An analysis of property values in Haywood County aims to reduce disparities between the value listed on the county’s tax rolls and the real-life value.
The project will more precisely hone in on characteristics that affect home values, hopefully resulting in a more accurate assessment in a pending countywide reappraisal of property values due out in 2011. Since the values are used to calculate property taxes, the consequence is whether some people pay too much or too little in property taxes compared to everyone else.
The county commissioners voted last month to hire the firm RSM associates for $211,000 to conduct the analysis.
“It gets us closer and closer to accurate and fair values,” said David Francis, Haywood County tax collector.
When doing an appraisal on a mass scale — roughly 52,000 parcels of land and 40,000 structures — it is simply too costly and time consuming to personally visit each one.
Instead, properties are weighed by key variables such as number of bedrooms, whether there’s a garage or even if it has a good view. Each variable takes the value up or down a notch, but is only as good as the baseline assigned to the neighborhood. The method is often accused of painting with too broad a brush.
The analysis aims to create more distinctions between properties on a micro level.
“I feel like this will give a more accurate appraisal,” said Commissioner Kevin Ensley, who owns property throughout the county and in the past has felt the county-assigned values were a little off.
Francis had to look no further than his childhood home for a classic example of what many in the county face. The home dates back to the early 1960s in what was then rural Francis Cove. During the building boom of the past decade, wealthy houses cropped up all around it.
“Right next door to the house I grew up in is a development where no house sold for less than $500,000,” Francis said.
While that would naturally push up the value of neighboring properties, there’s no way his boyhood home built in the early ‘60s was worth as much as those houses next door, Francis said. Under the conventional reappraisal method, however, it would have been lumped into the same category.
While the technical lingo for the project is “neighborhood delineation,” Francis likes to call it “fine-tuning.”
For example, while a home with a view is already valued higher than a similar home without a view, the new methodology will adjust not just for a view but the caliber of the view.
“My idea was to drill it down even further,” Francis said.
Worth the cost?
A couple of residents have questioned the expense of hiring the outside consultants.
“I believe that department is fully capable of doing this process on their own,” Ted Carr, a Bethel resident, said during a public comment period at a county meeting last week. Carr was among a group of vocal residents who have become regulars at county commissioner meetings. Members of the group regularly speak during the public comment period, largely preaching fiscal restraint.
When county commissioners voted to hire the consultants, they justified a portion of the expense by tapping into money already allocated for a reappraisal. The county budgets for a five-person staff in the property appraisal department. But it currently only has four staffers, resulting in a savings of $48,000. By not filling the fifth position, the county can apply the savings to offset the cost of the study — in effect only costing the county $115,000 instead of the full $211,000, the commissioners rationalized.
Carr challenged the mentality, however.
“What I am asking is to do what I do at home. When I find some extra money, I might apply it to the mortgage,” Carr told commissioners. “Please, don’t say ‘So where can we spend it?’”
County commissioners don’t see the expense as frivolous, however.
While there will always be inherent disparities in a property appraisal of this scale, the analysis should level the playing field, according to Commissioner Kirk Kirkpatrick.
“I believe this project will help to even out or create more fair market values,” Kirkpatrick said.
Francis said the lessons learned from the consultants could be applied in future years by the county’s in-house staff, making the one-time cost worth it in the long haul.
“They are teaching us a way to do a more fair appraisal,” Francis said.
Haywood County used to contract out the entire job of the countywide appraisal, but brought it in-house following the 2002 reappraisal.
That’s when the county switched from an eight-year reappraisal schedule to conducting one every four years. The shorter timeframe aimed to reduce “sticker shock.” Property values had been rising so rapidly in the mountains that over a span of eight years property was doubling, tripling or even quadrupling in value. While the state only requires property reappraisals to be conducted every eight years, nearly every county in the region has adopted a more frequent schedule.
When switching to the four-year schedule, the county realized it would be cheaper to set up its own department and do the job in-house rather than continue to contract it out.
Commercial versus residential
Along with neighborhood delineation, the firm will conduct the reappraisal of all the commercial property. It appears the last reappraisal in 2006 was favorable toward commercial property. Right now, commercial property is undervalued on the tax books when compared to residential, Francis said.
Naturally, property today is selling for more than it was in 2006, the year of the last countywide reappraisal. Residential properties are selling on average only 12 percent higher than the 2006 tax value. But when commercial property is included in the statistics, sale prices are 23 percent higher on average.
“We are seeing a huge difference in the sale prices on commercial property versus the tax value,” Francis said.
Francis pointed to the Sonoco gas station on Dellwood Road between Waynesville and Maggie, which sold for $1.4 million when the tax value was listed at half that.
The county reassesses property values every four years, with the next one up in 2010. But county commissioners decided to postpone it for a year due to the fluctuating housing market.
Pegging a value on homes and land would have been difficult over the past year, the period when the lion’s share of the reappraisal would have been conducted. Housing prices were still in flux, and to some extent still are, Francis said.
Since a countywide reappraisal hinges on the selling price of existing homes, the lack of a consistent baseline during the thick of the recession led commissioners to delay the process.
“It was just really fluctuating. I thought it was in the best interest of the citizens to wait a year,” Francis said.
Swain County, which had a reappraisal slated to take effect this year, chose not to enact it despite the work already being done. Swain simply tossed out the reval, which had been conducted just prior to the recession but would have taken effect post-recession, and will just stick with current property values until the next reval rolls around in another four years.