Vermont Legislature SmartTranscripts:

[Speaker 0]: Good morning.

[Rep. Emilie Kornheiser (Chair)]: It is Wednesday, January 28. We have a really fun day ahead of us. We have the property valuation report. We have the Act 73 report on regional assessment districts. We're gonna have so much fun with you here this morning. And then lunchtime is the AOE Open House. I think most of you have RSVP'd to that via Sorsha. So thank you for going. We'll try to wrap up in time for people to get there at noon. And then at 01:00, we are looking at the FY 'twenty seven budget proposal from the administration. And then at two we're going to

[Speaker 0]: take the last report we got from PACS, and we've turned it into some legislation to look at.

[Rep. Emilie Kornheiser (Chair)]: So anyway, great day.

[Speaker 0]: House floor is not till 03:30

[Rep. Emilie Kornheiser (Chair)]: today, so we have extra time to be working. And with that, we will pause for some brief technical issues. And I wonder if we could mute while that happens for a minute. Patricia, can you mute us for a second?

[Speaker 0]: Good morning, everybody. My name is Jill Remich. I'm the director of property valuation and review. We are the division in the tax department that works really closely with municipalities to do everything related to the statewide education property tax administration portion. So today, we are going to be walking you through the annual report that we do every year. I was literally walking out the door with my tote on heading over when the print shop dropped off the hard copy, so I'm very happy I was able to bring actual copies. This is one of the reports, myself included, that a lot of us like to actually have a hard copy, because you write it up or bookmark things. So that is what is on your desk. Yes, that is the great corn maze in Danville, taken by one of our employees. We try to mix up the cover every year. It's our chance to be creative. It's not like you just pick a random color. So this is a real So my plan is to walk you all through the report. Happy to take questions as we go, if that's helpful. I do have my phone of friends. I'm feeling very supportive today. I have Chloe Wexler, who's our senior fiscal analyst, who did a huge amount of the lift on the report and is much better versed than I from her time at JFO and tax, getting it to the nitty gritty if there are questions I can't answer. And then I also have folks from the tax department here in the room. So now I just need to That's promising. Okay. Great. So and states as on the cover here, right, this is a report we're required to do every year and submit to the legislature. I apologize, we are a little late. It's due January 15, but we, thanks to Eagle Eye and folks like Chloe, found some errors we want to make sure we corrected. We have been experiencing some challenges with our GramList software. So it just took a lot more manual work on Chloe's part to get us that information. I apologize that we were late. Is it's important to remember, it's the January 26 PVR annual report, but it's basically sort of a snapshot of 2025. So it represents all the data from the prior year. As you know, with I think this committee knows more than the average bear that a lot of the work that happens in the tax department regarding property tax information happens in a calendar year with the municipalities. Things like current use enrollment, and most importantly for the purposes of this submission, the equalization study that we do every year that culminates in this common level of appraisal and the coefficient of dispersion, and then also the January 15 gram list submissions that the town send to us every year. So this all of that work is encapsulated in one place. Also, there are supplemental data reports. There's a whole lot more data behind this information broken out town by town. That information is available on our website. I'm sure Phil will show you my screen. The annual report is on our website, and then there's a supplemental data page. So if you really want to look into your particular town, or information over time or by category, there's a lot more into the details behind the report. So the printed report is the statewide picture, and then there's a lot more detailed information in these supplemental reports. PVR, as we're affectionately known, the Property Evaluation Review Division is not a super large division. I think we have 20 people total. We have a team of district advisors. There's about seven of them that are actually located around the state and are assigned geographic regions of the state because they work directly with the municipalities. They go to towns. They help the towns with their equalization study, they help their towns navigate any assessment or exemption or current use questions, homestead questions, things that they have. They're very busy people. And then we also have another group of folks that are located next door with me at the tax department who oversee the current use program. As you can imagine, there's still a lot of applications with maps and things like that. So while we were able to pivot during COVID and again during the flood for them to work fully remote because we didn't have a choice, those folks tend to be in the office most days. And we're in the transition of moving some of that stuff electronically as well, which we'll talk about in a little bit. And then we have folks like myself and Chloe Wexler and our municipal school coordinator who are just overseeing the data and information in general, and our assistant director as well. So like I mentioned, the staff works directly with municipalities for the various processes that go back and forth between municipalities and tax. So starting shortly, starting in the next few weeks, we will be sending new current use enrollment information to municipalities for their review. We will be sending homestead declarations to municipalities for their review. And those processes, that sort of kickstarts sort of a back and forth conversation that in the end results in property tax bills later this year.

[Rep. Emilie Kornheiser (Chair)]: Can I ask you a question?

[Speaker 0]: I don't know why I asked you your permission, because I just asked you a question.

[Rep. Emilie Kornheiser (Chair)]: When you send the homestead declarations to municipalities for the review, what does that mean?

[Speaker 0]: So I think we're required, it's not until maybe May, to send the list of homestead declarations that we've received to municipalities. They actually then review those against either folks that they think should have filed that haven't filed. So there is some of that local knowledge that we don't have. Both the state and the municipality can run what we call a non filer list. Like, gosh, these people filed for the last three years. No, we haven't. We want to make sure that they know that they should file if they're still eligible. Or it might be, Hey, you've sent this homestead, but the span is incorrect. Or, The ownership has changed. Things like that. So there's always clean up, but it basically starts a weekly update back and forth from towns. And so the towns send something we call a list of response that might say something like, hey, this owner filed a homestead, but they're actually out of state on our grant list. There's sort of corrections. It's a conversation, checking each other's work. And that happens for several months throughout the year. And for current use, it's checking acreage, verifying tax maps, things like that. Just like, hey, does this look kosher? Is this who you have on your list? And also, here's a new enrollment. Make sure that you have them listed that way. And also providing us the valuation, the way that current use works. The municipality has to actually value the excluded acreage and the enrolled acreage as separate entities in their CAMA system so that we can do the exemption correctly on property tax bills. So there's some work involved once we've handed those things over to the municipalities. We also, of course, conduct the annual equalization study, which will also there's a fair amount of that in here. Like I said, that results in the common level of appraisal and the coefficient of dispersion. That basically starts in June, July. Once tax bills have gone out, then it's time to shift everyone's focus to reviewing sales. And so we receive sales from the property transfer tax returns every year. They get initially vetted for ones that are clearly not arm's length or there's lots of different family sale or tax sale, things like that. So then the town reviews their sales and goes through and makes comments or suggests that a sale should be included or excluded. Then our staff gets that in August and September and does their review, all with the goal of making sure we have three years' worth of sales information that genuinely reflect arm's length valid sales transactions that we can then use to set the CLA and COD. So that's another one of those processes that's like a shared responsibility between PDR and the town. We also work closely, obviously, with towns with the reappraisal process. I know we'll spend a lot of time on that later this morning, but certainly we maintain a list of approved appraisal firms that do that work. We help answer questions for towns. We try to connect them with folks who might be interested in doing the work. We make sure that they're in compliance with their statutory requirements. As I said, we also oversee the current use program. There are a combination of property tax exemptions that are reflected later in the report. Some are municipal only, some are state only, some are required, some are voted exemptions. So we help towns administer those. We also, of course, provide the education property tax rates to the municipalities, we collect the municipal property tax rates because that information is used for things like the current useful harmless payment and other payments. And also, of course, is used for the folks at Tax Credit Services for the property tax credit that they do. So a lot of information sharing back and forth between TDR and the towns. We also currently have one of the two options for a taxpayer to appeal a decision of the Board of Civil Authority in the case of a property valuation. So they can either appeal beyond the BCA to myself, and we have hearing officers who are not employees, but are people who do that work for us as contractors, paid hourly in statute, or they can go to Superior Court, so administer those as well. And then there's a lot of payments that are statutory payments that go out to municipalities, like pilot payments, the whole harmless payment I mentioned, the reappraisal and equalization study payments, all of those are calculated and administered by our team. So that

[Unknown Member]: appeal process to you folks, has that increased over the past few years or is it pretty much the same thing?

[Speaker 0]: It has bubbles. There were a few years ago it was more like 80 that we got, and now this year I think it's more like 50 something. It sort of goes up and down depending. Yeah, absolutely. I think it's generally And a few years ago, the legislature provided us the option. If we do get an appeal that comes to us that's really high dollar or unique commercial that feels a little beyond what we feel either equipped or appropriate to value, we can remit those to Superior Court. So there's been one or two of those every year that they might be My first litmus test informally is if it's over $5,000,000 and there's anything else about it that's a little complex, then we feel like we now have the ability to say this is better adjudicated in Superior Court. And I think later in the report, I do have over time the number of appeals, but we've definitely had bubbles and then we've had times that's been relatively quiet. As I mentioned, so part of this work, this work is not easy. We work with municipalities and a few different software systems to carry this out. We are still relying on the Nimric software that has been in place for quite a while, all of that I think once found use for property tax billing to oversee and manage and data check that work. And we are in the process of implementing our Vermont Property Information Exchange, our BTI program. So unfortunately, the towns have had to do a lot of work in both places for the last few years. This year, hopefully, is the magic wand where that stops. But it has not been easy and it has definitely been challenging. And it makes you really appreciate the complexity of collecting this work and how the different components impact each other. So for example, current use and homestead, there's overlap in those pieces. If you have current use enrollment, you've got the valuation done. Well, now there's all instead filed on the property. We've got to fix their property tax bill to reflect that. So there's a lot of that sort of interchange that happens throughout the year that adds complexity. But we're hoping this year we can all take a breath and work in fewer systems. Related to that, we did also move the current use application process, which did have some work in it for listers and clerks into the state of Vermont's V Tax software, which is where all the other tax types happen already, like property transfer tax returns, homestead processing, income tax returns, corporate business, all those pieces are in V Tax. So we've now moved the current use application process into V Tax just as of December. So that's one less software system we're asking folks to work in, and it's a significant improvement. There's a lot of benefits to moving current use into VTEX. There's income review that we have to do for current use. There's good standing checks we have to do. There's address and federal income tax review. There's lots of pieces in there that now we have in one place, which will make our review process a lot quicker.

[Rep. Carol Ode (Member)]: They all feeding into the same database, or is a different database a different same front end?

[Speaker 0]: For the current use piece or just

[Rep. Emilie Kornheiser (Chair)]: All all of of those.

[Speaker 0]: Yeah. So Wondering about the ability

[Rep. Carol Ode (Member)]: to compare data sets within the same if you look at Homestead, if you look at property tax credits, if you look at all that kind of stuff, it's in the same database, it makes it a lot easier.

[Speaker 0]: Yeah, so there are different sources of where they live and sources of truth. VTACS and VTPY need to communicate pretty frequently. And then the camera providers, is there's a few different camera providers that towns use, has to also feed into it. So the idea is definitely that VTPY will be the single source where everything lives and is fed into, and that's the grant list. That's the data set

[Rep. Rebecca Holcombe (Member)]: that we're working on. One

[Rep. Carol Ode (Member)]: of my listeners in particular was complaining about Pi being in its early development stages when it went live. How would you characterize it now?

[Speaker 0]: Honestly, it's not ideal. So it has been five years' slog of our team and towns working through the software system. Like I said, we have had to have municipalities and my staff work in two systems concurrently. It has fallen short of our expectations. So we are continuing to really hold the vendor accountable. We have a contract, we have contractual levers that we are pulling. It's really unfortunate because we've been entrusted with this really important information, and it has fallen short of expectations. Candidly, the company was bought by another larger company, and after that happened, we've just gotten less than ideal service. And so it has required a monumental amount of work on the part of folks like Ode Waxler to save the data in a safe place and break it down so that we can provide you folks information like this.

[Rep. Emilie Kornheiser (Chair)]: We're, yeah. How is ADS involved in all of that?

[Speaker 0]: Over the last year or so, we've gotten a fantastic project manager assigned to this project from ADS that has really helped us turn the tide, at least as far as tracking performance, so that we can hold the vendor accountable. That has been huge. And then we also now have So basically, we've come to the end of We've extended the contract multiple times to try to get this up and running fully. And so we are at the end of what's considered the implementation contract, and we are now in the support and maintenance contract. So because of that, I also now have another individual from ADS. I think they probably have other projects as well, but have been great about, again, how we can specify the actual issues and the contractual requirement that they're falling short on. So I feel like ADS has really been supportive in helping us in this last year or so hold the vendor accountable. Because it's us on top of our full time jobs that's really been challenging. I'm not saying that we haven't made mistakes either, but it's such important information. It's so complex. It's being used by hundreds of individuals across the state, and I have to say the towns have been very kind and understand that we're doing the best we can, but I'm really hoping we're able to get in a much better place within this next year because we can't continue to sort of work in both systems and not feel confident in what we've gotten. Go

[Rep. Carol Ode (Member)]: back. Right,

[Speaker 0]: right. If it was a car and you're like, Okay, guess it's time to trade it in, and then one day you get new keys, we can't do that. There are certain pieces that we do that only live in the system. Again, we have amazing people who have found ways to still make it so we can meet our statutory requirements for you all, but it is in spite of, not because of the support we're getting from this. Honestly, hopefully I didn't get myself in trouble just now. I want them to keep trying. Yes, that's right. Because again, we've got one place this stuff can work. And actually, after this, I'm meeting with CAMA vendors, with all the CAMA vendors all together, because we want to make sure that they understand what we need from them to make this work. Also, there is a new Gram List reporting requirement from last year that will really help the housing conversation and BCGI that requires a CAMA database extract. And so we're also going to have BCGI in that meeting, just walking them through what we're seeking for that. So things like years built, number of units, things like that. So the hope is that there is information that lives in the canvas level that we haven't needed to collect for the grand list isn't necessarily necessary for the grand list for taxation purposes, but is very useful for the housing tracking conversation. There's a housing dashboard that ACCD and BCGI are maintaining. The hope is that we can get some of that from CAMA vendors automatically between those two, not involving our software, but directly from CAMLA to BCGI. So the idea is that would really help provide more information to you all and ACCD and others about literally how many units we have and things like that. So we also, in addition to the equalization study, the district advisors host lister education programs. We have a certification program for listers and assessors who are employed in Vermont municipalities. We offer all those courses free of charge. And then we do also have a grant from, we get an annual appropriation from the legislature to support listers and assessors who take the IAAO, the International Association of Assessing Officers, or other courses that have a fee, they can submit for reimbursement for their course fee and their travel expenses to this grant program that our team administers out of that annual appropriation. So the idea being we want to make it as easy and as inexpensive as possible for these folks to get that training. We've moved basically to all of our trainings being live but virtual, except for there's a couple that they still do that are literally inspecting a house. They use my house sometimes for it, which is a nice way to sort of get out of the offices and see the work of appraisal. So those we just met last week and set that schedule for this coming year. As of, I think it was in last year, or as of this January, listers and assessors are required to get certified by PDR. So we are actually working with human resources to stand up a free using the one that state employees use a free online learning management system. So basically a way that listers and assessors can access these trainings on demand, and we would get notification that they've completed them. A way to That's exciting. Yeah. We had one training last year that was using a separate platform, and it was challenging. And a lot of Lister's offices, they may share one email. They may not have three emails, for example. And there's turnover every year. So that was an additional layer of, well, did Lister check it or did Lister take it or did Lister take it? And if they want to all sign up and get credit for that. So we're working through that. Yeah, employees use this system all the time. It's very easy to use. It will make it so that our staff can just get who's completed courses and individuals can sign up for those courses, take those courses on demand, get their certification, and also it'll keep track of what they've taken.

[Rep. Emilie Kornheiser (Chair)]: It is. For anyone who's thinking about VTHR, it is genuinely much easier than that.

[Unknown Member]: Jill, what about what are civil authority folks?

[Speaker 0]: We partner with VLCT to do a BCA training every year. It's May 13 this year that we found really helpful. That is in person. I think there's a virtual option, but it's gonna be at the Capitol Plaza. And we make a point of trying to invite municipalities that are at the end of a reappraisal because that's when we would have a higher volume of DCA appeals. We use part of that annual appropriation to partner with BLCT for that large training and to reach out to reappraisal towns for training for them. And then we also partner with VALA, the Vermont Assessor's Listener Association, again to support some of those IAAO courses that are part of our coursework requirement to get certified. Talked about the equalization study a little bit, but we'll go through some of those pieces if you're interested. Oh gosh, it's my journey already. So another component that's kind of helpful to have in this report is just again the sort of snapshot of the grand list. What we're looking at right now is the current table of grand list categories in this 2025 report. There will be some changes to this next year because the legislature passed a new grand list category of communications property. So that will remove some of the items that now fall under, for example, maybe miscellaneous or utility other and put them in a new communications property category. So that is going into effect now for the twenty twenty six gram lists. So that will look a little different. But these are the categories that are reflected in the current report. So have you

[Rep. Emilie Kornheiser (Chair)]: ever done data matching of landlord certificates and commercial apartments?

[Speaker 0]: I have not. That would be a question maybe for Rebecca or Jake Feldman. Okay. Thank you. And this is just another snapshot of the different brand list categories and the counts that are in each of those, the total value and then the total equalized value.

[Rep. Emilie Kornheiser (Chair)]: Municipal. Isn't standing out to you in all that?

[Speaker 0]: Not so much here with the municipal and statewide. I was asked to look into things like certain exemptions recently that was good to see. The vast majority of municipalities, for example, are offering the full $40,000 exemption for veterans, for example. There's things like that. This is another table that will look very different next year because cable, that third from the bottom, personal property, that will now be considered real property as communications property. So that will not be a category listed on here any longer. So as you can imagine, that's a fair amount of work this year to take pieces that might be on a municipality's local personal property tax rule, which municipalities have the authority to tax business personal property if they would like, maybe 40 do. Some of those pieces are now going to go on to their real property. And there are some municipalities where maybe that provider was not paying business personal property, But those components are now going to be on the grant list for both the municipal and the education grant list. And we took testimony about this earlier in the session because it

[Rep. Emilie Kornheiser (Chair)]: was part of budget adjustment. So that's slightly fresh in the mind that we made this statutory change. And I just want to flag for folks the mobile home landedunlanded is something that we're likely going to need to work on later in the session as a bill comes over from the housing committee to really look at the tax status of manufactured homes.

[Unknown Member]: You mentioned something about military valuation.

[Unknown Member]: Could you explain that?

[Speaker 0]: Right. So there is, in statute, all disabled veterans that meet certain requirement get a $10,000 reduction of their property value. And then that same statute allows municipalities to increase that up to $40,000 of a reduction. So we and the towns get a list every year from I keep going like this because they're across the street, the Veterans Affairs have a list of folks who have applied for that exemption or who have met it in the past and we expect still will. And then that list gets sent to us and to the town, so it's reflected on the grant list. So the idea is that their tax rate doesn't change, but their property value is reduced by that exemption to reduce their property tax bill.

[Unknown Member]: Based upon their disability and what percentages of their disabilities and their risk? It might

[Speaker 0]: be in the stat I could probably find that. I can send you the statute. I had it last year. Fairly easy to find. And there are these in there for surviving spouses and minor children and things like that as well. Something I think this committee might be interested in, just knowing what's going on in the world, I think we often get- Sorry, I have one more question.

[Rep. Emilie Kornheiser (Chair)]: I have a few. I'm sorry. Well, we will find the time that we need to do this, so don't feel rushed yourself. Do you have you looked in looking into sort of the veterans benefit question, do you have a sense of how many municipalities are using tax stabilization for properties in cases where sort of the education tax would not be stabilized, but the municipal tax would be stabilized? Is that

[Speaker 0]: the question you've ever heard? I have no idea. James Masland might know. Okay, cool. I'm not good at the foresight analysis components. That sounds like question. I feel like we're getting asked a lot to look into the future.

[Rep. Emilie Kornheiser (Chair)]: It's not a future thing. It's like the municipalities under current law have the ability to stabilize property taxes Oh, sure. Yes. Or property for any number of reasons. But the only example I know of any community doing it is a farm and stove. But I imagine it happens more often.

[Speaker 0]: I'm trying to understand that a bit. I think we do have that. And I don't have it in this regard. I think that's a great question. Because I think, for example, the reason we have this farm category is that there's also that's another one that municipalities can offer a stabilization agreement for. Okay. Yeah, I'm sorry. No, it's okay. So this is just, again, sort of a snapshot over time. So the total education listed value went up by about 7.3, but the actual equalized property value change year over year was 10.6. So this is just looking at sort of We like to show the typical year over year increase in our grant list. And then you can see post COVID, we went really into double digits. So we're still in double digit increase, meaning that basically the listed property values are going up every year by X amount. So our overall statewide brand list is going up. So last year it went up pretty significantly by 14%. This year it's slightly slower at 10.6, but still going up faster than assessment can. And demand, while maybe slowing slightly, or maybe the supply is slowing slightly, it's still a 10% increase in property value.

[Unknown Member]: So I know we enroll and exempt the first $10,000 of business first in property. Is there a maximum amount that we exempted?

[Speaker 0]: I don't know. That's a good question. I know we might have that in here, or we might have it in one of the supplemental tables. I mean, I presume they, I suppose they could exempt 100%, but then they'd be responsible for the education property tax revenue.

[Rep. Carol Ode (Member)]: I thought there were a couple of municipalities who were very important for a manufacturer not to have any business personal property tax, or maybe it inventory tax, never mind, it was an inventory tax.

[Unknown Member]: Inventory, yeah, is separate from business property.

[Rep. Carol Ode (Member)]: That was thirty years ago, it's not how far off list.

[Speaker 0]: Oh, here we go. Municipalities that tax inventory, utilities that tax machinery equipment, and then personal property. There's fewer and fewer each year, it seems like, are taxing necessarily jet inventory, but there still are some that do.

[Rep. Carol Ode (Member)]: Sorry, go back to the previous slide. Yeah, that one. So, I should know the answer, the difference between the municipal list value and the education list value, municipal is higher. Is that in recognition of some things that are tax exempt?

[Speaker 0]: Right, so there are more opportunities for exemptions, both either statutory or voted. So municipals can vote for exemptions, that reduces their grand list value, but they're still responsible for the education.

[Rep. Carol Ode (Member)]: So if there's a nonprofit building and the town says we're going to take that off the tax rolls, so it just reduces that and increases the per tax. Got it, okay.

[Speaker 0]: Right, and some of that other also difference might be business personal property or veterans exemptions like we mentioned. And so we do have another property tax exemption piece, and I think we have the supplemental data listed out, it breaks that out by town. All right, so one of the main outputs of the equalization study that we do every year, again, basically measuring our ground list values, assessed values that are listed on the ground list versus what we are seeing in the real estate market. So that results in a CLA for each municipality to supply to their education tax rate. And then we also calculate a statewide CLA by year. We've done this for a while. It is helpful to just sort of note the imbalance. And then recently, the statewide CLA, as you folks know, has become part of the, it's an adjustment factor to the CLA at the very end of CLA and tax rate setting. So it's gotten a little more attention, but it is just a helpful look. Again, as you can see right up until COVID and shortly after COVID, the statewide grant list was overall relatively in sync. And then it's continued to separate further and further. It's another factor in the reappraisal conversation. We can't keep up with the reappraisals as it is, just the churn and then your same property values continue to change. So a reappraisal can also be out of date pretty quickly because the grand lists are the values and what people are willing to pay for arm's length transactions is remaining pretty high. So the CLA, I think as you folks are aware, is sort of a town wide look at how in sync the brand list values as they're listed are with what the real estate market is doing. The coefficient of dispersion is another important measure that basically says within the municipality are different properties being valued equitably. So you don't want all your residential properties to be valued closer to 95% and all your commercial closer to 60%. That's telling you you've got inequity within your grant list. And so the COD is still a calculation that we do, still very important that we share that with towns every year. And it is still a way that if a COD is out of compliance with the levels that we can issue a reappraisal order. So these tables again have looked really different over the last few years. It used to be pretty much everyone was within the 10 to 20% range for their COD, and now you see greater variety in COD and CLA. So here's another look at that. You can see the chart move over time that we have a great deal of municipalities whose CLA is under 80%. I sort of understand what improves the CLA. What improves the COD? I know that we order reappraisals, but what happens at the reappraisal that would improve the COD? So there must be some factor that they're using for one of those categories of brandless properties, like residential or commercial, that needs closer review. Sometimes municipalities rightly do what's called a statistical reappraisal, where they only look at a subset. So mobile home, you mentioned that earlier, that's another subset. Sometimes that category alone is really out of whack with the rest of how the premise is valued. So they need to revisit that, look at their land schedule, look at that comparable sales and adjust those under a statistical reappraisal. Yeah, not easy, but No, so it's very specific interventions. The CLA, like I said, I think we have in the supplemental data certainly, but despite us doing more reappraisals than ever every year, it's just really hard to keep up with the CLAs continuing to drop. Theoretically, eventually it will flatten out, but you can just sort of see this time trend of change of where most municipalities, CLAs typically were for a long time, and then where we're going. There's a combination of where ordering reappraisal's work. You have the regular reappraisal schedule that should help, but there's also, it seems like maybe the residential market is chilling out a little bit. Is

[Unknown Member]: it the number of staff you have that cause you to be unable to keep up with this, the childs, or what is it?

[Speaker 0]: Yeah, so there is a, I think municipalities have a really hard time just finding even investors and assessors to do that work. And then reappraisal firms are the ones that the municipality contracts with to do the reappraisal. You kind of have an objective contractor come out and really do the deep dive. They do the data collection where they go out and measure properties and check things and review the town's land schedule. A lot of times the local Lister Assessor will participate in that and help get that work done. But even the reappraisal firms we have in Vermont, which you'll hear in about an hour or so, is one of our main objectives to try to increase qualified people to become assessors. That's where we really have a dearth of people doing this work. So it's an interesting profession. It's not really well known unless you either have a parent or somebody who does it, or you're not in this kind of universe, or you work in a municipality, you don't really know about assessment. And so the reappraisal firms are having a later time recruiting people to do the work, and municipalities are having a hard time finding people to be listeners or assessors. So one of our hopes is in order to really help truly turn the tide in a timely fashion, we've got to find a way to get more people interested and certified and hired to do the work. So

[Unknown Member]: last year when we were preparing for what became Act 73, didn't we talk a lot about hiring these firms and having them appraise larger portions of the state? And that's what our testimony for at 10:00 will start being. Alright, save my question then.

[Speaker 0]: It might be 10:15 though. Yeah, exactly. I mean, already even, as these things were happening, I think we were already finding we had a lack of bodies to do the work out in the field, and then it's only gotten exacerbated by the real estate market. So it's going to take time to turn that back around. As we'll talk about later, we've been talking with CCV and the labor department and other places of how can we get more people on this track. It's a matter of finding people to do the work. Talk a lot about reappraisal in a little bit. So table 10 here on page, looks like eighteen, nineteen. As you can see, municipalities are doing their level best to reappraise as many as possible. 33 in this past year was the highest that we've had so far. I think we're up to 38 in 2026. So the towns are actively trying to find firms to contract with. The firms are now scheduling out through 2031, unless they can find a lot more people to hire. And they're willing to train folks There's not a degree you get an assessment or a certification that's out there right now. There's a reappraisal. There's a real estate appraisal track under the Secretary of State's office, but it's a little different than municipal, not totally. They'd like to leverage that. But there's a backlog, so the firms are scheduling out. And part of what we heard during our group we'll talk about later is just some of the requirements for Vermont take a lot of time, and that time is money. And so it's not always very appealing to come and try to do a reappraisal in Vermont by rural and wanting interior inspections and land records maybe that haven't been touched since the last reappraisal in fifteen years. There's a lot of those challenges too. I think everyone is doing their level best. The firms are doing their level best to hire people and participate and respond to RFPs, and municipalities are doing their level best to find firms to do the work. The firms are like, If we could find 30 people, we'd have 30 jobs for them. We could keep them busy for the next five years just because of the demand. Let's see. So this is another sort of way to look at it. Again, don't want to spend too much time on reappraisal stuff because I know we'll talk about that a lot, but there are reappraisals that are relatively recent and then there are reappraisals that are really old. And so when the reappraisal is that behind, have CLAs in 40%. It's just unheard of. And that also means that it's been that many years since the entire brand list and information that the town is maintaining had a full refresh. So the longer time that goes by, the more work is involved in updating that information. So we are trying. Unfortunately, lot of the places that have had a long time, it's not always the smallest places, but in a lot of places it is, and the firms just don't respond to their RFPs. It's not worth their time. Part So of our chat in an hour or so is how can we help the municipalities that are not finding anybody who wants to do their reappraisal and who can help support that. Oh, current use. That was an easy transition. Any other questions about that? I know we will spend lot of time about reappraisal shortly. So like we said before, we have a team of folks who reviews current use applications, who maintains enrollment and updates to current use. We work really closely with Forest Arts and Recreation to do so. We also manage mapping updates and land use change tax, so withdrawals from the programs, appeals related to either decisions that we've made about enrollment or decisions we've made about removal from the program. So very busy group of folks maintaining current use. And again, that is done in partnership with municipality for the valuation portion and the sort of confirmation of do we have the same information at PBR about this parcel that they have at the municipality. So as you can imagine, there's only so many acres in Vermont. So while the number of acres enrolled is slowing down, obviously, the number of applications and owners is not necessarily slowing down. So one thing I noted to myself as I was looking through this to prepare to speak to you all, you can see, for example, the number of owners in that column is the highest it's been, but the number of ag acres has gone down a little bit. So we do have a lot of smaller ag parcels that are coming into the program. Forest has generally ticked up each year. There was the new category for reserved forest land that Forest Parks and Recreation has a report on. I think it's on your report site. If you ever want to hear more about the forest portion of current use, which is a significant portion of current use, someone from Forest Parks and Recreation would be a great witness for you to talk more about that piece and their work. Farm buildings can be enrolled in the program if they meet certain criteria. If they are enrolled in the program, they're taxed at zero value. So we do have a lot of farm buildings. So there are farm buildings that are worth $500 and there are farm buildings that are worth millions of dollars. So the total assessed value of enrolled farm buildings for 2025 was $357,000,000 And again, you can see on this table parcels with farm buildings is going down slightly, but there are some pretty amazing farm buildings out there right now. And just another note. What do mean by amazing? Multi million dollar high technology, sugaring processing. Not a value comment, but there's more every year. You can maybe have a methane digester that provides power to the building, things like that.

[Rep. Carol Ode (Member)]: First, looking at the report and the amazing part, I thought, well, does somebody have landed an outlandish residence that is at zero value and is no? Is there a No, good

[Speaker 0]: dwelling residences, house sites have to be excluded from the program. So we do have a lot of like 27 acres because there's a different threshold for 25 acre enrollment. So the resident, the dwelling and the two acre house site have to be excluded from current use. The only residents that can be enrolled is farm employee housing. Even then you still have to have a two acre house site removed. But there are, I think, about 600 farm employee housing units that are enrolled in the program right now. And they have to be enrolled for a year as farm employee housing before they can become eligible. I do think anecdotally, we definitely hear from farmers that it's hard for them to find places for their employees to live, so they'll put modular homes on their property for their staff. Representative Holcombe?

[Rep. Rebecca Holcombe (Member)]: Just anecdotally, farm buildings, there's a large farm building, it's fairly, know, it seems to pretty soon there'll be no lot left because it just keeps expanding and expanding. I mean, they do a great job, they're good farmers, but it is phenomenally huge. Anyway, just an anecdote.

[Speaker 0]: So use values. So there is a current use advisory board created in statutes made up of folks from the tax department, forest parks and recreation, representatives from municipalities, and have enrollees in the program. So we have representation from agriculture and the agency of agriculture, and we have folks who are in the forest industry and folks from forest parks and recreation. We have assessors and a town clerk. And the idea being that this board helps us, we oversee the administrative rules and then sets the values every year. The board has to have 51% of the makeup of the board cannot have land in the program. So that was a statutory construct, which is harder to maintain than you might think, because folks who are interested in being on a board like this are probably folks who are familiar with the program. But that group, we meet a few times a year. We spent the last year actually working on our administrative rules and updating those. Those had not been updated since 1985. So those will be going through the administrative rulemaking process, basically to just come up to statute. They had some very old administrative rules that would make it hard when we were managing appeals or other determinations. And we had these 1985 rules that didn't line up with statute. So we're excited to get those through LCAR and ICAR and out for public comment. So that's one of the major tasks of the Current Use Advisory Board. And the

[Rep. Emilie Kornheiser (Chair)]: other starting Can I pause just one second? This committee does not get involved in a lot of rulemaking. And so just public service announcement on this, we do have two members of LCAR here, which is delightfully convenient. And what usually happens is a package comes to the chair for comment related to that. And generally, that package is not shared with the full committee. So if folks are particularly interested in the rulemaking process around this, just let me know at some point.

[Speaker 0]: Back to you. Great. No, we're excited to have that move through. So in addition to administrative rulemaking, obviously the current use advisory board works directly with Forest Parks and Recreation and Agency of Agriculture to set the use values. So the use values are basically the way that the current use exemption works is you've got your enrolled acreage. It might be your entire parcel, it might be a quick bigger parcel. And there is an exemption applied based on a statewide set use value that so you're taxed at a much lower per acre property value. So there is a different calculation for forest based on stumpage value and things like that. There's a calculation for ag that's pretty complicated. I actually had it pulled up before I came here and closed all my windows for the agriculture land value per parcel. It does go up every year. It's actually, I think it's a three or five year average, try to sort of soften that blow every year, that increase. But that value we are setting on February 13. So the online version of this report will be updated with those figures for 2026. And you can see they do sort of creep up. But the idea being that that valuation of that parcel is still a pretty significant property tax reduction. It is statewide, so it doesn't really matter if the acre value is in, Try not to pick on some of the towns I usually pick on. Montpelier versus St. Jay, I don't know. But it's statewide, so it's the same. So the proportion of value or the proportion of benefit varies because the acres' values

[Rep. Emilie Kornheiser (Chair)]: differ. I

[Unknown Member]: believe under our miscellaneous tactical we were looking at our livestock grazing provision for current use. Does Current Use Advisory Board have to sign off on that or take a look at that?

[Speaker 0]: No, but I think that's a good point. If it changes in the statute, we would want our rules to reflect that. So our rules can only go as far as you folks set in statute, So we would want to make sure that that was clear in our rules and our instructions. Maybe we can, if that does pass, we would update the rules at some point. Okay. Yeah, thank you. Yeah, so the board basically has the authority to make recommendations to the legislature, but can't supersede anything that's in statute. And the rules are meant to sort of be an expansion of the statutory language, not going above and beyond that. Here's another piece that is interesting to look at over time. So the way that current use works, so if you're enrolled in the program, your value that your property tax bill is based on is reduced, and that's reduced for both your municipal property tax appraisal and your education property tax. So the municipal property tax savings to enroll landowners, which is basically how much money is foregone revenue for municipalities due to the current use enrollment, is repaid out of the general fund. That's what we call that hold harmless payment. So basically holding harmless municipalities for any loss in revenue due to current use enrollment. So it's meant to be, it's not punitive to have property that's in the current use program, have that negatively impact your municipal budgets. And then the education tax savings to landowners is forgone education tax revenue and or reduction of individual property tax bills. So the total tax savings to enrolled landowners for 2025 was a little over almost 78,000,000. It's important to keep in mind, right, property values are going up too, so it's not that current use is changing that significantly, the value of our property is going up.

[Unknown Member]: Have a question that may be obvious to the committee, but my question, so what happens to that, for example, this year, twelvetwenty twenty five, the most recent year on the list here, 56,000,000. What happens to that 56,000,000? Who does pay?

[Speaker 0]: It's just not collected. So Joint Fiscal Office includes it in their education fund outlook, believe, as a offset expenditure. An offset expenditure. Oh, okay. So is

[Rep. Emilie Kornheiser (Chair)]: that then it means that all the other properties in the state are responsible for raising the revenue that's needed?

[Unknown Member]: Do

[Speaker 0]: you know the history of how it was that the education portion came out of the education fund instead of out of the general fund? Do you know the answer?

[Rep. Emilie Kornheiser (Chair)]: We can take more testimony about current use, because I think there's even a real debate about if this is actually a tax expenditure or if it is reflecting the real value of that land. And so let's take specific

[Speaker 0]: tests to incurred use. The process was Act 16. Act 16, Act 68. I don't remember whether this was I just don't remember why it ended up this way. I think there was a concern, again, well before my time about the that municipalities were really getting hit if they happen to have a lot of front use enrollment, that their municipal budget was suffering because of So unemployment that seems completely legit to me, but I don't know the, sorry. Don't remember the I don't remember the before times on that. Before times. The before.

[Rep. Rebecca Holcombe (Member)]: That's good.

[Speaker 0]: Is it a I think we're gonna take

[Rep. Emilie Kornheiser (Chair)]: more testimony and create use, so don't wanna make sure that we have a chance to go through the rest of the if that's okay with you, Representative Masland?

[Rep. Rebecca Holcombe (Member)]: I wanna say and answer your question, representative Lee. I think it dates from original act 16. There was a policy decision made at that time. Yeah.

[Speaker 0]: A few years ago, those full perm lists and per parcel payments had been paid out of the education fund. They've all been moved to the general fund to also try to not keep chipping away at the end. Which ones did you say? The equalization study, reappraisal, grantless maintenance payments starting '21. Was while I was here. I know I was in the other day talking about land use change tax, I think I can maybe breeze over this pretty quickly. Just a reminder that when a parcel or a portion of the parcel is developed, which can mean it has had development on it, it has been subdivided into parcels less than 25 acres, it has had buildings or things put on it that are not associated with the farm. Or if an individual wants to remove the lien from the property, then land use change tax is assessed on the property. And it's 10% of the value. And if it's a portion of the parcel, it's 10% of the fair market value of the piece coming out as a standalone parcel. And then half of that land exchange tax is up to 2,000 just paid to the municipality. So there is a sort of financial incentive for the municipality to do that assessment in those cases. And then the remainder of that labor change tax that is collected is split between the education fund and the general fund. So it's a payment that we collect that and then we remit that. It's not a huge amount of money, but every bit counts. This is one of those tables that longitudinal data doesn't really tell you anything, because land use change tax is not on a trajectory. It depends every year different people could do different things to their land. Every year different people could bully move. It's not a good or a bad thing if the number is up or down. It could be for years where there's not that many, or there might be a town that suddenly has a huge parcel sold and split up, they've got 10 land use change tax valuations they gotta do. So it's not telling us anything that it's going up and down. If anything from this table, you'd want to probably pay attention to the amount assessed or the acres that have been removed. If you're concerned or interested in what's coming in out of the program, that's telling, but even that, it could be just a few huge parses that really skew those numbers. But this is just good historical data. And the reason that it changed for the 2026 and newer was that change from the prior methodology, which was that the value was just prorated rather than assessed separately by the list or assessor. And as you can see, that did increase, though.

[Rep. Carol Ode (Member)]: Is the exchange tax in your first column there, assessed on the bell bigger, is that the gross amount and the pass on municipality comes out of that, or are the two added together for the gross amount?

[Speaker 0]: The second column is part of that first larger number. Okay,

[Rep. Carol Ode (Member)]: so the net to the state is column A minus column B. And

[Speaker 0]: assessed doesn't necessarily mean collected either. When does it not? So if I withdraw my parcel and I haven't developed it, I don't mind a lien being on it, I can withdraw it from the program, and I'll pay my full property tax still, but I'll still have this land exchange tax hanging out there until I want the lien removed. So we have this fun category we have to track, which is a good deal of withdrawn but not developed parcels or portions of a parcel. So they're removed from the program, the lien remains on land. So we do have in our supplemental data some helpful breakdown by town of the property tax exemptions and how they are impacting each municipal grant list.

[Rep. Emilie Kornheiser (Chair)]: So one of the interesting things that we have not taken testimony on yet in terms of federal impacts is the federal government also changed the definition of public past charitable this summer, and our definitions are linked to their definitions. And so that might be something that we

[Speaker 0]: have to spend time on, but it is a Pandora's box. Interesting. I hadn't heard that. I'm wondering if that is going to affect how listers and assessors are categorizing public price. I doubt it, but we have to dig into it a little bit. Statewide in 2025, there were a little over 11,000 stepped for exempt parcels for a total value of $11,400,000,000 The vast majority are valued using the town's assessed value, some are by insurance value, and then there's a few that could be somewhere in between or a settlement or something. I'd love to just breeze right over TIFF because this is definitely not my area of expertise, you do get a separate, pretty significant report. PBR's role is not to administer the THRIC program, but our role is that our grandma software needs to host the calculations for the municipality to track their increment over time and their education liability. And then we do have to use the this is a question I think that came up last week we have to use the current assessed value for our equalization studies so that TIP isn't inadvertently changing the CLA for that town. We've got to use their fair market value. All right, so then there's a lot of information in here about the homestead, homestead declaration and the property tax credits. So we do have those summarized year over year. And then obviously in the supplemental data on our website, we've got a full breakdown of all of that too. And if you wanted to do a deep dive on this, I'd definitely recommend having Jake Feldman from our We spent a

[Rep. Emilie Kornheiser (Chair)]: decent amount of time on this left here, and we

[Speaker 0]: can spend a while. And then this also just provides some combination of some of that information for the longitudinal data, and then also how it intersects with the municipal. And then we do calculate the effective tax rates. This is actually one of the factors in the current use valuation, for example. But this is just sort of a if this, then this helpful illustration of if all towns were at 100% fair market value using both their municipal tax rates and their education tax rates, here's what their effective tax rate would be.

[Rep. Emilie Kornheiser (Chair)]: So tax rates are going down,

[Speaker 0]: but values are going up. So it might be that bills are, that doesn't necessarily tell us what a bill is doing. Right, and again, this is on the presumption that they're at 100% fair market value, so. There's no one else. Every year we're like, is this useful to calculate? But it does seem like it's helpful

[Rep. Emilie Kornheiser (Chair)]: to

[Speaker 0]: some to

[Rep. Emilie Kornheiser (Chair)]: have that different look at it.

[Speaker 0]: Rebecca always spent a lot of time from that age when you came in. This is when I would phone a friend if there were questions in the phone call. So as I mentioned, I think I already covered this, that we do receive appeals from the BCA level above. It looks like Peter only had 21 appeals in 2024, and then we have 41 open for 2025.

[Rep. Emilie Kornheiser (Chair)]: And how does that compare to years when a lot fewer appraisals were?

[Speaker 0]: We had a definite bubble a couple of years ago, running up to 80, which was a lot. So So we had a few years, yeah, 2020. And the year after that, we had a few years where it was up pretty significant. I'm not sure why in 2016 we got 117. That could have been a big reappraisal year. But it varies significantly. And again, it's not necessarily a good or a bad thing unless it really gets high. I do think once we get on a regular reappraisal cycle, I would assume that there would be more appeals. But then over time, the idea being that our values won't be as volatile if we're doing it every six years. So that would theoretically level out and would have probably a normal. I know this bleeds into the

[Rep. Emilie Kornheiser (Chair)]: next conversation, but there have been a lot more appraisals these last few years, right?

[Speaker 0]: Yeah. This is of appeals. Because this is through 2024. So we're still resolving and hearing 2025 appeals, for example.

[Rep. Carol Ode (Member)]: Burlington's was done 2025, effective 2025? Remember last year we heard the appraising firm saying it's about 6% appeal rate or something when a new appraisal is done, so with a larger base then you're just going to have more numbers.

[Speaker 0]: Right, volumes. And what we have heard from other states that reappraise a lot more regularly than we have is that by the time it gets to this level, there's not some explosion of appeals because landowners and property owners know they're a little more tied to their groundless value being closer to reality. And so when you reappraise every six years, it's not going to be a 100% jump, for example, like it is right now in Vermont. This is just another way to show the per parcel payments and other payments that we make that we talked about a little earlier. So we're really happy that the legislature helped us create this commercial litigation and appraisal and assessment program. So this is an annual appropriation we get, towns apply for assistance for high dollar unique commercial properties or other very strange properties that they're going to need to pay for a special appraisal for. And so if they apply and they sort of meet our criteria, we have the funds and the capacity, then we will actually work with the town. Our attorneys will serve as the attorney, and we will hire a contractor to do that appraisal and defend it in court. Because what we were seeing prior to this was it's another tax on that municipal budget to pay for a special appraisal on some of these, even it probably will help their grand list, but there's the huge expense of that. And then some of these higher value unique commercial properties can afford a lot of attorneys and a lot of attorney fees. And so it can really mean tens of thousands of dollars of costs that municipalities are just expected to absorb. So this way, we're kind of sharing that load because it also impacts the education fund as well. So it helps the municipality and it helps the education fund if we can say, yeah, we've got a specialty hydro. What we're seeing a lot of are vacant malls and vacant colleges, sadly. They've been in a lot of colleges and provided close. So those are sort of interesting properties. What do you do with it? How do you value it? So we have been supporting towns in those assessments. Do you able to track how much value April 13 on the grant list as a result of that? I think we I think we only have one year of information so far, but I bet we could. Because we now are at the point that one of these appeals from the BCA has come to us, but it was one that we were involved in. So we needed to agreement that to Superior Court. But yeah, I think that's part of the goal, is that we can sort of quantify that investment. And I think we did when we made this pitch to you all of why we thought this program would be important. Yeah, you might spend this amount of money, but the impact it'll have on the grant list is worth the money that we would spend.

[Unknown Member]: Is there a difference in how you tax colleges or universities once they close? Is there once it's operating there's a certain tax and then if it closes, does that value

[Speaker 0]: Yeah, so the appraised value could get changed depending on what it becomes, but once it is no longer for public price or charitable use, once it's no longer being used for that, then it goes on the tax roll as taxable. But what we're seeing is some of these are sort of laying vacant and whoever purchased these properties is going to have to invest a lot of money to make them usable as housing or a resort or whatever they want to use them for. So that impacts their fair market value, but they will become taxable once they're no longer owned by the entity. I really shouldn't throw out this example, but there was a church right in the middle of Burlington, and once it no longer was being used for the church and it was going to be set to be demolished, it became taxable. And so there was a bit of a chicken and egg, because once you demolished it, then the property is one thing, but it was an example of like, no, it's not on the tax roll as little value as it has its parcel in Downtown Burlington, and it did have a taxable value. So that's sort of the gist, ownership and use as of April 1. This is another program that we're really happy to have a lot of state support for. So this is the request for list value adjustment. So basically, this is another path to try to help towns who defend property values and use best practices and helping reimburse them for that impact on their municipal budget for paying for attorney's fees or any impact on their education fund liability. So some years it wasn't particularly very much, and then there were some years that we were having to prorate it because there was more demand than we had money for. So it varies greatly year over year, as you can see, but that has definitely been helpful for towns to support and encourage them to defend values rather than settle for a lower value than they know they should get because they can't afford to pay their attorneys. Thank you. I'm not putting you on the spot, I'm just wondering about something. So in the example that you gave, I was thinking, well, an attorney would have to be careful about when the actual transfer would occur and to make it after April 1, okay, but then to avoid taxation, people could enter into long term agreements where, say, a university building isn't sold, it's just, that's bad because the university doesn't exist anymore, but a church still exists. You could avoid putting that, building back on the tax rolls and just

[Rep. Emilie Kornheiser (Chair)]: By leasing it, is that what you're saying?

[Speaker 0]: Yeah, lease it or a long term arrangement of some kind.

[Rep. Emilie Kornheiser (Chair)]: Do you think that's something

[Speaker 0]: they should be worried about? If the entity also meets that public bias and charitable use, then they could remain tax exempt, but Oh, so then it's not the use. Yeah. Even if it's a lease, it's Yeah. Yeah, okay. So like there might be church parcels, but then they also have a field that's used for like a daycare. So the daycare portion would need to be That's

[Rep. Emilie Kornheiser (Chair)]: Thank you.

[Speaker 0]: Yeah, that's really good. I just get myself into it. PVR does not oversee real estate transaction taxes. These are done by another division of the tax department, but obviously the property transfer tax and the data that comes from that is very relevant to PVR. So just as a force of habit, we continue to include this information in the PVR annual report to see property tax revenue, land gains, and I think we have one more in here, real estate withholding tax. So these are other tax types that are administered in the department that tangentially related to property valuation, might be useful to see. I think there were some pretty significant changes to land gains tax, for example, that reduced that value, And then real estate holding is basically for non resident sellers when they file it from tax return. So that's the end of the printed report. And then like I said, we've got lots of, if you really want to deep dive into a lot of these different tables by town, current use enrollment by year, there's lots of these pieces on our web page.

[Rep. Emilie Kornheiser (Chair)]: I really encourage people to go into the appendices. They used

[Speaker 0]: to be part of the printed report, that's great that they're not anymore. But I want to make sure we don't lose them. Yeah, we struggle every year with we want to support current use, we want to use paper, but we also care about the environment. We don't want to use paper. And our communications team and I'm sorry, this is taking a while to load. And Chloe worked really hard to make these tables a lot more accessible for accessibility standards and also just for people to be able to easily sort and things like that. Thank you. Looks like current uses, we've got data back to 19E. That's great. Thank you. We're going

[Rep. Emilie Kornheiser (Chair)]: to take a five minute break, and then we're going to stay with Jill, but on a new topic. We're going let her catch her breath. So if we could.