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

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6 4 February 2023 Methodology The Study involved 39,027 Orange County residential property tax parcels,'from which there were 793 informal appeals and 190 formal appeals 4 Because it was impossible to determine the actual race for each of Orange County's residential property owners,the Study instead relied on demographic information from the Census, organized by tract.'Each of Orange County's residential property parcels was located in one of the county's forty-two tracts. For each tract,the Census provided White population percentage and median residential property value. The parcel and appeal data were then sorted and organized by these values to determine if either of two independent variables, race (a neighborhood's White population percentage) or property value (a neighborhood's median residential property value),consistently affected either of two dependent variables,appeal rates and appeal results. To better analyze the impact of these independent variables on informal appeals,the 793 informal appeals and the 39,027 residential parcels were each segmented into ten"bins"to enable analysis.Each bin contained roughly 10 percent of the appeals or parcels;bin sizes were adjusted as needed to avoid splitting individual Census tracts into different bins. For each bin, average values were calculated for each dependent variable—appeal rates and appeal results. Scatterplot graphs were then created to determine whether either of those independent variables had a consistent and material impact on either of the dependent variables.6 Detailed results from this analysis of informal appeals are presented below. Because of the small number of formal appeals,dividing that data into bins would not have yielded reliable average values. Instead,the analysis of formal appeals focuses only on the bottom and top 20 percent of each independent variable(neighborhood White population percentage and neighborhood median residential property value).The results for this limited analysis of formal appeals are presented above,under Summary of Results. 3.As used in the Study,the term"residential property"includes any property developed with one or more free-standing homes,multiplex homes,townhomes,and condominiums,regardless of whether it is occupied by the owner or a tenant.The term excludes(1)apartment buildings in which all units are owned by a single party and(2)undeveloped lots.The original data set provided by Orange County included 39,071 parcels,44 of which were removed from the Study because they could not be accurately located in a Census tract. 4.The original data set included 1,042 informal appeals and 198 formal appeals,which included some appeals that produced large increases in final appraised values and some in which taxpayers requested increases in appraised values.Those unusual appeals were removed from the Study.Some properties were in both the informal-appeal and the formal-appeal data sets.Of the 793 properties that were the subject of informal appeals in 2020,74 of them(9 percent)were also the subject of formal appeals in that year.The Study did not look at the substance of any of the appeals and focused only on their identifying characteristics(address,initial property appraisal,taxpayer's requested appraisal,final property appraisal). 5.A Census tract is a statistical subdivision of a county that is larger than a block group,with populations averaging around 3,800 people(U.S.Census Bureau glossary,s.v."Census Tract,"https:// www.census.gov/programs-surveys/geography/about/glossary.html#par_textimage_13).In the 2020 Census,there were 84,414 tracts in the United States,2,672 in North Carolina,and 42 in Orange County. (See"2020 Census Tallies,"Census.gov,U.S.Census Bureau,last modified July 18,2022,https://www. census.gov/geographies/reference-files/time-series/geo/tallies.html#block_by_state). The population of Orange County was roughly 149,000 in 2020,meaning the average population per Census tract was just over 3,500. 6.The data analysis was accomplished by Haki Johnson,a graduate student in the UNC—Chapel Hill Department of City and Regional Planning.The author thanks him for his excellent work. ©2023.School of Government.The University of North Carolina at Chapel Hill.