IAAO / URISA

9th Annual Integrating CAMA / GIS Conference

Savannah, GA

February 16, 2005

 

 

A Quarter Century of Mass Appraisal

“10 years of MRA Models in South Park, the Reality”

 

 

 
 

 

 

 

 

 

 

 

 

 

 

 


Submitted by:  David B. Wissel, Assessor

Park County, Colorado

Certified General Appraiser #CG01315752

 


Introduction

 

 

I’ve 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 Park County in that capacity ever since.   

 

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.

 

The purpose of this publication is to share some of my experiences, specifically regarding the application of Multiple Regression Analysis (MRA) valuation models, developed in SPSS software.  This experiment began in 1995, and continues forward.  I will also share a short history of the journey, and how we arrived at the place we are today. 

 

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!

 

 

1.                Park County, Colorado

 

South Park, the Reality

 

 

Established in 1861, Park County is approximately 45 miles wide from east to west, and 60 miles long, encompassing 2,166 square miles.  Within our borders are portions of three-wilderness areas, two state parks, twelve state wildlife areas and more territory above 9,000 feet than any other Colorado county. 

 

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.

 

Several named mountain ranges define the perimeter of Park County, including the Mosquito Range above Fairplay and Alma.  This spectacular range includes four of Colorado’s peaks higher than 14,000 feet above sea level.  It is also the east slope of the Continental Divide.  An additional 25 named mountain summits with elevations above 13,000 feet are located in the county too. 

 

Other mountains and ranges include Buffalo Peaks west of Hartsel, Continental Divide north of Jefferson and Como, Front Range and Kenosha Mountains above Bailey and Grant, Tarryall Mountains north of Lake George, and the Thirtynine Mile Volcanic Field surrounding the town of Guffey.

 

Within this ring of mountain ranges is South Park, a 900 square mile park located in the geographic center of Colorado.  With an average elevation of 9,000 feet, the short grass prairie supports herds of elk, deer, bighorn sheep and antelope, as well as beaver, raccoon, bobcat, mountain lion, black bear and waterfowl.  Communities in South Park include Fairplay, Alma, Como, Jefferson, and Hartsel.

 

The northeastern third of Park County is known as the Platte Canyon area.  This densely forested area is bisected by the North Fork of the South Platte River that follows US Highway 285 through the communities of Bailey, Shawnee and Grant.  This portion of the county is lower, with an average elevation of 8,500 feet.

 

The southern third of Park County includes the communities of Lake George and Guffey.  Rolling prairie and remnant volcanoes characterize this area.  The South Platte River and its tributaries have carved dramatic landforms such as Elevenmile and Tarryall River Canyons.

 

Metropolitan utilities own and operate five large water storage reservoirs (Antero, Elevenmile, Tarryall, Spinney, and Montgomery) in South Park.  All have become important wildlife and aquatic recreation areas.  Park County purportedly accounts for at least 25% of all fisherman days in the state.  Well over 500,000 people are attracted to the region each year for boating, fishing, hiking and camping.

 

Personally, I have genuinely enjoyed living and raising my family in South Park, the Real South Park, and the awesome beauty if offers!  Yes, the Trey Parker / Matt Stone Comedy Central channel adult cartoon is named after the place I call home.  Frankly, I have several opinions about the nexus of the cartoon and the true characters in this area, in respect to those I know.  I just don’t talk about them.

 

I 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 South Park?

 

Colorado has three major alpine parks, defined as “high altitude plains, surrounded by mountains”.  North Park is located in Jackson County, with the county seat being the town of Walden.  Middle Park is located in Grand County, with their county seat being the town of Hot Sulpher Springs.  South Park, the largest of the three, is in Park County, with our county seat being the town of Fairplay.

 

After 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 South Park.  Other areas of the county also developed water structures and devices too.  They were not as extensive or as large, when compared to those in South Park. 

 

Colorado is an appropriation doctrine state, with water being a real property right.  It can be severed from the land, and sold to another owner, who can apply to change the historic use of the water, (agricultural, mining, municipal etc).  The first person in time to place “unused” water to beneficial use, established a priority system of appropriating the available water.  All surface water is administrated within the physical flow of the river system.   Different times of the year, and the amount of winter snowfall and summer rains directly affect the amount of water flowing into the streams, and available for use. 

 

“First in time, first in right” is a common theme associated with water rights in Colorado, and the west in general.  This philosophy is far different than the Riparian Doctrine, which is common east of the Mississippi River.   In that doctrine, all water upon and flowing through the land is owned just like the surface rights.

 

After being developed, surface water became the lifeblood of the region, and South Park specifically.  World-class hay crops became standard production, and were sought after for their high nutrient qualities.  Ranching ultimately outlasted the boom and bust cycle of mining.  It became the prominent industry and occupation and held that distinction until the early 1960’s.  Beginning in 1966, ranches began to be purchased by downstream municipalities, and the water was removed from the land.  It is now used by the growing Front Range cities, and the ground eventually was sold and sub-divided into smaller vacant land parcels. 

 

At the present time, over 90% of the surface water has been removed from the land in South Park.  The water was purchased on the open market, and has been “moved” to the front range cities downstream.  However, a significant effort has been successfully offering alternatives to the remaining water and large ranch owners. 

 

Conservation 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 South Park.

 

Significant subdivision development occurred in Park County during the 1970’s, and continued until the late 1980’s.  Land was available and affordable, and Colorado was experiencing a growth boom.  I remember in my younger years seeing advertisements inviting you to visit the next new mountain paradise.  Just for coming and taking a look, they would reward you with a great prize!  A common enticement device was a toaster oven, or a clock.  Who wouldn’t want to own a piece of heaven?  The worst-case scenario was at least a new toaster!

 

Don’t tell anyone, but I live in one of the most beautiful areas in North America.

 

 

2.                Brief Background – Colorado’s Audit Program

 

“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.  

 

If 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 Administrator, (PTA).   The staff of the state Division of Property Taxation (DPT) will physically assist, and help the local Assessor, staff, and administration accomplish the goal of equalized values, within the county.

 

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.

 

The 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 area.  Platte Canyon (RE-1) has two campus locations in Bailey, and South Park (RE-2) has campus locations in Fairplay, Lake George, and Guffey.  They are real world examples of both sides to this funding formula.

 

For 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 Park County school district, (RE-1) which contains the largest population area, receives well over 50% of their funding from the state general fund.

 

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.

 

I 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 Colorado is required to be licensed, as required by law.  Each assessor’s office employee, who functions as an appraiser, has two years to obtain a minimum license (registration), as a condition of continued employment. 

 

The 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 Union that has public and private sector appraisers compliant with the same minimum standards.  This program has improved our collective public sector appraisal skills statewide.  I am very proud of the assessors and staff appraisers of this state.                      

 

 

3.                1995 – The Start of Utilizing SPSS & MRA Models

 

“You want to do what with that PC?”

 

 

When 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 Metropolitan County.  Jefferson County (Jeffco) had shared their administrative software with our county, beginning in 1976.  We had a “terminal” room, where two staff members entered data changes.  The system did enable some limited automated search and report functions, including producing the tax roll.  Reports were generated on “green bar” paper, on LARGE line type printers. 

 

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
Colorado Springs, where their office was located.  They would load the data onto a mainframe computer.  After processing, they would mail back big green bar paper reports.  We then compared the appraisal card data to those items listed on the reports.  Each value had to be entered into our administrative system manually. 

 

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 New York state, KVS Valuation Systems (KVS) provided the appraisal software.  Each county would purchase and support their individual hardware systems.  On we moved into the era of the mainframe computer, with green-screened workstations, using hard coded, no flexibility Cobalt software!

 

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.  Lake bottom fish habitat is what I had envisioned, but it didn’t come to pass.

 

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 Texas named after the founder, some guy named Dell.  That brought us into the applications available with DOS, and we were again on a big time roll!

 

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 values in SPSS.  Both land and improvement values were individually appraised, and then combined.  These total values, based upon their property classification, were then manually entered into our administrative system.   This process worked, but it became clear after one year that it was NOT going to provide a positive long-term option!

 

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 Colorado software vendor was beginning to make some noise, and to be noticed.  They had developed some great appraisal tools, and had demonstrated a solid commitment to a progressive vision of future products.  I liked what I saw.

 

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 Ft. Collins, Colorado.  We convinced the Board of County Commissioners (BOCC) that this was the best path to follow.  The BOCC provided the necessary funding.  We signed the contract to implement their software on county owned hardware in 1998. 

 

It was my original plan to have our software consultant, Allan Shafton (Good Turns Software) develop our own in-house administrative software system.  It was to be compatible and integrated with RealWare.  That arrangement did suffice for one year, but with significant problems.  Ultimately, the only practical long-term solution was to add the administrative package offered by CCI.  We were experiencing just too much brain damage! 

 

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 Pitkin County and Routt County web products too, respectively. 

 

The web site debuted on 1/1/1998.  At the time, we were the third county in Colorado to offer an on-line ability to search and obtain tax roll data.  Each year I try to add new, user-friendly features.  It is available for your review at www.parkco.org. 

 

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 Miami Beach, regarding the development of our web site.  It is titled, “The Assessor’s Office Website; A Searchable Tool”, if you are interested in that subject too.

 

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 Colorado who employ their products.   I am looking forward to the opportunity to utilize additional applications and modules in the near future.

 

 

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 South Platte river basin.  We have vastly different terrain and topography, from the top of the world to the low lands on our eastern border. 

 

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.  Platte Canyon is small in geography yet has greatest population density.  At the present time, very few vacant land parcels are available for purchase.  The majority of these residents work and commute into the Denver metro area.  The area experiences a high property turn over rate, as people find “living in the hills” doesn’t exactly turn out to be what they had expected.  Or, the daily commute becomes overwhelming, and they move back to the city.  They sell their house to another commuter, and the cycle continues.

 

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 South Park.  Every portion of our county sees workers who commute to employment in neighboring communities outside of Park County.  In this region, most of our commuters travel to Summit County.  They are employed directly or indirectly, in providing goods and services in this destination resort county.  As they continue to move into Park County, (our market is significantly less expensive), they tend to bring along a portion of that “other world” market mindset.  It has definitely affected sales prices in a positive way.  Sales prices, throughout the area, are continuing to increase.  The greatest amount of economic activity is now occurring in South Park.  This trend has continued for the past five years.

 

Vacant land represents 37% of our total value base.  We have over 25,000 vacant, platted parcels, with approximately 22,000 located in South Park.

 

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 Colorado, we must use a minimum of 18 months up to a maximum period of five years.  In each case, the time trend must calibrate to the specific effective date.

 

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 (LVC’s).  Today we continue to use Land Value Calculations (they are still called LVC’s)!  I have provided a listing of our data categories in this presentation. 

 

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 SPSS, the formulas are electronically and seamlessly transferred into their respective RealWare tables.  The mass appraisal applications are then applied to each land parcel.  This is generally accomplished via a mass batch process, by property type or class.

 

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 Park County.  We are generally single-family residences located on generally from one to two acre parcels, serviced by individual well and septic systems.  A total of approximately 250 platted subdivisions are located in the county.  We do appraise approximately 11,000 single-family residential structures.  Residential land and improvements represents 51% of our total tax roll.

 

I honestly believe that there is not one single property which mirrors any other in all of Park County.  Each structure is its own monument and the grand vision of the builder / owner.   I live in a very eclectic county, when it comes to residential structures!   I’ve seen everything from a 120 square foot “fishing shack”, all the way to the finest 12,000 plus square foot custom built “trophy” house(s).  I would volunteer to live in the staff housing if I had to! 

 

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 an advanced SPSS class, taught by Russell Thimgan, last October in neighboring Summit County.  At this week-long session, he suggested that a better approach for us to consider would be to use a longer time frame.  This would provide a larger data set.

 

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 plain old Colorado country common sense!  Why didn’t I think of this before?  We’ve always been taught, the more sales data available in the model, the better the results will be.  Now we have an opportunity to test this theory.

 

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 (AVM), via an on-line service being provided to lenders by an ex-assessor’s office employee!   We’ve been conducting for a couple of decades what the fee world has been discovering in the past five to seven years.  It is to apply mass appraisal techniques, with current time market data driving a SPSS model using MRA techniques. 

 

I’m not an expert at creating MRA models.  I attended this conference two years ago in Reno, my first GIS / CAMA event.  I believe it was the best conference I have ever attended.   I was very impressed by each of the presentations I saw.  I know most of the people attending this conference are far more knowledgeable and wiser than I am, regarding this subject.  I am in awe of their talent and skills, which are surrounding us this week.

 

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.

 

 

10.           Acknowledgments

 

 

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 Park County.

 

I certainly want to further recognize, and to publicly express my heartfelt admiration, trust, and confidence in our Modeling Crew; Chief Deputy Kristy Gould, Appraisal Coordinator Karen James, and Data Quality Control Administrator Pat Anderson.

 

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 Craig Barraclough, Park County GIS Coordinator for also attending this conference, and his assistance!  He is also a tremendous asset to our county.  His vision and knowledge have helped us actually see the light at the end of the tunnel, regarding our GIS applications.  He too provided digital photos from atop the Continental Divide used in the live presentation.

 

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 of South Park used in the live presentation.

 

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 southeastern Colorado, we haven’t done too badly for a bunch of flatland country boys!

 

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!