RPTAC Equalization Project Team
FROM: RPTAC Equalization Project Team
DATE: December 27, 2004
SUBJECT: 2004 Annual Report
Our team is chartered for a one-year period with evaluation by RPTAC occurring in the last quarter of the calendar year. We are submitting this report to identify the issues discussed, report the progress made and make recommendations for future topics.
In 2004 the team met on March 18, June 23, September 8 and December 1. The meetings were held in the ORPS Syracuse and Newburgh offices with a video-conference connecting the two locations. The meeting agendas, minutes and annual reports are available at http://www.tax.ny.gov/research/property/assess/rptac/minutes_index.htm.
Issues Identified for 2004 and Summary of Results: The following issues were identified in December 2003:
Review the pre-decisional collaboration process for 2004 equalization rates and make appropriate improvements and adjustments for 2005. Result: There was consensus that the PDC process for 2004 rates was better than the process for 2003 rates. The positives were that the PDC process for 2004 rates occurred earlier than in previous years and the ORPS CRMs were more involved in the process than in earlier years. The team thinks that the PDC process for 2005 rates needs to occur earlier in the cycle and that there needs to be more collaboration between ORPS and the assessors. In the summer of 2004 the team participated in the development of a 2005 PDC schedule that addressed these concerns. The schedule includes the sharing of final PDC ratios by the end of January 2005.
Evaluate the experiences of 2004 rates and make appropriate improvements and adjustments for 2005 rates. Result: The Level of Assessment (LOA) declared by the assessor was accepted as the 2004 State equalization rate in 82 percent of cities and towns. By comparison, in 2003 the LOA was confirmed as the equalization rate for 76 percent of cities and towns and in 2002 the LOA was confirmed for 64 percent of cities and towns. The team believes that with increased communication and collaboration between ORPS staff and local officials prior to the establishment of 2005 equalization rates that this percentage will increase in 2005. Final equalization rates were established prior to school levy date for every city and town in a school district that levies taxes on September 1. There were rate complaints filed by 29 municipalities. The State Board changed the equalization rates for 17 of these municipalities. In three cases the equalization rate was changed to the Level of Assessment stated on the assessment roll.
Review the determination of market value estimates in small municipalities and develop alternatives and/or improved methods for estimating value. Result: The team discussed the accuracy of ORPS' residential market estimates in municipalities that have very few sales. In the current equalization rate process ORPS conducts CAMA ratio studies to estimate the residential market values in these towns. Many of the team members are concerned that it is very difficult to develop CAMA models that produce reliable and consistent market estimates in towns with very few sales.
The team agreed that ORPS, the assessors and the county directors should be involved in identifying the towns where we can not build residential CAMA models that produce reliable and consistent results. It was decided that as part of the PDC process ORPS staff and local officials should look at the CAMA results over a multi-year time period. If the results look questionable then ORPS should attempt to do a second measurement. This second measurement could be appraisals or possibly a sales ratio study of more than 3 years. ORPS staff should also provide the local officials with a list of samples and the local officials would have the option of appraising these parcels to use in the support of their LOA.
The team agreed that it would be desirable to have two estimates of market value for every municipality. It was decided that the team will continue to review this issue in 2005.
Develop and define 2005 rate procedures. Result: The draft procedures developed for 2005 equalization rates are similar to the procedures for 2004. The changes from the 2004 procedures include the following:
1) The 2005 rate products for cities and towns will be based on a valuation date of July 1, 2004. The 2005 State equalization rate will represent the ratio of assessed value on the 2005 assessment roll to the July 1, 2004 full value of these municipalities.
2) The measured roll for a reassessment municipality will be the 2002, 2003, 2004 or 2005 reassessment; whichever is the most recent reassessment.
3) The measured roll for new appraisals will be the 2003 assessment roll.
4) For measured rolls that are earlier than 2005, the aggregate full value for each major type will be adjusted to a July 1, 2004 aggregate full value.
5) A residential full value will continue to be developed with a sales ratio study where there is a sufficient number of sales and with a computer assisted mass appraisal (CAMA) ratio study where there is sufficient inventory data.
6) Where a sales ratio study or a CAMA ratio study is used for the residential class, the full value will be as of July 1, 2004 and the measured roll will be the 2004 assessment roll.
7) If it is determined that ORPS can not build a residential CAMA model that produces a reliable result, then if time permits ORPS will conduct residential appraisals. If ORPS does not have time to conduct appraisals then the 2004 estimate will be trended to the valuation date for 2005 equalization rates.
The draft procedures developed by the team will be presented for adoption to the State Board at their meeting on January 25, 2005.
School Tax Shifts.
In response to an assignment from RPTAC the team reviewed the issues regarding school tax shifts caused by changing equalization rates. The team reviewed and analyzed the impacts of changing equalization rates on the apportionment of the September 2003 school levies. The team discussed the data and decided that the process is working correctly. The team does not think there should be limits on tax shifts. The team thinks that we need to focus on ensuring that ORPS is determining accurate market value estimates for every city and town.
Review the criteria for identify sales that should be excluded from ratios studies because of significant change and make recommendations as appropriate. Result: There is still disagreement over the definition of significant change. It is ORPS policy that a sale is only excluded from a ratio study if the inventory change occurred between the taxable status date of the latest assessment roll and the sales date. Many of the local officials on the team think that inventory changes that occurred prior to the taxable status date but without the knowledge of the assessor should qualify as significant change.
Legislative status. Result: Each meeting included status review of legislative proposals and their connection and impact on the equalization program. One important piece of legislation that was enacted in 2004 was a change in the valuation date from January 1 of the roll year to July 1 of the year preceding the roll year. This legislation is effective beginning with 2005 assessment rolls.
In 2004 we discussed the use of multiple parcel sales as comparable sales. The team agreed that ORPS staff and local officials should use these sales in the valuation process. It was discussed that the RPSv4 valuation system does not allow for use of multiple parcel sales as comparable sales. The team thinks this a problem, especially in farm communities because many farm sales include multiple parcels. The team is concerned that the failure to use multiple parcel sales could result in inaccurate market values and possibly inaccurate equalization rates. The team also agreed that if possible, the RPSv4 valuation system should be modified to allow for the use of multiple parcel sales as comparables. The team sent a memo to the manager of the ORPS RPS Unit requesting a modification to RPSv4 to allow for the use of multiple parcel sales as comparables.
There were discussions regarding RP-5217 forms for the sales of new homes that do not reflect the actual selling prices of the homes. It appears that in some cases the RP-5217 form only reflects a portion of the true selling price. This issue was discussed with RPTAC at their meeting on December 10, 2004.
The team expressed concerns regarding the methodology for developing equalization rate trends for the commercial and vacant classes. At the RPTAC meeting on December 9, 2004 it was decided that it will be the responsibility of the Equalization Team to review this issue and recommend improvements.
The team reviewed the criteria for determining the property classes where ORPS selects sample parcels to appraise. There is some concern that not sampling all classes might cause distortion in the equalization rates. It was decided that the team will review this issue in 2005.
At our December 1, 2004 meeting, the team agreed that we should continue to exist and continue our work on improving the equalization program. Our focus in 2005 will be on the following issues but additional issues may develop during the year.
1. Review the 2005 pre-decisional collaboration (PDC) process and develop a schedule for 2006 PDC.
2. Monitor the status of PDC for 2006 rates.
3. Review the process for developing 2005 equalization rate trends for the commercial and vacant classes. Analyze and evaluate alternatives for developing trends. Recommend improvements for developing trends for 2006 equalization rates. Monitor the implementation of these improved techniques for developing trends for 2006 equalization rates.
4. Review the criteria for determining property classes where ORPS conducts appraisals in the market value survey. Make changes for 2006 equalization rates if appropriate.
5. Review the criteria for conducting redo appraisals in the market value survey. Make changes for 2006 equalization rates if appropriate.
6. Evaluate the experiences of 2005 rates and make recommendations for future rate years
7. Review the 2005 rate complaint process and make recommendations for future rate years.
8. Develop proposed procedures for 2006 State equalization rates.
9. Push for ORPS to study the expansion of CAMA modeling techniques to the commercial and/or vacant property classes. The team is concerned with the lack of progress in this area.
10. Ensure that 2005 reassessments are appropriately confirmed at 100 percent.
11. Monitor the status of legislative changes that impact equalization rates.
12. Improve communications with the RPTAC Valuation Team regarding valuation issues that impact the establishment of accurate equalization rates
The team consists of four county directors: Tom Bloodgood, Paul Burckard, Bob Diener and Barry Miller; five assessors: David Briggs, Edye McCarthy, Curt Schoeberl, Walter Smead and Roger Tibbetts; and four ORPS staff: Patricia Holland, Tim Maher, Jim O'Keeffe and Tom Pinto. ORPS will continue the practice of bringing the appropriate additional staff depending upon the specific issue.
During the year, Val Martins a long time assessor and member of the team retired. Val made major contributions to the team and the improvements in the equalization program would not have been possible without his hard work and dedication. The team thanks Val Martins for his contributions.
The team expects to meet at least four times in 2005. Our next meeting is scheduled for February 16, 2005 in the ORPS Albany office with a video-conference to the ORPS Syracuse office.