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1987-12-28 Special Meeting ~ ~. _ _~ ...L ? l/.t2v MINUTES OF SPECIAL MEETING, DECEMBER 28, 1987 ASSEMBLY The New Hanover County Board of Corrunissioners met in Special Session on Monday, December 28, 1987, at 9:00 o'clock A.M. in the Assembly Room of the New Hanover County Administration Building, 320 Chestnut Street, Wilmington, North Carolina. Members present were: corrunissioners Jonathan Barfield, Sr.; W. Albert Corbett, Jr.; Fred Retchin; Vice-Chairman, Nolan O'Neal; Chairman, John M. Dolan; County Manager, G. Felix Cooper; County Attorney, Robert W. Pope; and Clerk to the Board, Lucie F. Harrell. r I L Chairman Dolan called the Special Session to order stating the purpose of the meeting was to hear a presentation by the Tax Department defining the process used for performing the 1988 Prope~ty Tax Revaluation. PRESENTATION BY NEW HANOVER COUNTY TAX DEPARTMENT - 1988 PROPERTY TAX REVALUATION Tax Administrator, Roland Register, listed the following reasons for electing to perform the reappraisal on a shorter cycle than required by state statute: 1. Rapidly escalating property values which create inequities. These inequities can be eliminated now, instead of in future years, by reappraisal which will benefit stable and declining neighborhoods. 2. Advanced revaluation allows people to pay property taxes based upon their wealth which is the original intent of the property tax. 3. Revaluation reduces or eliminates the risk that state appraised public service companies and large businesses will be taxed at less than 100% of value. ,- '- Tax Administrator Register corrunented on real estate as being a more accurate measurement with values viewed as a more respectable tax base than in personal value. He stated existing systems of personnel are now available in the County Tax Office for conducting a tax equalization program at a minimal cost. He stated contracting with private individuals could cost County taxpayers approximately $800,000 to $2,000,000. Tax Administrator Register stated revaluations are not popular; therefore, many inequities are allowed to exist and the burden of property taxes is placed upon lower income citizens. He corrunented on a 14% revenue loss from State appraised public utilities due to the sales ratio falling below 90%. He stated as State appraised public utilities values increase, more revenue will be lost, and by the year 1990, under 1983 values, the sales ratio will be 40-50% below the market with a loss of 40-50% of revenue from State public utilities. Tax Administrator Register emphasized the importance of performing revaluations more frequently than the 8-year cycle required by the State in order to more equitably distribute property tax among the citizens of New Hanover County. r- L Mr. Jim Bethune, Tax Appraisal Supervisor, stated an appraisal is an opinion; it is an estimate of value. A convincing appraisal is based on the integrity and competence of the appraiser and the soundness and skill with which the available pertinent data is processed. He stated the appraisal process is a systematic, logical method of collecting, analyzing and processing data into intelligent, L__ r u I' I ~ r L.J MINUTES OF SPECIAL MEETING, DECEMBER 28, 1987 (CONTINUED) 711.3 well-reasoned value estimates. It is used by both the assessor and the appraiser in estimating the value of property. Even though the assessor must appraise a large number of properties in a short period of time, no steps in the appraisal process may be omitted. Mr. Bethune listed the fOllowing steps used in the appraisal process: 1. Definition of the Problem a. Identification of the property b. Property rights involved c. Purpose and function of the appraisal d. Date of appraisal e. Definition of value 2. Preliminary Survey and Planning 3. Data Collection and Analysis 4. Application of Approaches to Value a. The Cost Approach b. The Comparative Sales Approach c. The Income Approach 5. Bundle of rights 6. Ad Valorem Tax Appraisal by the Mass Appraisal Process 7. Method Used for Estimating Value Mr. Bethune stated mass appraisal and the cost approach are used by New Hanover County in assessing values. He stated the cost approach is the fastest and least complicated of the three approaches to value and is the most economical and cost effective. He stated for these reasons, the reappraisal and assignment of value is performed by the cost approach; however, the market and income approaches are of great importance and used in support of, and for adj ustments to value assigned by the cost approach. Mr. Bethune stated mass appraisal is the process of valuing a universe of properties as of a given date, in uniform order, utilizing standard methodology, employing a common reference for data, and allowing for statistical testing. He stated the appraiser does not make a detailed appraisal of each piece of property since this would not be economically feasible nor would there be sufficient staff to perform individual appraisals. Assessment involves mass appraising, and the appraiser must rely on averages developed through the processing of great quantities of data. Accordingly, in using the cost approach, the appraiser will estimate by cost studies that certain structures, falling into a rather broad classification, will cost "so much" per square foot to reproduce, based on segregated elements of construction, with this cost factor being applied to all structures within that classification. Mr. Bethune commented on the Schedules of Values stating the basis for assessing each parcel of property is established by this schedule. The manual is designed to meet the legal requirements by setting out uniform schedules of values, standards, and rules to be used in appraising real property. He stated it is the intent of the law that each taxpayer shall be assessed in direct proportion to the value of real property recorded in his name. He stated the prime objective of the New Hanover County Assessor's office is to comply by setting a uniformity of standards, methods, and procedures which will result in equity of assessments. Mr. Bethune stated where assessments are made infrequently, inequities are compounded and for this reason, he supports a revaluation cycle at least every four years. Vice-Chairman O'Neal expressed concern for elderly persons who cannot pay increases in their property taxes when reappraised. He emphasized the importance of contacting our legislators requesting relief for these persons liVing on fixed incomes. Discussion was held on - -. -----, -~ '7 f''1 MINUTES OF SPECIAL MEETING, DECEMBER 28, 1987 (CONTINUED) raising the exemption for the elderly and disabled. Further discussion was held on bills that have been introduced in the House and Senate to provide assistance with no action being taken. Commissioner Barfield expressed concern for various values of land throughout the County, particularly property that has increased in value from 400% to 700% and questioned the mass appraisal approach used in the 1988 Property Tax Revaluation. '1 Mr. Bethune stated in general, the vast majority of the appraisals are correct. He stated the Tax Office has not received appeals from individuals with increases of 400% to 700% stating these individuals should contact the Appraisal Office immediately for a review of the assessed value. LJ After further discussion, Commissioner Corbett MOVED, to withdraw the 1988 Property Tax Revaluation until 1991 with preparation of a resolution requesting support from the legislators for a homestead exemption for elderly and disabled persons. The floor was opened for discussion. Commissioner Barfield SECONDED the MOTION stating since the County does not need additional revenues at the present time, he strongly feels additional time is needed to further assess the growth pattern in New Hanover County in relationship to the method of appraising property values. commissioner O'Neal expressed concern for the time and effort given by the Appraisal Office to perform the revaluation stating the problem was not the appraisal itself, but correcting the inequities that exist. He expressed concern for collecting enough taxes to support the budget and requested the County Manager to comment. r County Manager Cooper stated the taxes levied in 1987 will be ample to run an effective government based on needs in 1988 and the anticipated growth that might be incurred. He stated the projected increase in property values with the new revaluation is 35-45%, which will mean that an individual's property appraised higher than the 35-45% will pay more taxes; however, an individual with an increased appraisal of 35-45% will pay the same taxes; and an individual with an increased appraisal lower than the 35-45% will pay less taxes. He stated if the Commissioners desire to withdraw the revaluation, the County can function on the same dollar amount of taxes levied last year. 'L commissioner Barfield and Commissioner Corbett stated their comments and motion to withdraw the revaluation are not in criticism of the Tax Appraisal Staff or Tax Administration Office. They both emphasized the importance of allowing more time to further assess the method used in performing the revaluation. Commissioner Retchin recommended amending the MOTION to allow for an additional year before implementation of the 1988 revaluation which will provide ample time to hear appeals and more closely examine areas which have greatly increased in value. ,- Commissioner Corbett stated he would AMEND the MOTION to withdraw the revaluation for one year. L County Manager Cooper stated he felt this was a hasty decision based on the time involved in deciding to perform the revaluation. He requested giving staff time to make recommendations to the Board as to the legal and technical aspects of this motion before taking action on withdrawal or delay of the revaluation. ,.------ L_ _ MINUTES OF SPECIAL MEETING, DECEMBER 28, 1987 (CONTINUED) 7Jf~ Tax Administrator Register stated if the revaluation is deferred to 1989, the Tax Office will have to go through the same process as performed in 1988 which requires collection of data, placement of new cost factors in the computer, and regeneration of valuation notices. He stated the situation would not be different in 1989. Chairman Dolan stated if the revaluation is to be withdrawn, it should be delayed to 1991 as required under state statute. " After further discussion, Commissioner Corbett withdrew his AMENDED MOTION and requested a vote on the original MOTION, which had been SECONDED by Commissioner Barfield, to withdraw the 1988 Property Tax Revaluation until 1991 with preparation of a resolution to the legislators for a homestead exemption for the elderly and disabled. I ! LJ commissioner Retchin recommended delaying action on the motion. Vice-Chairman O'Neal stated he was in favor of supporting legislation to assist the elderly and disabled; however, he could not support withdrawal of the revaluation. Chairman Dolan called for a vote on the original MOTION by Commissioner Corbett. Upon vote, the MOTION CARRIED AS FOLLOWS: Voting Aye: Commissioner Barfield Commissioner Corbett Commissioner Retchin Chairman Dolan " I Voting Noe: Vice-Chairman O'Neal LJ ADJOURNMENT Commissioner Barfield MOVED, SECONDED by Commissioner Retchin to adjourn. Upon vote, the MOTION CARRIED UNANIMOUSLY. Chairman Dolan adjourned the meeting at 11:45 o'clock A.M. ~pec~~, '-e F. Harrell Clerk to the Board ,---, ( , Li -,