The Future of Reappraisal: What a Four-Year Cycle Could Look Like

reappraisal

 

County representatives from across the state have joined together to form the NC Reappraisal Study Committee – a group tasked with investigating & analyzing the potential benefits of moving from an 8-year to a 4-year real property reappraisal cycle.

Stan Duncan & Brent Weisner, both members of the Reappraisal Study Committee, co-wrote an article called Making the Case for a Four-Year Reappraisal Cycle. The article explains that a four-year plan “is particularly attractive for staffing and budgeting concerns of NC counties” when considering the general time schedule being proposed1.

An overview of what this four-year reappraisal timeline could look like in NC is listed below (Duncan and Weisner):

What a Four-Year Cycle Could Look Like

  • Year 1: The Year of the Reappraisal (Effective as of January 1st of the calendar year):
    • Complete mailing notices of reappraisal values.
    • Conduct all informal and Board of Equalization & Review meetings.
    • Review appeals at the local level.
    • Maintain inventory of legal and physical changes to property.
    • Identify areas for redress in preparing for the next reappraisal.
  • Year 2 of the Reappraisal Cycle:
    • Complete all appeals pending before the NC Property Tax Commission, either by Consent Agreement or adjudication by hearing before the Commission, and possibly appellate courts.
    • Continue to maintain inventory of legal and physical changes, and continue redress areas of concern for the next reappraisal.
  • Year 3 of the Reappraisal Cycle:
    • Increase attention to market analysis, especially those market forces having changed since the effective date of the most recent reappraisal.
    • Continue to maintain inventory of legal and physical changes.
    • Develop preliminary Schedules of Values, Standards, and Rules for the upcoming reappraisal.
  • Year 4 of the Reappraisal Cycle:
    • Continue to monitor the local real estate market by location and property type in order to accurately prepare and apply the Schedules of Values, Standards, and Rules to be adopted by the board of county commissioners for the upcoming reappraisal.
    • Continue to maintain inventory of all legal and physical changes, verify areas of concern identified during the first two years of the cycle have been adequately studied and remedied if necessary, and review and reappraise all neighborhoods at market value with attention to equity among and between all neighborhoods, value stratifications, and property types.
  • Year 1: The Year of the Next Reappraisal
    • Start the process over again, while applying lessons learned and knowledge gained from the previous reappraisal.

Overall, “a four-year reappraisal cycle would eliminate the need for conducting sales assessment ratio studies in the fourth and seventh years under the current eight-year reappraisal cycles as provided for under G.S. 105-284(b), the Uniform Assessment Standards. And, under the current law, public service companies could only challenge the median ratio established in the year of the reappraisal.”1

Sources:
1. Duncan, Stan, and Brent Weisner, “Making the Case for a Four-Year Reappraisal Cycle,” Print 2014.

Is e-Listing Right for Your County?

elisting

From online shopping and banking to e-filing tax returns, the desire to use twenty-first century technology to conduct transactions online is a sentiment felt by consumers and taxpayers across the country – including those in your own taxing jurisdiction. This attraction to conducting business online is why an increasing number of NC tax offices are looking towards the more convenient option of offering electronic listing (e-Listing) services.

“This service saves taxpayers time and expense in the filing process,” according to Durham County’s website, where BPP online listing is already put to use. “The online listing application is easy to use as the text fields for information mirror the fields on the NC State form.” In addition, “taxpayers may also store data so that future listings will have previously entered information and only additions and deletions will need to be entered.”

Not only is e-Listing a convenient and time-saving solution for taxpayers, but counties that provide this service also offer their citizens the option to electronically request an extension on the listing period – creating even more flexibility and satisfaction among their taxpayers.

e-Listing Benefits for Taxpayers

As the convenience of online business turns mainstream, check out the list of ways e-Listing caters to your business taxpayers:

  • Free access
  • Secure database
  • No travel or waiting times
  • Automatic responses & confirmation of completed listings
  • Increased accuracy with prelisted information available
  • Personalized database of clients maintained within the system
  • Ability to enter multiple extension requests simultaneously

e-Listing Benefits for Tax Staff

When taxpayers are happy, your work-life is made easier. Therefore, it should come as no surprise that improving citizen satisfaction through free access to online listing services will, in turn positively affect the way you do business.

Check out the list of additional e-Listing benefits your tax office can enjoy below!

  • Automatic uploads into your county’s existing database
  • Reduced paper and mailing costs
  • Less time processing paperwork
  • Shorter waiting lines in your office
  • Less re-keying of data & reduced keying errors
  • Increased  input value efficiency
  • A secure database of information
  • Increased accuracy year to year

Ideas that reduce your workload and improve taxpayer services are hard to come by, but e-Listing may just be one of those rarities.

For more information on the North Carolina Electronic Listing and Requirements as established by the NCDOR, click here.

New Software Exclusions

software exclusions

NC Senate Bill 490 modified G.S. 105-275(40) to exclude custom software from the property tax base. The additional wordage now reads as follows:

“The foregoing does not include development of software or any modifications to software, whether done internally by the taxpayer or externally by a third party, to meet the customer’s specified needs.”

What Does This Mean?

Beginning in January of 2014, customized software will be viewed as a service. Thus, custom software services rendered will be transactions that are exempt from state sales tax – effectively changing the way that software is taxed in your jurisdiction.

Software that is purchased before customization will still be subject to taxation, but significantly enhanced additions to a commercial piece will not.

The revenue impact of this new exclusion is unknown at this time. However, NC legislators believe that relieving the broad levy on computer software will make North Carolina a more attractive business environment.

Know the Distinction

What classifies as a “customized” software piece will be highly debated, so it is important to understand the distinction between commercial and custom software and the language generally used to describe both:

  • Commercial/Taxable: Off-the-shelf software that is readily available for purchase by the general public and often sold in retail stores (e.g. Microsoft Office, Windows).
    • Prewritten software
    • Canned software
    • Mass marketed consumer software products (e.g. video games)
  • Customized/Not Taxable: Made-from-scratch software & customized software that has substantially modified existing software; often developed for use by a single user or business.

To further distinguish these differences, “…modifications to a prewritten program are treated as custom software and not taxed if the modification costs are separately stated from the canned program cost. If modifications are not separately stated, the total amount is taxed. However, if the modifications are so extensive that the end result is not a modification to a canned program, but rather is a custom program, then the program as a whole is not taxed” (Wei-Ching Kuo 7-8).

It’s possible that the lessened burden on taxpayers will increase growth and decrease transaction costs for software companies in NC, making business use of software less costly. Going forward, be sure to pay close attention to any changes to the computer section of your tax base to develop a more clear understanding of the effect the new exclusion may have on the tax revenue in your jurisdiction.

Source:

Wei-Ching Kuo, John. “SALES/USE TAXATION OF SOFTWARE: AN ISSUE OF TANGIBILITY.”High Technology Law Journal. 1987:  7-8. Web. 5 Dec. 2013. 

Sales Verification Techniques

sales verification

When it comes to the sales verification process, both finding the right contact to verify sales data AND receiving a timely response are not the easiest of tasks – often requiring appraisers to get a bit creative in their verification techniques.

Sales verification should always include a joint effort of both examining real estate transfer documents and qualifying the sales price listed for ratio study purposes.

Check out the list below to see if you are using all of the verification sources and methods available to you.

Buyers and Sellers

If the contact information for a buyer or seller is available, reach out to them directly to qualify a recent sale price. Be prepared, know what questions you plan to ask ahead of time, and clearly explain your reasons for getting in touch.

Contact a buyer/seller using one of the methods below with the following benefits:

  1. Telephone interviews
    • Quick responses
    • Immediate clarification
  2. Personal Interviews
    • Fewer Refusals
    • Reliable information
    • Reveal more unusual or special considerations
  3. Sales Verification Questionnaire
    • An authorized signature or sworn statement
    • Information in writing

If contact details are not provided, try the phone book or stop by for an on-site visit. But, don’t limit yourself to a phone directory – try LinkedIn, Facebook, or a Google search. If the information is public, why not use it as a resource to locate a phone number or email address and contact the buyer/seller listed?  Electronic means of contact tend to be quick and inexpensive.

If you still can’t reach your intended target, send a sales verification questionnaire to the home address of the new buyer, with a postage-paid return envelope included.

Third Party Sources

When transfer documents don’t provide full disclosure or omit important sales information and the buyer/seller can’t be reached, you can always reach out to one of these third-party sources:

  • Multiple Listing Services
  • Title companies
  • Financial institutions
  • Leasing agencies
  • Property managers
  • Real estate brokers and agencies
  • Government and private fee appraisers
  • Attorneys
  • Appraisal organizations

Sound too easy? It’s important to note that none of the methods for reaching sources is without its faults. For example, phone interviews make it difficult to prove the identity of the person on the other end of the line and personal interviews are both costly and time consuming.

And, although using a sales verification questionnaire as a source for collecting sales data is not very costly, you do incur the costs of printing and mailing the letter and you have the disadvantage of having to wait for a response. Information gained is limited to the questions stated on the questionnaire and can leave the need for follow-up verification.

Just keep in mind, sales information should never be accepted at face value without first verifying the sale by contacting a party to the sale – especially when data is unclear, or when questions about the sale remain unanswered.

*Special thanks to Harding Sugg, Deputy Tax Assessor for Pitt County, for providing information on the sales verification process.

Additional Source: http://www.iaao.org/uploads/Verification_Adjustment_of_Sales.pdf

Geo-tagging Technology on a Shoestring Budget

shoestring

Previously, we discussed the many advantages that geo-tagged images provide for revaluation, record-keeping, and appeals processing by allowing users to add geographic coordinates to their photos.

Today, we’ll discuss how you can take advantage of this time-saving technology, even on a tight budget.

Believe it or not, there are minimal costs involved with leveraging geo-tagging technology. At this year’s NCAAO Fall Conference, both Guilford County and Rockingham County offered presentations on how their departments have affordably implemented geo-tagging technology.

Guilford County

By relying on only the resources their county already had – a basic point & shoot digital camera, a Panasonic Toughbook, handheld GPS, and an external GPS antenna – Guilford County implemented geo-tagging with no additional expense.

Tax officials for Guilford County got a chance to put the new technology to the test when they took on a reappraisal project in preparation for the 2010 implementation of their new property tax system, NCPTS.

According to Eric Funderburk, GIS Analyst for Guilford County, the project started with a two-man team of appraisers driving themselves to each site. One person took the pictures while the other provided navigation, collected photo points, and entered data. At first, the team would capture the photos and then return to the office to manually rename them with their corresponding parcel ID and match the image taken with the correct parcel in ArcGIS. This proved to be a time consuming endeavor.

To speed up and simplify the process, Eric Funderburk and the GIS team worked to create the Process Work Flow – a six-step method that helped automate the actions of renaming and mapping photos. The Process Work Flow includes collecting the photos, creating a photo point in ArcPad, retrieving the photos, synchronizing field data from the mobile PC, geo-tagging photos, and renaming photos by parcel ID.

Although it might sound like a lot, many of the steps in the Process Work Flow are done automatically without the tax office having to manually enter a thing!

With the help of ESRI Support, the Guilford County team was able to create different Python scripts that would both sequentially automate the digital images for easy map assignment in the field and read the camera’s memory card inserted to a desktop computer back at the office.

The memory card contained valuable information that allowed the created script to match image files with the data that was assigned in the field to automatically rename the photos and match them with their corresponding Parcel ID.

These automated steps were a tremendous time-saver and allowed the tax office to process more photos than they had ever thought possible.

Before the GIS Department got involved in the project, tax appraisers would process about 50-75 photos per day. Afterwards, their productivity increased to 1,500-2,000 photos per day, enabling the tax office to process and geo-tag 75,000 images at the end of the reappraisal project (Funderburk)!

Rockingham County

Rockingham County has spent just a few hundred dollars to get geo-tagging up and running in their county, purchasing only a Nikon GPS-enabled digital camera and GPS- Photo Link software to enable their images to be displayed in ArcGIS.

According to Mark McClintock, Real Property Supervisor for Rockingham County, their initial project goals were to capture images of as many main and miscellaneous improvements as possible using up-to-date technology.

Although Rockingham County is still in the process of implementing their new technology, they have reported positive results so far. They are continuing to take pictures in preparation of assembling a geodatabase that will eventually link to Pictometry and their GIS department is exploring the use of an ArcPhoto application (McClintock).

While both Guilford County and Rockingham County used a digital camera to capture property images, a dedicated digital camera isn’t necessary.  Instead you can use a handy device that most of us have by our side on a daily basis – a smart phone. Most smart phones are now equipped with a GPS chip that instantly geo-tags any photo taken. You may be unaware of it, but when you snap an image on a smart phone, the exact coordinates are embedded in your photo and can easily be retrieved.

As you can see, there are many different systems and processes that can help you take advantage of geo-tagging technology without spending a lot of money. For more information, check out Tagging Real Property Photos to Your GIS.

*Special thank you to Mark McClintock, Real Property Supervisor for Rockingham County and Eric Funderburk, GIS Analyst of Guilford County for agreeing to be sources for this article.