Development

‘Your taxes are going up,’ ominous letter warns. But that’s not necessarily the case.

ICON Property Tax Appeal is offering help, but it may be misleading

ICON Property tax appeal is offering Charlotte residents help in appealing property revaluations. However, appeals are free.
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ICON Property tax appeal is offering Charlotte residents help in appealing property revaluations. However, appeals are free.

An urgent letter many Mecklenburg County property owners received this month had a stern warning: Taxes are going up, and you should hire someone to protest your property’s new assessed value from the 2019 revaluation.

But the county and the local Better Business Bureau say the letter, from a company called Icon Property Tax Appeal, is potentially misleading. While property values went up across the county, the property tax rate hasn’t been set and the impact on individual property tax bills won’t be known until this summer.

Several homeowners contacted the Observer after receiving the letter. The county is “aware of the letter and taking it quite seriously, ” Mecklenburg spokesman Leo Caplanides said.

“We’re aware of some misinformation going around,” said Caplanides. He said the county published a news release Monday in response to the letter from Icon, telling residents that bills won’t necessarily increase, and that there is no cost to file an appeal yourself.

Nick Olenec, principal and founder at Texas-based Icon Property Tax Appeal, said he believes the letters make it clear that the increased taxes spelled out are just hypothetical scenarios.

“Our intention was never to come across misleading if that’s what people feel,” he said. “Our intention was, given the current data points we have, here’s what’s likely to happen.”

Icon’s letters show hypothetical tax increases for homeowners by applying the current tax rate to the increased value. But that’s not how the taxes will be calculated.

That’s because the tax bill also depends on how the county, city and other local municipalities set their tax rates, which they’ll do in the coming months.

Local leaders have been trying to hammer home the message that property tax rates — the percentage homeowners pay — are set separately from the assessed value, or the amount a house is worth. So a home with a 25 percent increase in value won’t automatically see a 25 percent tax bill increase.

“The notice of the 2019 real estate tax assessment is not a tax bill,” said county Commissioners Chairman George Dunlap. “Property taxes are separate, and the tax rate won’t be set until the boards approve their fiscal 2020 budgets...That is a separate function altogether.”

A $787 tax bill increase?

Retiree Wally Burlingham received a letter from Icon last week, and was immediately suspicious. In bold letters at the top, it told him his taxes on his property in south Charlotte near Pineville-Matthews Road would go up by an estimated $787 — the same 19 percent increase as his property value in the revaluation.

He proceeded to do the calculations himself.

The 19 percent increase Burlingham saw is smaller than the countywide median of 43 percent for residential properties. The county has said homeowners with an increase that’s less than the median are more likely to see their taxes fall, no matter how the property tax rate is set.

Icon presented Burlingham with two scenarios: one calculation of what his taxes would be if rates stay the same, and one based on a revenue neutral rate, or when the county takes in the same amount of money as the last budget.

Even with a hypothetical reduced tax rate, Icon’s letter to Burlingham estimated that his taxes would go up $630.

But a review of the calculations using Burlingham’s total new property value shows that under the hypothetical, reduced tax rate scenario presented by Icon, his total tax bill would actually go down about $200.

“I don’t believe that’s a mistake,” he said. “That’s a trick.”

Olenec said he was applying a hypothetical revenue neutral tax rate to the dollar amount of the increase, which is where the $630 increase figure came from.

It doesn’t matter if you pay less than last year,” he said. “It’s illustrating the marginal effect of the tax increase.”

Olenec said even if a property owner doesn’t see a higher bill this time around, their taxes could go up in future years if the county raises tax rates. Homeowners won’t have an opportunity to appeal the assessed value until the next revaluation, which county leaders hope to do in four years.

The Better Business Bureau opened an investigation into Icon after the Observer called BBB’s regional president, Tom Bartholomy, to inquire if they’d gotten complaints about the company. Bartholomy said he received an advertisement for Icon at his home, though it didn’t include the same kind of detailed analysis as Burlingham’s letter.

He said including the word “estimate” next to the tax increase listed isn’t enough to clearly communicate that there’s still uncertainty around the rates.

“It’s what we call the large print giveth and the small print taketh away,” he said.

The county also pushed back against Icon’s assertion that owners will definitely see their taxes go up.

“The County Assessor’s Office is aware of at least one company that is telling property owners: ‘Your property taxes are going up.’ This is a misleading statement,” the county said in its Monday statement. “Whether an individual property owner’s property taxes are going up, staying the same, or being reduced will not be known until the tax rates are set by the respective jurisdictions.”

2019 property revaluation appeals

Icon isn’t the only company offering revaluation appeal services. Other law and property firms are also offering their services to property owners, though Icon’s advertising appears to be the most aggressive.

It’s not the business of offering a paid service to help with the appeal process that Bartholomy said his organization takes issue with. It’s the blanket statement that property taxes are going up, he said.

“If H&R block put out a statement saying your income tax is going to increase, we would have the same problem with that,” he said.

Olenec said his business offers advantages to property owners, who may be struggling to understand the process of appealing a revaluation.

“When something comes around every eight years, there’s not a lot of (repetition) to it because it’s not every year,” he said.

“So everybody’s kind of rusty at this.”

Olenec said he’s heard from between 500 and 1,000 property owners. Besides the letters, he said, the company has been running a social media campaign, and has a website. He said they charge between $295 and $995 for properties under $1 million.

The letter states that if the company doesn’t reduce a property assessment, they’ll refund the owner 50 percent of the fee.

But the county wants people to know they don’t have to pay someone to file an appeal. People can request a free, informal review of their assessed property value at MeckReval.com, or by filling out the card that came with revaluation notices in the mail. A formal appeal can be filed with the Board of Equalization and Review by May 20.

Homeowners can choose to hire someone to help, but it’s not required.

“You don’t have to hire a lawyer to appeal,” Dunlap said. “I can’t stress that enough.”

In Texas, annual property revaluations provide a good business opportunity for Icon, Olenec said. He said last year, they helped with over 30,000 tax appeals in 90 counties. In North Carolina, he said his business operates under the legal name Island Peak Group LLC, and records show the business was formed in the state at the end of January. Revaluation notices for most property owners went out at the end of January.

Sam Kendrick, who lives off Providence Road in Bishops Ridge, said he believes a company like Icon could offer helpful services. People might not want to sift through comparable sales data to find evidence their assessment is incorrect, for example.

But he said the message of “your taxes are going up” is misleading.

“They’re misrepresenting what’s going to happen, and they’re trying to put fear in the process,” said Kendrick. “I guess they think it sells better that way.”

But Olenec said it’s likely taxes will go up. The county raised property taxes in 2018 to pay for more children to attend Pre-K, the first increase in five years.

He cited a recent statement from Dunlap, who said the chances of a revenue neutral tax rate are “slim-to-none.”

“I think given the historical data, the feedback from the county commissioner meetings, and seeing how significant assessments have gone, I think you’re going to be really challenged to see the same sort of tax bill you saw in previous years,” Olenec said.

Still, that doesn’t mean tax bills will be higher for everyone.

I guarantee you I will have less taxes — I’m one of the lucky ones,” Burlingham said. “And they sent me a letter saying my taxes are going to go up $800.”

Questions about the revaluation or filing an appeal?

People with questions can contact the assessor’s office at 980-314-4226 or email at AssessorQuestions@MeckNC.gov.

Danielle Chemtob covers economic growth and development for the Observer. She’s a 2018 graduate of the journalism school at UNC-Chapel Hill and a California transplant.

Ely Portillo covers local and state government for the Charlotte Observer, where he has previously written about growth, crime, the airport and a five-legged puppy. He grew up in Maryland and attended Harvard University.

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