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Wednesday, 13 August 2014 14:43

Round three: Haywood County takes on political adversary in property value dispute

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A challenger in the Haywood County commissioner race lost ground last week in a fight with the county over his property values, a three-year dispute laced with political overtones.

Denny King claims the county incorrectly pegged the value of his home and land, which in turn determines his property tax bill. King has accused the county of mass errors in a countywide property revaluation conducted in 2011, a criticism that is a cornerstone of his campaign for county commissioner.

King claims his home on three acres in the Beaverdam area north of Canton is worth only $165,000 — about $45,000 less than the property value listed on county tax rolls.

King took his case to the N.C. Property Tax Commission, which sided with King last year, pegging his property value at $172,000.

But the county appealed that decision to the N.C. Court of Appeals, which has now sided with Haywood County and sent the case back to the property tax commission for rehearing.

In short, the N.C. Property Tax Commission failed to offer rationale when ruling in King’s favor and failed to explain how it came up with the lower value, according to the N.C. Court of Appeals.

“The commission must issue specific findings and conclusions explaining how it weighed the evidence to reach its decision … and how it determined the true value,” the court of appeals ruling stated. “In the present case, the commission did not do so. The findings and conclusions are inadequate to explain the commission’s analysis.”

The N.C. Court of Appeals stopped short of weighing in on what King’s property is worth, however. Instead, it sent the case back to the property tax commission to reconsider.

“On remand, the commission shall make specific findings of fact and conclusions of law explaining how it weighed the evidence to reach its conclusion,” the court of appeals ruling ordered.

David Francis, the Haywood County tax administrator, questioned whether the county got a fair hearing initially from the Property Tax Commission.

While five members sit on the commission, only three were present for the hearing on King’s protest. One of the three who voted in the case arrived late and was inattentive during the hearing, even talking on his cell phone, getting coffee and dozing off, Francis recalled.

The property tax commission entered a split vote of 2 to 1 in King’s favor. The two who sided with King are no longer actively serving on the property tax commission.

 

The bigger picture

When making his case, King argued that the county’s method for pegging his property value was arbitrary and “substantially exceeded the true value” of his property.

The initial ruling of the Property Tax Commission would have lowered King’s property tax bill from about $1,300 a year to $1,100 a year.

But for both sides, more was at stake than the roughly $200 on King’s annual property tax bill. 

King has been an adversary of Haywood County commissioners for the past few years. He has publicly spoken out against their policies and decisions, including the property tax revaluation.

The county spent $5,000 in legal fees to fight King’s property value protest, according to county officials. King’s supporters have questioned why the county would spend more fighting King’s protest than it possibly stands to recoup on King’s annual property tax bill.

But Francis said the decision to appeal the initial decision to the N.C. Court of Appeals was a matter of principle. Francis said county critics have waged a “misinformation campaign” surrounding the property revaluation in 2011. 

The state requires periodic revaluations of every home, lot and tract of land to ensure the property values on the county’s tax rolls are an accurate reflection of real estate prices.

King claims the county missed the mark in the last revaluation, not only on his own home but on thousands of homes. King has criticized the formula used to appraise property.

“I believe the last revaluation was flawed. I don’t know if it was intentional or a lack of knowledge concerning the economic conditions of the real estate market,” King said in an email.

King’s own property value went up, which doesn’t square with the reality of a falling real estate market, he claimed. 

But county officials have stood by the revaluation and its method. 

As property values change, tax rolls are updated to reflect the real-world real estate, aligning the tax-book value of each property with what it would likely sell for on the open market.

But it’s an imperfect science. There’s dozens of variables at play when trying to peg what a home is worth: the size, the location, the view, the age, the type of heat, even the life left in the roof.

But at the end of the day, it’s impossible to know exactly what someone might be willing to pay for it, or what the owner’s willing to sell it for. The county’s revaluation can’t perfectly predict what the future selling price is going to be.

“It is all over the place. We have dirt that’s sold above, and dirt’s that sold below,” Francis said.

But on average, the sale prices lineup with the county’s appraised property values.

“There is not an exaggerated picture of ‘Oh my gosh, they really missed it,’” Francis said.

On average, property is selling for about 2 percent less than the county’s appraised values. In other words, the property values on the county’s tax rolls are less than real-world sale prices — discrediting the claim that the county’s tax values are over-inflated.

But King said the average is misleading.

“Overall the sales to assessed ratio may be spot on, but it’s way off at the bottom and top end,” King said in an email. “Since the reval, lower end housing continues to sell well below the assessed value, and higher end homes well above the tax value.”  

The revaluation in 2011 was based on the real estate market at the time, Francis said. And at the time, higher-end homes had come down in value substantially, while lower-end homes didn’t see the same crash.

But the real estate market isn’t static. Property values continue to go up and down. 

“It was a snap shot in time. Things change, and by 2014, things have changed. Some neighborhoods are up and some are down,” Francis said. “That’s why we do another reval to address sales that have transpired, to capture those fluctuations in the market.”

 

 

What’s a property revaluation?

Property values dictate your property tax bill. The more your property is worth, the more you pay in county property taxes.

Counties are required under state law to update property values on the tax books periodically. It’s intended to level the playing field — ensuring that property taxes match the true value of someone’s property.

 

 

A timeline of the King vs. Haywood County property value dispute

• Jan. 2011: In the countywide property revaluation, Denny King’s home on three acres in the Beaverdam area north of Canton is valued at $210,000.

• Sept. 2011: King protests the property value to the Haywood County Board of Equalization and Review, which knocks the value down modestly to $205,000.

• 2012: King appeals to the N.C. Property Tax Commission, claiming his property is worth only $165,000.

• June 2013: The N.C. Property Tax Commission sides with King and lowers his property value to $172,000.

• July 2013: Haywood County commissioners appeal the ruling to the N.C. Court of Appeals.

• August 2014: The N.C. Court of Appeals overturns the decision of the N.C. Property Tax Commission. The rationale for lowering King’s property value was “inadequate,” and the property tax commission failed to explain why or how it arrived at the lower value. The case is sent back to the N.C. Property Tax Commission for a second look.

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