IAAO / URISA
Annual Integrating CAMA /
A Quarter Century of Mass Appraisal
“10 years of MRA
Submitted by: David B. Wissel, Assessor
Certified General Appraiser #CG01315752
been fortunate to be employed by, and to be a part of the Assessment
Administration and Appraisal industry for over twenty-five years. I began my career as an entry-level employee
in the Park County Assessor’s Office in June 1979. By January of 1980 I was promoted to the
position of Deputy Assessor. In October
of the same year I was appointed to lead the Office of Assessor, by filling a
vacancy. I’ve had the honor of serving
the citizens of
The job has been, and continues to be, challenging, fulfilling, and rewarding. I truly have come to appreciate the saying, “the more I know, the more I don’t know”. It has become the order of the day, some days more than others! I learn something new every day.
purpose of this publication is to share some of my experiences, specifically
regarding the application of Multiple Regression Analysis (MRA) valuation
models, developed in
I believe the MRA method produces the best possible results for our jurisdiction, for the greatest number of properties. A saying from my favorite uncle, “the best’est for most’est” certainly applies. How can we produce a quality mass appraisal product, within our available resources? Not only that, how can we recognize and reflect the vast differences of property types, location, and other numerous factors?
There will always be exceptions to any mass appraisal application. Any method of appraisal will never be able to satisfy all concerns. There are some properties that simply will not “model well”. In my experience, each property owner has administrative remedies available to exercise if they believe their value is incorrect. It is also my experience that a very small number often utilize these rights on an annual basis regardless of our total value estimate.
I will not offer or suggest intricate details and formulas. The “Old Dogs Learn New Tricks” theme for this presentation will be explored. I am living proof that “old dogs” (or, perhaps even fossils like me) can adapt, and progress with innovation.
Mr. Gloudemans, and other leaders in this field will cover more technical presentations, and new MRA tips. However, I will offer a listing of some of the significant influences that affect value, both positive and negative, which we use.
We have discovered, in our analysis of our local real estate markets, that we do have units of logical comparison. In order to account for those similarities, we have identified five different geographic / economic areas. We also apply additional local and other neighborhood and sub-area adjustments too.
The true test, however, was in actually writing, and FINISHING this effort. Thank you Dave Hawker, Tyler Technologies – Eagle Division, for the opportunity to be a part of this conference, in more ways than one. Sit back, enjoy the ride, enhance the volume of your favorite rock and roll, and I hope you have some fun!
Federal lands comprise 51% of the county’s landmass. State-owned lands account for approximately 8%. The remaining 41% is held in fee simple ownership.
Notable features on Federal lands include the 644,000-acre Pike National Forest; Lost Creek; Mt. Evans; and Buffalo Peaks Wilderness Areas; Eleven Mile Canyon Recreation Area; Bristlecone Pine Scenic Area; Wilkerson Pass Visitors Center; and the Colorado Trail.
named mountain ranges define the perimeter of
mountains and ranges include
this ring of mountain ranges is
northeastern third of
southern third of
utilities own and operate five large water storage reservoirs (Antero,
Elevenmile, Tarryall, Spinney, and
I have genuinely enjoyed living and raising my family in
want to illustrate the profound differences, between the imagery penned by
them, and what this true place is. What
in the world is a park, let alone
the Ute Indians, and the mountain men, it was the gold rush miners who were the
early permanent settlers of this area.
Following them came the cattle ranchers and hay farmers. Both groups initiated flood irrigation
systems and water delivery structures, like flumes and ditches. This water was applied to various uses throughout
in time, first in right” is a common theme associated with water rights in
being developed, surface water became the lifeblood of the region, and
the present time, over 90% of the surface water has been removed from the land
easements, a $3,500,000 state Legacy / Heritage Grant program, the South Park
Heritage Program, Mosquito Range Heritage Initiative, and the preservation of
the Wahl / Coleman Ranch are just a few examples of the local preservation
efforts. In total, over $6,000,000 in grant
dollars have been leveraged for these types of projects in
subdivision development occurred in
tell anyone, but I live in one of the most beautiful areas in
“Make sure you hit those performance targets, or else!”
My personal experiences being a part of the evolution of the Assessor’s Office provide insight into our past. We need to look backwards, to see where we’ve been. That will be our guide for where we are headed into the future. I had little idea what opportunities this path would unveil.
“Back in the day”, as my college freshman daughter Jennifer likes to say to me, saw little resemblance to the modern office setting we experience today. Virtually all of our workflows were manual. Little, if any, automation systems existed, not to mention affordability.
Sales ratio information was supposed to be sent consistently to the state Division of Property Taxation. This would assist the state in developing cost manuals, to be used by the local assessor to fairly value improvements. We were at a 1973 level of value, or effective date.
Land values were based on comparable sales, but no current time market data was utilized. All values were several years behind in their effective date, when compared to the current time. Values determined by the assessor had little relationship to how property was being bought and sold.
Little application of common appraisal principles was apparent, except the Cost Approach. There was no requirement in place for any type of appraisal compliance. Even if there were rules to be followed, no one could enforce penalties, as there were none.
For a multitude of reasons, in 1982, the Colorado General Assembly referred a constitutional question to the voters, identified as Amendment #1. It contained vast institutional and procedural changes. It also specifically limited the value of Residential property to the Cost and Market approaches to value.
The main component required the implementation of an annual compliance audit of the local assessor, to be supervised by the state. It also re-organized the State Board of Equalization (SBOE), its mission statement, and prescribed who the individual members are, or their representative.
Compliance with newly adopted measures of central tendency and assessment level would to be enforced. The punishment for non-compliance could be punitive. If the performance standards were not met, then the state would insure that the local assessor would have the responsibility to “re-appraise” all of the affected properties.
the SBOE finds, after providing due process, that a county is in
non-compliance, it issues an order of reappraisal. The county has to agree to develop a plan of
mitigation. There has historically been
assistance and supervision under the direction of the SBOE via the Property Tax
Once the plan of reappraisal has been successfully completed, and the county is found in compliance, state school aid funding is reviewed. If the school district(s) in the county received excess school aid, then the county government MUST refund that amount, with interest. The individual school district(s) don’t repay the money, the county government does. It is an effective enforcement mechanism.
The basis of allocating the state’s 66% contribution to the statewide total program costs for Kindergarten – 12 education systems is total assessed value per pupil. By equalizing the values within the state, this method for distributing the state’s general fund annual appropriation would be legal, under state law. By enforcing equitable appraisal compliance within each county, the state provides a uniform minimum funding level per pupil. Local school districts have the ability to levy additional funding, via the property tax, upon a positive vote of the people.
bottom line: the less total assessed value per student, the more state aid is
provided. On the reverse side, the more
total assessed value per pupil, the less or no state aid is provided. Two school districts encompass our county
example, my local school district (RE-2) receives little or no state aid, and
their primary funding source is local property tax dollars. The district supports three separate campus
locations, and has the largest geographic area.
Yet, my other
Needless to say, the driving force from the state’s perspective is to achieve uniform appraisals within each county, and throughout the state. It is my opinion that our twenty-year audit and compliance process has greatly contributed to the appraisal excellence we practice today. It wasn’t easy, as the growth and evolution came with trade offs. I, too, experienced an order of reappraisal twice. However, in hindsight, this journey was an opportunity to learn and experience events we never could have envisioned. In hindsight, it has been worth the pain and torture!
The primary goal of each Colorado Assessor is to pass the annual audit! I am pleased to say that one order of reappraisal has been issued to one county for the past three years.
believe another factor, which has helped each county assessor and their staff
appraisers, is mandatory licensing by the state. In 1990, I was involved in the establishment
of a uniform program to license all appraisers, regardless of whom they worked
for. The bottom line: each appraiser in
most personally important achievement was becoming a certified general
appraiser. The process of being able to
demonstrate my appraisal knowledge and skills equal to any other appraiser is
gratifying. We are the last state in the
1995 – The Start
“You want to do what with that PC?”
I arrived at the Park County Assessor’s Office, the only computers we had were
terminals hooked by a dedicated phone line to a neighboring, more sophisticated
We then blasted into the
world of personal computers on the very capable Apple II e model. That was in 1982, when were going to set the
world on fire with our “
automated appraisal applications”. We then entered our historic “paper” appraisal card data onto a private vender software system (REAP program), via the Apple computers. The data was captured on 5.25 “ discs, which were then boxed and sent to
This system evolved into our first “automated” Cost Approach based reappraisal, accomplished on a computer system in 1983. In hindsight, we really thought we had a good thing! Let’s just say it provided a useful, for the time, appraisal result. However, we did learn a few things to do, and not to try again, along the way.
Later that same year, the very first state audit / compliance report indicated 62 out of 63 counties would be found in some type of non-compliance. We realized we had to get used to the idea of the changes on our horizon. Our appraisal skills had to progress forward. We had to upgrade significantly our tools, and it would require funding, imagination, and creativity.
It did force us to group with
other county government peers, facing the same issues. A mountain region group was formed to
explore our options. The end result was
that an in-state software vendor (AmericanFundware, long since deceased!) was
retained to provide an administrative software package. A second vendor based in
We used this basic platform
from 1985 - 1998! What I find even more
amazing is that we did find a good home for the reliable old Data General mainframe hardware when we upgraded! I must admit my first thought was to donate
it to the bottom of one of our five storage reservoirs.
Our applications certainly evolved, and if I do say so myself, we did accomplish some trendy innovations over the years. We ultimately transitioned from a two-vendor system, to an all KVS installation. After a few more years, we ended our contractual arrangement with KVS, and used local hardware and software consultants to modify and upgrade our systems.
At the same time, we were the
first Office in the local courthouse to invest in a new tool called a personal
computer. We bought a couple of systems
from a little company in
In the mid-1980’s I had the opportunity to take several IAAO classes. One of them was being taught by Bob Gloudemans. It was there that the seed of applying MRA was planted, and from there it has grown. Our systems at the time were far too limited to implement such a technological scheme, so we needed to again look toward upgrading to more modern software / hardware options.
The mid-1980’s also saw several legislative changes enacted in our state. We had moved from a four-year reappraisal cycle, to a two-year cycle. This seemingly minor difference, in regard to our appraisal effective date and the current time real estate market, generated huge taxpayer appeals all over the state. We can joke now that we did “survive the level of ‘85”, but with the scars to prove it!
In 1987, (with an effective date of 1985) our office experienced the largest number of property tax appeals in my career. We received over 4,000 property appeals out of a total of 36,000 accounts. We processed appeals from May – October. This “mini” property owner uprising lasted until the early 1990’s. At that time the real estate market adjusted downward, due to an economic downturn. Our ad valorum value began to reflect “real” market values; at least that was the public’s perception. I can also state with confidence that our appraisal products improved during those years. Experience counts!
Our first application of MRA
based appraisals was for a 1994 effective date, in our 1995 reappraisal
project. We generated our indicated
This limitation became another opportunity to upgrade our systems. At this same time, PC based, “mini” computer / server vendor systems were becoming available, and a viable and reasonable option. In that regard, I continued to attend IAAO conferences, and our state assessor conferences, shopping for a new system. Since I don’t control my annual budget, what could I possibly obtain funding for? What would be within a reasonable cost, and would it grow with us? Which system offered the best use of technology and innovation for the future?
We continued our search by
scheduling visits with local vendor systems.
A relatively new vendor, but well known to me, (I’ve know the principle
owners for several years, prior to this business venture) asked for an
opportunity to come to Fairplay to demonstrate their products. This small but energetic
I demonstrated several
software packages, from numerous vendors.
It was a difficult choice.
Ultimately, I picked an appraisal software package, RealWare, offered by
Colorado Customware Incorporated, (CCI), of
It was my original plan to have our software consultant,
Concurrently, we had been
planning to launch our Office web site product.
The plan for this application was to use our in-house administrative and
RealWare appraisal software data to support an on-line searchable web
site. Good Turns Software is our web
site developer. He also supports the
The web site debuted on
I am very proud of our web
products. It is my baby, and my pride
and joy! I make available most of the public
record data contained in our Office. My
goal is to make access to our information without pain, and without a phone
call! I also have general information,
and other useful and helpful items. I
also have a link to the paper I presented at the IAAO conference in 2001, in
I believe strongly in the
rising star that CCI has become. I can honestly
say that this company has certainly arrived.
They are moving towards becoming one of the top software developers in
their field. We believed in them, from
their early days to now! They are
adding new clients, and their product improves with each new user. I am proud we are one of eight counties in
4. Valuing Vacant Land
“From the Continental Divide, everything is downstream”
I never take for granted that the west boundary of my county is the east slope of the Continental Divide. To have seen the world, from having been on top of the world on most of these mountains, is unforgettable.
Our location places us at the
headwaters of the
With this diversity are also other site components, such as location, access to live water or private fishing rights, public lands, solar exposures, and many other factors. We have separated the county into various geographic areas, which have similar social, economic and market influences.
We have divided our county
into two major regions, coincidently following school district boundaries.
We have observed the cause and effect of this reality. Prices have increased as the higher quality parcels have been purchased. However, the prices being paid are continuing to increase, regardless of lessening parcel quality. As long as a building site can be established, the market has reflected consistent appreciation in total sales price.
Our other major region is
Vacant land represents 37% of
our total value base. We have over
25,000 vacant, platted parcels, with approximately 22,000 located in
Our choice of MRA applications for vacant land has been a multiplicative model. I believe, along with our modeling staff, this process returns the best possible appraisal products for our county. I have included a listing of those factors that we have developed, and use as value influences.
While vacant platted
residential parcels are the significant portions of our total property class
value, we do have other applications for MRA models. It has been used in our development of both
commercial land, and non-producing mining claims. In both of these instances, we are using a
five year time period. In
We are fortunate that
beginning in 1973, when the county hired a private appraisal firm to perform a
complete site-by-site reappraisal, they accounted for our diverse areas. This firm, as a part of their data and
inventory collection plan, identified individual parcel characteristics and
site data. This process has continually
evolved from what was originally labeled Land Value Calculations (
This data provides, at the individual parcel level, several factors to help identify those unique characteristics inherent with each parcel. By reviewing the market transactions, we develop measurable adjustments to value, based upon those components. We do develop our adjustments by economic area, the neighborhood level, and even the subdivision level too, as necessary.
Once the MRA models have been
thoroughly tested in
This feature has greatly enhanced our MRA modeling workflow. It eliminates the extra steps of reproducing each and every model component, and the possibility (and frustration) of transposition errors.
Final land values are then posted to the administrative portion of RealWare. This data is also verified that it reflects the indicated value via the MRA models.
5. Valuing Residential Improvements
“The Good, The Bad, & The Ugly, and what it sells for”
I’m sure each of you have reviewed sales documents, compared the purchase price to the picture, and said WHAT? What #$%^ paid THAT amount of money for THAT property?
I can count on one hand the
number of “tract” type housing developments within
I honestly believe that there
is not one single property which mirrors any other in all of
How do we value apples with oranges? Simply peel the skin, and get down into the fruit! It isn’t easy! Frankly, we do the best with what we have to work with.
Another factor we must face is we are limited to ONLY the market approach to value. Another constitutional change occurred in 1992, when the voters adopted a different Amendment #1, the Taxpayers Bill of Rights (TABOR). It also contained a multitude of significant policy changes, regarding property tax limitations, spending limitations, and voter approval for any tax increases.
One of the other main factors is that it specifically limited the appraisal of residential property to ONLY the Market Approach. No more could we use the two approaches authorized by the 1982 constitutional amendment.
The method of MRA model we use in residential improvements is additive.
Generically, we use a range of base square foot values by property type, style, age, condition, location, and additional items as identified. I have included a copy of the influences we have applied the past several years.
6. Something New in 2005
“Old dogs can learn new tricks!”
Our modeling staff attended
For the past twenty years we have been required by law to use an18-month data collection period. We have generally experienced a shortage (can you ever have enough sales?) of available and qualified sales. It has also increased the difficulty of having to place round pegs into square holes. It gets especially frustrating to those people trying to build several different models. We use one for each economic area, for both vacant land and improved residential properties.
It is my opinion, as long as the time trend applications are valid (and thoroughly tested), the data set is qualified and verified, it should ease the problem solving associated with MRA modeling. Could that be possible?
I made the decision late in
October 2004 that we will be utilizing a 48-month time frame in our
2005-reappraisal project. It just makes
The preliminary results are supporting the theory. I believe we will provide supportable appraisals with a significantly greater number of market transactions. It will provide a lower rate of value increase than the 18-month period alone. I believe it will also provide a lower rate of decline, if and when our local markets engage in a correction. That hasn’t happened in the past few years, but I feel it is inevitable.
We have experienced steady economic growth, in regard to new residential building activity. New building permits are averaging approximately 700 – 900 new units per year. In 2004 we added a countywide total of $84,000,000 of new construction value. This is the largest amount of new construction I have experienced during my time as the Assessor.
We also hope to accomplish greater consistency in our sales confirmation process. While using an 18-month sales activity period, we were always “missing” a six-month sales gap. By using four full years as our base data set, we will add two years, and drop two years. Our goal is to have greater understanding (filtering) of sales activity, and to better confirm the terms of each sale. We have also decided to scan all of our disclosure documents, (RPTD’s or TD1000 forms). They are confidential documents within our law. However, if we create our own internal data set, we will be able to retrieve them at any time without digging in a box. If you can find the right box!
We have altered our workflow activities accordingly, and increased the methods of direct contact with the buyers / sellers. Sales confirmation surveys will be sent at the time of data entry, to be timely with current time sales activity. We had been sending sales verification letters before. We feel this process will become an automatic portion of our workflow, not a sporadic effort.
7. The Upside & the Downside
“More work on the front end! Will it produce positive appraisal products? Will we have to re-educate our taxpayers?”
I’ve spent the past twenty years educating my constituents about the 18-month “window” of time that we have historically used to build our market models. Now, I’ll have to change my shtick to include this new four-year time period wrinkle.
There has been a greater time requirement placed on the modeling and appraisal staff. It required the staff to confirm the “missed” six months time period, in each economic area. It also required historical sales data and records to be re-located, and placed into a useable order. The “re-confirming” of previous sales with the buyer and seller has added some additional time to the project too.
We have tried to assign our appraisers to a specific economic area. This is to try to improve the consistency of who sees what. I call it normalizing the data. In other words, if both you and I look at the same property, we may have different perceptions of what we saw. Neither is wrong, nor absolutely correct. It does impact the quality of the sales data. It CAN and DOES drive the modeling team nuts!
This is an ongoing project, as we continue to work toward identifying and reinforcing consistency within individual opinions. That is no easy task. We need to standardize the application of what “typical” for the area really is, or what is average tree cover as compared to heavy tree cover, as an example.
On the positive side, we will have more data in order to better identify and substantiate our individual adjustments. This will be helpful in all level of appeals, and taxpayer interaction. More sales data will also assist in more consistency in our final appraised values. They should be less volatile, and more stable, due to the longer view of the market.
Our goal is to continue to produce a better appraisal product. After this initial front-end impact on staff, it is my opinion that there will be no downside at all.
8. What Does the Future Offer?
“The only limitations are time, money, imagination…”
Over the ten-year period of time, I’ve seen the ability to continually improve the tools and applications of MRA readily available in the appraisal systems marketplace. When you apply for a second mortgage, or a new car loan on a home equity line of credit, how do you gain approval without paying for a fee appraisal?
More than likely those types
of loan decisions were based on an Automated Valuation Model (
I’m not an expert at creating
MRA models. I attended this conference
two years ago in
However, I am confident in believing that this application has provided the best tool we’ve ever had to provide “fair, uniform, and equal appraisals, within the law”, for the past ten years. We will continue to experiment, and strive to improve with each application. I see no logical reason to change our course.
9. Closing Remarks – Q & A
It has been my pleasure to offer my thoughts, experiences, and opinions. If you have further questions or comments, please contact me at your convenience. I would like to hear some of your experiences, and the results. My personal and contact data are listed at the end of this document.
I want to sincerely thank my
entire Office staff, especially our appraisal section. I am very fortunate to have the outstanding
people of character and quality that we presently employ. The current staff is the best I’ve ever had
the pleasure of working with. A manager
is only as good as their human resources, and they are each to be commended for
their commitment and dedication to the people of
I certainly want to further
recognize, and to publicly express my heartfelt admiration, trust, and
confidence in our Modeling Crew; Chief Deputy
This is their third reappraisal cycle together, and they continue to improve their MRA modeling skills. I believe they are individually, and collectively, the very best! They are highly motivated, and committed to continued learning, in order to always produce a quality work product. They have continued to demonstrate their significant value to our county community.
I want to sincerely thank
I want to recognize and thank
Gary Nichols, Park County Community Development Director, for the digital
pictures and images. He has always been
a great photographer, and in the live presentation, you’ll see his work. He captured and provided the digital photos
My brother, Ken Wissel, for getting me over the techno-phobia and actually opening PowerPoint! Not to mention helping me to prepare my visual portion of the live presentation.
I wouldn’t even be able to
discuss this subject if not for Bob Gloudemans, Garth and Russell Thimgan. Each of you is an expert in this area. You have offered me the opportunity to learn
something useful each time we meet. You
three are the best in the business, in my opinion. And, since the Thimgans and I are both from
Last, and certainly NOT least, I also want to recognize Arlene Samuels, Data Entry Supervisor. She has my sincere gratitude and heartfelt appreciation for every little detail and the feedback she provides. And, for everything you do for the Office. She is an outstanding proofreader, friend, and a great human being!