Agenda 08-26-2025; 6-b - Update on Revaluation Appeals, Studies, and the Tax Assessment Work Group

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21 Attachment 2 ORANGE COUNTY TAX OFFICE 228 S CHURTON ST,STE 200 HILLSBOROUGH,NORTH CAROLINA 27278 Phone 919-245-2100 tax@orangecountync.gov Fax 919-644-3091 Chad Phillips,Deputy Tax Assessor On June 171",the Tax Office began a county-wide neighborhood level review on vertical equity based on concerns brought forth by the Orange County Property Tax Justice Coalition.This review was completed on July 301".The initial review was based on neighborhoods that had a statistically significant number of sales available to calculate a Price Related Differential (PRD). Based on the recommendation from the UNC School of Government, additional consideration was also given to conduct calculations of the Price Related Bias (PRB).After this review, it was determined that 86 neighborhoods county-wide fell into the category of being outside of IAAO standards for both PRD and PRB, as well as having a statistically significant number of sales available. One of these neighborhoods (T706) has already been corrected through Board action on July 23 d.This leaves 85 neighborhoods. IAAO Standard for analysis states that a minimum of 5 sales should be used to calculate a PRD, however at least 30 should be used in order to provide "reliable and stable measures." IAAO Standard for PRD shows an acceptable range of.98 to 1.03 where> 1.03 indicates regressivity and < .98 indicates progressivity. IAAO Standard for PRB shows an acceptable range from -.05 to+.05, However, it states that the "unacceptable range" is-.1 to+.1. IAAO guidance from the 2013 Standard on Ratio Studies clarifies this as saying that the .05 standard implies that the results are questionable, and the .1 standard implies that inequity is likely. IAAO recommends using the PRB in addition to PRD for more comprehensive equity testing. It says that while the PRD is easier to compute, the PRB is preferred. There are multiple methods that can be used for vertical equity review in neighborhoods that have under 5 sales. None of them alone should be considered significantly reliable, and IAAO suggest performing more than one. Due to the lack of sales, no PRD or PRB could be calculated on these neighborhoods, but based on review, in our opinion 76 neighborhoods warrant closer inspection. The original challenge brought by the Coalition pointed to 19 specific neighborhoods that they were reviewing. Of these 19, 8 have a statistically significant number of sales and are out of standard for both PRD and PRB. 9 have a statistically significant number of sales, and are either in IAAO standard range, or come into range if outliers are taken into consideration.The remaining 2 do not have enough sales to calculate, but are recommended to be reviewed based on review. The Tax Office also contracted with a third party vendor to run equity analysis countywide.The Tax Office is currently reviewing this material and how it relates to our neighborhoods.