Wisconsin Policy Forum: Value judgment: A look at property assessment in Milwaukee County

Current approach has cost upsides, but may affect assessment accuracy, uniformity

Milwaukee County municipalities may stand to benefit by working collaboratively to conduct property assessments, either with an in-house or contract assessor, a new Wisconsin Policy Forum report finds.

Milwaukee County’s 19 municipalities currently use a mix of in-house assessors and contract firms to separately determine property values. Though this approach maximizes local control, it also limits economies of scale, leads to quite different approaches among neighboring communities. It may also, at times, affect the quality and uniformity of assessments.

The state Constitution generally requires that properties of equal value within a given municipality are subject to the same level of taxation. To achieve equal treatment, the values of the properties must be assessed at the same share of their market value.

“That principle is particularly challenging to achieve in Wisconsin, where property assessment is divided among more than 1,840 cities, villages, and towns,” the report finds.

Wisconsin is one of only eight states that handle property assessment at the municipal level, as most states handle it at the county level. To better understand the assessment practices of Milwaukee County municipalities, the Forum surveyed each municipality and examined state Department of Revenue (DOR) data. We also interviewed municipal and county officials and contract assessors to better understand how the system works and potential impacts of proposed changes.

Lower costs are upsides of current system

In each municipality in Wisconsin, the assessor is responsible for discovering, listing, and valuing all parcels and property. The values are assessed on an annual basis and reported to the state DOR, which uses them along with other information to generate equalized property values, which are meant to reflect market prices.

Across municipalities in Milwaukee County and statewide, the scope of this work varies enormously. The city of Milwaukee has 151,672 parcels reported to DOR, while River Hills has 663. In Milwaukee County, only the cities of Milwaukee, Wauwatosa, and West Allis employ in-house assessors. The others have opted to contract with one of six private companies to handle assessments.

This approach offers some advantages, including that its use of mid-sized to large companies helps to compensate, at least in part, for the lack of economies of scale at the municipal level. It also delivers low costs. Our survey found that leaders of eight municipalities, or almost half, said their annual costs of conducting assessments totaled amounts that worked out to less than $15 per parcel. Overall assessment costs vary widely on a per parcel basis, from Wauwatosa at more than $48 per parcel to Hales Corners at less than $9.

Quality may be at issue in some cases

The tradeoff for this low-cost approach is that in some cases it may affect quality, assessors and other experts said. It can lead to out-of-date or incomplete property information and involve inadequate methods of valuing property. In one extreme case, a municipality has sued its contract assessor for allegedly failing to properly value properties, though the case is ongoing and the claims are unproven.

Wisconsin law recognizes four levels of annual assessment, the simplest and cheapest of which is a maintenance assessment, which tracks only major changes such as new construction, demolition, or zoning or property classification changes. On the other end of the spectrum is a full revaluation, which is meant to set assessed values at 100% of current market value, in part by requiring the assessor to re-inspect the interior and exterior of each property where possible.

Some municipalities in Milwaukee County have generally sought to update values annually in recent years. Others have revalued infrequently. This mix of regular and much more irregular updates makes it possible that assessments may be more accurate and closer to market values in some Milwaukee County communities than others. Properties that are just across a municipal border from one another may be valued differently.

Possible alternatives

Changing the current system would likely be difficult, in part because any change would likely include an increase in costs for some communities. Should local leaders wish to consider potential assessment alternatives, options could include

• Municipalities partnering to form a new commission that would hire its own assessment staff to
  value properties. This approach could improve the accuracy and uniformity of assessments but
  could involve a substantial increase in costs for most of the 16 municipalities that currently use
  a contract assessor. A similar tradeoff would result from potential partnerships between two or
  three municipalities to start handling their assessment in-house.
• Another option would be for communities to continue using a contract assessor, but instead do
  so by pooling their buying power to achieve a greater economy of scale. This could allow for
  greater oversight of the contracting and assessment process, and assessment companies agree
  it would likely result in some savings (or improved service) over municipalities’ already low costs
  for assessment. However, this approach would not necessarily resolve local leaders’ concerns
  about the contract assessment model.

As with all our work, the Wisconsin Policy Forum is not advocating for or against any change to the current system. Rather, we hope our report will provide insights for taxpayers and help municipalities meet their constitutional mandate of delivering accurate and uniform property values. Ultimately, municipal leaders must determine their preferred approach.

This report is supported by a state Innovation Planning Grant from the Wisconsin Department of Revenue (DOR) that went to the village of Bayside, which served as the fiscal agent. Go here to read the report.

The Wisconsin Policy Forum is the state’s leading source of nonpartisan, independent research on state and local public policy. As a nonprofit, our research is supported by members including hundreds of corporations, nonprofits, local governments, school districts, and individuals. Visit wispolicyforum.org to learn more.