It Isn’t Just Us, the Entire Nation Is Burdened With Property Tax Inequities

Asheville, NC. (Source: Wikimedia Commons.)

Urban3’s Joe Minicozzi runs a firm that helps local governments take charge of their financial future by presenting financial analyses in a visual (and often very revealing) form. He shines a light on underperforming investments in towns and cities all across the country. Last week, during a presentation to the North Carolina Ad Hoc Appraisals Committee, Minicozzi’s light might have felt a little too bright for assessor staff and some representatives in Western North Carolina. 

The committee, which was established by the North Carolina General Statutes in response to recent charges of inequities in the property tax assessment system, had the opportunity to listen to a presentation on the research Urban3 has gathered on the NC property tax system. Minicozzi was granted one hour to present his organization’s case to the committee. But Minicozzi’s time was cut short by accusations and debates from a defensive audience.

“What you’re seeing is my presentation and my data of this assessment process,” he said, after a flurry of interruptions broke up his presentation. “But what you need to realize is that it's not just an assessment problem. It’s not just an Asheville problem. It’s how we do this nationally and how the assessment practice has been going on at a national level, not just a Buncombe level.” (Asheville is located in Buncombe County.)

Across the nation, the property tax burden has been placed primarily on people who own smaller and less expensive homes, versus owners of larger and more expensive properties. Dr. Chris Berry, professor of public policy and municipal finance from the University of Chicago, performed an extensive analysis detailing the inequalities in the property tax assessment system. He discovered that the majority of local governments are failing at their job of accurately assessing property values; lower-priced homes are being assessed at a higher value relative to their actual sale price and higher-priced homes are being assessed at a lower priced value.

When Urban3 replicated Dr. Berry’s methodology in Buncombe County, they discovered similar inequities. 

(Source: Urban3.)

Urban3’s “J-curve” graph above illustrates that when a house in Buncombe County is purchased for around $225k, it is assessed at around $225k. The distortions begin when prices fall above or below this amount. Urban3’s research shows homes that are purchased for less than $225k are assessed at a greater value and houses purchased above $225k are assessed at less than the selling price. 

This aged assessment system is placing a heavy burden on residents with lower incomes and making homeownership a nearly impossible goal for low-income buyers. Citizens have expressed that something is clearly wrong with the property tax assessment system as they struggle under the shocking weight of sudden tax increases. Last year, America got more expensive, and lower-income households are struggling to cover basic costs. We see the same trend with homeowners who struggle under the weight of property tax increase. 

“I can't keep up, y'all gonna run me out of town. I've owned my home for six years, and the mortgage has gone up way more than it ever did when I was renting. Give us a break!!” said an anonymous resident in the North Carolina Buncombe County reappraisal community survey, where citizens were asked about their thoughts and opinions on the property tax appeals and appraisals process. 

Over the years, the lowest-valued homes have grown in taxable value by 323%, while the highest-valued homes have increased by 138%. While both home types have increased in value, one group is experiencing a more shocking increase when they receive their tax bill.

Each circle at the bottom of this graph shows when a reassessment was performed, excluding year 2009, when it was bypassed by the county in light of The Great Recession. (Source: Urban3.)

“We should limit the amount the property tax can increase each year. While mine was only a few hundred dollars, I had a friend whose increase was several thousands. It was SUCH a shock to them,” commented another North Carolina resident in the reappraisal community survey. 

Minicozzi faced the committee that Wednesday night, hoping to shed light on the opaque property tax system in North Carolina and be a voice for the concerned residents of Buncombe County, urging for change. Human viewpoints can be distorted by bias, and Minicozzi challenged the committee to find the truth in the data and challenge their own bias in the upcoming weeks as they examine the system and develop solutions to the issues presented by the community.

In the presentation, Minicozzi spoke about how racism has been practiced geographically throughout the United States. In 1934, the Federal Housing Administration enacted a policy known as “redlining,” which ultimately furthered segregation by creating an environment where African-American neighborhoods were refused insured mortgages. Throughout Urban3’s research, they’ve asked, “Does our assessment practice unknowingly do the same?”

Assessors might not be distorting the law for their own gain, they may instead just be following a crude and broken system that has been in place for decades. It’s past time to look outside the box, realize our mistakes, accept the system is not working, and make a meaningful change. 

The Just Accounting for Health consortium, which includes Strong Towns, is collecting data and researching the potential causes and health effects of property tax inequities in Western North Carolina. The Just Accounting project is meant to bring about an understanding of the presence and effects of biases in property tax assessment standards, and to suggest possible solutions. 

In the upcoming weeks, we’ll be digging deeper into the research presented by Urban3 and the other partners in the Just Accounting project. Check out the website and sign up for email alerts to follow along on our journey.

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