Reval Appeals Avalanche And Looming Tax Hikes
New values delivered this week for commercial properties in Mecklenburg County that reflect significant increases across the board seem to directly contradict the county’s own dire forecast on how local markets were trending, giving rise to predictions for wholesale reval appeals and an increased possibility that a majority of homeowners will be walloped by a property tax hike.
According to county officials and the uptown paper’s analysis of property revaluation notices, commercial property values for retail, office, hotels and other businesses increased by an average of 31 percent compared to 2003 values, topping an average 15 percent rise in single-family home values.
“The county says the numbers reflect how the commercial market has held its own despite the recent economic slump,” the uptown paper reports. “Other appraisers, brokers and some property owners say the values seem high.”
Funny, but that later assessment seems nearly identical to what the county was predicting only a short six months ago, when its Citizens Revaluation Advisory Committee was warning the board of commissioners to brace for cratering commercial values:
Our primary concern is the commercial side of reevaluation. Perhaps not as volatile as today’s securities market, in many ways real estate is behaving in a similar fashion. That is to say, badly! Values have been changing quarterly and in rare cases significantly, within a mere 90 days of the last appraisal.
While the T.B. Harris Commercial Market Data Study was provided to staff in December 2009, much has changed. Overall, the commercial real estate market appears to be caught in “A Perfect Storm” of factors that will impact it’s (sic) ability to recover for several quarters. This assessment is driven by the unemployment numbers, the anemic monthly growth numbers business is experiencing, and the lack of liquidity to small businesses. All these factors, and others like consumer confidence, will continue to hammer at real estate values.
How does a commercial market “caught in ‘A Perfect Storm’ of factors that will impact its ability to recover for several quarters” suddenly morph into an average 31 percent rise for commercial property values? That’s more than double what was predicted by county tax assessor Garrett Alexander, who told commissioners in September that, based on his department’s analysis, the increase would be “somewhere in the neighborhood of 12 percent.” Other analysts pegged the ceiling at a more modest 7 percent increase, while still others predicted a drop in some commercial sector values.
In that light, it’s not surprising that county officials anticipate a slew of appeals from commercial property owners. If those appeals return significantly lower values, it could alter the predicted balance of commercial property taxes versus residential property taxes as a percentage of the county’s tax base (about 35 percent versus 65 percent, respectively), placing a larger burden on homeowners, as some had originally feared.
If a homeowner’s revaluation was less than 10 percent in increased value, they likely won’t see a tax increase on their bill, predicted Commissioner Bill James, a Republican. If the revaluation was more than 10 percent?
“You’re going to see a tax increase,” James said. Based on discussions he’s had with fellow commissioners, James said, “the Democrats want to add between $40 million to $50 million to the budget. There’s no way that happens without some homeowners taking a hit.”
A bulk of the additional revenue James said Democrats want would go to fund libraries and Charlotte-Mecklenburg Schools, he said, with the prospect of saving the school district’s pre-K Bright Beginnings and other programs and initiatives that district officials have ranked as higher priorities.
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