The county is in the process of revaluing properties to better close that gap.

And the anticipated drop in homes values means fewer tax dollars coming to the city of Wilmington unless the council raises taxes, New Hanover County Tax Assessor Roger Kelly told council during its regular meeting Tuesday.

Kelly told the city council that to bring in the same amount of revenue the city brings in now, it will have to increase its tax rate by almost 8 cents per $100 of value from the current rate of 37 cents to nearly 45 cents in the fiscal year 2012-13.

The news that home values have declined is no surprise given the turbulent economy since the last revaluation in 2007 when the housing market was booming. What's unknown to city residents is whether the decreased values will be good news or bad.

"Are somebody's taxes going to go up? Yes, but somebody's is going to go down," Kelly said.

In areas where the tax values shifted dramatically, residents could see a decrease in taxes they pay. But some city residents will likely see higher tax bills because their values haven't shifted as high as the neighboring beach towns.

According to recent revaluation adjustment estimates, the city will see the lowest decrease in home values at 13 percent while Carolina Beach will have the most dramatic value change at 47 percent.

To bridge its anticipated gap in revenue from the revaluation, the county will have to consider a "revenue neutral" rate, or a 10-cent increase to the current 46.5-cent tax rate.

Councilman Charlie Rivenbark questioned whether there was a better way to update property values. Being in the real estate business, he said he sees six-month-old appraisals being redone because they are considered old.

The state requires counties to revalue property every eight years, but New Hanover chooses to do revaluations every four years. Last year, given the tough economy, the county delayed the revaluation a year to save money.

Property owners will be notified of the reassessed values, effective January 2012, in December.

Compared with the last fiscal year, the city has already seen a 1-percent decrease in its tax base, a loss of about $118 million in real property that can be taxed. To deal with the decreased tax base in the current year, the council cut some city projects and deferred merit increases for employees. The decrease in the tax base came from more seniors and veterans applying for tax exemptions, appeals of property owners' values, business closures and more.

By Shelby Sebens
Shelby.Sebens@StarNewsOnline.com