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Tyler Technologies has signed three contracts with Delaware's counties to reassess a little under a half a million parcels in the state. | PHOTO COURTESY OF JIMMY CONOVER/UNSPLASHED[/caption]
A nationally known software and management services provider company has landed three separate contracts with Delaware’s counties valued at a combined $27.8 million to reassess the 482,097 properties in the state.
Tyler Technologies Inc., headquartered out of Plano, Texas, will start the laborious and time-consuming process of knocking door-to-door of every home and business this fall to update its valuation. Delaware’s three counties settled a lawsuit with the NAACP Delaware State Conference and education activists that triggered a statewide reassessment.
Per the settlement, New Castle County must have the value of 212,000 parcels reassessed by July 2023; and the 88,497 in Kent County and 181,600 parcels in Sussex County by 2024. As it stands, each county issues property tax bills based on valuations from decades ago — Sussex dates furthest back as 1974, while Kent County is the most recent at 1987.
New Castle contracted the company for $14.3 million, while Sussex County contracted for $9 million and Kent County will pay roughly $4.5 million.
While this is a historic move for Delaware, it’s another day at the office for Tyler Technologies. With more than 60 offices across the country and 6,000 employees, the firm offers financial management solutions ranging from utility building services, and accounting systems and tax appraisal software for local municipalities. Tyler Technologies is projected to hit $1.2 billion in revenue this year, and has 15,000 local government clients throughout all 50 states.
“Delaware is not unique, and this is in our wheelhouse. We’ve been doing this since 1938,” Tyler Technologies Eastern Regional Sales Lead Paul Miller told the Delaware Business Times in July. He spent the summer in Delaware’s three counties walking public officials through the reassessment process.
Tyler Technologies has handled reassessment cases all across the country, including the state of West Virginia and this summer, the firm was contracted to value all commercial property in a county in Georgia. But the closest comparison Miller may have for Delaware’s process is Tyler Technologies' work in Pennsylvania.
Much like the First State, Pennsylvania operates on a base-year system and lawsuits also forced reassessment there. Tyler Technologies handled reassessments for Alleghany County, Montgomery County and Delaware County, which involved 700,000 parcels alone.
“In these situations, so much time has gone by it’s clear there is going to be some changes brought on by reassessment. The fear of the public is mostly brought on by misunderstandings, and we try to circumvent that the best we can, but it does come with a lot of challenges,” Miller said.
The process
Tyler Technologies will send out mailers to every property, starting this summer and continuing through next year. The first mailer will include data pulled from records on the number of rooms and floors, like a real estate agent’s information sheet. Commercial property owners can also add income and expenses, if so desired.
“In a nutshell, we’re trying to predict what every property would sell for if it was on the market that week,” Miller said.
In the next two years, Tyler Technologies will send trained data collectors to every property in the state to take exact measurements of any home improvements. If no one is home, the analyst will leave a door hanger encouraging the owner to self-report the changes.
Data is also collected from recorded sales and evaluating the neighborhood and street views, although nothing compares to seeing the property in person or property owners volunteering the information.
“I worked as an assessor for years, and I can say we train people on what to look for … it gets to the point where they can see something like a 20-by-20-foot addition and figure out if it’s recent compared to what the last assessment says,” Miller said. “Very rarely does the outside not match the inside in terms of conditions.
“But it’s critical we share the information with the public,” he added. “No one knows their home better than they do.”
All the data is entered into Tyler Technologies’ Computer-Assisted Mass Appraisal software. With the information in hand, the firm will start analyzing the data, coming up with a valuation and mailing out a second notice to property owners with the estimate. The next step will be setting up informal meetings with property owners if they have questions.
Future impact ‘impossible to determine’
Since the reassessment won’t be completed for several years, taxpayers will not know the full effect until the first tax bill is mailed out once Tyler Technologies is done with the process. Property owners who disagree with the valuation can file an appeal, and Tyler Technologies will provide some assistance up to 50 days in that process.
But most of the impact may be on county and municipal governments, as property taxes directly fund local government and school district budgets.
“It really depends on each municipality’s fiscal standing and the growth in each county to see what comes of this,” said Jim Butkiewicz, professor of economics at the University of Delaware. “Sussex County in particular has been growing for years, and the revenue from the transfer tax may be able to handle whatever pressure comes. If property values go up, it does increase the taxable base they can draw from.”
The New Castle County Council has already declared it will not raise property taxes, no matter the result of reassessment.
“The impact on individual taxpayers is impossible to determine at this time; some people will see increases in their property taxes, some will see decreases. It is important to keep in mind that as assessed values go up, the tax rate goes down,” said Brian Cunningham, a New Castle County spokesman. “Both schools and municipalities can increase taxes after reassessment, and the county has no control over those decisions.”
For the real estate market, the Delaware Association of Realtors (DAR) officially supports reassessments that allow for “reasonable appeals of fair valuations that are not-biased against non-residential properties.”
But Mia Burch, the president of the DAR, has concerns that re-evaluating homes will put more financial burdens on buyers. Delaware is a popular state for retirees from northern states due to its low taxes and relatively short drive to the beach.
“The relatively low property values are a selling point, and if property values go up, it may not be as bad as New Jersey or New York, but it’s going to mean buyers will have to put more money on the table,” Burch told DBT.
According to a 2021 WalletHub study, New Jersey homeowners may pay average real estate taxes of $8,362. New Yorkers and Pennsylvanians pay around $5,407 and $2,852 respectively.
Delaware homeowners pay an average of $1,431 in real estate taxes.
Butkiewicz contends that even if the reassessment changes the calculus for some homebuyers, he was willing to bet people from the Mid-Atlantic region would still be willing to relocate to the First State.
“The tax increase could be so low compared to our surrounding states, I think they would still find it to be a bargain,” he said. “It’s also a lifestyle choice as well as a financial one.”
