Data analysis and additional reporting by Lee Gans.
Property taxes in Durham went up nearly universally last year in the wake of a countywide revaluation. So when City Manager Bo Ferguson announced, last month, that the city faces a $9 million budget deficit due to low property tax revenue—the largest source of income for both the city and the county, the latter of which navigated a deficit of its own before passing its budget this week—council members were perplexed.
For answers, they turned recently to Durham County Tax Administrator Keyar Doyle, who presented a slide deck meant to explain the shortfall during a city council budget work session on May 27.
Doyle first laid out a chain of record-breaking numbers: last year’s revaluation, the first since 2019, produced the largest jump in assessed property values in county history, which, in turn, produced a record 10,533 appeals from property owners challenging their valuations. Ultimately a six-person board called the Board of Equalization and Review, or BOER, granted enough of those appeals to result in a $4.4 billion reduction in the assessed value of property across the county. That drop translated to $9 million in lost revenue for the city, as it collects property tax based on the values Doyle’s office calculates.
While the tax office had expected to lose some assessed value to appeals, Doyle told the council, the reduction ran well past what his office had planned for. The city’s budget shortfall stemmed from that gap: the difference between what revenue was expected and what actually materialized. No plan could have accounted for a value loss this size, Doyle added, because, he said, commercial properties filed more appeals and won larger sums than anyone could have expected.
Council members were not hostile to Doyle’s presentation, but they weren’t satisfied, either. Mayor Leonardo Williams said he plans to request a “deep dive” to pinpoint the “vulnerabilities in the systems” that brought about the shortfall. Other council members pressed Doyle on questions he was unable to answer on the spot, from how the $4.4 billion breaks down by property type to the success rate of appeals at the BOER.
Meanwhile, a six-week INDY investigation—involving records of the 10,000-plus appeals, data from five public records sources, and hundreds of county, state, and corporate documents—has produced answers to many of the questions the council raised.
Among the INDY’s biggest findings: relief flowed overwhelmingly to corporate landlords and to companies like Blackstone, Capitol Broadcasting Company, IBM, and BlueCross BlueShield, which, just between the four of them, had $524 million shaved off the assessed values of their properties. High-value property owners also didn’t just secure the largest reductions, they faced better odds in the appeals process; a low-income homeowner in Hayti was much less likely to get any reduction than, say, an Amazon warehouse. All told, big businesses saw their tax bills cut left and right, while the tax burden stayed on the shoulders of ordinary residents.
There was also a meta finding: Much of what the INDY’s analysis turned up does not align with the explanation Doyle and the tax office have given as to why the reductions ran so large and why they weren’t anticipated.
Nine million dollars is a small slice of the city’s roughly $766 million budget. But most of that budget—which goes to a vote before the council on June 15—is already spoken for by essential services, leaving a small pool for things like employee raises and park improvements.
Both the size of the current shortfall and how late it came to light are unprecedented for the City of Durham, forcing even tougher budget tradeoffs than usual, according to a city spokesperson. The city was left in the dark about just how much property tax appeals would be cutting into its tax base until the eleventh hour, so it wasn’t able to take the steps it normally would when a revenue gap looms, like trimming spending. With options narrowed, the city has proposed freezing merit raises for city employees and eliminating nine staff positions in order to close the gap.
So where the revenue went—and why no alarm was raised sooner—deserves a hard look.
Apartment Complexes Drove the Loss, but Offices Were an Easier Scapegoat
Sail a paper airplane off a downtown parking deck and it stands a good chance of drifting into a building whose owner just won a small fortune back from the county: Commercial properties accounted for 93% of the reduction in assessed value countywide, despite making up just 12% of appeals.
The largest share of the $4.4 billion loss, over a third, came from commercial apartments. Successful appellants in this class ranged from brand new luxury towers to decades-old complexes that cater to low-income tenants.
Industrial properties made up the second largest chunk of the loss. Among them: an IBM-occupied data center campus that received a $337 million reduction in value—the greatest reduction of any single property and the equivalent of $2.6 million off its property tax bill.
Retail came next, with the owners of big-box stores like Lowe’s, Home Depot, Kohl’s, and Sam’s Club each winning value reductions north of $10 million, and Blue Heron, the firm behind the Ninth Street shopping center anchored by Harris Teeter, securing a $15 million reduction in value.
Office buildings brought up the rear, as far as commercial property, making up 12% of the $4.4 billion reduction.
The county has not published this sort of breakdown by property type. And when it does discuss which properties drove the value loss, its narrative only partly matches the numbers.
Specifically, the county tends to name apartments and offices in the same breath, as though the two drove the loss in equal measure. During Doyle’s May 27 presentation to council, for instance, Doyle named offices, alongside apartments, as a top driver of the reduction. A county spokesperson stated the same in response to an INDY inquiry in April.
The logic the county typically pairs with its emphasis on office reductions is easy to follow: that remote work has left office buildings vacant and eroded their value. But, of course, offices made up a small share of the overall value loss, so it’s curious that the tax office has invoked them so frequently.
The county also traces apartment reductions, a genuine heavyweight, to vacancy issues. The tax office’s commercial supervisor, Jeremy Conn, told the INDY last month that the city’s sweeping approval of new apartments in 2022 and 2023 led to “more supply than demand,” leaving apartments sitting vacant and pulling down their values.
Pointing to apartments, though, comes with a complication that pointing to offices doesn’t. Pin the loss on empty offices and the pandemic takes the blame; pin it on empty apartments and you dredge up fraught debates around housing development. This precarity came through during Doyle’s presentation to council, where discussion of apartment vacancies went over awkwardly to a point that Doyle seemed to retreat to the depoliticized territory of offices.
“I sense a road that we may be going down for potential political argument,” Mayor Williams, who routinely votes in favor of new housing development, said, after Doyle linked apartment vacancies to major losses in assessed value. “When you say there’s a vacancy issue, I think we need to provide full context to that.”
Williams went on to caution against implying that we don’t need more housing, as that kind of rhetoric “is going to hurt a lot of people.” Doyle concurred, and pivoted.
“I agree. I think that this is a bigger issue,” Doyle said. “It’s not about Durham. There are multiple things impacting the office sector. I benefit—my office benefits—from remote work. That’s a real thing. It impacts the actual ability for these businesses to rent out space in these office buildings.”
Ahead of publishing this story, the INDY put a series of written questions to the county. Asked about the weight it has placed on offices, a spokesperson said references to offices were meant to illustrate appraisal methodology in general terms rather than to identify offices as a cause of the shortfall, and that its intention had been to convey that vacancy drove reductions in offices and apartments alike.
For Homeowners, The Deck Was Stacked
If you reached into a bag of all 10,533 appeals, chances are you’d pull out an ordinary homeowner’s: someone who, for example, opened their new tax bill last March, balked at a value that had risen twofold, and resolved to get it lowered. Residential owners filed many times more appeals than commercial owners, despite barely contributing to the $4.4 billion reduction.
It might be tempting to write off this discrepancy—so many residential appeals, so little reduction—by reasoning that commercial property is worth more to begin with, and would therefore account for more of the lost value. But that logic actually doesn’t hold, for a few reasons.
Residential property owners make up the bulk of the tax base; they paid 62% of the total property taxes billed countywide last year. So it would stand to reason that the bulk of the reduction would be theirs too.
Moreover, compared to commercial, residential properties are more likely to be overassessed, and thus more likely to merit appeal in the first place, based on analyses by UNC’s School of Government and DataWorks. In Durham, where sleek new builds often butt right up against aging homes, waves of construction or renovation routinely inflate the assessed values of humbler residences nearby.
With that in mind, it’s quite jarring that residential properties made up just 7% of the overall value loss. That figure stems in part from the fact that many homeowners don’t know how to file appeals. But it also speaks to a gap in success rates between commercial and residential appeals following Durham’s recent revaluation: the BOER granted reductions in 83% of commercial cases, compared to 65% of residential ones. A Blackstone attorney and a family from Lakewood walked into their appeal hearings with very different odds of relief. (For appeals that didn’t win a reduction, the outcome was typically no change. Increases were equally rare on both sides.)
Across the board, more expensive properties won appeals more often. The spread is staggering: the lowest-valued residential properties won a reduction 54% of the time, while the highest-valued commercial properties won 95% of the time. A modest bungalow contesting a few thousand dollars was far likelier to walk away empty-handed than a global corporation asking to shed millions.
That imbalance—pricier property, better odds—is evident not just between residential and commercial appellants, but between appellants in the residential category itself: Of the $319 million in assessed value reduced during residential appeals, $153 million went to landlords, investors, and developers, whose property can be counted as residential when the holdings are small enough. In other words: homeowners received a share of the relief that fell well short of their share of the filings.
Most of these findings went unaddressed during Doyle’s presentation to council last month, though not for lack of council members asking. When council member Carl Rist asked how much relief had gone to multifamily residential properties, Doyle didn’t have the figures. When council member Chelsea Cook pressed Doyle on what share of commercial versus residential appeals were successful, he said it was a “layered question” and declined to give a number, saying he’d have to follow up.
Doyle did hazard a guess when asked how much of the $4.4 billion reduction came from residential appeals, though he put the number in vaguely inflated terms, saying “less than $1 billion,” then “closer to $500 million.” Both descriptions technically hold true of the real figure, $319 million, though Doyle’s phrasing tracks with an issue in the county’s records: according to documents the INDY obtained, the tax office miscategorized a sizable chunk of commercial parcels as residential, falsely bloating the residential total to close to $500 million. (A county spokesperson said Doyle had spoken in approximations during his council presentation because staff lacked exact figures at that meeting. Regarding the misclassified parcels, the spokesperson said that property classifications sometimes need adjusting after the property use is confirmed.)
Residential appeals took on outsized weight elsewhere in Doyle’s presentation, too. At one point Doyle walked the council through a table of median property sale prices, connecting it to a cooling market he implied was part of the backdrop to the overall reduction. But the table, which reflected only residential sales—a fact Doyle did not mention to the council—had little to do with the reduction, which, of course, residential appeals barely moved.
Asked about the table, a county spokesperson said the table was included in the presentation only to give general market context.
As Revenue Loss Loomed, the City Drafted a Budget in the Dark
Losing assessed property value to appeals doesn’t, on its own, produce a budget shortfall.
A shortfall happens when tax revenue lands below what was expected. So, especially on the heels of a countywide revaluation, it’s incumbent on a tax office to accurately project how much property value will survive the appeals process, because when the numbers are that large, a shoddy projection could blow a massive hole in a budget.
Evidently, the projection the tax office made last year fell short, resulting in the deficit now weighing on the city budget. How that happened, and how long it took the county to get its arms around the issue, makes for another confusing aspect of this saga.
There’s a state formula for how many appeals a given revaluation will generate. Last year, for Durham, that formula predicted 12,600 appeals. Doyle knew this number; he was quoted, citing it, in an INDY article last April, adding, “I would expect us to have a historic amount of appeals.”
But as the June 16, 2025, deadline for property owners to file appeals in the wake of the revaluation crept closer, not many had come in. Doyle took this as a sign that the historic wave he’d anticipated might not arrive, he recounted in his recent presentation to the city council. So with two weeks left before the deadline, he revised his estimate from 12,600 down to 7,500—a number he reached by extrapolating from the rate at which appeals had been arriving. That revised figure almost immediately became the basis for the revenue the city and county each projected for the year ahead.
It also quickly became outdated: In the final two weeks before the deadline, 5,000 more appeals came rushing in. After that point, there was every reason to revisit those revenue projections: the tax office had the real number of appeals, and—because every appellant names the reduction they’re seeking—a clear line of sight into how much value was on the line.
But there’s no indication that the tax office revised its projected revenue figures, then or in the months that followed. Even seven months on, in late February, the county was still seemingly using the projection built on the 7,500-appeal estimate, citing it in a slide deck it presented at a county budget retreat. By then, reductions had climbed to $2.1 billion—well past the $1.3 billion the tax office had projected for the entire cycle—and there were hundreds of appeals yet to be heard, most of them large, commercial cases where owners had requested hefty reductions. (State law directs most appeal hearings to be held by December 1, though continuances are allowed. Based on records released to the INDY, Durham’s BOER did not begin resolving commercial cases in earnest until mid-November.)
Meanwhile, in February, the city began drafting its budget for the upcoming fiscal year. As departments laid out their needs, budget staff took stock of what the city could afford, referencing the revenue figures the tax office had projected.
It took two more months for the city to learn the full scope of the impact the reductions would have on its revenue; it wasn’t notified by the county until April 13, a city spokesperson confirmed to the INDY—“much later in the budget process timeline than usual.”
That made for a tight turnaround. In an April 28 email to council members and staff that the INDY obtained, Ferguson, the city manager, wrote that despite having just finished drafting the upcoming fiscal year’s budget, an “unexpected” shortfall meant he and staff would be going “back to the drawing board,” less than a month before that budget was due to be unveiled.
Ferguson also wrote that when staff had checked in with the county earlier in the year, “our assessed values appeared on track and our tax collections were strong.”
So how does the county explain the timing?
Reached for comment, a county spokesperson said many of the largest reductions weren’t decided until late—into March and April—which, in the spokesperson’s telling, kept the tax office from knowing how big the reductions would get. The spokesperson also told the INDY that, in September, in response to the crush of appeals, the tax office attempted to create a second BOER to move cases through faster, but a second board never materialized, “based on the applicant pool.” (The BOER’s members are appointed by county commissioners and paid $35 an hour; the current board’s six members are all current or former realtors, developers, and appraisers.)
The fact that many appeals were decided later than usual doesn’t explain the county’s apparent inaction in the face of the tsunami forming on the horizon, though. Asked why it didn’t flag the problem sooner, the county spokesperson said the tax office did tell the city, in February, that reductions could “materially affect anticipated revenue,” with updated figures following in March.
The city, asked by the INDY what it knew in February, reiterated that it didn’t learn the scale of the reductions until April.
Amid Signs of a Flawed Process, Records Remain Under Wraps
While the number of appeals the county received last June was indeed historic, that tally only goes so far in explaining the magnitude of the reduction. Even if Doyle had estimated, ahead of the appeals deadline, exactly how many appeals would be filed, the standard formula for projecting value loss still would’ve come in $2.6 billion short of what ultimately took place.
This raises an unresolved question: why were the reductions so large that they blew past what even a correct appeal forecast would’ve predicted?
The county has yet to offer a clear answer. But tidbits Doyle has dropped—to the city council and the INDY—offer a hint.
Doyle has said that the real estate market data the county used to aid its revaluation—data it bought from outside vendors to gauge market conditions as it set new property values—was “bad data” that didn’t accurately reflect the market and caused appraisers to set values too high. Because of that, he’s said, the county and the BOER had to swap the market data for self-reported data from property owners themselves when deciding whether to adjust value. If the market data pegged an apartment building’s rental income higher than it actually was, for instance, the owner could appeal, submit their actual income data, and win a lower valuation.
But that’s not how the process is supposed to work, according to decades of state Property Tax Commission rulings. A property is meant to be valued on the income it could generate—what’s typical for comparable properties on the market—not the actual income its owner reports. This keeps owners from winning tax breaks for vacancies they created or income lost to their own mismanagement. So while an owner’s numbers might prompt a second look during an appeal, they’re not supposed to override the county’s market data; that’s the reason the county buys the data in the first place.
In his presentation to council, though, Doyle described his office’s commercial appeal review process as closer to automatic deference: “Once you have shown us actuals,” he said of appellant property owners, “we have to replace” the market data with self-reported data.
Asked about Doyle’s characterization of the appeal process, a county spokesperson said the county doesn’t default to owners’ figures. The county weighs all evidence—the market data it buys, the “data in its own system,” and whatever an appellant submits—as state law requires, the spokesperson said.
Of course, Doyle’s office does not make final decisions on appeals, the BOER does. So the only way to know for sure what evidence the BOER weighed and how it justified its decisions is to examine the hearing records.
That’s not currently possible, unfortunately, because the county does not publish the rationale for its appeal decisions, as many jurisdictions do. In response to a public records request, the tax office did share partial appeal records with the INDY, but comprehensive documentation the INDY has requested remains pending.
It’s unclear how much documentation of the appeals process exists: Doyle and a subordinate, tax division supervisor Jack Streater, both told the INDY in May that detailed minutes of last cycle’s BOER hearings were not kept, despite a state statute requiring as much from such a quasi-judicial board, whose proceedings are meant to be documented in near-verbatim detail. (A county spokesperson told the INDY that the tax office’s documentation practices for the board meet statutory requirements but did not provide evidence. The county hasn’t posted any BOER minutes online in several years, and a records request the INDY filed weeks ago has gone unanswered.)
For now, then, the hard facts of why such big reductions were granted remain unknown—to the INDY and, seemingly, to the tax office. Doyle, in one conversation with the INDY, cast the BOER’s decisions, not the tax office’s, as the thing that had gone awry, saying, had the board followed recommendations the county makes on each appeal, “we don’t have these losses.” (Asked about the remark, a county spokesperson said the board acts independently by law, and that its diverging from staff recommendations is to be expected.)
As far as what the public knows about all this, the basics of the situation have been telegraphed by Ferguson, who’s been vocal in attributing the budget shortfall to appeals by commercial property owners. Even without the nitty-gritty, that information, plus the cuts now pinching city workers, has given residents plenty to be up in arms about. Dozens packed the council chambers to speak during a city budget hearing June 1, among them Edgar Ivon, a volunteer at Nuestro Barrio Liberation Center, who lamented the fact that “before we look at supporting our city workers,” Durham is stuck answering for this “tragedy by commercial giants.”
“It’s alarming,” Ivon said. “But it’s not surprising.”
Comment on this story at [email protected].
Lee Gans is an independent journalist and data analyst who specializes in housing, environmental issues, and politics.
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