Since the Mecklenburg County commissioners decided to delay the planned property revaluation -- a proposal we urged them to reject -- they should show some clearer thinking on what to do next.
First, understand that revaluation, if accompanied by a revenue-neutral tax rate, doesn't mean everyone's taxes go up. If your property values have risen about as much as the countywide valuation has risen, your taxes would stay the same. Plenty of people would be in that situation. If your values went up more than average, or went down or rose less than average, you'd pay lower taxes. So the stuff about everyone's taxes going up is malarkey. Read between the lines: People with money and houses in sought-after neighborhoods (and thus, political influence) are more likely to see higher taxes. You figure it out.
Second, the argument to delay because the market is volatile is flawed as well. Yes, the market is changing, and yes, the real estate bubble has popped and some properties are selling for under the asking price or less than what people paid for them a few years back. But remember, the county plan was to revalue every two years. Under the old timetable there'd be a 2011 revaluation to capture any dramatic changes in market value. And a 2013 revaluation, a 2015 revaluation, etc.
Finally, there is one revaluation issue that is serious and deserves some study: How best to protect long-time homeowners on fixed incomes who live where home values are rising sharply. Neighborhoods such as Wilmore, Wesley Heights and NoDa are examples. People who bought into lower-income or working class neighborhoods may have legitimate problems paying rising property taxes. The county (AND the city) should find a way to address this problem. This won't be easy, mind you. Property tax laws are state laws, and require legislative changes, not just county-level action.
I disagree with you here. We are talking about politicians. There is not a single politician anywhere on this planet that has anything other than his/her power and an increase in revenue as top priorities. They will find a way to bilk EVERYONE for more tax money. After all, it takes increased revenue to make every function of life a government function - and that's what every politician wants, on both sides of the aisle. The more functions that are government-controlled, the more the citizens have to rely on them, which gives them more power. There is not one ounce of truth in anything politicians say these days. None of them can be trusted, and they're absolutely not going to do anything that will decrease or flatline revenue. Yes, we have to do the revaluation eventually. But EVERYONE will have a higher tax bill regardless of when it's done, so there's no harm in waiting until next year when the economy should be in better shape and fewer people are out of work.
ReplyDeleteA delay because of market volatility is perfectly reasonable. Here is why: The tax appraiser uses comparable 'recent' sales to determine a neighborhood's typical price per square foot. The more sales, the more 'accurate' this guess will be. Since prices are declining, it is hard to make this judgment. If the appraiser needs five sales to make the comparison, some might be from a year ago, and therefore the price and the tax would be inflated. It makes more sense to wait till prices stabilize, and then do the appraisal, which will determine up to 10 years of future taxes.
ReplyDeleteWhen the Observer and Jeff Taylor over at the JLF MeckDeck blog both agree that the revaluation should not have been postponed, you know something weird is going on. They never agree on anything, so when they do, you should pay attention.
ReplyDeleteAlthough it might hurt me personally for the revaluation to occur now, as I am sure my residence has increased in taxable value, it doesn't make sense for people in very expensive houses to continue to pay a lower tax than they should be. And if the revaluation forces a few homeowners to have to sell their overleveraged homes, then they shouldn't have been in them in the first place.
The real issue that needs to be addressed is in the methodology for valuation. The way the County does it is that they assign a lower value to older homes regardless of whether they have been remodeled. Thus you have hundreds of 4,000 square foot houses in Myers Park originally built 70-80 years ago that have been completely gutted and effectively rebuilt, but are valued for assessment purposes at $200,000 or $300,000 simply because of age---which yields a total assessment of $750,000 (including land) for a home that is worth $2 million even in this market. New houses that size in the same area are valued at twice the amount.
ReplyDeleteThe other problem is the historic tax credit, which was originally needed to encourage renovation of old homes but which is not utilized almost exclusively by wealthy homeowners.
What this means is that you have a bunch of investment bankers who are being subsidized by everyone else.
The other key thing to consider is the inherent unfairness of the property tax. It assumes that people are more 'affluent' because the value of their property has increased. That is false. A home is a LIABILITY, not an asset, until you sell it. You are no more 'richer' because you live in a home that has increased in value, until you sell it. Consider a 70-year-old single woman living on a pension in a million-dollar home. Her income is small but her tax is large. And she uses almost no county services. A fairer tax would be on 1) the sale of the home (a transfer tax, or 2) a progressive income of people working in Mecklenburg county. Or both. Income tax? Oh, that is horrifying. But it would be more fair based on who is using the counties services, and certainly gets more at 'wealth.'
ReplyDeleteCharlotte/Mecklenburg's Three Step plan for anything.
ReplyDelete1. Dig hole in sand.
2. Place head in sand.
3. Use hands to cover head with sand
This has helped us get gangs, light rails outrageous cost overages, the banks owning us, Velma and George as elected officials, our crappy Observer news people/editorial staff and the Bobcats just to name a few.
But it is strange the Observer wants this revaluation as much as they do for all illegals to get citizenship?
Maybe my thinking on getting revaluation this year is flawed.
Anon at 1:50 is absolutely correct: A house is an illiquid asset and just because you own one does not make you wealthy. Property taxes should either be eliminated completely, since you pay taxes on the INCOME that you use to help pay for the house in the first place (this is double taxation, basically), or they should at the very least factor in your income level to determine an amount that you can actually afford. There is no reason why someone should be forced to sell their home just because the surrounding properties increased in value and their taxes went up as a result.
ReplyDeleteHere is a novelty idea. If we got our spending under control instead of throwing public money on every crazy idea out there, maybe we would not need revaluations and tax hikes every other year.
ReplyDeleteI know it's a lost cause, but approving hundreds of millions of dollars worth of bonds for parks, affordable housing, arenas, stadiums to name a few, will only lead to more revaluations in the future.
I am in the situation posted by anonymous 1:50p. When married bought my house for 140,000, 23 years ago (in a close to uptown neighborhood). As of the 2003 assessment it was valued at 695,000 which translates to a prop tax of about 9300. I am a divorced mom (kids now grown) with a low yearly income and have to pay the prop. taxes out of my savings. Whenever the house gets reassessed, undoubtedly the value will be higher because I am surrounded by million dollar houses. My house has not been modernized/fancified inside because I can't afford to do so. Also I can't sell the house in this down market. The major point is that a person's house value doesn't represent a good measurement of income---especially for older folk who have lived for decades in the same place.
ReplyDeleteI am in Plaza Midwood and all of our houses were already re-assessed this past year. So it's not fair that they are holding off on others. Either the revaluation is warranted or it's not.
ReplyDeleteclear thinking, indeed! The tax value should be based on what you paid for your home, period. Just because someone paid alot to live next door to you doesn't mean you should have to pay more in taxes. The only "fair" way is for everyone to pay the same tax rate per square foot. Anything else is extortion. To assert that folks living in desirable areas "owe" the government for their appreciation is ludicrous! The only way you profit from an increased value is to sell your house! Do people living in dseirable areas use more services? They probably use LESS. I had to move after the last reavluation b/c my taxes went from 1400.00 to 7000.00 -- and I did not get anywhere near what the city "valued" it at. And I was NOT "overleveraged" - I bought a modest home at a modest price and hoped to live there for life and raise my family there. Since when does the government have the right to confiscate property, which is in essence what happens when you start valueing modest homes as if they are mansions, just because there are mansions in the area. I think they want everyone to be forced to move out of close in areas so that the rich folks can bulldoze the existing houses to make way for McMansions and upscale condos that bring in even more money.
ReplyDeleteWow - that was some liberal thinking. I currently live reasonably in one of those now 'desirable neighborhoods' (and by the way, I have NO poltical influence, trust me), but bought in when the prices were still reasonable so made a wise long term investment. However, just as everyone else has been hit with the stock market drops and hard economic times, so have those of us who made those investments before the bubble. I've seen my property value increase steadily, then drop right back down in reaction to the economy. My company is cutting back, so no bonuses or raises in 2009 (or the forseeable future), and I'm lucky to not be one of the unfortunate souls who has lost their job at one of the big banks.
ReplyDeleteHowever to even consider revaluating property under the current tax rates in this volatile time is asinine. I'd like to see some proof behind the allegations made in the article that "If your values went up more than average, or went down or rose less than average, you'd pay lower taxes." What is the probability that they would enact a revenue-neutral tax rate in Meck Co?
So, let's say they do revaluate. Imagine all those who can no longer afford their tax rate, who also can't sell the house because the market is so slow - then what? How do you propose they handle that situation?
I'd personally like to extend my appreciation to the commissioners for voting unanomously to put this re-evaluation off for a year. It allows me to breathe a little easier in times of economic uncertainty.
It seems the only people who could benefit from a re-evaluation now is those who bought in at the peak of the housing market and have seen their values tumble, but since the last evaluation was in 2003, that's probably not even a likely scenario. And a lot of Charlotte area property is still vastly inflated, so the new values would likely reflect that leftover over over-inflation since we're just really getting into the 'R' word.
This article was offensive.
My house, regardless of the value doesn't use any more or any less public service than the next house. I think all home owners should pay the same amount of tax. I know people will say this is a regressive tax and unfair to the poor. Well, then why don't different income stratas pay different rates of sales and gasoline taxes? I would like to see property tax be a useage tax much like sales and gasoline taxes. I think it's only fair for taxes to be levied on income or useage. This assessed value crap is contrived and effectively a redistribution of EARNED wealth.
ReplyDeleteYou've confused people by saying "If your values went up more than average, or went down or rose less than average, you'd pay lower taxes"
ReplyDeletewhen it should say "If your values went down or rose less than average, you'd pay lower taxes"
Obviously, if your values increased MORE than average, if the final tax rate is revenue neutral, you'll pay MORE taxes.
The real problem is the length of time they wait between revals. In other states you are rewarded for keeping your towns values as close to 100% as possible. Yearly updates are done on whole neighborhoods at a time in order to keep up with changes more consistently and not have these huge changes. If the state of NC allows it, Mecklenburg should consider it after doing this major update. Also, since they are not going to impose the new values now, are they going to do all the work over agian for next year? what a waste of the assesors' time!!!
ReplyDeleteGee if this whole mess were as easy
ReplyDeleteas The Daily Views seems to think it is, then why all the problems?
None of this came up until property values skyrocketed. Now that the bottom fell out and people are over extended they sniffle like little kids and crying foul. YOU PAYS YOUR PRICE AND YOU TAKES YOUR CHANCES!Who cares about these poo butt
idiots and their little mini mansions. Buy what you can afford! If you lose out because of taxes or you have a balloon you can't afford to pay, or signed a contract you might default on, you are a dummba** and deserve what you get. We should not have to pay for other's mistakes, or bail them out. WELCOME TO THE REPUBLIC OF CHARLOTTE. Thanx Burgess and the rest of the county gov. idiots. GOOD JOB!!!!
I find the assessment process very simple: Evaluate real estate values every few years to eventually revert to the mean. Real estate prices are cyclical. Certain years will boast inflated values and several years will have undervalued prices. Rolling revaluations automatically produce an accurate value every few years. The accuracy of real estate prices through scheduled revaluations is the most important way our municipality achieves credibility amongst its citizens, the state and the municipal rating agencies - the influential companies who publicly display their trust in the municipality through debt ratings. If the municipality projects tax revenues from stale and inaccurate real estate data, the rating agencies will assign substandard debt ratings and the municipality is then forced to pay higher borrowing costs on its debt. As a consequence of higher borroing costs, the municipality has less money to spend on projects such as education, roads, and crime prevention.
ReplyDeleteAn honest and transparent government should revalue the real estate as scheduled and immediately reduce the tax rate to achieve a revenue neutral tax assessment objective.
The newly elected county commissioners’ current path of reduced transparency should be enormous concern of all taxpayers.