(The Center Square) – A recent report examining property tax assessments in 18 western North Carolina counties found many overtax lower income properties and undertax higher income properties, though at least one county assessor disagrees with the findings.
The analysis was conducted by a coalition known as Just Accounting for Health, which includes the nonprofit Strong Towns, the University of North Carolina Asheville, and Urban 3, a data analytics firm, with $850,000 in funding from the Dogwood Health Trust.
Researchers collected property assessment data from 18 western North Carolina counties and the North Carolina Department of Revenue’s Property Tax Division, then analyzed the assessed values compared to selling prices.
North Carolina law requires property tax assessments to equal the “true value” defined by “the price estimated in terms of money at which the property would change hands between a wiling and financially able buyer and a willing seller,” but the report suggests that’s not always the reality in practice.
“The evidence presented in this report suggests that there are long-standing inequities in the administration of the property tax that places unfair financial burden on those least able to withstand it,” the report read. “These disparities may have cascading impacts on housing affordability, gentrification, displacement, household economics, and may ultimately become a driver of community health disparities.
“We refer to these persistent, unjust disparities as ‘the assessment gap,’ whereby homes of lower value are assessed at rates consistently higher than the rates applied to higher-value homes,” the authors wrote.
The research showed across the 18-county region, low-valued homes were on average assessed at a rate 1.4 times higher than expensive homes, though the exact reason is unclear. The results ranged from 2.14 times higher in McDowell County to 1.05 times higher in Transylvania County. Other counties above the 1.4 average include Burke at 1.43, Graham and Swain at 1.5, Haywood at 1.55, Cherokee at 1.86, and Clay at 1.96.
The data analyzed covered nearly $146 billion in assessed valuation across the 18 counties, resulting in over $1 billion in taxes collected, which represents over 40% of county-level general fund revenue.
The report cited several examples of high-end properties in Buncombe County that were assessed for roughly $1 million less than their ultimate selling price in 2021, while smaller properties were assessed at rates as high as 155% above the selling price.
“Property appeals, minimal sales comparisons (thin markets), algorithmic bias, infrequency of valuations, policy choices, intentionally erring on the low side for high-valued properties to avoid litigation, the assumption that assessors seek to maximize political support, property and neighborhood characteristics, personnel shortage, and funding limitations all intersect to conditions that produce the observed assessment gap,” the report read.
Buncombe County tax assessor Keith Miller has disputed the implication of bias in assessments, suggesting discrepancies in valuation of more expensive properties likely stem from interior upgrades assessors can’t see. Miller has insisted assessments are driven entirely by market value, and stressed all properties are assessed at the same rate.
Just Accounting for Health offered a series of suggestions to improve fairness in assessments, including conducting them annually instead of every four to eight years; comprehensive inspections of properties; an overhaul of the tax appeals process and exercising clawback provisions in state statute; equity commitments from assessment staff; and compensation to residents who have been adversely affected.
Miller noted that moving to annual assessments would require significantly more staff for county assessors, along with dramatic increases in funding.
The counties are western-most in the state, from a vertical line formed by Rutherford, Burke and Avery counties. McDowell and Buncombe counties are also in the 18. Others along the Tennessee border are Cherokee, Graham, Swain, Haywood, Madison, Yancey and Mitchell; along the Georgia border, in addition to Cherokee, are Clay and Macon; and along the South Carolina border Jackson, Transylvania, Henderson and Polk.
