Weddington, Indian Trail consider vote, Monroe gives thumbs down
Now is not the time for a property tax revaluation, several Union County towns say. The city of Monroe passed a resolution, while Indian Trail and Weddington consider asking county commissioners to hold off on any revaluation, currently scheduled for 2012.
During Weddington’s town board meeting Monday, Feb. 14, county tax administrator John Petrosky said county officials already have decided to stop the revaluation.
“My understanding is that on March 7, the board has it on their agenda to rescind the revaluation,” Petrosky said Feb. 14.
County commissioners, however, say that’s not the case. “To the best of my knowledge, there’s been no decision,” commissioner Todd Johnson said. “I think it will be added to the March 7 agenda.”
“Nothing’s come from the board. Nothing’s been decided,” Chairman Jerry Simpson said. “In our orientation, John (Petrosky) told us a decision needed to be made by the end of March. We have talked about putting it on the March 7 agenda, but nothing has been decided.”
While they failed to pass a resolution, Weddington council members made it clear they oppose any reassessment of Union County real estate in 2012.
A reassessment means some homeowners will still pay taxes on over-valued homes. State records indicate Union County ranks among the top 10 counties most out of sync with current property values.
“Most people in Weddington couldn’t sell their house for the value established in 2008,” member Werner Thommiser said.
High-end homeowners in particular feel the pain, as their homes took perhaps the biggest hit of all. One resident of a neighborhood where homes once sold for more than $1 million explained the plight to the Town Council: “People are paying taxes on $1.2 and $1.6 million,” she said, “when homes in our neighborhood are selling in the $400s.”
The purpose of a revaluation is to create a real property tax base, Petoskey explained to the council, and to determine an equitable distribution of the tax burden. State law stipulates a revaluation must take place every eight years.
But Union County’s last revaluation took place in 2008 before the recession toppled values drastically. A previous Board of Commissioners decided to schedule a revaluation in 2012 to help lower tax bills on over-valued homes.
Proponents of the revaluation argue it is unreasonable to continue with current property values because they are frozen in a time that no longer exists and may not exist again. Although many homeowners are likely to experience a double-digit decline in assessed values, the result may very likely prompt county commissioners to raise the tax rate to make revaluation “revenue neutral,” Petoskey said.
Assuming a 14 percent decline in the real estate base, Petoskey’s presentation to the board indicated the county would require an 8-cent tax rate increase to remain revenue neutral. According to Petoskey, residents whose homes are valued between $250,000 and $600,000 will feel the greatest pain.
Should county commissioners vote to go ahead with the revaluation, the assessor’s office faces a challenge shared by many counties across North Carolina in determining accurate property values. Across North Carolina, 12 counties have postponed their revaluations from 2011 because they have don’t have enough sales.
In the past, the county has used a sales ratio to determine fair market property values, calculated by dividing the property assessment by the sales price. Since the 2008 revaluation, Union County has seen a 70 percent decline in homes sales, and many sales took place in neighborhoods with foreclosures. Although assessment equations do not include foreclosure sales, there is no doubt sales figures in recent years are affected by homes sold at bargain-basement prices.
When left with limited figures by which to determine values, assessors must expand their comparison searches to include different areas, or perhaps take an income or cost approach. “The sales approach is best for residential,” Petoskey said, “and 80 percent of Weddington’s properties are residential.”
Petoskey estimated a revaluation would cost the county about $250,000, although the cost would increase with a large number of appeals.
Based on a 14 percent decline in Weddington home values, the town also would have to raise the town tax rate 3.5 cents to avoid a significant loss in town revenue, Council Member Jerry McKee said.
“I hope you wouldn’t raise the village tax rate since you didn’t touch it the last time,” Petoskey told the Weddington board. Indian Trail is scheduled to vote on the issue Feb. 22.
“This is a lose-lose situation,” County Commissioner Jonathan Thomas. “Nobody comes out ahead, regardless which choice we make. It’s just a question of which group will be penalized.”