Agenda - 04-18-2023; 4-a - Property Tax Appeals Bias Study Presentation from UNC School of Government

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11 Orange County Property Tax Appeals:A Systemic Bias Analysis 9 Conclusion What do these results mean for the Orange County tax office and its practices going forward? It may be helpful to put the Study's results in context. Orange County's results were"better" in some sense than the results of recent similar studies that the School conducted for Durham County and Mecklenburg County in that the Orange County study found less evidence of systemic bias 7 In all three counties,the studies found that appeal rates were generally higher for more expensive neighborhoods. But in Durham and Mecklenburg counties, appeal rates were also generally higher for more White neighborhoods.And in Mecklenburg County, appeal results were also generally higher for neighborhoods that were more expensive and more White. That said,remember that the Orange County results were affected by an unusually large number of appeals from taxpayers in and near the Northside neighborhood.Without these additional appeals,it is possible that the Orange County results would have been more similar to those from Durham and Mecklenburg counties. The lower appeal rate among taxpayers who live in less expensive neighborhoods may contribute to a"property tax assessment gap"that benefits Whiter,wealthier taxpayers.This assessment gap is the gap between the ratio of tax assessments to sales prices for Black-owned property versus White-owned property.One national study concluded that the assessment gap in North Carolina was 11 percent.In other words,Black-owned properties in North Carolina were assessed about 11 percent higher than White-owned properties relative to their actual sales prices.This result places North Carolina just below the study's national average assessment gap of 12.7 percent but in the highest third of all states." Most appeals produce reductions in assessed values.'If taxpayers living in less expensive neighborhoods are less likely to appeal their tax appraisals,it follows that the property owned by those taxpayers on average would be assessed higher relative to market value than property owned by other taxpayers. The lower appeal rates for certain groups of taxpayers may occur in part due to a lack of education and information about the process of appealing property taxes.Additional outreach by the tax office targeting less White and less expensive neighborhoods might alleviate some of that information deficit.Taxpayers may be more likely to take advantage of the appeal process if they learn that the process is free,does not require an attorney,and generally does not involve a home inspection.While additional appeals of course increase a tax office's workload,they can also make a mass reappraisal more accurate. 7.See Chris McLaughlin,"Analyzing Property Tax Appeals for Systemic Bias,"Coates'Canons NC Local Government Law(blog),October 4,2021,https://canons.sog.unc.edu/2021/10/analyzing-property- tax-appeals-for-systemic-bias/(Durham study)and Christopher B.McLaughlin,Mecklenburg County Property Tax Appeals:A Systemic Bias Analysis(July 2022),https://www.sog.unc.edu/sites/default/files/ meck_county_appeals_study_final.pdf(Mecklenburg study). 8.For more about the assessment gap,see Chris McLaughlin,"Systemic Bias and Property Taxes," Coates'Canons NC Local Government Law(blog),November 23,2020,https://canons.sog.unc.edu/ systemic-bias-and-property-taxes/. 9.More than 70 percent of all informal and formal appeals included in the Study resulted in reductions in assessed values. ©2023.School of Government.The University of North Carolina at Chapel Hill. Use of this publication for commercial purposes or without acknowledgment of its source is prohibited. Reproducing,distributing,or otherwise making available to a non-purchaser the entire publication,or a substantial portion of it,without express permission,is prohibited. For permissions questions or requests,email the School of Government at publications@sog.unc.edu. Other School reports can be accessed on the Publications page of our website:sog.unc.edu/publications.