When Buncombe County, North Carolina, released its property value reassessments in 2021, employees at the local consulting firm, Urban3, were intrigued. Familiar with reporting by national news outlets about inconsistencies in property tax valuations within counties around the country, homeowners on staff began comparing notes.
“One person’s values increased dramatically. Others’ didn’t,” remembers Ori Baber, an analyst with Urban3, which works with local governments on budget, planning, and tax-related issues. “So we began wondering about all 130,000 parcels. If we’re perplexed and confused, chances are others are too.”
As Baber and his colleagues scrutinized the numbers, they found that the county’s assessment—which occurs every four years—had some serious discrepancies. Most notably, some properties that were valued at less than $315,000—the median home price in the county—were being overassessed, while more expensive homes were being underassessed. That meant that some owners of very small homes had received tax bills that, proportional to the size of their land, were higher than those for larger houses.
“For example, the Biltmore Forest neighborhood, a very wealthy neighborhood, has very large lots and multimillion dollar homes. Across the street is the Shiloh neighborhood, which was formerly redlined. Properties there are a few tenths of an acre, and a home’s value is maybe $250,000,” says Baber. “If you normalize by acreage, you find that the value per acre for that smaller home is astronomically higher than in Biltmore Forest. More modest homes are packing a very productive punch from an economic perspective—a lot of revenue is being generated there.”
In practice, assessed values are supposed to closely track market prices, but in reality this frequently doesn’t happen, given assessors’ limited knowledge of individual homes and the dynamics of housing markets around the country. Still, the number should be close. But Urban3 found repeated examples of luxury homes that wound up selling for far more than their assessed values; in some cases, the market value was almost double the figure the county had assigned it a few months earlier. For instance, one house in Biltmore Forest was assessed at about $1.2 million in 2021, but it sold for $2.45 million later that year. Meanwhile, some small homes were selling for distinctly less than their assessed values. A house in Shiloh that was assessed at $209,000 last year wound up selling for $180,000.
The upshot of those discrepancies is twofold. Urban3 calculated that the county was losing out on roughly $4 million in property taxes from higher-income homeowners because their houses had been underassessed. But arguably even more significant was the finding that lower-income homeowners—who, in Buncombe County, are disproportionately people of color—were paying around $1.5 million too much in taxes. Residents who may have already faced racism, redlining, and predatory lending have been subsidizing the county’s general fund, almost two-thirds of which comes directly from property taxes.
Black residents who live in the city of Asheville, located in Buncombe County, say they had a feeling they were paying more than their fair share, but few had spoken out about it. Kristyn Harris, fundraising coordinator with Asheville’s Racial Justice Coalition, says that many people are just worn out. “It’s one of many things Black people in Asheville are struggling with, along with health care, education, and other things,” says Harris. “It’s like, OK, here’s another thing we have to worry about as a Black person in this region.”
Far From the Only One Doing It
Property tax assessment is an idiosyncratic process: every state does it a little differently. In North Carolina, counties assess property values, set property tax rates, and collect taxes. According to state law, they must conduct reassessments every eight years, but many counties, like Buncombe, do it more frequently.
Buncombe County is certainly not the only place in the state or the country that’s perpetuating errors and inequities—and nor is the issue a new one. As early as 1973, HUD published a report that highlighted the property tax assessment problem. And according to Larry Clark, director of strategic initiatives at the International Association of Assessing Officers (IAAO)—a government assessment officials’ professional organization—“Assessors have been aware of it for years.”
But the topic gained major public attention last year. Research by University of Chicago professor Christopher Berry made headlines with its finding that homes in lower-income neighborhoods are being overassessed and higher-income ones underassessed in counties all over the nation. And another 2021 study found that property assessments are 10 to 13 percent higher for Black and Latinx homeowners around the U.S.
It’s not that government assessors necessarily have nefarious motives. Determining housing price trends and appropriate comparable sales is challenging in any environment, but particularly in the booming housing market the country has been experiencing in the past few years. And while just about all assessors use Computer Assisted Mass Appraisal (CAMA) software, the results can only be as good as the data—coming from construction permits and real estate listings, for example—that goes in.
But one problem is the fundamental way that assessed values are determined. Unlike private real estate appraisers who examine a house inside and out before it’s sold or mortgaged, assessors don’t have the resources to look at each home individually. Instead, they often cluster homes into market segments, each of which gets a median value. The problem with a median, though, is that the houses at the tails—those that are lower and higher value than the median—wind up being over- and underassessed, respectively.
In addition, off-the-shelf CAMA software doesn’t fully take location into account. For example, two 1,500-square-foot two-story homes with three bedrooms and two bathrooms might be valued the same within a market segment, regardless of where they are. But location, of course, matters intensely. For example, research has repeatedly shown that homes in Black neighborhoods fetch lower sales prices than identical models in white neighborhoods. As a result, assessors’ software that includes both neighborhoods will overassess properties in Black neighborhoods.
There is a mechanism for addressing assessors’ mistakes. Homeowners in Buncombe County and elsewhere are allowed to appeal their assessments if they feel an updated property value is incorrect. However, those who most frequently tend to appeal—and win—are upper-income, with the means, know-how, time, and sense of empowerment to advocate on their own behalf (or to get legal assistance). Lower-income homeowners might not have the time or resources to complain, or simply might not know it’s an option. The outcome winds up reinforcing the basic problem: overassessed low-cost homes retain their inflated assessment, while high-end properties’ values are further reduced.
No one observing the assessment industry expects perfection. “The field is inexact and there are some inequities no matter what,” says Kirk Boone, a professor at UNC-Chapel Hill’s School of Government. And as Berry’s analysis indicates, Buncombe County’s process isn’t all that flawed relative to other counties across the country.
But the region made national news in 2020 when the City of Asheville and Buncombe County passed resolutions supporting community reparations for Black residents. It was one of the first places in the country to do so, and the city and county subsequently allocated $2 million for reparations in 2021 and another $2 million earlier this year.
Racial equity clearly seems to be a major priority for Buncombe County’s residents and elected representatives. So it’s understandable that Urban3’s staff assumed that their data would be hailed by local officials as a critical issue warranting immediate redress.
A Flawed Tax Process and a Muted Response
“When we set out with this ad hoc committee, one of the big questions was the disparity in high income homes’ taxes versus low-income homes, and specifically in the inner city. But did I miss it? Did you address that in the report?”
That’s Al Whitesides, Buncombe County’s only Black commissioner, interrogating a real estate appraiser at a county commissioners’ meeting in July. It’s where Urban3’s findings are finally getting a public hearing. Sort of.
The meeting was a culmination of a 15-month process of trying to get someone to act on the findings. Last year, after ensuring that their property value vs. assessment conclusions were rock-solid, Baber and Urban3’s principal Joseph Minicozzi brought the firm’s findings to county officials. Things didn’t quite go the way they’d hoped.
First came a meeting in April 2021 with the county’s tax assessor, Keith Miller. “He was immediately defensive, to the point where it really strained our ability to collaborate or communicate or work in a direction that’s best for our community,” says Baber. The conversation didn’t go far.
Baber and Minicozzi then presented their data to the county manager and county commissioners. Those leaders kicked the can down the road by establishing an Ad Hoc Reappraisal Committee that would spend eight months studying the issue and then return with recommendations.
But from the start, the committee’s makeup and structure seemed designed to limit scrutiny of the county’s assessment process. Along with Baber and some at-large members, the committee included three real estate brokers, two of whom work for the high-end real estate brokerage firm Christie’s. And Miller, the tax assessor, was charged with staffing the committee. That is, the person whose work was ostensibly going to be closely evaluated was providing the group with background information and vetting the speakers.
As a result, says Baber, the committee didn’t receive the kind of detailed, transparent information its members needed to be able to make informed decisions. Minicozzi, for example, had hoped to address the group very early on, since it was his company’s conclusions that kicked off the process in the first place. But he says he wasn’t allowed to present findings to the committee until six months after the group launched.
Meanwhile, Miller presented his own data, including a slide demonstrating that Buncombe County’s assessments matched sales prices at an almost one-to-one ratio. “Urban3 approaches that question [of discrepancies] in a totally different way than we do. When I look at how the appraisal model performs, I see different things,” Miller says.
But Urban3 representatives say that the “different things” Miller sees are the result of a practice he’s using called “sales chasing,” something the IAAO frowns upon. Sales chasing is a process of utilizing information from a recently sold property—either its sales price, or the now-public information about its interior characteristics—to readjust its assessment. When that new assessment is compared to the sale price, the two will, not surprisingly, be virtually the same.
The difference in methods is tricky and technical, though, and committee members were never given the full picture, say Urban3 representatives. As a result, when they presented their recommendations to the county commissioners in July, there was no mention of inequities in assessment results. None. And no suggestions of how to rectify them.
But the commissioners didn’t vote to accept the recommendations at that meeting, and they seem to acknowledge that the process lacked substance. Along with Whiteside’s challenge, Brownie Newman, the commission chair, says, “To me, the committee didn’t answer the question” of whether the county’s assessment process is impaired. It’s unclear what will happen next.
To Do It Better? More Money, More Effort
That kind of uncertain, rather-not-deal-with-it response has been common around the country, says Berry, the University of Chicago professor whose 2021 research brought national attention to the problem.
“To characterize overall,” says Berry, of the IAAO, “they’re holding their breath and hoping I and the problem will go away.” Even in places like Chicago and Detroit, where the systems have proved to be far more unfair than in Buncombe County, local government officials continue to deny that problems exist.
Unfortunately, while there are proven solutions, they’re rarely cheap or easy. For example, if counties conducted reassessments annually or every other year, they’d be much more successful in capturing housing price shifts. But to do so would require more staff and funding.
Josie Faass, executive director of the Robert Schalkenbach Foundation and co-director of the Center for Property Tax Reform, also points out that assessors are usually white men. “A lack of diversity in the assessing profession as a whole, for example, is often cited as a reason why assessments of parcels in neighborhoods of color may be less accurate than in whiter areas,” she recently wrote for Shelterforce. Faass says that the IAAO is cognizant of this and is aiming to diversify the field.
Ultimately, fair tax assessments result when local officials understand that the system typically skews toward inequity and endeavor to address that imbalance. North Carolina’s Wake County, for example, has been singled out as one of the country’s least-unfair counties. But getting there took work.
Back in the 1980s, Wake County’s assessment staff recognized that industry-standard methodologies weren’t wholly accurate, and they partnered with a nearby university’s statistics department to customize their approach. More recently, the agency hired a leading data analytics company (based in Wake County) to ensure that the methodology is still working as intended. And finally, the department has an experienced, knowledgeable appeals board that doesn’t immediately cave when high-income residents or their lawyers complain that a home has been overvalued.
Of course, Wake County is able to do all of that because it’s one of the state’s richer counties. But another way to move toward more equitable outcomes is through advocacy and public attention.
Since last year, Urban3 has been part of a large project examining tax assessments in 18 western North Carolina counties—places where assessors’ technology and techniques are likely less evolved than those in Buncombe County. Despite the poor reception to their earlier findings, Urban3 is determined to keep going. The firm’s leaders are hoping that more data, paired with more media coverage, will draw attention to the issue and eventually convince policymakers to work harder to get these calculations right.
as an owner of a “gut rehabbed” house in a Baltimore neighborhood that designated urban renewal area, I was surprised how high my first state tax assessment was. Baltimore uses assessments provided by state employees who actually perform assessments as the basis for calculation for the tax, but each jurisdiction municipality applies its own rate to that state number. I complained about to the state assessment office and met one-on-one with their boss with a few pictures and recent comparables. This process cost nothing and succeeded in reducing the figure used to calculate and reduce my tax. Staffing is reduced by the state’s use of a geographic distribution that rotates sending appraisers out to 1/3 of the jurisdiction per year.