A study looking into property tax appraisal and assessments in Franklin County, OH determined that properties in low-income, Black-majority neighborhoods are regularly overvalued for tax purposes. The result is that Black homeowners pay more in property taxes relative to the sales values of their homes, while homeowners in majority-white neighborhoods were regularly undervalued.
In Spring 2020, Franklin County Auditor commissioned a study into its property valuation practices to look at (1) reviewing the 2017 appraisal audit and offering recommendations based on those findings specific to historic policies (including redlining) and racial bias in the real estate market; (2) assess the current triennial review through a racial justice lens focusing on accessibility; and (3) make recommendations for future triennial reviews to further address the negative impacts of historical and current policies that marginalize communities of color.
The review found that the biggest disparities occurred prior to 2015, when neighborhoods that were 70%-90% Black were overvalued by as much as 50%, while neighborhoods that were 70%-90% white were equivalently valued or undervalued. While there have been some improvements since 2017, neighborhoods like Linden, Southern Orchards, and South-Central Hilltop have been consistently overvalued relative to their neighborhood sales.
The report also found that racial disparities exist between white and black majority neighborhoods, and have gotten worse in the last 10 years. In 2010, there was a $55/sqft disparity in average sales in white and black majority neighborhoods; by 2019, that disparity had grown to $63/sqft.
Source: Kirwan Institute
In 2019, a home in a white majority neighborhood sold for an average of $148 per square foot, while homes in majority Black neighborhoods sold for $85 per square foot.
The Kirwan/Franklin County Auditor study joins a growing body of research that documents the regressive nature of the property tax system, and how that system burdens Black and minority households more than their white counterparts. A pair of articles earlier this year profiled research from the University of Chicago that visualizes income disparities in property tax assessment by county across the country. In many cities, low-value properties face higher tax assessments relative to their actual sale value (the interactive website can be viewed here). Research last year out of the University of California - Berkeley surveyed 75,000 taxing entities and found a nationwide “assessment gap” that lead local governments to place a disproportionate fiscal burden on racial and ethnic minorities.
In all cases, property value assessments contribute to an unequal property tax ecosystem. The Kirwan Institute study also suggested that low-income homeowners are less likely to file a claim with the Board of Revisions to contest high value assessments. The study listed several recommendations to improve the appraisal process to better match values, like improving the “grading” system to better reflect actual conditions; having more than one appraiser examine properties to remove any biases; and more narrowly define neighborhoods to better capture comparable sales. Other recommendations include improving outreach strategies to Black majority neighborhoods and low-income diverse neighborhoods to include them in the Board of Revision process, and also encourage the BOR to track information necessary to assess outreach. The Franklin County Auditor is moving on several of these changes.
The Kirwan Institute Report on Racial Bias in Appraisal Process is available on the Franklin County Auditor website.
Articles
Study Shows Persistent Racialized Disparities in Property Tax Assessments WOSU – 07/15/2021 Reported by Nick Evans
Opinion | How Lower-Income Americans Get Cheated on Property Taxes New York Times – 04/03/2021 by The Editorial Board
Property taxes are twice as high in poor neighborhoods as rich ones Washington Post – 03/12/2021 Reported by Christopher Ingraham
Higher Property Taxes: Homeownership Costs More for Black Families WAMU – 07/14/2020 Reported by Sasha-Ann Simons