ourselves a question: Is it fair to that homeowner because he
just happened to live in that neighborhood that their values dropped so
drastically?” he asked. “That’s the question, is how we deal with it and treat
everybody equitably, treat everybody fairly.”
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