Agenda 12-09-2025; 7-a - Update on Revaluation Appeals and Neighborhood Reviews

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2 Neighborhood Reviews The Tax Office conducted an equity analysis on the County's 1,026 assessment neighborhoods. The International Association of Assessing Officers (IAAO) specifies that measures of vertical equity are only representative of possible inequities in neighborhoods that have a statistically significant amount of sales. Based on that, the Tax Office reviewed the neighborhoods with five (5) sales or more and identified 86 neighborhoods that were outside of the equity standards used by the IAAO. Of the neighborhoods with less than five (5) sales, the Tax Office examined those neighborhoods for consistency and reasonableness and identified an additional 76 neighborhoods that required a more thorough review. The Tax Office also studied the 19 neighborhoods identified by the Orange County Property Tax Justice Coalition for possible value adjustments. A total of 171 neighborhoods were identified by the Tax Office for closer review. If value adjustments are made as a result of the neighborhood reviews, property owners will receive notice of the change and will have fifteen (15) days to appeal that change to the Board of Equalization and Review. Tanner Valuation Group is assisting the Tax Office with the neighborhood level reviews. As of November 26, 2025, 152 neighborhood reviews or 89% have been completed. Those reviews resulted in value adjustments to 1,460 properties and a total assessed value decrease of $60,972,300. The remaining 19 neighborhoods will be completed by December 19, 2025. While conducting the neighborhood reviews, the Tanner Group observed some common issues warranting a decrease to the original assessed value. The most common reason that assessed values were reduced during the neighborhood review process was that the original assessed value was not discounted due to deferred maintenance. During the appraisal process, Orange County appraisers conducted roadside evaluations of approximately 10,000 of the approximately 58,000 properties in Orange County. The roadside review can result in a reduction in value due to deferred maintainance if it can be obseved on the exterior of the property, but appraisers do not inspect the interior of homes unless they are invited. As a result, properties that were not viewed by appraisers in a roadside evaluation and properties where maintenance was deferred on the interior would not have been accounted for in the original value assessment. A question about best practices for identifying, verifying, and accounting for deferred maintenance will be added to the Tax Assessment Work Group Request for Proposal for consulting services. Tanner Valuation Group also noted that some neighborhoods in Orange County, particularly near the University, include a variety of housing types. Mass appraisal generally assumes that properties in a neighborhood are like one another. However, some neighborhoods in Orange County have very diverse houising types where older, owner-occupied properties are situated next to properties that have undergone extensive renovation or are income producing student rentals. The conservation neighborhoods in Chapel Hill such as Northside also have restrictions on how large a property can be if an older home were removed and a new home constructed. These restrictions limit the potential value, and, therefore, also limit the assessed value. On the statistical measures of vertical equity, the Tanner Group noted that the statistical analysis conducted by the Tax Office included the sales data dating back to 2021. If those sales are appraised using market conditions in 2024, the assessed value would likely be much higher than the sale price in 2021 given market pressure that raised prices since then. Tanner would recommend limiting the analysis to more recent sales data.