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.

Equalization board votes to restore $2.5 million in values to Monticello Park

David Shaw (left) and William V. White, John Burgiss and Michael Pollock

An official panel tasked with hearing appeals to property tax valuations voted today in a unanimous decision to restore $2.5 million to dozens of properties in Monticello Park, an upper-middle income neighborhood that is home to a number of prominent African-American civic leaders such as Winston-Salem Mayor Pro Tem Vivian Burke, along with retired educators and business owners.

The Forsyth County Board of Equalization and Review approved the recommendation to make blanket changes to 51 properties at the recommendation of county Tax Assessor John Burgiss. Many of the properties are larger and newer homes located either on Cumberland Road or nearby. Burgiss said staff determined that three sales in 2012 and 2011 that had been used to set values for the neighborhood were not representative of the houses recommended for adjustment.

The 51 properties affected by the blanket change include homes owned by Jim Shaw, a retired tire dealership franchisee and nonprofit executive who is Mayor Allen Joines' reelection co-chair and the widow of the late Judge Roland Hayes. The previous valuations assigned to the properties represented a 71.2 percent decrease from 2009, while the new valuations reduce the blow to a loss of only 39.4 percent.

"These are extremely large changes," board member William V. White said. "They're based on lack of sales. I guess the concern is, what other neighborhoods do we have the same situation that we're not going to know until we receive the appeals and it's too late to do anything about the remainder of the properties?"

Burgiss said staff looked intently at 14 neighborhoods where residents expressed concern about severe drops in valuation and was still open to making further changes.

"May I suggest a potentially radical action to go further into that?" White continued. "Whenever there's so few sales, there's a situation where those sales may not reflect values even though even though all rules say that they do. What about the concept of asking the appraisers in the field the question of, 'Do you think that this work adequately reflects the values out there, notwithstanding the methodology that we use?' The answer is either a yes or a no. If it's a no, then I suggest going back again and looking at the neighborhood, do what you can, and maybe you can expand the number of sales used outside the neighborhood."

The changes made today follow a decision last week by the board to restore more than a $1 million in values resulting from individual appeals in several east-side neighborhoods that were flagged for review because of community outcry, including Monticello Park, Dreamland Park, Castleshire, Slater Park and Shalimar/Salem Village.

White publicly urged property owners to continue to file appeals through the statutory deadline of June 28 so that the board can get a sense of whether further blanket changes are needed.

"I think what the board is looking for is by the 28th to have a comfort level that a) the right methodology was used, b) in your judgement that's the best we could do with it, and then c) we've gotten the word out about the opportunity for individuals to bring an appeal to us," White said. "That even if they don't plan to be present, it forces the assessor's office to take another look at the property. So their individual properties will be examined even further.... I just want to on the 28th say that Forsyth County, the tax assessor's office and the board have done everything they could possibly do to ensure that every citizen had the right to appeal and we've gotten it as good as we possibly could do it in a less sale than desirable environment."

The staff also addressed the findings of an investigation conducted by YES! Weekly and Camel City Dispatch into the tax revaluation.

Real Estate Division Manager John Potter noted that the investigation raised questions about roughly a dozen sales out of 750 sales reviewed in 55 neighborhoods, and that the staff concurred that six of the transactions were either counted, or in one case discounted, in error. The 750 some sales reviewed in the investigation covered only a portion of the 14,000 qualified sales across the county.

"That's six out of 750 — less than 1 percent," Potter said. "We feel that's a pretty good accuracy score."

Staff acknowledged that the disqualified sales that were used in comp lists to set values for neighborhoods included transactions between family members, sales involving churches and foreclosures.

Appraisal Manager Michael Pollock said he used a methodology known as "trended sales ratios," which compares sale amounts to the 2013 valuation with adjustments made for observed market trends, to determine if the errors would have affected the neighborhood values. In all six cases, with the exception of one that he characterized as a judgment call, Pollock said the errors had no material effect on valuations.

In a neighborhood the tax administration calls Anderleigh, but many residents consider Konnoak Hills, Pollock said removing an incorrectly qualified foreclosure sale reduced the sales ratio from 0.97 to 0.94, where 1.00 is the ideal.

"Generally, we like to be .95 to 1.05 in our sales ratios, but in taking a look at that, that was a 5 percent appealed neighborhood," Pollock said. "Looking at it more, I didn't think I could justify making a change. That's my opinion."

Pollock said that adding an improperly excluded sale in the Cameron Park neighborhood (also known as East Winston) had the effect of changing the trended sales ration from 0.995 to 0.990, and was too small to warrant any changes.

The investigation by YES! Weekly and Camel City Dispatch estimated that the exclusion of the sale reduced values in the neighborhood by about 6 percent. The investigation used a methodology of comparing sales to 2009 valuations and pegging changes to the median value to reach that conclusion.

White alluded to two sales flagged by the investigation involving the use of transactions recorded on quit-claim deeds, which the tax administration deemed to be legitimate for the purpose of building sales comps.

"I have a possible concern about quit-claim deeds," White said. "Notwithstanding what the [NC Department of Revenue] says, I think you have to go all the way to the bottom of a quit-claim deed. You usually can't do it with just the deed."

Pollock said staff concurs, and that in the two cases brought to its attention assessors believe that they reflected true market values and 100 percent interest in the property being transferred.

Burgiss reiterated staff's position that the errors had no material effect on valuations for the neighborhoods.

"The one that potentially comes the closest to that is Anderleigh, and that does put us at an assessment level of 94 percent," he said. "We do like to be between 95 and 105 percent. That's the comfort level — that's the range that we like to be in. Certainly, 94 is not 95, so we can understand the question: Was that enough of a change to warrant a change in the neighborhood? There's 400 properties in that neighborhood. The one neighborhood we did bring, we were asking for pretty big changes on those properties. If we were to look at something like Anderleigh that would be very minor."