Agenda - 04-21-1998 - 10a - Laserfiche WebLink

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MEMORANDUM TO: Orange County Board of Commissioners FROM: John Smith, County Assessor DATE: April 16, 1998 SUBJECT: Present-Use Value Program BRIEF HISTORY OF THE PRESENT-USE VALUE PROGRAM Enacted by the General Assembly in 1973, the present-use value program in North Carolina became a part of the property tax system in 1974. While North Carolina law had always required that real property be appraised at market value, it was assessed (also by statutory directive), at a percentage of that market value. Historically, counties had adopted conservative rural land values (de facto land use, which resembled the present-use value schedules to come). A legislative change in 1971 added to the pressure being directed on the property tax system. Part of the legislation governing the taxation of public utilities also provided the impetus to appraise and assess all property at market value. This statutory change, along with the 4-R Act, required the counties to tax the public utility property at the same approximate level as all other property. In the early 1970's North Carolina was becoming a prime destination site as hundreds of large and small companies located, relocated, or expanded in or near an affordable and reliable labor force. With this commercial and industrial expansion came job opportunities, in turn luring thousands of families to settle in or near these developing areas. Almost all of the new development; residential, commercial, industrial, as well as the new roads necessary to handle this growth, took place on what had been farmland located on the outskirts of towns and cities. Simultaneously, downtown business districts (especially retail), suffered as they lost business to shopping centers also being built on the outskirts of town. All of these changes within the economy applied pressures on land values for which property owners and assessors alike were unprepared to handle. In 1973, North Carolina had an overall increase of 19% in land values. Land close in to towns and cities, especially where located on major highways and interchanges experienced tremendous increases in value. Skyrocketing land values, supported by sales where farmland was being converted to non-farm uses, became the basis for land assessments. This set the tone for very unpleasant relationships between farmers and counties. It was not uncommon for land values to increase several hundred percent between reappraisals. Farmers, who had once been a large part of a stable economy as they competed against other farmers in expanding their land holdings, now found themselves part of a more robust economy competing against large corporations and land developers. Consequently, farmers found they could not pay the new market prices and still compete with those farmers who had or could make lower investments in land due to their location some distance away from all the new development.