Quorum Court Hears Re-Appraisal InformationJune 24th, 2011 by Drew County Offices
UNDERSTANDING the 2011 DREW COUNTY REAPPRAISAL PROJECT
by Beth Davis, Drew County Assessor, and Ronald Pack, Drew County Appraisal Manager, Arkansas CAMA Technology, Inc.
Notices of Change in Assessment letters are to be mailed to some Drew County property owners during the middle part of July. These mailings will continue through July 18, 2011. The letters are a result of the recently completed countywide reappraisal project that has been ongoing in Drew County since January 2009. A comprehensive, countywide reappraisal is a complex and often times misunderstood endeavor. The purpose of a reappraisal is to ensure that property valuations, not only within Drew County, but also among all Arkansas counties, are fair, equitable and reflect current market values. We hope the following information will help the citizens of Drew County better understand the current reappraisal project and the Arkansas property tax system.
When was our last reappraisal in Drew County and why are we having to reappraise again so soon?
The last countywide reappraisal in Drew County was completed in the fall of 2008. Act 1185 of 1999, perhaps the most significant piece of property tax legislation to ever be implemented, significantly changed the time periods between reappraisals in Arkansas. Among other things, Act 1185 requires that all Arkansas counties must reappraise a minimum of once every three years. The primary purpose of this law was to avoid excessive increases in property taxes due to the long periods between reappraisal cycles and to ensure that all counties were reappraising their properties in a similar fashion and on a related time schedule. Nineteen (19) counties in Arkansas are scheduled to complete their current reappraisal project by the end of 2011.
What are the duties and responsibilities of the Drew County Assessor and the Drew County Board of Equalization?
The county assessor’s duties are to discover, list and record a fair and equitable value on all taxable real and personal property within the county. Arkansas law requires that real estate assessments be based upon either the property’s market value or upon its “use value”. Market value is generally defined as the most probable price that a property would bring if exposed for sale in the open market and is an arms-length transaction between a willing and knowledgeable seller and buyer. In Arkansas, bona fide agricultural properties (pasture, crop and timber lands) are valued based upon the use of a particular parcel of land and the productive capability of the soils that make up that parcel of property.
The Drew County Board of Equalization is a five-member board. The members are all Drew County citizens who have agreed to serve on the board. One member is selected by the school districts, one member is selected by the cities, the county judge selects one member and the county quorum court appoints two members. At least one of the two members appointed by the quorum court must be a licensed real estate appraiser or broker. County boards of equalization have two primary responsibilities:
1) to review and equalize overall county assessments as assessed by the assessor; and
2) to hear assessment appeals by property owners.
What role does the Arkansas Assessment Coordination Department (ACD) play in the property tax system in this State?
All counties in the State of Arkansas are required by law to appraise real estate, with the exception of bona fide agricultural lands, between 90 and 110 percent of a property’s estimated market value. Lands determined as bona fide agricultural properties are valued based upon the use of the land (e.g. crop, timber, or pasture) and the productive capability of the particular soils that comprise the property. Lands planted in rice are now included in the “crop” category. The ACD updated agricultural land values in Drew County this year pursuant to Act 994 of 2007. This Act requires the ACD to annually revise agricultural land values in those counties being reappraised. Each assessor is required to use the land values provided by the ACD. Previous crop, timber, and pasture land values in Drew County were established by the ACD in January 2008.
The full assessed value of a property is determined by multiplying the appraised value of the property by 20 percent. Perhaps the most important mandate of the ACD is to ensure that assessment ratios in all of the 75 counties in Arkansas are within the range required by state law. Among other things, the ACD real estate audit consists of taking samples of actual real estate sales in a county and comparing those sale prices to the full assessed value levied on the property by the local assessor. When the results of the audit indicate an assessment ratio is outside compliance levels then a county must provide for more accurate real estate valuations in order to bring assessments in the county to an acceptable level. If the assessments are not corrected then county and school turn-back monies can be withheld by the State of Arkansas.
Who is Arkansas CAMA Technology, Inc.?
Arkansas CAMA Technology, Inc. (ACT) is a private real estate appraisal and assessment software development company with ten (10) offices located throughout the State. The company formed in January 1992 and has grown to 76 full time employees and 5 part time employees. ACT, and/or its affiliated companies, has diversified its business by offering on-line real estate record access and geospatial technology related services.
This is the fourth countywide reappraisal project that ACT has completed in Drew County. The first reappraisal cycle conducted by ACT, commenced in January 2000. This project was successfully completed in December of 2002. ACT was again selected by the County in December 2008 to conduct the current project which is scheduled to terminate at the end of this year.
ACT has completed, or is in the process of completing, reappraisal projects in 23 Arkansas counties. In addition, the company has also developed a computer assisted mass appraisal (CAMA) software system that is in use in 34 assessor’s offices in the state. Arkansas CAMA Technology, Inc. has been approved by the Assessment Coordination Department to perform real estate appraisals within the State of Arkansas for ad valorem tax purposes.
What is likely to happen as a result of the reappraisal?
An increase in your assessment historically has meant an increase in your property taxes. However, since the passage of Amendment 79 in November of 2000, an increased real estate assessment may not necessarily mean an increase in your property taxes. Amendment 79 provided all homeowners up to a $300.00 property tax credit on their principal place of residence. Act 142 of 2007 has now increased this property tax credit by $50.00 or, up to a 350.00 credit. If you have not certified your principal place of residence to the assessor you should promptly do so by calling the Drew County Assessor’s office at 1-870-460-6240. Besides the $350.00 property tax credit the following limits on assessment increases after a reappraisal are now in effect:
a) Assessments are “frozen” on the principal place of residence for those taxpayers 65+ years old and those taxpayers that are disabled.
b) Assessments on the principal place of residence for other taxpayers can only increase at an annual rate of 5%.
c) Assessments on all other properties can only increase at an annual rate of 10%.
It should be noted, however, that even though a property owner’s assessment has been either “frozen” or “capped” by Amendment 79, any previously “non-assessed” property (new construction, additions, recently discovered, etc.) will be assessed at 20%.
Effective January 1, 2006, pursuant to Act 2284 of 2005, “when a person sells his or her property, the county assessor shall assess the real property at 20% of the appraised value at the next assessment date after the date of transfer”. Assessment limitations as provided for in Amendment 79 will not apply to the property that was sold until the second assessment date after the date of the transfer.
Many properties will see an increase in their assessment but many may possibly see a decrease. The percentage of increase or decrease will not be the same for each property. An increase, or a decrease, in your real estate assessment is based upon what your property has been assessed for in the past, compared to the value that is recorded on your property as a result of the current reappraisal.
Property taxes in Arkansas are not due and payable until October of the year following the assessment. Thus, any change in the amount of your 2011 real estate taxes resulting from the current reappraisal will not be due for payment until October of 2012.
Your 2011 property taxes will be determined by multiplying the millage rate in your taxing district by the 2011 taxable assessed value of your property LESS any property tax credits afforded by Amendment 79 and Act 142. However, property taxes can only be estimated at this time since millage rates are not certified by the taxing entities until later in the year.
Is the value of real estate declining in Arkansas?
Since early 2007 much has been written and spoken on the television, radio, the internet, newspapers and in periodicals about the decline of real estate values in certain parts of our nation. With the exception of bona fide agricultural property, real estate taxes in Arkansas are based upon a property’s market value. As such, it is very important for those involved in the valuation of real estate to constantly stay informed about the changing dynamics of the market.
It appears the generally poor economic conditions in some areas of the United States and the resulting credit problems for some groups of home owners and investors in commercial real estate have brought about a volatile situation within some markets. Fortunately, with the exception of a few specific markets in a “handful” of counties, owners of real estate in Arkansas have not experienced the effects of a rapidly declining market. The Drew County Assessor, Board of Equalization and the valuation analysts at Arkansas CAMA Technology, Inc. (ACT) are keenly aware of and are very sensitive to the dynamics affecting real estate values, most particularly in today’s economic environment. ACT’s analysts have spent a great deal of time, effort and resources researching and tracking the changes in property values that may have occurred since January 1, 2008, the last date most of the properties in Drew County were appraised for property tax purposes.
The CAMA (computer assisted mass appraisal) software system developed and used by ACT provides the company with the ability to review sale prices within any particular market area in Drew County. Researching valid sales activity and establishing reasonable estimates of a property’s most probable sales price is the primary responsibility of ACT’s analysts. The effort of researching and analyzing the various real estate markets in Drew County has been conducted in a very diligent manner utilizing the most current, local sales information available. The goal of ACT’s valuation analysts is to record a fair, equitable and defensible estimate of value for each of the approximate 16,000 parcels of real estate situated within Drew County.
When will I know about my new assessment and what I can do if I have questions about the value recorded for my property?
During the middle part of July, a “Notice of Change in Assessment” letter will be mailed to the owners of each parcel of property that experiences an increase in its new appraised value resulting from the current reappraisal project. A letter will not be mailed should the appraised value of a parcel decrease or remain the same. Should you receive a letter you should review it carefully. This notice will list your parcel number, the owner of record, a brief legal description of the property, the previous and current estimated market, assessed and taxable values and how to schedule a hearing with the Drew County Board of Equalization should you wish to appeal the valuation. The notice also contains other information helpful in understanding the process.
To determine if your 2011 appraised value, resulting from the reappraisal, is reasonable you should first attempt to decide what your property is currently worth by considering the answer to some of the following questions:
• How much have other properties similar to mine sold for in the past couple of years?
• How much did I pay for my property?
• Did I purchase my property at its “true” market value?
• How long ago did I purchase my property and how much did I spend to get it to its current condition?
• What would it cost to replace my house or commercial building today?
• Do any adverse conditions exist that may affect the value of my property?
If you do not know the answers to these questions local Realtors, appraisers and bankers may be helpful. Also neighbors, friends and family members who have recently purchased or sold real estate could be a good source of information.
Appraisers employed by Arkansas CAMA Technology will be available to help answer questions. If you have any concerns about the value recorded for your property you are encouraged to call the appraisers at the telephone number listed on your notice. The notice sent to you will provide the time and dates available to call the appraisers.
Should you still have questions about your assessment after speaking with the appraisers you can make an appointment for a hearing with the Board of Equalization. This hearing can be scheduled by calling the Drew County Clerk’s Office. Please remember, the Board of Equalization cannot lower your property assessment simply because you think your taxes are too high! The Board can only adjust the value recorded for your property if there is a legitimate reason to do so. The members of the board will listen as you support the reasons as to why you think the appraised value of your property should be adjusted. Information that could help you make your case before the board could be data about the sale of property in your neighborhood, surveys, appraisals, listing information, photographs, income and expense statements, rental information, etc.
Property owners in Arkansas can appeal their assessment each August. The last day to schedule a hearing with the Board to appeal your 2011 assessment will be August 15, 2011. If you desire a hearing with the Board do not let this date pass you by.
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