Community Leaders Put Tax Office on Defensive During Reval Discussion
Only three people spoke to the Forsyth County Board of Equalization and Review on Monday during a special meeting set aside for public comment, but their pointed questions about how revaluations were conducted in a band of predominantly black neighborhoods where residents saw deep markdowns in values put the tax office on the defensive.
The meeting was poorly publicized. No e-mail notices were sent out by county staff notifying media outlets that the board would accept public comment, and as recently as the previous Thursday board members and staff had debated whether to allow public comment at the meeting, indicating a lack of consensus on the matter.
Incumbent Derwin Montgomery and challenger Joycelyn Johnson, Winston- Salem residents and rivals for the East Ward seat on city council, along with the Rev. Paul Lowe Jr., pastor at Shiloh Baptist Church and Democratic chair for the 5 th Congressional District, peppered the board and staff on such seemingly arcane matters as comparative sales, functional/ economic obsolescence and sales ratios.
“I’m coming on behalf of members of the church that were drastically affected by the reappraisal,” Lowe said. “I have a number of members that live in various parts — Monticello Park, Northwoods Estates, Castleshire, Slater Park area — and most of them it was like their value went down 65, 70, some as high as 87 percent. And that’s just enormous.”
Montgomery presented information about his property, located at 2451 Dellabrook Road, which he purchased for $113,000 in 2010, but which the tax department assessed at $67,000 on Jan. 1, 2013.
Montgomery’s property was disqualified from the tax office’s list of comparative sales on a technicality because there are two deeds on file which each record sales of $56,500. Together, they equal what he paid for the property.
The tax office looks at recent sales of comparable properties to determine current assessments.
“The sales price of what I paid for my property would not be include in any computations for the neighborhood,” Montgomery said. “The price that I paid for that property, my community doesn’t get the benefit of what I paid.
“Even in my case and looking at this as an individual case,” Montgomery continued, “who’s to say other instances of similar things are not documented the same way in what we currently end up with as values for properties?” Tax Assessor John Burgiss said the meaning of the deeds were not clear, so his staff did not record the sale.
“These are nice, nice areas, but their value was just atrocious,” Lowe said. “And then I looked at the other piece that was economic function or functionality, and where you saw high percentages there the homes were dramatically devalued. The formula that’s being used is basically, as I understand it, based upon sales. And that’s pretty much how it’s done all over the country. However, what do you do with areas where there are not a lot of sales? People keep up their neighborhoods, keep up their homes, and when they dramatically devalue them, you talk to some people and they say, ‘Well if you just wait awhile….’ Like one member of mine, Dr. Scales — 86 years old. Somebody said, ‘Well, if you wait five or 10 years it will go back up.’ Well, you know, you lose 80 percent on your home, you know it probably won’t go back up in her lifetime. These are things she’s trying to bequeath and her legacy and that type of thing. So I’m really concerned all of the people be treated fairly.”
Burgiss said he is unaware of any procedural errors in the reappraisal conducted by his staff. He said his staff has reviewed sales data for neighborhoods that have been subject to significant complaints.
“We’ve been focused primarily on gathering information for you,” Burgiss said.
“In looking at that we have not found anything necessarily — because it’s all based on the sales. If you have the same sales you have the same results.”
Richard N. Davis, an accountant and former Winston-Salem City Council member who chairs the board of equalization, said sales in troubled neighborhoods will have to be tracked to get to the bottom of the problem.
“I think some things are very apparent,” Davis said. “Whenever you see a drastic change in sales price over a relatively short period of time, to me that indicates something out of the ordinary occurred. And we need to discover what that was. What was that thing out of the ordinary that caused this particular property to drop $130,000 in value? What caused this to happen? If it was a sale that we should not have used or if it was a sale that we thought was bona fide and we discover that it was not, these are the kind of answers that I’m looking for.”
Both Johnson and Lowe asked the tax assessor to explain how economic and functional obsolescence factors into revaluations, noting that property records show that neighborhoods that experienced severe reductions in value also indicated high rates of economic and functional obsolescence.
Burgiss explained that the appraisals start with a land value, often by benchmarking a raw land sale in the area.
Then they determine the replacement cost for the building. He said land values combined with replacement costs always equal more than market value, so the tax office uses two mechanisms to bring the property value in line with the market.
“There’s only a few — I call them ‘dials’ — there’s only a few mechanisms that we have available to us,” Burgiss said. “I can’t change the square footage of your home to get your home to be in the right value, according to the market. So one of those dials is depreciation. That’s made up of two components, which is physical depreciation and economic and functional, which we combine. And so all that process is, is bringing those — land value plus replacement cost-new less depreciation — into alignment with where the sales values in that market.”
Burgiss added that depreciation and economic/functional analysis are derived from market analysis of particular neighborhoods.
Johnson indicated she was dissatisfied with the process, based on how Burgiss explained it.
“There’s something wrong with the process,” she said, “and there’s an institutional problem with the way things are being done in this office.”
Johnson and Montgomery asked the board to hire an outside consultant to come in and review the tax office’s work. Davis and fellow board member Marybeth Abdow responded that bringing in an outside consultant would be inefficient, and Abdow said she believes outsiders would not be as familiar with neighborhood lines and other local conditions as county staff is.
But board members conceded on a request by the three citizens for additional meetings set aside for public input beyond the narrow scope of appeals by individual property owners.
“I have some concerns: It may be summed up by saying that extraordinary situations sometimes require extraordinary actions,” board member William V.
White said. “I think we have economic change at a level that has hit and concerns large numbers of the public. And I personally would be more comfortable if we made every effort to hear comments from the public not directly related to their own appeal, but just general comments.”
He added that he favors holding a meeting at a site in the community rather than at the Forsyth County Government Center, and that it should be scheduled as quickly as possible within the constraints of public notice requirements.
Lowe offered Shiloh Baptist Church as a site for a future meeting for the purpose of receiving public comment.
Davis urged citizens to file appeals if they believe their properties have been undervalued and to take advantage of the opportunity to address the board, noting that the burden of proof is on the taxpayer to prove that their assessment was incorrect.
“We will certainly look at the issues involved in some of these neighborhoods that have been devalued, and if we discover where there’s some functional problems or procedural problems or problems in the way that these neighborhoods have been graded, we will certainly correct it,” Davis pledged.
Burgiss acknowledged to board members last week that if transactions involving banks or other disqualified sales were errantly included in the comparative analysis for particular areas, then the values of neighboring properties could be artificially depressed.
“We say, ‘If it’s wrong, then let us know,’” he said. “And if we can understand and verify what you’re saying, we’ll adjust it. If that happens and if there’s enough errors in an area of course that could change the values derived from analyzing the market if you change the sales that you use. So we understand that. We’re open to that. We know that if you change enough of those sales, then you change your answer.”
Last week, board member agreed to systematically review sales in several areas of concern, including Monticello Park, Castleshire, Northwoods Estates, Cameron Park and the Reynolds Park Road area. On Monday, Johnson gave them some more: Dreamland Park, Slater Park, Skyland Park and Konnoak Hills.
Davis cautioned Burgiss to be sensitive to homeowners who have found themselves underwater on their mortgages or with most of their life savings wiped out because of the recent revaluation.
“And this is upsetting for some people,” the board chairman said. “If there was a discrepancy, or there were some comps that were used that should have been, we need to find out why. And it’s not always a foreclosed sale that’s causing the problem. The foreclosed sale can be thrown out, but then the person who bought the foreclosed property can turn around and resell it. You’ve got two individuals dealing with it, and it looks like it’s a good sale, but it’s really not because the person who bought that foreclosed property, all they’re looking for is a certain percentage of profit. And they’re willing to turn it around and keep moving. So the people doing the flipping of houses in certain neighborhoods is causing some of these problems. Because if you look at the deed stamps it looks like it’s a good sale, but when you take the cover off you find out it’s not. These are the kind of things that I’m concerned about.
“We need to make sure we can satisfy the taxpayer and say, ‘We have looked at all of this, and we are using only qualified information, and this is your value,’” Davis concluded. “‘Whether you like it or not, this is the best we can come up with; these are the values.’ But if we can’t look the taxpayer in the eye and say that, we need to find out where the problem is and correct it.”