Owners of cheaper homes will shoulder more of Mecklenburg County's new tax burden

Mecklenburg County residents and businesses will receive notices next month assessing the new tax values on their properties. Nearly all will be higher than they were four years ago, when the county last did a revaluation. But the value of homes on the cheaper end increased more sharply — especially in the city’s designated Corridors of Opportunity — meaning their owners will be shouldering more of the community’s tax burden.

WFAE’s Lisa Worf joined Morning Edition host Marshall Terry to discuss the impact.

Terry: First, Lisa, how much of a jump in property values are we seeing in Mecklenburg County?

Worf: The median increase for a home is 59%, but the steepest increases were in lower-priced homes. Here’s Mecklenburg County Tax Assessor Ken Joyner explaining it to county commissioners in a recent meeting:

Joyner: The highest valued properties have not increased in value at the same rates that we've seen those middle third and that lowest third with the revaluation.

Worf: So, for example, those homes priced in the top third increased on average by nearly 50%, while those priced in the bottom third nearly doubled. So that means owners of the lowest-priced homes will see the highest increases in their tax bills. Of course, geography has a lot to do with how much values increased too.

Terry: Where did the county see the biggest increases in home values?

Worf: Not surprisingly in lower-income neighborhoods surrounding uptown from the northeast to the southwest — in what people call the crescent. They’re close to uptown, and the real estate market there has gotten really hot. Many buyers used to avoid them — now it’s the opposite. Those are the neighborhoods seeing the most change and newcomers buying homes at higher prices, sometimes to build bigger ones. Those sales increase the values of property all around them. County Manager Dena Diorio says she believes corporate-owned rental homes are also driving up property values in these areas. In neighborhoods like Druid Hills, Ashley Park and Lockwood, average property values have doubled in the past four years. Many of those neighborhoods are along the city’s designated Corridors of Opportunity. Those are six historically overlooked, lower-income areas where the city is focusing public and private investment.

Mecklenburg County

Terry: How would an increase like that show up in a tax bill?

Worf: There are a few factors that determine your tax bill, and the value of your house is just one of them. Of course, there’s the tax rate that the county, city and towns set. Often in revaluation years, the aim is to set a revenue-neutral rate — so that because the total tax base increases, the rate goes down to collect the same amount of money. In that scenario, revaluation shuffles around who ends up paying more. If your home increased more than the average, you’ll be paying higher taxes in this scenario. If it increased less than the average for all properties of 52%, you’ll be paying less.

Terry: So what kind of increase could people in those quickly-changing close-in neighborhoods see?

Worf: The county has calculated three different scenarios for different-priced houses, with a revenue-neutral rate. So if your home is valued at $140,000 and it’s nearly doubled in value over the past four years — your tax bill will go up about $278 to around $1,300. Compare that to a home closer to the median — around $420,000. That tax bill would be larger, but only go up $177. It’s a lot of numbers, but the big takeaway is that the lowest priced house ends up with the biggest tax increase. And those numbers are all based on preliminary data.

Mecklenburg County

Another concern is that a lot of these neighborhoods have relatively low homeownership rates. In Ashley Park and Enderly Park, off Freedom Drive, only a third of residents own their homes, compared to nearly 60% countywide. So low-income renters could see those higher tax bills passed along in the form of higher rents.

Terry: Now, the value of commercial property did not increase as much as residential. How does that impact things?

Worf: Yes, the value of commercial properties only went up 42%. So that means the tax burden will shift more to residential properties. Last time around, in 2019, commercial properties saw their tax values go up more than residential, and that meant homeowners didn’t see as much of an impact.

Terry: Is there an appetite to keep the tax rate revenue neutral?

Worf: There’s certainly an acknowledgment from county commissioners that even if they go with a revenue-neutral plan, it’s going to be tough on many owners of lower-priced homes. Here’s what Commissioner Leigh Altman said at that meeting where the tax assessor gave his presentation. She was looking at a map that broke down the increases in value.

Altman: This slide you have up portends a real shock and convulsion to properties in the lowest third of the community. And all of us are, I think, very concerned that the leap in values are going to harm the most economically fragile in our community.

Worf: On the other hand, County Commission Chair George Dunlap said a revenue-neutral rate will not support the services county residents need.

Dunlap: Because if you come in saying we want revenue neutral, then you're also saying we're not going to be able to pay for schools, we're not going to be able to pay for additional services.

Worf: Now, a majority of the revenue that comes from property taxes goes to the county, but Charlotte City Council and the towns will set their own tax rates, which will affect your bills too.

Terry: Are there any ways to protect long-time residents in areas where property values are jumping?

Worf: There are. If you’re 65 or older with an income less than $34,000, you can receive an exclusion on the taxable value of your home — either $25,000 or 50%, whichever is greater. That threshold is set by the state. A Mecklenburg County program called HOMES, doesn’t have an age requirement and has a higher income threshold — 80% of area median income or about $75,000 for a family of four. To qualify, residents must have lived in their homes for at least three years. The county will pay 25% of the tax bill up to $340.