COUNTY OF ALBEMARLE

 

                                                                     EXECUTIVE SUMMARY

 

 

 

AGENDA TITLE:  

Annual Real Estate Reassessments

 

 

SUBJECT/PROPOSAL/REQUEST:

Review of staff report on annual versus biennial reassessment process.

 

 

STAFF CONTACT(S):

Messrs. Tucker, Breeden, Woodzell; Ms. White

 

AGENDA DATE:                          ITEM NUMBER:

December 3, 2003

 

ACTION:     X                              INFORMATION:

 

CONSENT AGENDA:         

     ACTION:                                INFORMATION:

 

ATTACHMENTS:    Yes

 

 

REVIEWED BY:

 

 

BACKGROUND:

Current Assessment Process

The County of Albemarle consists of approximately 740 square miles and currently contains 37,898 real estate parcels. Real estate parcels are currently assessed on a biennial basis by the County Assessor’s office.  Office staff consists of fourteen employees: a County Assessor, Deputy County Assessor, seven appraisers, a tax supervisor, and four clerical staff. 

 

The current assessment process takes approximately one and one-half years to complete.  Each appraiser is assigned a geographical area to assess and is responsible for assigning fair market value to approximately 5,000 parcels.  During the eighteen-month process, all parcels are visited and reviewed by the assigned appraiser.  In addition, values are assigned for new construction that may have occurred; if applicable, the land use status is reviewed; and values are assigned to parcels that have been newly created by subdivision of property. The Assessor’s Office attempts to visually inspect every parcel during the reassessment process. After notices of reassessment are mailed, property owners have two months to file an appeal with the Assessor’s office, and an additional 30 days to file an appeal with the Board of Equalization.

In 1999, the assessment process changed from a completely manual process to a computer assisted mass appraisal (CAMA) process.  With this system, each cost schedule associated with CAMA is updated to accurately reflect current market conditions and costs prior to the start of the reassessment process. These tables assist the appraisers in arriving at their property valuations.  In addition to increasing the efficiency of assessment operations, the CAMA software speeds mathematical computations and allows extraction of data for reports and analyses.

 

 

DISCUSSION:

Annual Assessment Process

Currently, annual assessments are being conducted in 10 out of 80 counties and 15 out of 35 cities in the Commonwealth.  Of the remaining counties and cities, 20 conduct their assessments on a biennial basis with the remaining localities performing their assessments every 3-6 years

 

Staff conducted a survey of the localities conducting annual assessments to determine the following: number of parcels, ratio of developed vs. undeveloped land, appraisal staffing levels, percentage of parcels visited each year, cycle of parcel review, and sales ratio information.  This data is summarized in Exhibit A.

 

An annual assessment process would take approximately nine to ten months to complete.  This condensed timeframe will require that the majority of the assessments be completed from sales ratio analysis conducted in the office.  It is anticipated that physical inspection of all properties will be limited to those parcels which have sold, have a current building permit, or whose owner has requested a review.

 

This limited timeframe will also require the reduction of the appeal period to the County Assessor from 60 days to 30 days and to the Board of Equalization from 30 days to 15 days.   These appeals periods would be in line with the condensed timeframe required for an annual assessment program. 

 

It is anticipated that the timeline for office workflow would be adjusted as follows:

 

 

Process

Biennial Assessment

Annual Assessment

 

Reassessment Notices Mailed

 

December 31

 

December 31

 

Reassessment  hearings/reviews

 

January 1 – February 28

 

January 1-   January 31

 

Board of Equalization appeal period

 

March 1 – March 31

 

February 1 - February 15

Inspection of new properties applying for land use and parcel divisions

 

January 1 – February 28

 

February 1-February 28

 

New Construction

 

March 1 – May 31 and each December

 

On-going

 

 

New Cost Tables Established

 

April 1 – May 31

 

February 1 – February 28

 

Reassessment work period

 

June 1 (odd yr.) to

December 15 (even yr.)

 

March 1 – December 15

 

 

Benefits of Annual Assessments

·         Provides a more current picture of the property tax basis;

·         Increases the borrowing capacity of local governments, since the maximum amount a local government can borrow is usually limited to a certain ratio of debt to total assessed value; 

·         A higher tax base can result in a higher bond rating and a lower interest rate;

·         Assessments are a more accurate reflection of current fair market value, especially in rapidly increasing or declining markets. Assessments closer to market value should reflect a higher sales ratio study;

·         Assessment accuracy is essential to property assessment and can have legal benefits;

·         Taxpayers and the courts are becoming more cognizant of the desirability of annual assessments in order to secure a just valuation of property for taxation;

·         Annual assessments result in less dramatic changes in property values;

·         The real estate tax rate would be reviewed annually in light of a general reassessment;

·         Savings may result from a reduction in the number of assigned vehicles to appraiser staff. An annual assessment may lower the number of assigned vehicles to the department from eight to five.

 

Disadvantages of Annual Assessments

·         Costs associated with additional operating expense would result in an increase in on-going costs of approximately $16,000 per year for mailing costs and reassessment notice forms;

·         Using 5000 parcels as an assessment goal per appraiser, one additional appraisal position will be required in conjunction with the implementation of an annual assessment at an expected cost of $50,000,including benefits.  However, even if the biennial process continues, an additional appraiser position would be required due to parcel growth;

·         Appeal process would need to be shortened in order to accomplish all annual workload deadlines for both appraisal staff and Board of Equalization. Approximately 3%, or 1200, of all property owners contact the Assessor’s office following a general reassessment;

·         Market trends and sales ratio analysis, rather than a physical inspection, would be used to assess the majority of parcels, therefore appraisers will be less familiar with individual parcels. Approximately 1/3 of assigned area would be physically reviewed on an annual basis. The International Assessing of Assessing Officers recommends each parcel be physically reviewed at least every six years;

·         In a declining market, the impact on the tax base will be more immediate;

·         Parcels that are currently under the Land Use Taxation Program will not be subject to a physical inspection every two years, therefore, these parcels may not be immediately recognized should they fail to meet or maintain the requirements of the program. However, the County could require land use property owners to revalidate, which would assist in monitoring the actual use of land use parcels;

·         Increases will have a more immediate impact on the Revenue Sharing Agreement with the City.

 

Implementation of Annual Assessments

Prior to implementation of annual assessments, several items will need to be addressed.

 

·      Albemarle County Code Sections 15-1000, Biennial assessment of real estate, and Section 15-1002, Time limits for appeals of real estate assessments, will have to be amended.  This requires advertisement of the proposed code changes followed by a public hearing. 

 

·       The Assessor’s office has begun the initial process of converting SMDA 2000 to the new Proval Plus software. Prior to the implementation of annual assessments, staff recommends that the migration from SMDA 2000 to Proval Plus be thoroughly completed, thereby lessening the learning curve associated with both the change in assessment process and the new computer software. Newer software requires higher maintenance and quality control to insure proper functionality. With that in mind, staff feels more comfortable using the new Proval Plus software for one more biennial assessment before beginning the annual assessment process. Staff would begin the field- work on the last biennial reassessment starting summer 2005, and the reassessed values would take effect January 1, 2007. The field- work for the first annual reassessment would begin in March 2007, and the reassessed values would take effect January 1, 2008.

 

·      A review of the appraisal staff assignments and job descriptions should be conducted.  In reviewing other localities that assess annually, most localities have one position dedicated to commercial appraisals, one position that serves as an appraisal reviewer, with the remaining staff conducting residential appraisals.   Staff believes that one appraiser position will be required to conduct commercial appraisals and that an appraisal reviewer is essential due to the quantity of appraisals required within the limited timeframe given to complete the annual assessment process.

 

·      Education of the public regarding the change in assessment process should also be addressed. Staff recommends that the change in assessment process and reasons why this change is necessary be promoted to the public through press releases and other media prior to implementation.

 

RECOMMENDATION:

Staff is capable of assessing property annually and CAMA Systems are designed for annual assessments. At this time, staff believes the change from biennial to annual assessments could best be accomplished with one additional appraiser. Annual parcel growth is approximately 1,200 parcels per year and each appraiser is currently assessing 5,000 parcels, which is the industry standard.  However, an additional appraiser would be required based on estimated parcel growth for either an annual or biennial process.  At the time of implementing annual assessment, parcel growth should justify the one additional appraisal position.

 

Staff is of the opinion that the issues identified above relating to staffing realignments, programming changes, and impact on workflow processes would suggest that implementation of annual assessment should begin in 2007, with the reassessed values taking effect for the 2008-tax year.

 

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