Some property values go up, some down in property tax appeals process

The Forsyth County Board of Equalization and Review continues to hear appeals after restoring $3.7 million in value in global changes affecting two affluent, African-American neighborhoods on the east side of Winston-Salem in late June.

June 28 was the deadline for the board to make any mass changes affecting multiple properties. But the board continues to hear individual appeals.

When the board convened in the late spring, much of the public attention on the process centered on severe devaluations experienced by homeowners, including both upper- and lower-income African Americans on the east side and racially diverse, working-class neighborhoods on the south side. The push by many of those property owners was to restore values to maintain equity in their homes.

But many individual property owners, similar to past revaluations, are seeking to reduce their valuations.

The board approved changes today reflecting a net reduction in tax valuation of $1.5 million, although some individual property values were enhanced while others were cut. Most of the properties affected came to the board with a recommended change negotiated between assessors with the Forsyth County Tax Department and appealing property owners.

The board held hearings on a handful of appeals. The board approved an appeal by Christopher and Yvonne Anthony for a three-bedroom frame house off Shalimar Drive in Winston-Salem, raising the value from $65,800 to $70,000 after Christopher Anthony argued persuasively that improvements he made to the house should have increased its value.

But the board turned down a request from Bill Bodsford to reduce the value of nine vacant lots in Kernersville that have remained undeveloped since the 1970s because the land doesn't perk — or absorb water sufficiently to install a septic system. Bodsford argued that $8,600, the assessed value of each parcel, was too high. But board member Marybeth Abdow said similar unimproved land in the area is selling for $24,000 an acre. Slashing that figure by 50 percent to reflect it's percolation problems still gives it a value well above what the county assessed.

Forsyth tax review board adjusts values in second Winston-Salem neighborhood

A Forsyth County board tasked with hearing appeals to property tax valuations approved mass changes to a second neighborhood on Friday before officially adjourning.

The board of equalization and review unanimously approved a recommendation by the tax office to make upwards adjustments to values in Castleshire, an affluent African-American neighborhood adjacent to Winston Lake Golf Course in a sequel to a similar decision last week to make blanket changes in Monticello Park.

The neighborhood stood out because there were no sales from 2009 onward that assessors could use to set values. Tax Assessor John Burgiss said staff decided to make an adjustment across the neighborhood based on changes approved in individual appeals. Staff was challenged by the fact that there are few similar properties in adjacent neighborhood and had to select comparable sales from across the county.

"This represents an extreme degree of difficulty," Burgiss said. "I was searching countywide, which is something we would normally not want to do. I looked at the comps and then we looked at the result of the appeals. Based on that, we made the decision to start from scratch."

The adjustment in Castleshire brings the total amount of value restored through blanket changes to $3.7 million, in addition to almost $1 million from individual appeals by property owners across the east side of Winston-Salem.

The neighborhood is home to several prominent Winston-Salem citizens, including Contract Office Furnishings owner Thomas Trollinger and Chronicle publisher Ernest H. Pitt.

The mass change approved by the board restored $1.2 million in valuation in aggregate to 110 properties in Castleshire, increasing their values by an average of 6.9 percent. The initial revaluation knocked off an average of 21.2 percent of values in the neighborhood, with the approved changes blunting the reduction to 17.3 percent. In contrast, many neighborhoods on the east side and parts of the south side of Winston-Salem lost more than 50 percent of value, and some, such as Castle Heights, hemorrhaged by as much as 75 percent.

Monticello Park, the first neighborhood subject to mass adjustment by the board, is also an upscale black community on the east side, but comparisons end there. Properties in Monticello Park lost 70 percent of value on average in the initial reappraisal. The board's vote to implement mass changes in part of the neighborhood restored $2.5 million in value and whittled the loss experienced by the affected properties down from 46.6 percent to 14.9 percent.

The mass changes in Castleshire did not affect one influential resident, Forsyth County Commissioner Walter Marshall, who represents District A. His home on Kittering Lane dropped in value from $220,800 in 2009 to $200,800 in 2013.

Community leaders from across Winston-Salem who attended the hearing expressed mixed feelings about the board's action.

Carolyn Highsmith, president of the Konnoak Hills Community Association, said she was disappointed that the board did not make any adjustments in a section of her neighborhood where staff acknowledged that a flawed sales comp potentially caused upwards of 100 properties to be undervalued my more than 5 percent.

A racially diverse and mixed income area, the Konnoak Hills area is located on the south side of the city. Highsmith worked with the Ministers Conference of Winston-Salem and Vicinity to help property owners file appeals both to bring relief on an individual basis and encourage the board to take a second look and consider mass changes. Burgiss said the tax office received more than 1,500 appeals in the last few days.

Highsmith said Vice Chair David Shaw did not respond to an e-mailed request for the board to correct values in the affected section of her neighborhood, identified by the tax office as Anderleigh.

"I think the issue is still out there," she said. "They addressed it as minimally as they had to. They have done their job according to the statute, but is what benefits the community the most? I don't think so.

"They've built in the inequity because they changed the highest valued neighborhoods," Highsmith added. "The most motivated neighborhoods appeal. What about the neighborhoods where people didn't get their appeals in because they were taking care of someone who was sick or there was a death in the family? Or they're just trying to get by and they're too busy making ends meet to get their appeal in?"

Burgiss said notices of adjustments were not sent out to Monticello Park residents until Wednesday and that he expects some push-back. Affected property owners will have 15 days from the time they receive their new notices to appeal.

Burgiss also said the tax office received a request from the West Salem Neighborhood Association to consider making global changes to values in the neighborhood, but after reviewing staff's methodology he did not think any changes were warranted.

Friday marked the statutory deadline for mass changes. The board will continue to meet to hear individual appeals.

"Today's the day we need to all feel comfortable," Shaw remarked before accepting a motion to adjourn.

The board also voted in a unanimous decision to allow board member William V. White to bring a report for consideration that would be submitted to the Forsyth County Commission.

"It would talk about the assessment process in a catastrophically changing market," White said. "It would talk about briefly the assessor's outreach efforts during the informal appeals, including public meetings. It would summarize very briefly some of the public concerns. It would talk about in summary fashion some of the neighborhoods that had areas of concern, the county assessor's recommendation that two of those areas be changed, talk about the appeal process, and it would conclude the finding of fact that we followed the statutory provisions all the way through and that mass changes otherwise would have been in violation [of state statute], and basically state that we believe the assessor's office did a good job."

Burgiss said the 2013 reappraisal has been challenging for citizens, staff and the board alike.

"So I appreciate your interest in and looking into what the reappraisal was all about and trying to help us make sure that we have equitable values for all our citizens," he told board members. "I realize that this puts you in a more unique position than has been exercised in the past."

The 2013 Forysth County tax revaluation was the subject of a two-part investigative report published jointly by YES! Weekly and Camel City Dispatch.

Forsyth County tax panel will not meet with residents in community

A volunteer board appointed to hear appeals to property tax valuations in Forsyth County reversed position on May 30 when members said they are no longer interested in scheduling a meeting in the community to hear directly from residents in neighborhoods affected by plunging home values.

The decision angered Joycelyn Johnson, a Skyland Park resident and community leader who is running for Winston-Salem City Council. Johnson had also asked members of the Forsyth County Board of Equalization and Review to personally visit homes in affected neighborhoods that have lost as much as 70 percent of their appraised value to see firsthand their quality of upkeep.

Johnson and Tax Assessor John Burgiss engaged in a heated discussion about economic-functional obsolescence, an instrument the appraisers in the tax office use to reconcile a cost-based assessment of what properties are worth with market activity.

  

“That’s the institutional problem you have — is you have neighborhoods with economic-functional obsolescence of 75 percent. When you tell me my home is only 25 percent functional, you’re devaluing my neighborhood. I doubt very seriously that any of you have. I doubt very seriously that any of you lost more than 50 percent of the value of your house.”

Johnson was one of only three members of the public who attended the meeting. Since the board convened in early May, its meetings have been poorly attended, in contrast to mass meetings held in churches by the Ministers Conference of Winston-Salem & Vicinity, the Rev. Paul Lowe and Winston-Salem Councilman Derwin Montgomery in March when residents first received notification of their assessments.

“System-wide you have certain neighborhoods where you had no sales, or you had foreclosures, or you had few sales nearby,” said Carolyn Highsmith, president of the Konnoak Hills Community Association. “It feels like you’re penalizing 115 or 215 properties in an entire neighborhood. I think the data points are too small for the samples to devalue hundreds of parcels.”

Chairman Richard N. Davis, who has been the most vocal advocate for addressing neighborhood-wide complaints on the board, was not present for the meeting. Board member Marybeth Abdow was also absent.

Vice Chairman David Shaw said he believes the best way to address any perceived problems is to submit evidence of any errors through individual appeals.

Burgiss said the tax department has received no information to indicate any “widespread data problems.”

The board has scheduled two additional meetings, on June 13 and June 20, before it is statutorily required to make any blanket changes to neighborhood valuations on June 28. On Thursday, June 13, the board will begin hearing individual appeals from property owners in Monticello Park and other neighborhoods under scrutiny because of severe reductions in values.

Board of equalization looks at tax appraisals in neighborhoods with plunging values

John Burgiss

Members of the Forsyth Board of Equalization and Review debated how they should address deep cuts to property valuations in Monticello Park and other predominantly African-American neighborhoods of Winston-Salem on Thursday.

The volunteer citizen board, which is comprised of real-estate professionals appointed by the county commission, is tasked with hearing appeals to property valuations and making mass adjustments if they find systemic problems in the recent reappraisal by the county tax department.

Board member William V. White expressed doubt that the board will uncover any evidence of error sufficient to justify the kinds of mass changes sought by residents of neighborhoods who have seen their home values plunge by as much as 70 percent. 

“In aviation there is a concept called ‘slope line’ to where when you slow the air speed down to the point where the controls get kind of dysfunctional and mushy,” he said. “And it sort of likens to a valuation problem with no sales. I think we are victim of general economic conditions and few sales. But I don’t see any compelling reason to do anything different. I think you’ve got to follow the sales. I don’t see significant problems with it. I know it’s not what everybody wants to hear. I do have some concerns about a shoot-the-messenger reaction.”

John Potter, real estate division manager for the tax department, reviewed sets of qualified sales used to set appraisals for properties in Monticello Park, Konnoak Acres, Shalimar/Salem Village and Reynolds Park.

Due to the wild fluctuations in the real estate market between 2010 and 2011, Tax Director John Burgiss told board members that staff relied on sales from 2011 and 2012 to compile qualified sales lists, commonly known as “comps,” for each neighborhood. Neighborhoods with high numbers of foreclosures, which are excluded from consideration, also had low numbers of qualified sales. Narrowing sales to 2011 and 2012 further winnowed the list.

There were only three sales on the comp list that were used to set values in Monticello Park.

In one, a woman represented by a power of attorney sold a brick ranch house under a generous tree canopy that had been previously valued at $114,300 to a couple for $32,900 in September 2011. In November 2011, seven heirs of William Nelson Knight sold a handsome, split-level ranch house previously valued at $184,000 to Carrboro couple for $82,000. And in November 2012, an investor from Maine picked up a house for $27,000 in a second estate sale. The property had previously been appraised at $120,000.

Chair Richard N. Davis challenged the use of estate sales to determine values for the neighborhood, noting that in his professional experience heirs often sell below market value.

“The heirs didn’t put any money into the purchase of the house, so everything they get is gravy,” he said. “And some people want money. And if it’s a $150,000 house, they get an offer for $65,000 or $75,000 and they say, ‘Let’s sell.’ In a case where it’s multiple heirs, you can’t say it’s majority wins. Everyone has to agree. They put pressure on the one who is holding out, and say, ‘We need the money.’ So I don’t personally think an estate sale should be an indication of a market-value sale.”

Burgiss interjected that, in fact, the tax department does consider estate sales in its comps, in accordance with the state law governing tax appraisals.

“I don’t mean to be in conflict with you, but we are in compliance with Department of Revenue standards,” Burgiss said. “I just want to make sure we’re on the same page.”

Vice Chair David Shaw said he doesn’t relish hearing individual appeals from property owners in Monticello Park.

“What disturbs me is we’re going to have to make decisions based on such limited information,” he said. “In that one neighborhood we’ve only got three sales, maybe one or two are questionable as estate sales. It’s going to be real tough to work through this.”

Board members approved a proposal by Burgiss to front-load the individual appeals from Monticello Park and other troubled neighborhoods so that the board can make any mass changes deemed necessary before a June 28 deadline.

Potter said the dearth of qualified sales presented challenges to appraisers in Monticello Park.

“It’s not something that was easily done all the time,” he said. “Our objective is to show you how it’s done. But that’s what an appraiser has. And when he walks away he’s got to match that to a sale that’s out there. So whether it’s up or down, or way down, that’s what the appraiser is charged to do.”

Davis inquired about a number of sales in neighborhoods such as Reynolds Park and Shalimar/Salem Village that had been cited to him by concerned property owners. Potter said that they were bank sales and were appropriately excluded from the comps.

Board members also looked at how close the recent 2013 reappraisal tracked with market sales in several of the neighborhoods flagged for review. Staff presented average sales ratios, which compare appraised values to actual sales, for that purpose.

“Konnoak seems to be right on the money,” Davis said in reference to the sales ratios presented by staff. “It impressed me as being more accurate than any of the others.

“Some of the others I had problems with,” he added.

Davis cited a decision by the Mecklenburg County Commission to bring in an outside firm to review the 2011 tax revaluation and asked Burgiss if he saw the situation in Forsyth County as comparable. In Mecklenburg, some property owners in the Cornelius area complained that their assessments were too high. The outside review commissioned by the county found instances of erroneous data that had “a significant impact on the valuation” of whole neighborhoods, including sales that should have been excluded from comps and misapplication of grades to individual properties.

“Eighty-five percent of the public regarded public relations [by the Mecklenburg County Tax Department] as poor,” Burgiss said. “I can’t speak for the public, but we don’t have that problem here.”

Davis expressed disappointment that staff was unable to report how many informal appeals in the troubled neighborhoods had resulted in valuations being changed.

“In my opinion the whole idea behind this is to find out where we were, how we stood,” he said. “And I would hope one of the objectives of the effort would be to. ‘Okay, we did this. Here’s how we came out. We adjusted some higher.’ I mean, what’s the use of doing this study if you don’t know the outcome? This is the thing that disappoints me: We did this to put our hands on the problem, and yet we don’t know the results of it.”

Shaw and White suggested that the board take a look at sales after Jan. 1, 2013 — the legal cutoff point for the revaluation — to see if they’re relatively aligned with those used to set values, particularly in neighborhoods such as Monticello that are challenged by limited samples. The two board members acknowledged that only sales from 2009 to 2012 can be legally applied for the purpose of setting values.

“I would feel more comfortable in that neighborhood if we knew how many houses are on the market and how many sold in the last six months,” Shaw said. “I think it would certainly be an indication, and it would make me feel good that, hey, these valuations are right.”

Burgiss responded that he can provide any information board members want, but added that the values are assumed to be correct and the burden is on appellants to prove that they are incorrect.

Davis said as he reviews individual appeals he will be mindful that overall values dropped by 11.9 percent across the county, and measure some of the troubled neighborhoods against that metric.

“Some of these homes that dropped 65 or 75 percent just because they happened to be in a neighborhood where there was a problem, we ask ourselves a question: Is it fair to that homeowner because he just happened to live in that neighborhood that their values dropped so drastically?” he asked. “That’s the question, is how we deal with it and treat everybody equitably, treat everybody fairly.”

Equalization board undertakes review of extreme markdowns in black neighborhoods

Tax Assessor John Burgiss responds to questions from the board of equalization

Members of the Forsyth County Board of Equalization and Review committed to undertake a systematic review of tax reappraisals in troubled, predominantly African-American neighborhoods that have experienced an extreme markdown of values over the past four years.

The volunteer board, which is appointed by the county commission, faces a June 28 deadline by state statute to make any mass changes to property values.

"A lot of people are looking to this board to solve this problem," Chairman Richard N. Davis said during a regular meeting of the board today. "And we need to start coming up with some ideas on how we are to proceed to resolve some of these problems. I think the problem is so broad that we can't solve it on an individual basis. I think there are certain neighborhoods that have been severely affected by this that perhaps we might need to direct the staff to look at the entire neighborhood and come back and give us what they find."

As the sole African American on the five-member board, Davis has been bombarded by phone calls from concerned property owners on the east side of Winston-Salem at the urging of a group of pastors who led a series of community meetings a couple months ago. While expressing skepticism towards concerns about systematic error by the tax office, the other four members gave a respectful hearing to Davis' argument that the board needs to thoroughly examine tax data to address citizens' concerns.

"There is a feeling that the county is arbitrarily lowering the value of black neighborhoods," Davis said. "They look at this as disenfranchisement. A lot of these people, their homes are the most valuable thing they own. And some of these people have mortgages on their homes. And they have a house that used to be valued at $180,000; now that house is valued at $79,500. And so they've lost $100,000 in value. They have a mortgage of $120,000. The mortgage company is saying, 'Hey, you're underwater as far as we're concerned. Your house is now worth much less than what you owe on it. And you got to pay us more money or we're going to call your loan.'"    


Forsyth County Tax Assessor John Burgiss defended his staff's work.

"We believe that we have done everything right," he said, adding that all of the data is available on the tax department's website for people to review. 

"We want the right answer," Burgiss said. "All we want is to have an equitable distribution of taxation."

Board member David Shaw said he believes the reductions are most likely the result of economic realities rather than any error on staff's part.

"I don't have any prejudgment or pre-opinion," he said, "but I can tell you as a realtor that's on the street, what I see is that this thing is more nearly right than not." 

Davis said a news reporter tipped him off about a sale in which a house was sold at an auction and the buyer bid at $65,000, paid $25,000 down and then paid the balance of $40,000, adding that the county used both the down payment and the balance payment as qualified sales in its comparative analysis to arrive at appraisals for the entire neighborhood.

"We've got to make sure that some of these houses that's been severely devalued, we've got to make sure that we've got evidence to prove that the value the county placed on it was justifiable — that the county did not use disqualified sales in their comparisons," Davis told Burgiss. "I just want to throw some of those things out to put you on guard that some of those things are coming out and the county needs to be prepared to deal with it."

Burgiss responded that he would like to know those specific sales so his staff can look into the matter.

Board members asked staff to bring them data on several neighborhoods where they have either received complaints or observed severe drops, including Monticello Park, Castleshire, Northwood Estates, Cameron/Cleveland Avenue and Reynolds Park Road.

Davis cited an instance when a homeowner sold a house for $45,000 that had been previously valued at $169,000 because he was threatened with foreclosure if he didn't come up with his mortgage payment. Instead, he found someone to buy the house at a deep discount to avoid foreclosure.

Transactions resulting from a foreclosure or transactions that involve a lending institution are among those that the tax office excludes from its list of comparable sales. Not so for what are known as "short sales," which take place when a seller finds a buyer to preempt foreclosure.

"Short sales will cause us a little more problem to detect," Burgiss said. "Part of the decision that I made was to not expend the staff effort to try to locate short sales."  

Board member Marybeth Abdow said she doesn't believe it's practical for the tax department to go through every single sale to try to spot short sales.

Board member William V. White suggested that some of the troubled neighborhoods might have suffered from reductions in value because of what he called "downstream" sales in which a bank takes back a foreclosed property and sells it to an investor, who in turn makes minor, cosmetic improvements and sells it for a profit that is still well below its previous valuation. Davis submitted another term to describe the phenomenon: "Contaminated."

"I don't think there's any practical way to track these sales," White said, "and I don't think there's any statutory way we can count that as anything other than a qualified sale."

Burgiss acknowledged that if the county included bank sales in its analysis, 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."

Davis said  he once worked at Wachovia Bank and that at one time the bank refused to lend in certain "red-lined" areas of Winston-Salem because property values were so low the bank didn't deem them as worthy of investment. The legacy of disenfranchisement from such historic practices makes it imperative that the board of equalization avoid any perception that it's practices are historic inequity, he suggested.

"We're going to have to come up with some way to let these people know that this is not a systematic thing on the part of the county or anybody else to take value out of their property, that these things happen because of economic conditions," he said. "But what we've got to make sure of, is that the value on these homes was not reduced because of sales that should not have been included in the comps. We're not supposed to use distressed sales. We're only supposed to use fair-market, arms-length transactions. And we need to make sure this is the case. We need to look at these homes and we need to look at these neighborhoods and see if we're justified in the low values that some of them have."

WANNA GO? The Forsyth County Board of Equalization and Review is still deliberating on whether to allow public comments at regular meetings, which are typically scheduled every Thursday at 3 p.m. But the board will hold a special meeting on Monday, May 13 at which they will allow citizens to speak for five minutes. All meetings take place in the Board of Equalization and Review meeting room on the first floor of the Forsyth County Government Center, located at 201 N. Chestnut St. in Winston-Salem.