Reassessment New Castle County. R. Douglas Sensabaugh Manager Office of Property Assessment

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1 Reassessment New Castle County R. Douglas Sensabaugh Manager

2 Assessment Base Assessments in Delaware are over thirty years old The last reassessment in each County was New Castle County: 1983 Sussex County: 1974 Kent County:

3 Current Assessment Process All newly constructed property in New Castle County is assessed on what the value of the property would have been in The main items used to produce an assessment for a residential property are Square footage Living Area (# of fixtures, # of stories, attic, basement) Quality of construction Condition Location Attached structures (deck, patio, breezeway) Detached structures (pool, garage) Below are two examples of newly constructed homes that were sold within the last two years. Purchase price: $350,363 Assessment: $109,900 Purchase price: $358,285 Assessment: $105,400 3

4 Steps for Reassessment 1.RFP process (est. 6 to 12 months) Scope of RFP Perform reassessment of all parcels (approx. 210,000) New Assessment software (installation, implementation and training) Defense of appeals generated by reassessment Training of Assessment staff 2.Reassessment of all parcels (est. 3 years) 3.Appeals from reassessment (est. 2 years) Total timeline 5.5 to 6 years 4

5 Estimated Cost for Reassessment (Approximately 210,000 parcels) Reassessment of all parcels Est. $50 per parcel (est. $10,500,000) New Assessment software Hosted by Vendor (est. $2,500,000) ($457,000 annual fee) Hosted by County (est. $3,500,000) ($216,000 annual support) Defense of appeals generated by reassessment Informal appeals Should be included in per parcel cost above Formal appeals commercial parcels Training of Assessment staff Should be included in per parcel cost above 5

6 Reassessment Going Forward The County should have a plan on how assessments will be kept up to date going forward after the initial reassessment process. Two methods used across the country are Conduct a rolling reassessment. This would require reassessing one third of the parcels (currently 70,000) in the County per year over a three year period. Conduct a reassessment of the entire County at routine intervals (maybe every 5 or 10 years). This would require a partnership with the vendor that performed the initial reassessment. The best course of action would be to add this into the RFP as an optional item and discuss this process in depth with the selected vendor to come up with the best practice and cost for the taxpayers of the County. 6

7 Rolling reassessment example Maryland currently uses a three year rolling reassessment model. A description of the process performed on one third of the parcels each year from their state handbook is ASSESSMENT PHASE-IN For any increase in the full cash value of a property, state law requires that the increase in value over the old assessment is "phased-in" over the next three years. Use, as an example, a new appraisal of $130,000 compared to an old appraisal of $100,000. In this example, the new appraisal is $30,000 higher than the old appraisal. That $30,000 increase is "phased-in" equally over the next three years: 1st year, $110,000; 2nd year, $120,000; and 3rd year, $130,000. 7

8 Revenue Limitations of Reassessment State Code Title 9 sec c) When any total reassessment of taxable properties within a county of this State shall have become effective, the county property tax rate levied for the immediately ensuing fiscal year shall not be such as to yield county property tax revenues greater than 15 percent in excess of the total of the county property taxes imposed for the fiscal year immediately preceding the fiscal year in which such reassessment shall have become effective. Any initial assessment made on new construction shall not be taken into account in determining such limitation. d) When any total reassessment of taxable properties within a county of this State shall have become effective, a tax rate shall be computed so as to provide the same tax revenue as was levied during the prior fiscal year. That rate shall be known as the "rolled-back rate. e) The ordinance establishing a property tax rate upon total reassessment shall state the percent, if any, by which the tax rate to be levied exceeds the rolled-back rate computed pursuant to subsection (d) of this section, which shall be characterized as the percentage increase in property taxes adopted by the governing body. Within 15 days of the meeting at which the ordinance shall be considered by the governing body, the county shall advertise, in a newspaper of general circulation in the county, said percentage increase in the tax rate. House Joint Resolution 22 established a committee in 2008 to supply recommendations to provide a mechanism for a fair and equitable reassessment of all real property in the state. According to the committee recommendations, excluding growth in the assessment base due to new construction, in the aggregate, County and local governments and school districts should be limited to a 7.5% increase in revenue as a result of the initial reassessment. Overall revenue growth resulting from subsequent reassessments would be limited to 5%. 8

9 What to Expect The 1983 reassessment was on approximately 140,000 parcels and was completed in about two years. Following the 1983 reassessment over 6,000 informal appeals were heard by the revaluation firm. Approximately 3,000 formal appeals were heard by the Board of Assessment Review. The hearings for the formal appeals were conducted over a two year period by hearing panels established by the Board. A similar or greater taxpayer response may be expected following reassessment. 9

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