08/14/08 — County eyes revaluation cycle law

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County eyes revaluation cycle law

By Steve Herring
Published in News on August 14, 2008 1:47 PM

Wayne County isn't expected to be impacted by a new state law that could require property revaluation every four years -- at least not for this year anyway since the county already is in the midst of its regular eight-year revaluation cycle.

"Our big argument against mandating counties going to four years is the whole issue of does it pay for itself," County Manager Lee Smith said. "You have got to have a certain percentage of growth on an annual basis to have it pay for the cost. It costs us between $1 million to $1.3 million to conduct the revaluation process."

Wayne County's growth rate has averaged only 2-3 percent over the past eight years. However, county tax officials are unsure of how the economy may impact that rate in upcoming years.

The portion of the law concerning the shortened-revaluation cycle only applies to counties with populations of 75,000 or more. Wayne County has a population of about 114,000.

The revaluation is triggered once a county's sales assessment ratio is less than .85 percent or greater than 1.15 percent. That percentage is a ratio of the overall average difference between the selling price of property in the county and its assessed value.

Once that threshold is reached, a county has three years in which to conduct a revaluation.

It has been five years since Wayne County's last revaluation and the ratio has just dipped below the .85 threshold -- meaning the county would have to conduct a revaluation within three years, something it already is in the process of working toward.

"Once we have the next revaluation then from that point forward if, in any given year, we drop below the .85 sales assessment ratio then we would have three years to conduct a new revaluation," said David Ward, Wayne County tax administrator.

The N.C. Dept. of Revenue Property Tax Division requires counties to conduct a sales ratio assessment study annually. The state sends out a list for county tax officials to follow. Local tax officials pull random deeds from the register of deeds office and compare the selling prices and assessed values of the properties.

"It's normally 400-600 sales (compared), it varies," Ward said. "They (state) take the information and compile it to get the overall average difference between selling price and assessed value and that is the ratio."

"In a revaluation year, the market value and assessed value would be the same," said Alan Lumpkin, assistant tax administrator. "We try to hit the 100 percent market value. And as the years go on, hopefully the market value will go up. Our assessed values stay the same. You will see the disparity gap get bigger and then we are required to have revaluation to bring the assessed value back to market value."

"In 2003, we notified you of what the market value of your home was," Ward said. "If you hadn't made any improvements or changes to your home or added anything to affect the value on it, you are going to pay on that same market value for the next eight years even though the market value of your home might have increased.

"At the next revaluation, we will bring you back up to market value again."

Lumpkin and Ward said a number of the state's faster-growing counties -- particularly ones along the coast and in the mountains -- have gone to four-year revaluations.

Meanwhile, Smith said photography of property in the county has been completed at a cost of $80,000 to $100,000.

This year the photos are in color -- something Smith said will be "very helpful" in the appraisal process and "great information" for developers, Realtors and others.

Also, later this year, the county will install new appraisal software.

"We have the same software we have used for many, many years on an old mainframe," Smith said.

He said the county is in the "final stages" of making a decision on software and should have it in place by December or January "so we can begin the process next year."

"I am concerned that if we just have moderate growth it (shortened revaluation cycle) may not pay for itself," Smith said. "I think the state should allow the county to make the decision. Right now we have do it every eight years or you can do it every six, four or two if you wanted to, but that was totally up to your jurisdiction based on whether it would pay for itself."