Consultant explains COD rates

Oct. 29, 2013 @ 09:47 AM

It is a complex process which is difficult for even experts to get their heads around.

But, the coefficient of dispersion (COD) can show appraisal impact for every property owner in Rutherford County.

The COD is calculated to show the variance between the highest sales and lowest sales compared to the median. A low COD "represents conformity amongst the county" whereas a high COD "shows there is a large variance between the highest ratios and the lowest ratios compared to the median."

Emmitt Curl, a consultant with Pearson's Appraisal Service, fielded questions regarding the county's higher-than-average COD over the past few years.

In fact, according to Department of Revenue data, the county's COD went from 29.08 in 2007 — a year of revaluation — to 56.22 in 2011. The most recent revaluation was 2012 where the county had a rate of 43.91. A higher COD can imply some property owners are paying more than they should while others may be paying less.

Curl, who has served as a consultant to the Rutherford County Revenue Department during their recent upgrade to offices and equipment, said lower CODs are expected in non-revaluation years.

"I would have to say, the last five or six years have been very volatile in the market," Curl said. "A lot of counties have had higher than preferred ratios."

He said there has been a variance in sale prices of properties that have also led to a higher-than-usual COD in the county.

The big question is how can the county be more equitable in its assessments — making sure taxpayers are paying what they should pay?

"You have to get the data cleaned," Curl said. "In the next year the staff is going to every piece of property to make sure the data is correct.

"You have to get out and look at things. Neighborhoods change and that can cause a COD to go nuts."

In 2002, the county did employ data collectors who went door to door obtaining information about each property in the county.

"I would like to see us go back to that," said Sherry Lavender, billing and collections team leader for the Revenue Department.

A report issued earlier this year from the North Carolina Association of County Commissions suggested Rutherford County's COD rate of .043 was "unsatisfactory."

"There are just as many over 100 as there are under 100," Curl said. "What the .043 means it is diversified as to how many are paying more and how many are paying less."

That report suggested the county look to see if different neighborhoods were contributing to the high rate of dispersion.

"The higher downturn of the economy hit Lake Lure," Curl said. "There are properties that were 30-35 percent below. But, it's more higher-end property than anything else."

It means Lake Lure residents may be paying more than their fair share of property taxes "now" according to Curl.

The variance in sale prices to assessments can be attributed to only 5-8 percent of random properties falling outside the ratio they should be in. In most cases, sales that had a large margin between sale price and assessment are traditionally thrown out of the equation to find the COD. However, Curl said there were most cases where those sales were being qualified due to the clerical process the county was utilizing.

That clerical process could be a large reason for dispersion.

"A couple of processes have changed," Curl said. "Now, each sale will be done in the field and that is a big deal. It wasn't being done before."

In comparing counties in the region, Rutherford County had the highest COD in the last five years in 2011 while McDowell County had the lowest overall at 12.59 — also in 2011.

Henderson County has been the only county that has not seen a great fluctuation in its COD, ranging from a high of 26.08 in 2010 to 16.65 in 2012.

The county is currently in the process of implementing new software, replacing software that is over a decade old.

Lavender said the county is in the process of updating its software used. She said the timeline is 14 months before all aspects of the new software can be implemented.

However, Curl said the software was just a "tool" to be used. But, more importantly, confidence has to be restored in the process.

"People have have have confidence is what you are doing," Curl said.