** OF ^ STATE AND LOCAL GOVERNMENT \v - Sp ecial Studies No. 72 U.S. DEPARTMENT OF COMMERCE BUREAU OF THE CENSUS Digitized by the Internet Archive in 2012 with funding from LYRASIS Members and Sloan Foundation http://archive.org/details/statelocalratioOOunit STATE AND LOCAL GOVERNMENT Special Studies No. 72 State and Local Ratio Studies and Property Assessment Issued August 1975 Sr *T Ci O' *" U.S. DEPARTMENT OF COMMERCE Rogers C. B. Morton, Secretary James L. Pate, Assistant Secretary for Economic Affairs BUREAU OF THE CENSUS Vincent P. Barabba, Director BUREAU OF THE CENSUS Vincent P. Barabba, Director Robert L. Hagan, Deputy Director Shirley Kallek, Associate Director for Economic Fields GOVERNMENTS DIVISION Sherman Landau, Chief ACKNOWLEDGMENTS This report would not have been possible without the cooperation of State officials having responsibilities in assessment administration, and of assessors and other local officials. Their assistance is gratefully acknowledged. The report was prepared in the Governments Division by the Taxation Branch headed by Earle B. Knapp, under the general supervision of John R. Coleman, Assistant Division Chief for Economic Statistics. John O. Behrens supervised the entire project and wrote the text. Marshall W. Moore provided technical assistance. Maurice Criz, Senior Staff Advisor and former Assistant Division Chief for Economic Statistics, played an important part in developing and implementing the survey. Survey responses were tabulated by the Special Support Staff, headed by Ella Thomas. Publications Services Division provided advice and service in preparation of copy for publication. Publication copy was prepared in the Governments Division under the supervision of Helen D. Files. Library of Congress Catalog Card Number: 75-60080 SUGGESTED CITATION U.S. Bureau of the Census, State and Local Ratio Studies and Property Assessment, Series GSS No. 72, U.S. Government Printing Office, Washington, D.C., 1975 For sale by the Superintendent of Documents, Government Printing Office Washington, D.C. 20403 - Price $1 .70 CONTENTS Page Introduction 1 The Assessing Environment 1 Nature and extent of property taxes 1 Assessing-the function and its organizational setting 1 Objectives of assessing 2 Ratio studies 4 Improvements in assessing 5 Burden differences and zero dispersion 6 State Ratio Studies 6 General features 6 Types of ratios derived 7 Characteristics and methodology 8 Nature of the sample 9 Selection criteria 10 Statistical measures derived 11 Uses of State ratio study findings 14 Ratio Studies By Local Jurisdictions 15 General features 15 Characteristics and methods 15 Statistical measures derived 16 Purposes and implementation 16 Transfer Taxes and Recordation Requirements 16 History 16 Coverage 17 Rates and revenue 17 Implementation 17 Enforcement 18 Table 1. Number of Primary Assessing Jurisdictions, by Type of Government, by State: 1974 19 2. Scope of State Ratio Studies 20 3. Jurisdictional Classifications for Which State Agencies Derive Ratios, by Status of Ratio and by State . . 21 4. Area Locations for Which State Agencies Derive Ratios, by Status of Ratio and by State 21 5. Property Use Categories for Which State Agencies Derive Ratios, by Status of Ratio and by State 22 6. Major Characteristics of State Ratio Studies .' 23 7. Categories of Sales or Other Transfers of Property Excluded From State Ratio Studies 25 8. Statistical Measures Derived, State Ratio Studies 26 9. Use of Ratio Findings Contained in State Ratio Studies 27 10. Scope of Ratio Studies Conducted by Local Jurisdictions 28 11. Intra-Area Classifications for Which Selected Local Jurisdictions Derive Ratios, by Jurisdiction 29 12. Property Use Categories for Which Selected Local Jurisdictions Derive Ratios, by Jurisdiction 31 13. Major Characteristics of Ratio Studies Conducted by Local Jurisdictions 33 14. Categories of Sales or Other Transfers Excluded From Ratio Studies Conducted by Selected Local Jurisdictions 35 15. Statistical Measures Derived by Selected Local Jurisdictions as Part of Ratio Studies 37 16. Purposes and Implementation of Ratio Studies Conducted by Selected Local Jurisdictions 39 17. State Transfer Taxes and Recordation Requirements 41 18. Transfer Taxes and Recordation Requirements of Local Jurisdictions 42 CONTENTS— Continued Appendix A. State Legal Standards for Property Assessment 43 Table 1. Legal Basis for Assessed Value of Realty, by State: 1975 43 Table 2. Legal Basis for Assessed Value of Selected Classes of Tangible Personal Property, by State: 1975 . . 47 Table 3. Provisions for Assessment of Property for Agricultural, Open Space, and Associated Explicit Uses, by State: 1975 50 Appendix B. Selected References 55 Part 1. Official Recurring Reports (From State Government Agencies Unless a Local Government Source is Specified) 55 Part 2. Reports of Special Commissions or Other Agencies 57 Part 3. Selected General References 58 INTRODUCTION THE ASSESSING ENVIRONMENT Because ratios are an integral element in assessment administration in the United States, a natural intro- duction to discussing them is a summary of the total assessing environment. Nature and extent of property taxes That environment exists because of property taxes, levies within the power of 66,000 primarily local units of government throughout the country. Even though other revenue sources attract increasing attention, prop- erty taxes still dominate local structures, and still exert regressive burden effects despite a surge of relief measures and new insights into property tax incidence. The dominance has been moderating proportionately in recent years, but annual revenue aggregates keep increasing in absolute terms, as table A indicates. Thus, for calendar 1974 revenue from local property taxes amounted to $48.1 billion, $15.6 billion higher than the amount collected 5 years earlier. That amount, $32.5 billion, represented 86.0 percent of local tax revenue in 1969, 3.9 percent (or 3.2 percentage points) higher than the corresponding proportion of 82.8 percent repre- sented by the $48.1 billion for 1974. The 5-year increase of 48 percent in annual collec- tions underscores a new sensitivity to property tax burdens, and to who bears them. Among elderly families in 1970, for example, real property taxes amounted to 15.8 percent of family income for those receiving $2,000 or more per year. Corresponding percentages for groups under 65 were 18.9 percent and 2.9 percent, respectively. 1 One result has been an emphasis on tax relief, an objective that can be quite compatible with though not necessarily dependent on reforms which promote assessment uniformity. Assessing-the function and its organizational setting Amounts payable as property taxes result from the application of the applicable tax rate, or combination of rates, to assessed values. The public function which includes discovery, listing, and valuation of taxable property is called assessing. It is the appraisal of property on a mass basis. Such appraisal or assessing is the estimation of value as of a specified date at the "highest and best use" of the property involved. "Highest and best use" is generally regarded as the one most congenial to the site and likely to result in the optimum net return, actual or imputed, to the property owner from investment in the property. It may be and often is, but need not be, the same as "zoned use" and 1 Special tabulation of U.S. Bureau of the Census, relating to data in Residential Finance Survey 1970 and quoted in Property Tax Circuit Breakers: Current Status and Policy Issues, report M-87, Advisory Commission on Intergovernmental Relations, Washington, D.C., February 1975, page 15. Table A. Tax Revenue, State and Local Governments, Calendar Years 1969 and 1974 (Amounts in millions of dollars Item State and local governments State governments only Local governments only 1959 1974 1969 1974 1969 1974 Total, all tax revenue: Amount Percent 82,825 100.0 135,457 100.0 45,059 100.0 77,398 100.0 37,767 100.0 58,059 100.0 Property taxes only: Amount Percent of total 33,356 40.5 49,426 38.5 1,073 2.4 1,366 1.8 32,483 86.0 48,060 82.8 Source: Adapted from material compiled for Quarterly Summary of State and Loc Revenue , issues covering October-December 1969 (GT-69, No. 4, March 1970), and Oc noromhor- 1 Q74 ffVT-74 Nn 4 Ani-il 1 Q7 K *l II S nonaytmont nf Cnrnmarr'a RnvoQii nf December 1974 (GT-74 Washington, D.C icigBei'.-ueceoiDer isoa ^ui-os>, ino . <±, iviaicn iviv/, anu uciouer- 4, April 1975), U.S. Department of Commerce, Bureau of the Census INTRODUCTION "actual use." An important element in appraisal or assessing is judging the extent to which sales price in a given instance indicates, confirms, or otherwise con- ditions differences among the three uses as influences on market value. Appraisal or assessing is the responsibility of a local official whose official title may be "assessor," "audi- tor," "lister," or something else (now "property apprais- er" in Florida, "property valuation administrator" in Kentucky), depending on applicable law. In more than 30 States the official is a county officer. Throughout New England, Michigan, Wisconsin, and in some places elsewhere, the assessor is a city or town (township) official. Three types of assessing organizations predominate in the United States, as follows: County-type assessor system. In this arrangement, initial official responsibility for determining the assessed value of all taxable property in the jurisdiction rests with the county assessor of the area having county-type functions. The county assessor system prevails totally in 31 States plus the District of Columbia, the official involved elected in some places and appointed in others. In 1975 the county-type system applies to New York City and two other areas in New York State-; a majority of areas in Iowa, Missouri, and South Carolina; and a minority of areas in Illinois, and Pennsylvania. Municipalities, school districts, and special districts in a few States may require an assessment function for their own purposes, inde- pendent of the initial official responsibility exer- cised by the county assessing officer. The county- type organization also includes State officials with county or county-type responsibilities in the State administration of local assessing, as in Hawaii, Montana (effective with 1973 legislation), and, beginning in 1975, Maryland. Township-municipal and county joint functioning . In organizations of this type, township or munici- pal assessors, typically elective officials, exercise initial official responsibility, within guidelines or supervisory directions duly constituted county officers provide. This type of organization occurs throughout Indiana, Kansas, Minnesota, New Jersey, and North Dakota, and in those parts of Illinois, Iowa, Missouri, New York, Pennsylvania, and South Carolina not within the county-type classification above. Township-municipal functioning . This type of organization exists in the six New England States (Connecticut, Maine, Massachusetts, New Hamp- shire, Rhode Island, and Vermont), as well as in Michigan and Wisconsin. In these eight States individual township or municipal assessors, elective or appointed, exercise initial official responsibility. The basic unit in any of the organizational types specified above is the primary assessing jurisdiction. By definition, this is one of the contiguous territories (counties or something else) which together occupy the entire area of the State, with each of such units having initial responsibility for determining the tax base for general property taxes levied by local governments and, where applicable, the State government. In 1974 there were 13,516 such jurisdictions, as shown by State in table 1 . Totals for Maryland and Montana still include counties (and Baltimore city in Maryland) as the primary assessing jurisdictions, even though assessors in Maryland have been State employees since July 1, 1974. and assessors in Montana agents of that State's Depart- ment of Revenue since July 1, 1973. Classification is based on interpretation of applicable statutes and responses to the survey questionnaires. The 1974 total is about half the number of primary assessing jurisdictions existing 35 years ago, as table B indicates. In 1940 there were 26,304, two-thirds of which consisted of predominantly small townships. By 1965 combination and absorption of small districts had reduced the overall total to 14,496. Since that time almost 1,000 more jurisdictions have disappeared or merged with other units. Objectives of assessing Assessing is regarded as well done to the extent that values resulting from it are uniform, at the level prescribed in governing constitutional provisions and statutes. In one-third of the States, that prescribed level is market value, or something of the same meaning otherwise expressed. In the remainder of the States constitutional provisions or statutes, or both, specify one or more levels or relationships to market value for all or specified types of property. A summary of State provisions is contained in Appendix A, table 1 for realty and table 2 for tangible personalty. A further compli- cation in recent years is the extent to which applicable law requires assessing at the value for an explicitly specified use, in addition to or as a substitute for assessing at market value. A summary of such laws is contained in Appendix A, in table 3. 2 The level of value evident in assessed values of local jurisdictions is important for several reasons. Perhaps the most significant is the use of jurisdictional aggre- gates as bases for the apportionment of State aid. notably for public elementary and secondary education. 2 For a recent study of such provisions, see Use-Value Farmland Assessments: Theory. Practice, and Impact by Robert J. Gloudemans, International Association of Assessing Officers. Chicago, 111., 1974. INTRODUCTION If each aggregate represents the same level of value, no distortion results from using it as a basis for calculating the jurisdiction's entitlement. If jurisdictional value levels differ, however, State aid distributions will be affected in ways contrary to their purpose unless aggregates are "equalized" to a common level prior to calculation of aid allocations. 3 Within each jurisdiction it is also important for equity that individual values be uniform with respect to each other at the particular level in fact attained. Indeed, for 3 The "relative fiscal capacity" indications evident from equalized values have received attention from policy makers and analysts for a long time. Some authorities believe that equalized values are a "better indicator than resident income of the relative fiscal capacity" for within-county areas, and perhaps for entire counties. See Monitoring Revenue Sharing by Richard P. Nathan, Allen D. Manvel, and Susannah E. Calkins, The Brookings Institution, Washington, D.C., 1975, especially chapter 6, pp. 135-177. Table B. Number of Primary Assessing Jurisdictions, by Type of Government: 1940, 1965, 1974 Type of government All types, Counties 2 , Municipalities 3 , Townships 4 , Other 5 , 26,304 1,956 4,313 17,625 2,410 14,496 2,512 2,028 9,953 2,555 1,968 8,991 2 Source for 1940 data (48 States): Assessment Organization and Personnel National (now International) Association of Assessing Officers, Chicago, Illinois, August 1941, page 38. Source for 1965 data: Primary Assessing Areas for Local Proper- ty Taxation , State and Local Government Special Study No. 50, U.S. Department of Commerce, Bureau of the Census, Washington, D.C., page 6. Source for 1974 data: Table 1. 2 Includes county-equivalent cities, or city-county consolidations; parishes in Louisiana; boroughs in Alaska (1965, 1974). 3 Includes city-equivalent towns, villages, and boroughs, as in Connecticut, New Jersey, North Dakota, Pennsylvania, South Dakota, and Wisconsin. 4 Includes towns in New England States. 5 For 1940 includes 859 city wards; 439 school and civil districts; 1,112 unorga- nized areas. intrajurisdictional uses of values, uniformity at the level attained is deemed more important, at any given moment, than attainment of the level legally prescribed. If individual values are widely dispersed around a level instead of uniformly related to it, taxpayers owning properties essentially equal in market value will pay unequal amounts of tax, solely because of assessment disparities. Nowadays, of course, unequal amounts of tax may in fact be payable for properties equal in market value, even where no assessment disparities exist, as later discussion of burden differences and zero dispersion points out. The concern here, however, is tax difference attributable to dispersion, a factor amenable to amelioration within the assessing process. The distinc- tion is important, for while equitable assessments remain an essential goal in many places, their achieve- ment may still leave other equity issues unresolved. Though both fall well short of perfection, the two indicators of market value with greatest acceptance are sales and appraisals. Of the two, sales prices are preferred whenever their frequency and discernible characteristics of comparability can support subsequent calculations and analysis. In the type of study now most familiar, sales prices and assessed values are, respec- tively, denominators and numerators for fractions expressed in percentage terms as assessment-sales price (also called "assessment-sales") ratios. They, or corre- sponding assessment-appraisal ratios, constitute the basic data for the "ratio studies" conducted by State and local governments in order to accomplish, or at least promote, interjurisdictional and intrajurisdictional assessment uniformity, for the purposes of aid alloca- tion or assessment correction suggested above. Such ratio studies are the subject of this report. They encounter conceptual challenge currently, even as general acceptance has increased. Because assessment- sales ratios "cannot be assumed to be normally distrib- uted," 4 the desirable measure of uniformity in any given grouping of such , ratios is one implying no prerequisite assumptions about distribution. The stand- ard deviation and its related coefficient of variation 4 Gloudemans, Robert J., "Analysis of Census Assessment- Sales Data," International Association of Assessing Officers, Chicago, 111., April 1975, page 15. This is a working paper prepared as part of a survey of assessment practices conducted by IAAO under contract with U.S. Department of Housing and Urban Development, Office of Policy Development and Research. For discussion of sales-assessment ratios, see "The Common Level of Assessment in Property Taxation," by a principal proponent, Mr. Pao Lun Cheng, National Tax Journal, March 1970, pp. 50-65; also by Mr. Cheng, "A Reference Model of Assessment Uniformity," paper presented at the 39th International Con- ference on Assessment Administration, International Association of Assessing Officers, Miami Beach, Florida. November 6, 1973; "Measurement of Valuation Accuracy," by James E. Reinmuth, Assessors Journal, October 1974, pp. 3-15; and "Sales Ratios and Property Tax Regressivity" by Theodore R. Smith, Journal, October 1972, pp. 25-42. INTRODUCTION both rest on assumptions that the data being measured are normally distributed. When such assumptions are in fact correct, the standard deviation has the advantage of making possible mathematical testing for reliability. When the assumptions cannot correctly be made (as is more often the case with assessment-sales ratios), the coefficient of dispersion is deemed the better measure of uniformity, since nothing is assumed beforehand about the nature of the data distribution. Some now advocate the use of sales-assessment ratios in order to identify the common or de facto assessment level. Briefly, the probability of any two parcels A and B being sold within the same percentage of respective fair cash values is held to be the same, with each relative price (sales price divided by fair cash value) thus part of a normal distribution measured by a common standard deviation. Relative price becomes a sales-assessment ratio if the applicable assessed value (denominator) is understood to be the product of fair cash value times the assessment level (called the "uniform assessment factor"). The reciprocal of the sample mean of observed sales-assessment ratios may then, under certain circum- stances, be an unbiased estimate of the uniform assess- ment factor. This would give way however, in circum- stances inconsistent with "reasonable" dispersion to use of the mode among ratios, or some other criterion, as a basis for identifying a de facto level and the extent of dispersion present. Though it has attracted considerable attention, the sales-assessment ratio has not become a common measure among most State and local ratio studies. The assessment-sales ratio and the coefficient of dispersion retain general acceptance. Ratio Studies On the basis of originating source, there are four types of property assessment ratio studies, those from the three levels of government, and those from the private sector. State government studies are associated with one or both of two major objectives, the achieve- ment of equalization among local jurisdictions as a condition for State aid apportionment, and the promo- tion of more uniform assessed values among and within local assessing jurisdictions, as an achievement necessary for improved assessment administration and more equi- table property taxation. Thus, State studies measure de facto assessment levels at a given moment, as a first step in adapting them for use in distribution formulas, or as a preliminary to corrective change in individual assessed values. Studies by local governments are also aimed at expeditious correction of individual assessed values in particular neighborhoods or throughout a jurisdiction. They are likely to be specifically directed as well, however, at components of local administration: The discovery of property groups, classified by location or use, requiring an updated value calculation ("reap- praisal" or "reassessment"), the evaluation of "mass appraising" methods, and the measurement of assessor performance. Increasingly, local studies have become useful elements in the initial valuation process, in contrast with the "oversight" or "review" orientation of more traditional ratio study applications. In this context selling prices are the starting points in assessed value calculation, changing places with reproduction or re- placement costs as the assessor's basic value indicating data. This presumes requisite frequency of sales among the property types affected, a constraint influencing if not inhibiting ratio studies of all kinds. The only study of national scope is the quinquennial taxable property values survey carried out as part of the Census of Governments in each year ending with 2 or 7. A central purpose of this survey is presentation of as much empirical data as is possible on values assessed for purposes of local general property taxation, in compli- ance with title 13 of the U.S. Code. Since national and other aggregates of assessed value contain the influences of diverse assessment levels, it is helpful to any understanding or use of such totals to have an indication of what jurisdictional and other components of assessed value mean in relation to the level of the market. The ratio study provides such indications. Privately conducted studies have become significant in some parts of the country, especially in places where States do not yet carry out this function. Activating sources may be industry groups, nonprofit research organizations, or for nonrecurrent studies, university institutes, or individual researchers. Obviously there are great differences in purpose and scope. Within such variations, however, certain charac- teristics of ratio studies can be noted: 1 . Sensitivity to statistical principles. This may be more aim than achievement, since individual studies range from minimum to adequate in resources used, and from elemental to esoteric in sophistication attained. There is, at the least, intui- tive awareness of rudimentary statistical concepts. More ambitious efforts provide confidence intervals, regression coefficients, and the like for compre- hensive classifications of data. In most studies the following are vital considerations: a. The need for representative data. If the entire universe of sales is not initially used, a pattern designed to yield a representative sample is recognized as essential. Sales and other transfers not qualifying as "arm's length" transactions are excluded. b. The importance of classifying data in reasonable ways, for discovery of disparities and for subse- quent analysis. INTRODUCTION c. The relative merits and demerits of the various measures of central tendency, as indicators of de facto assessment levels. d. Distinctions among dispersion indicators. While the coefficient of dispersion has widest accept- ance, the standard deviation and the coefficient of variation are also getting increased attention, reflecting in part an aim to produce measurably reliable results, if possible. 2. Specified timing relationships. Essentially the objects of study are sales prices (or appraisal estimates) as of a given date, and assessed values as of a given date. If the assessed values are those of the official valuation date immediately preceding sales occurrence, ratios will indicate the composite of two influences: Differences between the way in which the assessor and the market, respectively, account for the same value components, and differences between value components con- sidered by the assessor and those considered by the market. A basic assumption is that the assessed value as of the valuation date immediately preceding the sale will incorporate all value components prescribed, directly or by implication, in applicable statutes. These will be the same as the value components in the market, unless statutes call for stated levels of full value, or values based on a specified existing use (e.g.,, open space), instead of highest and best use. Thus, ratios ranging down from 100 percent become the governing statutory standards against which ratios expressing the relationships applicable for enumerated sales can be compared. To the extent that the latter ratios fall below the standard, they indicate things considered of value by the market but not by the assessor. For ratios at a level above the standard, the opposite is true. Many State studies, and local studies as well, use assessed values as of the valuation date immediately preceding the sale. In some studies, however, both at State and local levels, the valuation date for the assessed values used precedes some sales and follows other sales, or is immediately subsequent to all sales. The report of the 1972 study in Minnesota, for example, states: The assessment-sales ratio survey is based upon the latest assessor's estimated market valuation as related to the purchase price of properties sold for the most current 3-year period. .. .The 1972 assessment-sales ratio study is based upon the purchase price of arms-length transactions for 1970-72 as related to the assessor's 1972 estimated market value. The assessment-sales ratio study, then. . .is a 3-year average of sale prices as related to the assessor's market value. 5 Whenever there is use of assessed values as of a valuation date subsequent to the sales price, the possibility exists that the sale itself has acted as a stimulant to, or is at least a factor in, a review of the assessed value involved, together with modification if needed. Thus the adjusted assessed value becomes the one used in the ratio study. To the extent that this happens, the study yields a measurement of a dual or multiperiod level rather than a static, preexisting assessment level. Some believe such results not only promote sensitivity among assessors to market influences but also present a longer run view of assessment levels, with benefit (in that view) to use of resulting ratios in aid distribution formulas. Others regard them as directly contrary to ratio study purposes. The important point, perhaps, is that the unit of government conducting a study use the same basis for all jurisdictions involved. Improvements in assessing Ratio studies, long considered fundamental tools in any renascence of the property tax, occur today in a setting marked by equally fundamental developments. The studies became necessary in the first place because actual assessment levels so often resembled those prescribed in statutes only by coincidence. The reasons for fractional assessing interlaced with disper- sion are numerous. They include a tantalizing quest for "stable" values safely immune from the reaches of market volatility, and the "workload compromise" which substituted fractional assessing of jurisdictional segments over a multiyear cycle for the usually impossi- ble job of annually assessing each taxable parcel as nominally required by law. With technology available today, however, it has become feasible to accomplish that result, even in large jurisdictions. Moreover, it is also feasible to complete that still considerable task at the market level. Both objectives become realistic if there are enough human and other resources, including access to automated data processing, not only for record-keeping and sales processing functions, but for valuation as well. The latter can occur through use, practical only with computers, of a technique called multiple regression analysis (MRA). 6 This makes possible the use of known data (previously recorded realty sales, plus known characteristics of all such properties) to estimate unknown data (market values of unsold properties-i.e., most of those in any jurisdiction, in any given year). An 5 1972 Real Estate Assessment/Sales Ratio Study, State of Minnesota Department of Revenue, St. Paul, Minnesota, page 9. 6 For an excellent treatment see Hie Application of Multiple Regression Analysis in Assessment Administration, International Association of Assessing Officers, Chicago, 1974. Fundamentals are summarized in the introduction, by Robert J. Gloudemans. INTRODUCTION essential preliminary in MRA is assembling a data file, including details of valid sales plus physical and fiscal information on property. The latter data items are "independent" variables which are "regressed" on the sales data, the "dependent" variables, to produce value estimates for unsold properties. At present MRA works well for residential realty, where sales occur with sufficient frequency. Because such property constitutes the major single component of taxable realty in most places, assessing it takes a substantial amount of time. Any contraction in that amount makes time available for appraising more complex commercial and industrial parcels. MRA has, in several local jurisdictions, become the key to the value-predictive ratio study mentioned earlier. Such studies are part of arriving at assessed values rather than examining those already existing. Annual assessing, buttressed by annual State and local ratio studies, can be expected to end dilemmas presently implicit in some of the statutory framework. Commonly the basis for assessed values is market value, or a percentage of market value, as of a stated date. At the same time, an assessment cycle 7 may be specified, extending over periods of 2 to 8 years in almost a third of the States. Indiana, for example, specifies "just valuation" as the basis, as of March 1 each year. Statutes in Indiana also provide for a reassessment cycle of 6 years. Though annual changes in assessed values are possible, the extent to which a given assessment roll contains values based on the market as of March 1 in any nonreassessment year can be well short of sub- stantial, especially with markets as dynamic as those recently. Unless a State's "reassessment cycle" makes it possible for each assessed value to reflect market influences existing on each of the annual valuation dates within the cycle, full compliance with a market value assessment standard will be occasional at best. In any event, ratio studies are often vital elements in assess- ment cycles. Burden differences and zero dispersion As ratio studies have become more sophisticated, property taxes have become more complex. Assessed values for properties equal in market value may be identical (perfect uniformity), yet tax burdens attrib- uted to the individual properties can differ substantially. The reason can be a burden influence other than dispersion, quite beyond ratio study effect. Examples include differences in legal classification, property tax relief measures, and specific use emphasis. Classification distinctions affect realty in the eight States 8 which have, or eventually will have, separate, legally prescribed assessment levels for specified types of real property. Several additional States classify partic- ular categories of personal property. The most familiar property tax relief measure is the "circuit-breaker," now existing in half the States. Under a typical type, when property tax exceeds a specified percentage of taxpayer's income, a tax credit or rebate of the excess goes into effect. Thus, in Vermont, if the effective tax rate is 3 percent of sales price, and two identical homes are assessed at $20,000 each (full market level, property tax $600 each), the qualifying owner with (household annual) income of $600 will pay a net of $270 in property taxes, half the amount paid by a qualifying owner with income of $10,800. Without the circuit breaker, such differences in burden would imply an assessed value difference of 100 percent for identical properties. Specific use emphasis refers to requirements in the laws of 38 States (see Appendix A, table 3) for assessing at an actual, stated use (usually agricultural or "open space" use). Resulting values may be very different from what the property would be worth at "highest and best STATE RATIO STUDIES Findings concerning State ratio studies appear in tables 2 through 9. Observations about scope, charac- teristics, uses, and the like follow, all based on responses to a questionnaire survey conducted for this report, (augmented by telephone interview as deemed neces- sary) and on reference to applicable legal provisions and published materials. General features The survey reveals that ratio studies now occur on a regular basis in 36 States, as table 2 indicates. A study 6 years ago by the Bureau of the Census indicated that four additional States conduct studies, namely, Indiana, Missouri, Oklahoma, and South Carolina. 9 Presently Indiana and South Carolina collect data on sales and may also carry out appraisal activity, but they under- take no ratio studies on any regular basis. 1 ° In Missouri the State Tax Commission arrives at the equalized value of taxable realty and tangible personalty among the counties (and the city of St. Louis) by using abstracts of 7 An assessment cycle is the time period during which the assessing official responsible is expected to reassess, or review in detail (sometimes as a consequence of mandatory physical inspection), each taxable property in the jurisdiction. 8 The States are Alabama, Arizona, Illinois (Cook County), Louisiana (in 1°78), Minnesota, Montana, Tennessee, and (by rate limit) West Virginia. 9 Property Assessment Ratio Studies, State and Local Govern- ment Special Studies No. 52, U.S. Department of Commerce. Bureau of the Census, Washington, D.C., undated, pages 1 and 8. 1 "Legislative proposals providing for annual studies are re- ceiving attention within each State. INTRODUCTION assessed values and abstracts of sales prices supplied by county clerks and the St. Louis City assessor. 1 ' Ratio studies as such, however, do not take place at the present time. In Oklahoma, ratio studies were discon- tinued in 1970. 12 What may have been the first study occurred in California in 1880 as part of an intermittent series which ended in 1909 and did not resume annually until 1955. Oregon and Virginia began this work in 1913, while Kansas, Kentucky, and Wisconsin followed two decades later. Only during the last 25 years, however, has significant expansion taken place. After New York and Washington initiated studies in 1951, eight States followed in the subsequent nine years, and 12 more States began during the 1960's. Since 1970 Alaska, Florida, and Nebraska have joined the group. In 28 of the 36 States studies recur annually. Arizona and Ohio do the job every 6 months. The particular frequency is not necessarily related to the length of time over which sales are accumulated. This latter period is 1 year in each of 21 States. In Ohio it is 6 months. Five States prefer a sales period of 2 years, and eight others use 3 years. Pennsylvania reports that sales occurring within 5 years of each annual study are included. Among eight out of 34 reporting States, ratios resulting from a study in a given year are averaged with those for one or more prior years, as a procedure related to certain uses of the ratios. The eight States are California, Illinois, Maryland, New Jersey, New York, North Dakota, South Dakota, and Wisconsin. Most of the States conducting studies publish the results. The present survey revealed this to be the practice in 26 States (see table 2). An additional State, Iowa, publishes "in part," and seven States make results available to the public on request, by means of correspondence or something similar, but other than publication. These findings differ in some respects from those of the earlier Census study, in which 30 States are reported as publishing reports. Two of the States, Indiana and Oklahoma, do not conduct studies at present, while in two others, Georgia and Hawaii, results are now obtainable by the public, though not published. Money spent for ratio study activity has increased since 1969, but the range among States which have figures available remains vast. In the present survey annual amounts spent varied from $5,000 in South Dakota to $5.5 million in New York. This contrasts "Missouri Revised Statutes, Title X, Chapter 138, Section 138.390. 12 The legal standard for assessment of realty in Oklahoma is now 35 percent of fair cash value, at the "highest and best use" for which the property "was actually used" or "was previously classified for use. . ." during the preceding year. Oklahoma Statutes, Article X, Section 8. with variations 6 y ear s ago extending from $2,000, reported by West Virginia, to $3 million in New York. Thirteen States reported that no figures were available for 1974, three more than those reporting in similar fashion for 1 969. The following summarizes some of the larger amounts of cost incurred, as indicated by the two surveys: State 1969 1974 Thousands of dollars 3,000 1,250 (*) 412 100 200 5,500 California Florida 1,839 900 625 Washington Georgia. 525 325 Did not conduct studies. It is important that caution attend any interpretation of cost data reported. What they contain and what they omit will vary substantially among States. If the activity proceeds as part of an overall responsibility of the agency involved, it is not always possible to identify segments associated with ratio studies. Types of ratios derived Ratios like values invite classification on a variety of bases, for operational and analytical purposes. To indicate classification according to underlying status, respondents to the survey were asked to designate ratios derived as "officially found" or "unofficially calcu- lated." Those officially found are ratios computed to satisfy prescribed requirements associated with publi- cation, an aid formula, or similar purpose beyond internal analysis. Ratios unofficially calculated are those deemed helpful for internal analysis. Within the above framework, respondents classified most ratios as officially found, as the summary in table C, and the details in tables 3 to 5, clearly demonstrate. In some States statutory prescription establishes the "official" status of the ratios affected. California, for example, requires that its Board of Equalization appraise a representative sample of locally assessable property in each county at least triennially to determine the "total full value" of such property. After oppor- tunity for examination of preliminary tabulations by local assessors, and consequent adjustments, the board "shall publish the ratio of assessed to full value of all locally assessable property for each county and for the State." 1 3 It should be noted that California considers 3 See California Statutes, Revenue and Taxation Code, Sections 1815 to 1903, especially 1819. The legal standard for assessed value in California is 25 percent of full value (section 401). INTRODUCTION only the overall ratios for each county, and for the State, as officially found (see tables 3 and 5). Other ratios, for specified property use categories, are classi- fied as unofficial. In Kansas, statutes go further. Each year the director of property valuation "shall determine, as nearly as possible, the sale price of each tract or piece of real estate and the ratio of the assessed valuation to the sale price. . ." Then the director arrives at the average ratio for, respectively, urban realty, rural realty, and "each classification of property and for all classes combined in each county." The director's annual report, "published as required" includes county ratios of urban. . .and rural real estate" and for the other classifications of property used in the State. 14 Table C. Indicated Status of Ratios for Selected Classifications, by Numbers of States: 1974 Classification Offi- cially found Unoffi- cially calcu- lated Jurisdictions : 13 26 19 7 11 12 5 4 11 15 22 16 16 25 21 24 18 5 2 6 6 6 6 3 4 1 1 Area locations: Urban, entire area Neighborhoods Suburban 1 1 1 1 Property use categories: All realty, as one group. Residential, all Single-family Multif amily Commercial 1 2 4 4 4 4 Agricultural Vacant land Timberland 3 5 3 3 Other 3 2 assigned the State agency involved. In Minnesota the equalization aid review committee 15 is empowered to "review the assessed valuation of the districts of the State." If "reasonable evidence" exists that assessed values are not based on market values, the department of taxation can take the steps necessary to ascertain the market value. The department, which is the agency conducting ratio studies, reports the assessed value of each county annually to the committee. Utah provides another example where some of the ratios are considered officially found, without specific reference to such ratios in the statutes. The latter contain general powers and duties of the State Tax Commission. Thus, classifications as to status in tables 3 to 5 reflect interpretations based on assigned responsi- bilities, as well as exphcit statutory content. Among jurisdictional classifications, county ratios are the most frequent, resulting from studies in 29 States. There are ratios for municipalities in 23 States, for townships in 12 States, and for school districts in 8 States. A third of reporting States provide ratios on an urban and rural basis. Four among that group carry the urban coverage down to individual neighborhoods. As the impact of computerization intensifies, this intra- jurisdictional concentration is likely to spread further. As table 5 indicates, major property use classifi- cations for which States compute ratios include resi- dential (24 States), commercial (29 States), industrial (25 States), agricultural (27 States), and vacant land (23 States). Characteristics and methodology State ratio studies use three types of value indica- tors: sales prices, appraisals, or a combination of the two. A sales price is the amount, expressed in terms of money, which the transacting parties mutually agree the property in question is worth at the time of ownership transfer. In the usual absence of anything better, it is thought to be the best indication of market value. 16 Sales prices comprise the basic data for ratio studies in 1 9 States, as shown in table 6. An appraisal is an opinion from a specialist of the amount of money which represents market value of the property involved. 17 On the other hand, Minnesota (tables 3 and 5) exemplifies a situation where ratios are considered officially found, within the implications of duties 4 Kansas Statutes Annotated, Section 79-1437. 1 s Consists of commissioners of education, administration, and taxation. See Minnesota Statutes, Chapter 124, Section 124212. 16 Market value of property is generally regarded as the amount of money which a willing, knowledgeable buyer would, in practical circumstances, pay to a willing, knowledgeable seller to acquire the property in a transaction free of duress for either. 1 7 The appraisal is usually in writing. It incorporates attention to all factors and approaches held to be relevant to the circumstances, including what the property cost, what loss in value (depreciation) it has sustained, if any, what income it will earn, and what sales prices similar properties have commanded. INTRODUCTION Three States use appraisals, not sales prices, in con- ducting ratio studies. They are Arkansas, California, and Florida. In another 14 States which participated in the present survey, a combination of sales prices and appraisals is used. Resort to appraisals often comes about because sales of particular types of property do not occur frequently enough to sustain valid statistical inferences. This is especially the case with commercial and industrial realty of specialized or composite types rarely transferred and in any event, not easily separated from total business values that may include machinery, fixtures, and goodwill. Most State studies are, in practice, cooperative efforts of State and local officials, at least in data assembly phases. As table 6 indicates, local recorders and assessors often provide the sales prices, sometimes in accordance with procedures specified by statute. This is one among several activities involving assessment administration which demonstrate that its enhancement is usually a product of State-local cooperation. Nineteen of the 36 States conducting studies report initial use of all sales occurring during the survey period. Seven others began, in their most recent studies, with a sample of sales ranging from 20 percent to 95 percent. Unless statutes compel use of all sales (as in Kansas, for example), the choice for any State is associated with the objectives sought and the resources available. There is considerable agreement among the State agencies about which sales to exclude immediately, as table 7 indicates. Anything qualifying as a forced sale, for example, is not deemed an "arm's length" trans- action. Thirty-two States report that such sales are removed. Transfers between relatives are in the same category, the rationale being that any price shown will probably differ from that likely in a sale between unrelated parties. Certain States indicate in procedural memoranda that sales involving governmental units and nonprofit private organizations may in fact be valid value indicators. The analysis necessary to confirm this is undertaken, however, only if other types of sales are insufficient for study purposes. these States (Idaho, Nevada, New Jersey, North Dakota, Oregon, and South Dakota) also interview the parties, in person or by telephone, if it is necessary to verify sales prices. One verification method of increasing significance is recourse to transfer tax and/or recordation documen- tation, now a possibility in 23 of the 36 States conducting ratio studies (see tables 6 and 17). A frequent requirement of real property transfer taxes, discussed in greater detail below, is presentation of an affidavit or declaration containing the sales price, at the time the deed of conveyance is recorded. In some States the document takes the form of a legal affidavit, or sworn statement, subjecting whoever signs it to penalties for perjury for any false statements it contains. In other instances the declaration required does not qualify as an affidavit, but may nevertheless give rise to penalties specified by statute for any violation of requirements. Nature of the sample Ratio study source data comprise only a small part of a value-indicating universe, even when all sales are initially included. The number of properties being sold in a given time period is a small fraction of the Nation's property inventory. A recent estimate, based in part on Census of Governments data from 1956 to 1971, placed the annual turnover rate "between 5 to 10 percent of total parcels". 1 8 Except in Arkansas, California, and Florida, ratio studies depend entirely or primarily on sales, and thus begin with the assumption that properties which sell, a market-selected group, reveal information useful to judgments about the universe of taxable property. Sales are a sample of that universe, or at a minimum, that part of the universe subject to market transactions. Even in the three States cited, of course, sales are a very important factor in the studies, since appraisals reflect attention to ah value approaches, beginning with any market data available. Screening of sales commonly occurs at three or more stages during the study. The earliest is the enumeration period itself. Nineteen States at least begin the elimi- nation of unrepresentative sales here. Fourteen continue the process during the second stage, verifying sales prices. Minnesota, New Hampshire, and Pennsylvania initiate screening when price verification occurs. There is further elimination during statistical processing in 23 States. As to any sales study using less than all sales, the source data in effect represent a sample of a sample, in terms of the taxable base. Appraisals supplementing the sales used constitute a sample representing that portion of the taxable base (e.g., certain commercial and residential property) rarely transferred as part of a usable sale. States which use appraisals only commonly provide for coverage cycles, with appraisals carried out in a portion of local jurisdictions each year. It is important to verify prices whenever possible, but funds available do not always permit a canvass of transacting parties by questionnaire, telephone, or per- sonal interview. Fourteen States do in fact send ques- tionnaires to one of the parties (usually grantee). Six of 18 Land Title Recording in the United States: A Statistical Summary, State and Local Government Special Studies No. 67, U.S. Department of Commerce, Bureau of the Census, and U.S. Department of Agriculture, Economic Research Service, Wash- ington, D.C., March 1974, page 15. INTRODUCTION Selection criteria In every State the most basic condition influencing the size and composition of the data base used is the amount of funds available. The budgetary constraint is a fundamental element in all studies, in some instances inhibiting the extent to which the State involved can comply with statutory directive (as in Arkansas, see below). Technically, sample size and selection criteria involve stratification. This may occur on the basis of assessed value ranges, property use categories, location, or other factors, including some combination of the foregoing. Because State studies tend to be "individual" in these respects, the following summaries are presented, based on responses to this survey. Arkansas By statute, the Assessment Coordination Division has responsibility for appraising "not less than three percent of the total number of (taxable) real proper- ties in each classification in each county." 19 Classifi- cations include residential, commercial, industrial and miscellaneous. The number of taxable parcels of real property in Arkansas approximated 1,400,000 in 1974. In fact, resources permit 3 percent coverage for one-fifth of the 75 counties each year. There are 1 7 field appraisers among a staff of 28 people. During the noncoverage parts of the 5-year cycle, responsi- bilities for counties affected are carried out by reference to the most recent (i.e., "active") appraisals on file. In each of 1973 and 1974, the appraisers completed approximately 13,500 realty appraisals. In addition, for 1973 appraisers and other staff checked 33,488 personal property assessments, conducted one assessor training school, and provided consulting assistance to local assessors as requested. Total cost for that year (1973) amounted to $470,000. A summary of active appraisals follows (they include those completed for the 1973 study): Item Appraisals Total Real ty 83,610 50 162 16 047 1 581 203 Rural (including agricultural) Rurban (generally, nonagricul- tural property having some urban and some rural charac- 26,245 6 086 Personal ty 33,448 California The State Board of Equalization completes appraisals in one-third of the State's 58 counties each year. A full value estimate is then projected for 1, 2, or 3 years, for comparison with current total assessed value. For several purposes, 3-year averages of the quotient of statewide ratio divided by county ratio are used. The board stratifies assessments within assessed value ranges, nine on the "secured roll" 20 (real property) and nine on the "unsecured roll." There is a separate stratum for developed petroleum mineral rights. Sample size determination for each county results from consideration of five factors: 2 ' 1. Distribution of assessed values among the several strata, as shown in prior survey for the county 2. Relative amounts of dispersion among assessed values and appraised values, and the ratio of total market value to total assessed value in each of the strata, all as shown in prior survey for the county 3. Cost of appraisals in each strata 4. Total funds available 5. Desired level of reliability in final results, in comparison with those from prior survey for the county. For each county the optimum size sample is distri- buted among the strata in accordance with a formula incorporating three elements for each stratum: The number of assessed values, measures of variance for appraisals and assessed values (from prior survey), and the square root of the relative cost factor (also from prior survey). The second and third elements are separately used for calculation of a weighting factor. The ccst of the study, including the above appraisals, amounted to $1,838,500. Sample sizes ranged from 186 properties in Inyo County to 441 properties in Los Angeles County. '' Arkansas Statutes, Section 84-477. Secured roll is that part of the roll containing State assessed property and property the taxes on which are a lien on real property sufficient, in the opinion of the assessor, to secure payment of the taxes. The remainder of the roll is the "unsecured roll." California Revenue and Taxation Code, Section 10 c ). 2 'Material from Procedure 105, California State Board of Equalization, Intercounty Equalization Division, Sacramento, 1474. INTRODUCTION Appraisals completed as part of the study for the year ending June 30, 1974, follow: Item Realty Pe rsona lty All types 4,776 1,986 1,663 683 335 922 598 252 *1 ,162 129 Single-family only. . . 508 263 195 67 - Represents zero or rounds to zero. *A total of 5,081 appraisals was in- volved, some of which included both realty and personalty. Florida In accordance with specific statutory directive, 2 2 the Assessment Ratio Study Division in the Office of Auditor General appraises property in one-third of the State's 67 counties each year. The division completed work in 21 counties in 1974 (see table D). Twenty-five counties will be covered in 1975, and the remaining 21 in 1976. Sample is based on stratified random selection, with previous year studies providing data supporting relia- bility calculations. Within each county, one stratum is reserved for high value properties, the threshold value distinctive for each county. Other strata are based on property use. Characteristics of individual strata may differ for each county. For the 1-year study period ending June 30, 1974, the division appraised 9,868 properties in 21 counties, as shown in table D. Cost of the work for the year ending June 30, 1974, amounted to $900,000. Maryland Appraisals supplement sales. For its 1974 study, the Department of Assessments and Taxation included 7,000 sales. Appraisals were completed for agri- cultural properties (assessed on a use basis), and for most of the commercial and industrial properties included in the survey. Some residential appraisals also occurred, to the extent time and money were available. A summary of realty appraisals completed follows: Residential Commercial and industrial Agricultural Florida Statutes, Section 195.096. Allocable costs, for the study completed between February and October 1974, are estimated at $55,000. Minnesota The Department of Taxation supplements sales with appraisals, to assure representation for properties infrequently sold. The department stratifies each local roll by assessed value and property use category. For each classification, there must be included three or more properties (sales and appraisals), or at least 1 5 percent of assessed value (market level) total for the classification. Study for 1974 cost $235,000. Nevada Department of Assessment Standards of State Tax. Commission uses sales and appraisals. In each of three categories (urban, rural, and special), the appraisal sample should constitute at least 0.6 percent of the total number of properties in the category. Cost of 1974 study has been estimated at $19,000. Washington Department of Revenue supplements sales with appraisals of properties infrequently sold. In some counties, the department uses appraisals only. Ap- praisal work occurs in one-third of the State's 39 counties each year. Appraisal sample is selected randomly after stratification, within assessed value ranges, for each county. For the 1974 study the department completed 2,057 realty appraisals and 1,742 personalty appraisals. Cost of the study approximated $525,000. Statistical measures derived Any one among three ratios commonly results from State studies to indicate a de facto assessment level. The first is the arithmetic mean of the individual ratios, each of which expresses the relationship between an assessed value and a sales price, or an assessed value and an appraisal estimate. The second is the median ratio, the one with the middle value in an array of individual ratios arranged from lowest to highest. Finally, there is the aggregate ratio, or ratio of aggregate amounts. This is the quotient which results from dividing the sum of assessed values for all properties included in the study, by the sum of market value indicators (sales prices, appraisal estimates, or a combination thereof) for the same properties. As table 8 indicates, the following 1 6 States compute all three of the measures of central tendency described above: Oregon Pennsylvania South Dakota Virginia Washington Wisconsin 770 960 California Minnesota 784 Georgia Montana Idaho Nebraska Iowa Nevada Kentucky North Dakota INTRODUCTION Table D. Number of Parcels, Appraisals, and State-Calculated County Ratios, Selected Counties, State of Florida: 1974 Entire county Strata detail, by type 1 County Numbe r of taxable parcels Number of apprais- als Number of strata County ratio (per- cent) 2 Confi- dence interval (+ per- cent ) 3 Ranges of assessed value 4 Residential Number of parcels Number of apprais- als Number of parcels Number of apprais- als Alachua Broward Collier Duval Franklin Gadsden Hamilton Highlands .... Holmes Indian River. Jefferson .... Lafayette. . . . 34,454 328,219 137,216 183,289 8,072 14,780 6,039 51,390 7,790 43,943 5,293 3,344 264,023 15,987 33,030 174,471 77,823 256,445 25,779 2,515 (NA) 456 639 556 510 423 564 503 463 421 521 384 400 419 527 498 500 445 458 453 316 411 4 5 5 5 4 5 5 6 3 5 5 3 5 5 5 4 4 5 5 3 4 83.0 84.4 90.4 87.5 88.4 85.6 68.6 78.8 46.2 89.7 83.3 76.7 74.5 93.1 90 .7 75.8 72.8 75.9 73.3 76.2 (NA) 1 .7 1 .7 4.3 3.7 4 .7 5.5 2.9 3.6 4.3 1.9 3.3 3.3 6.7 2 .1 3.8 3.3 2 .6 1 .7 4.1 3.9 (NA) 146 297,677 530 179,932 8 3 5 16 (X) 246 16 (X) 295 19 105 1,856 344 1,431 149 (X) 17 45 439 89 480 8 3 5 7 (X) 85 8 (X) 51 10 45 128 36 42 19 (x) 17 27,378 (X) 48,311 (X) 6,480 8,798 2,647 45,776 (X) 14,305 2,282 (X) 229,403 9,982 24,554 115,922 57,145 184,158 17,701 (X) (NA) 192 (X) 193 (X) 192 245 195 188 (x) 166 145 (x) 245 Nassau Osceola Palm Beach. . . Pasco Pinellas Santa Rosa . . . Union Walton 191 147 197 190 194 195 (x) 195 Note: Use of table authorized by Director, Assessment Ratio Study Division, Office of the Auditor General, State of Florida, Tallahassee, 32302. NA Not available. X Not applicable. Characteristics of each stratum may be different for each county. 2 For each stratum, the sum of assessed values is divided by the sum of appraisal esti- mates to produce a "weighted mean." Each "weighted mean" becomes a component of the county ratio via a weighting procedure based on the proportion of stratum total assessed value to county total assessed value. County ratios are published. 3 Level of confidence, 95 percent (i.e., chances are 95 out of 100 that the ratio for each appraisal will be within plus or minus, the percentage shown for the weighted mean). INTRODUCTION 13 Table D. Number of Parcels, Appraisals, and State-Calculated County Ratios, Selected Counties, State of Florida: 1974— Continued Strata detail, by type 1 --Continued County Agricultural Nonagricultural or other acreage Splits 5 Other < Number of parcels Number of apprais- als Number of parcels Number of apprais- als Number of parcels Number of apprais- als Number of parcels Number of apprais- als Alachua Broward. ..... Collier Duval Franklin Gadsden Hamilton Highlands .... Holmes Indian River. Jefferson. . . . Lafayette .... Lee Nassau Osceola Palm Beach . . . Pasco Pinellas Santa Rosa. . . Union Walton (X) (x) (x (x) (x) 2,740 2,497 2,791 3,448 (X) 2,210 1,886 (x) 2,088 2,676 (x) (x) (x) 2,980 1,167 (NA) (x) (X) (x (x) (x) 143 191 144 188 (X) 135 190 (X) 149 146 (X) (x) (x) 73 100 149 (X) (x) 76,623 (x) (X) (X) (x) (x) 3,704 23,364 (x) (x) (X) (X) (x) (x) (X) 53,319 (X) (x) (NA) (x) (x) 148 (x) (X) (x) (x) (x) 203 144 (x) (x) (x (x) (x) (x) (x) 95 (x) (x) (NA) 895 30,542 8,913 3,357 311 1,231 265 1,131 638 2,900 450 188 22,933 1,185 2,175 2,475 1,163 1,220 1,221 204 (NA) 30 200 30 30 29 30 30 30 30 30 29 21 30 30 30 29 24 30 29 25 (NA) 3,035 (x) 2,839 (x) 1,273 2,003 625 1,676 (x) 3,128 335 1,270 11,332 2,713 3,540 54,218 19,171 16,317 3,728 1,144 (NA) 189 (X) 96 (X) 194 143 82 94 (x) 96 67 189 93 147 130 146 195 97 137 191 50 4 May include more than one stratum. Detail follows (number of appraisals as specified): $5,000 or less Duval (48) $5,001 to $50,000 Duval (293) $10,000 or less Broward (97) $10,001 to $50,000 Broward (194) $50,001 to $200,000 Broward (99), Duval (93) $100,001 or more Pasco (36), Santa Rosa (19) $120,001 or more Franklin (3) $200,001 or more Alachua (45), Broward (49), Collier (89), Duval (46), Highlands (7), Indian River (85), Jefferson (8), Lee (51 ), Nassau (10), Palm Beach (128), Pinellas (42), Walton (17) $240,001 or more Hamilton (5) $300,001 or more Gadsden (3) $400,001 or more Osceola (45) 5 "Splits" are parcels resulting from divisions during the year specified. INTRODUCTION Thirty-one of the 36 reporting States calculate aggregate ratios, five more than the number which includes the arithmetic mean as a basic result. Median ratios are used in 24 States. The measure of intrajurisdictional uniformity most popular is still the coefficient of intra-area dispersion. Mathematically, this is the quotient produced from dividing the average deviation from either a mean or median ratio, by that ratio. Twenty-one States produce this result for the local jurisdictions. In 1 2 of the States the coefficient is calculated on the basis of the median ratio in the same way as that used by the Bureau of the Census for its nationwide survey. In the other nine States, the intra-area dispersion coefficient is calculated on the basis of the mean ratio. In Kansas, statutes require that the director of property valuation order a reappraisal, within any county affected, for all property in any classification shown, from ratio study findings, to have a "coefficient of deviation" (same as coefficient of intra-area dis- persion) greater than 20. The analytically useful standard deviation (square root of the variance) is a product of ratio studies in 22 States. Fifteen of these also compute the coefficient of intra-area dispersion. As mentioned earlier, the standard deviation is best regarded with caution when the group of ratios being studied is not normally distributed. One statistical measure gaining adherents as tax burdens increase is the price-related differential, some- times called an index of regressive assessment. This differential is the quotient which results from dividing the mean ratio for a given group of sales by the aggregate ratio for the same group. An area differential ratio exceeding 100 percent indicates that relatively high value properties are likely to have lower ratios than relatively low value properties. The converse is true for price-related differential ratios at 1 00 percent or below. In the present survey 10 of the 36 States compute the price-related differential. Recently interest in this meas- ure has increased, specifically in terms of developing, around 100 percent, zones of tolerance which could be accepted in a "satisfactory assessment" profile. Uses of State ratio study findings As table 9 indicates, States use ratio study findings in two basic ways: to change individual assessed values, or to change aggregates of assessed values. The first usually relates to a review function, the second -to an equali- zation function. In an alternative interpretation, both are involved with equalization, the first with intra- jurisdictional effect (largely or exclusively), the second with interjurisdictional effect. A major interjurisdictional equalization objective is equitable opportionment of State aid to help local school districts finance public elementary and secondary education. This is the aim in 27 of the 36 reporting States. Other aid apportionment objectives include State assistance to local governments for health, welfare, highways, public safety, and libraries (other than those affected by school aid grants). School aid distribution formulas now get close scrutiny, in the wake of school finance litigation. 23 There is now a disposition among States to examine existing school aid plans carefully with a view to changing the local property tax com- ponent of school district revenue. State ratio studies also influence selection of reap- praisal area priorities (in 23 States) and the evaluation of reappraisal projects in local jurisdictions (in 15 States). Reappraisal planning, for example, has been the dominant ratio study purpose in Utah. Use of State ratio study findings by individual taxpayers for appeal purposes has become a possibility in 17 States, according to survey responses. The possibility carries no necessary implication, however, that an appellate review body need accept such findings in a controverted case. The entire question of how taxpayers, and assessors, use State-produced ratio findings is described by several respondents as "not yet encountered." In California, where it has been, the following summarizes what occurs: Relevance of State ratio findings. The State Board's findings as to the average assessment ratio of locally assessed taxable property in each county are pub- lished annually before the close of the period allowed for the appeal to the county equalization agency for reduction of particular assessments. These Board findings may be relied upon in such proceedings, since under the 1966 statute the equalization agency must find the property's full value and then apply the lowest of: (1) 25 percent, (2) 115 percent of the Board's ratio findings for the county, or (3) "the ratio of assessed to full cash value of all property in the county (both locally and State assessed) established without reference to the Board's ratio for the county." !3 Major cases: Serrano v. Priest, No. 938, 254, California Superior Court, April 10, 1974: Serrano v. Priest, 487 P 2d 1241 (1971); San Antonio Independent School District v. Rodriguez, 4 1 1 U.S. 1, 93 S. Ct., 1278 (1973); Robinson v. Cahill, 62 N.J. 473 (1973); Shofstall v. Hollins, 1 10 Arizona 88, 515 P 2d 590(1973). INTRODUCTION The quoted third alternative is designed to satisfy the constitutional mandate of complete rather than only substantial uniformity, but calls for evidence that is so difficult or costly to develop that it has only rarely been invoked in taxpayer appeals. 24 RATIO STUDIES BY LOCAL JURISDICTIONS Ratio studies conducted by local jurisdictions have become familiar internal "working" tools in several places. They constitute part of the assessor's admini- strative and technical procedures, associated with valuation, review, and workload planning. Usually they are not required by specific statutory directive, but flow directly from the local need for continuing sensitivity to the market and other value indicating sources. Discussion that follows is based primarily on survey responses, correspondence, and telephone interviews. At the same time there are similarities with the more institutionalized State studies, many of which use locally assembled sales data. Survey responses indicate this to be what happens in at least 1 2 among the 22 States in which there are no studies by local jurisdictions. Like State efforts, many local studies today possess statistical integrity. Standards for acceptance and rejection after initial assembly of sales closely resemble those at the State level. There are also deliberately planned time sequences for study activity elements, in some places as part of a "continuous" study framework. There are differences between State and local studies, however, as the following summary of survey findings among re- spondents from 26 States (including as a State the District of Columbia) makes evident. General features Among jurisdictions responding, Washington, D.C., began studying assessed values and sales price rela- tionships in 1912, well before any of the others. In a sense Washington is atypical, since it has charac- teristics of a State and a city-county. Its ratio work, however, definitely has local character, including comprehensive coverage of individual neighborhoods (assessment areas) within the city. As table 10 indicates, almost two-thirds of the other local jurisdictions responding have begun studies since 1960. In New York City the first study took place in 1937, 11 years before the city of Milwaukee (Wisconsin) started, in 1948. 24 The Property Tax in a Changing Environment - Selected State Studies, Information Report No. M-83, Advisory Com- mission on Intergovernmental Relations, Washington, D.C., March 1974, p. 66. Most local studies occur annually, though approxi- mately one-fifth of the jurisdictions work on a semi-annual basis. Only five of responding local jurisdictions report that ratio study results are pub- lished, in one instance (Detroit) by display on individual tax bills. Other jurisdictions which publish findings are Douglas County (Nebraska), Fairfax County, and the city of Richmond in Virginia. Thirty jurisdictions in 22 States make ratio study data available to the public but do not publish the findings. In 19 places in eight States the data are not released for public use. More than half of 5 1 responding local jurisdictions produce ratios for each of the neighborhoods within their boundaries (see table 1 1). City and/or township ratios also result in more than half of the local areas. Exclusively suburban and rural coverage is less ex- tensive. There are separate school district ratios in seven jurisdictions. Predictably, the single-family residence predomi- nates as a property use identified in specific ratios. Four out of five jurisdictions in 26 States report derivation of ratios for homes, as table 1 2 indicates. More surprising are the relatively large numbers of cities and counties which calculate ratios for commer- cial and industrial properties. These use types are widely regarded as subject to market transactions on too seldom a basis for significant value indicating inferences. In the present survey, however, commer- cial and industrial ratios result in 43 and 39 places, respectively, out of a total of 56. Only 32 of the 56 jurisdictions compute ratios for vacant land, a use category commonly associated with relative under- assessment. The "internal" nature of local studies is apparent from the substantial number of locally specific ratio classifications encountered (see table 11). Eighteen jurisdictions calculate ratios on the basis of property types appearing in the local appraisal manual. Orange County in California has ratios by "map books," while Kansas City uses postal zip code areas as a ratio classification. Characteristics and methods All of the 54 local jurisdictions responding to this part of the survey (see table 13) used sales as a value indicator, 40 of them exclusively. Appraisals for local studies, reported by 14 jurisdictions, are essentially supplemental, incorporating the use of any market information available for the type of property in- volved (e.g., rental income, occupancy ratios, operat- ing expenses, construction costs). Unlike appraisals completed for State studies, those in local situations will presumably be the work of the same specialists who supply the local assessed values. Such appraisals are, in effect, reassessments, undertaken to assure responsiveness to whatever any value indicator (in- cluding the market) may reveal about properties not transferred. INTRODUCTION All sales that do occur are likely to be initially included. This is the practice in 36 of 54 instances shown in table 13. Supplemental screening eliminates sales on the basis of criteria essentially similar to those used by States. As a comparison of tables 7 and 14 indicates, however, several local jurisdictions apparently prefer to retain, at least initially, sales involving a nonprofit organization as transacting party. A preponderance among local jurisdictions provides for screening at the time statistical calcu- lations are completed. Proportionally less exclusion occurs at earlier stages than is the case with State studies. A substantial majority among local jurisdictions attempts to verify price. Most jurisdictions (including 9 from California) use personal and/or telephone interviews. The interviews may or may not result from a mail canvass via questionnaire, a technique reported by 16 places (only six from outside Cali- fornia). State transfer tax documentation constitutes a data source for local studies in 30 jurisdictions. Records associated with local transfer taxes have the same utility in California, District of Columbia, New York City, Ohio, and Washington (State). Statistical measures derived The assessment level achieved is an obvious con- cern in local jurisdictions, and local ratio studies reflect this, as shown in table 15. Among 55 respondents, 41 (in 22 States) reported derivation of mean ratios, while 33 (in 17 States) calculate medians. The ratio of aggregate amounts ("weighted mean" in some definitions) appears in 29 local studies. Intra-area dispersion coefficients, where calculated, are based on median ratios by 19 local units. Two of them (Alameda and San Diego counties in California) also calculate a coefficient based on the mean ratio. Eight of the local jurisdictions responding used the mean ratio only. Certain local assessing offices compute coefficients of interarea dispersion as well. The "areas" involved comprise neighborhoods or other subterritories within the city or county. In San Bernardino County, for example, there are portions of territory contained within "map books." San Diego County identifies them as "tax rate districts." Purposes and implementation As earlier material suggests, local studies are intended to promote intrajurisdictional uniformity. The basic aim is to minimize dispersion, by way of specifics detailed in table 16. Stated positively, the purpose is to equalize individual assessed values within parts of a jurisdiction or within property use categories, as soon as possible after existence of disparities becomes known to the assessing official involved. Thus local ratio study findings can trigger changes in assessments throughout a jurisdiction, or only within a specified subgrouping. The above relates to traditional "oversight" or "review" functions. In a limited number of local jurisdictions, continuing study of sales produces the basic for the primary approach to valuation, market data. The underlying assessment level is 100 percent, or full value, and assessments are aimed at a stated percentage thereof. Maricopa and Pima Counties in Arizona exemplify this kind of assessment sequence Local ratio study findings also become a possible element in taxpayer appeals, at least at the first level of review. This is not yet a common occurrence, however, as the findings in table 16 make evident. Local studies generally are still internally oriented tools rather than externally available sources of disparity data. TRANSFER TAXES AND RECORDATION REQUIREMENTS History Prior to 1968 the Federal Government imposed a tax on the transfer of real property at the rate of 55 cents per $500 (or fraction thereof) of the selling price involved. Evidence of payment took the form of documentary stamps affixed to the deed of convey- ance at time of recordation. The stamps were commonly used as one source of sales data for ratio studies, subject where possible to verification by other means. Verification was deemed necessary because often more stamps than necessary were attached to the deed in an effort to hide the actual price involved. In other situations stamps were affixed after recording, or simply ignored if "enforce- ment" countenanced such a course. The Federal tax was repealed in 1965, with repeal effective at the end of 1967. State transfer levies date from 1922, when Virginia passed the first one, followed by South Carolina the next year and Florida in 1931. Alabama, Maryland, Tennessee, and Washington also enacted such laws prior to 1940. Thirty-five State real property transfer tax laws now exist. In addition, the eight States listed below authorize local transfer levies supplementary to the State laws: Delaware Maryland New York Pennsylvania South Carolina Virginia Washington West Virginia INTRODUCTION In California, Ohio, and the District of Columbia, there are local levies only. Details of State and local levies are contained in tables 17 and 18. It should be noted that Kansas, which has nc transfer tax, nevertheless has for at least 10 years required that a certificate of value containing the sales price be filed along with the deed being registered. Other States have similar statutes con- ditioning recordation on compliance with sales price display requirements. No inference necessarily at- taches, however, about the validity or status of the deed of conveyance involved. Coverage Twenty-two of the State transfer levies specify the full sales price as the base of the tax. In 10 States the base is the sales price exclusive of the value repre- sented by any mortgage assumed as part of the sale. In Florida, the basic tax applies to the full price while the supplemental tax is limited to the net amount. Arizona uses a tax of $2 per document instead. Coverage in Indiana extends only to corporations subject to that State's gross income tax. Rates and revenue State transfer tax rates range from 1 cent per $100 (0.01 percent) in Colorado to 2 percent in Delaware, as table 17 indicates. In 12 States the rate is 55 cents per $500 or equivalent ($1.10 per $1,000, or 0.11 percent), the same as that used in the now defunct Federal levy. Among the 12, Florida and Maryland have supplementary taxes of 30 cents per $100 (0.3 percent) and 0.5 percent, respectively. The percentage equivalents for the several State levies are contained in table E. Revenue from State real property transfer taxes may go to the State, or to local governments exclusively, or to State and local governments, in accordance with applicable statutes. Amounts collected can be substantial, depending on the interaction of rates and transfer volumes involved. In fiscal 1974 the yield in Pennsylvania reached $49.7 million. This is approximately half the total in Florida from all documentary stamp levies, including those not involving real property transfers. Other State collections for fiscal 1974 (in millions) include $17.1, Virginia; $14.7, Maryland; $11.8, Tennessee; and $8.8, New York. In contrast, transfer tax revenue in Rhode Island and Alabama slightly exceeded $0.5 million and $0.6 million, respec- tively. 25 Implementation Statutes in 21 States provide that stamps be affixed to deeds to confirm that applicable transfer taxes have been paid. Ten States accomplish the same thing by means of an imprint or certification on the deed. The most useful result to assessors and to other officials interested in valuation and ratio studies is the sales price. This information becomes available by way of affidavits, declarations, or transfer tax returns, required as part of transfer tax or recordation procedures in 18 States, as shown in table 17. In Kansas, one of the 18, there is no transfer tax, as noted earlier. The documentation requirement is part of the law providing for ratio studies. 25 See State Tax Collections in 1974, U.S. Dept. of Commerce, Bureau of the Census, Washington, D.C., GF-74, No. 1, November 1974, table 9. Table E. Percentage Equivalents, State Transfer Taxes 0.01 0.05 0.10 0.11 0.15 0.02 0.22 Colorado Hawaii Alabama Arkansas New Hampshire Massachusetts Minnesota Georgia Connecticut South Carolina West Virginia Illinois Iowa Kentucky Maine New Jersey Michigan North Carolina Nebraska South Dakota Nevada Washington New York Wisconsin Oklahoma Rhode Island 0.25 0.26 0.41 0.5 0.61 1.0 2.0 Virginia Tennessee Florida Vermont Maryland Pennsylvania Delaware INTRODUCTION Local transfer taxes in New York, Ohio, Virginia, Washington (State), and the District of Columbia also provide for affidavits or declarations which display sales prices. In most instances where the above documentation is necessary, its use is an element among ratio study procedures for the State and localities involved. Enforcement Survey responses indicate that at least four States (Nebraska, New Jersey, Vermont, and Wisconsin) require the specified documentation for all transfers, including those exempt from payment of the tax. Fifteen States relieve transacting parties in an exempt status from the obligation to supply the affidavits or other prescribed documents. Penalties for false statements of value are detailed in table 17. In several instances there is specific provision for invoking penalties for perjury. Fines specified range from $20 (South Carolina) to 55,000 (New York), and imprisonment from 10 days to 5 years. STATE RATIO STUDIES Table 1. Number of Primary Assessing Jurisdictions, by Type of Government, by State: 1974 19 palities Unit :m;i Alabama Alaska Arizona Arkansas California Colorado Connecticut. — Delaware District of Coli Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts. . Michigan Minnesota Mississippi 3 312 1,247 Montana .... Nebraska. . . Nevada New Hampshi: New Jersey. New Mexico. New York . . . North Carol: North Dakot. Ohio Oklahoma... Oregon Pennsylvanii Rhode Islam South Carol: South Dakot; Tennessee.. Texas Utah Vermont .... Virginia... Washington. West Virgin: Wisconsin. . Wyoming . its lids sro o] 'includes boroughs in Alaska and parishes in Louisiana. 2 Each respective State total affected includes the following city-counties or city-county consolidi Calif.; Denver, Colo.; Jacksonville-Duval County, Fla.; Columbus-Muscogee County, Ga . ; Baton Rouge-Ea: New Orleans-Orleans Parish, La.; Philadelphia, Perm.; Nashville-Davidson County, Tenn. *rotal shown consists of towns for Connecticut, Massachusetts, New Hampshire, New York, Rhode Islai Total shown for Maine consists of 419 towns and 55 plantations. 4 Each respective State total affected includes the following cities performing county-type functioi Baltimore, Md.; St. Louis, Mo.; New York, N.Y.; eight cities in Rhode Island; and 38 "independent" ci 5 The State is the primary assessing jurisdiction for the entire State in Hawaii, and for the unorg; In Maryland, local assessors and their clerical staffs became employees of the State on July 1, 1974, tively. In Montana, county assessors became agents of the State Department of Revenue, effective July States, however, counties (and Baltimore city) are considered primary assessing jurisdictions for the 1975, respec- 20 STATE AND LOCAL RATIO STUDIES Table 2. Scope of State Ratio Studies itudy 1 Published Not published, to public as Cost study Arizona Arkansas C 1 torn Illinois 1945 K M rvland "ii In Mirnesot Montana Nebraska (NA) Pennsylvania Washington Wisconsin 14 1932 NA Not available. 'The letters in this col 2 Annual unless otherwise age of 3 years Yes 1 year 1 year Yes 1 year Yes 3 years Yes 1 year Yes 1 year Obtainabl 1 year Obtainabl 1 year Obtainabl 1 year Yes 5 'years 1 year 3 years i 1 ") 1 year 2 years 1 year 1 year 1 year Obtainable Not obtainable year for small counties, foil 1935 to 1937, 1951. Current as annually, in a 3-year cycl , C - Semianm arge counties. (NA) 470 L.839 900 325 (NA) 100 NA 50 (NA) (NA) (NA) 235 19 (NA) (NA) '5,500 (NA) 38 NA ) 625 (NA) '3()u I NA ; 525 NA 3011 Cost over a 2-year period; includes systems work on modifi 8 No study was conducted from 1964 to 1967. 9 To be conducted annually, effective 1974. 10 Three years for urban counties; 5 years for rural countie "Cost over an 18-month period. 1 Conducted biennially prior to 1973. 1 3 Done only on an irregular basis prior to 1972. 14 Begun in 1932, ratio studies now differ substantially fro cessment system was introduced in 1971. In addition, a new rest, swamp, and waste land was introduced in 1973. and programming of new operations. p assisted, office-verified sales/ applicable to sales of agricultural, STATE RATIO STUDIES 21 Table 3. Jurisdictional Classifications for Which State Agencies Derive Ratios, by Status of Ratio and by State Arkansas . Californi Colorado. Florida. . Georgia. . Hawaii . . . Idaho. . . . Illinois. Iowa Kansas. . . Kentucky . Massachusetts Michigan iota New Vork North Dakota Ohio Oregon Pennsylvania South Dakota Utah Vermont Virginia i'.i - .,i Explanation of codes used in copy is OF (Officially found) ■ aid distribution formu ratios is in compliano -iy Refers to ratios computed , or similar purpose not c with a specific statutory Refers to ratios ca 1 assessment -ibed requirements associated with publication oi r lal analysis. In certain instances the computation :h a general statutory directive. ited) i/or within the lc ssessing jurisdictions Table 4. Area Locations for Which State Agencies Derive Ratios, by Status of Ratio and by State Urban Suburban Rural State Urban Suburban State Entire area Neighbor- hoods Entire Neighbor- Rural OF OF OF OF OF OF 'OF OF 'OF UC OF OF OF OF OF OF OF OF OF OF OF OF OF OF OF UC OF OF OF OF OF UC New Jersey South Dakota Utah Illinois planation of codes used in copy is as follows: OF (Officially found) - Refers to ratios computed to satisfy presc aid distribution formula, or similar purpose not confined to inter ratios is in compliance with a specific statutory provision, or wi UC (Unofficially calculated) - Refers to ratios calculated as an a ibed requirements associate lal analysis. In certain ir h a general statutory direc I with publication of results, a ;tances the computation of such responsibilities affecting local assessn :ion, and/or within the local - Indicates no ratio derived, 'in Alaska, "service areas"; in Hawaii neighborhoods or groups of neighborhoods . 22 STATE AND LOCAL RATIO STUDIES Table 5. Property Use Categories for Which State Agencies Derive Ratios, by Status of Ratio and by State Colorado. Florida. . New Hampshi Oregon. . Pennsylv Rhode If Public utili- ies (as a single group ) Rurban (rur periphery; Resort realty Rural (home si planned subdi sions, recrea realty) OF: Seasonal OF: Special land OF planation of codes used in copy OF (Officially found) - Refers aid distribution formula, or si ratios is in compliance with a UC (Unofficially calculated) - responsibilities affecting loot - Indicates no ratio derived. Effective with 1974 study. 3 Platted lots only. is as follows: to ratios computed to satisfy pre milar purpose not confined to int specific statutory provision, or il statutory directive. -nal analysis within the St ; local assessing jurisdict STATE RATIO STUDIES 23 2 5 § 3$ § ]j * s i »S S j 3 1 & C ! i 1 1 1 1 1 1 e u g U « » S3: J £ 2 j s a? c < B , S : i S a t B ( a s S! S t "S £ i w § £ C g2 I S £ < S " 2' g H gH gca a H I . g as 24 STATE AND LOCAL RATIO STUDIES T3 CD =5 _C C o O i to CD O +3 TO Q£ sd ■M TO g a s s i % t n i s ° g sa s2 5" £ 2 S S3 2 £ 5 S £ £ S v.* « I m 3 « i s. ~ i a ^ I ill's STATE RATIO STUDIES Table 7. Categories of Sales or Other Transfers of Property Excluded From State Ratio Studies 25 itionship of Nonprofit organiz convenience Foreclosu or other such lega action neous ategories, number used Unit Sts tots Alaska Arizona California... Colorado Florida Georgia Hawaii Idaho Illinois Iowa Kansas Kentucky Maine Maryland Massachusetts Michigan Minnesota Montana Nebraska Nevada New Hampshire New Jersey . . . New Mexico. . . New York North Dakota. Ohio Pennsylvania. Rhode Island. South Dakota. Texas Utah Vermont Virginia Washington. . . West Virginia Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes (*) ( 3 ) Yes Yes 'Transfers between corporate ■ corporations having the sam< rrect defect; relevant to transfers t< 3 Data sought jffiliates, or bet« ownership. and its stockholc 26 STATE AND LOCAL RATIO STUDIES Table 8. Statistical Measures Derived, State Ratio Studies Coefficient of New Jersey... Ohio Pennsylvania. Rhode Island. South Dakota. STATE RATIO STUDIES Table 9. Use of Ratio Findings Contained in State Ratio Studies 27 Florida Hawaii I-E, A I-S Illinois I-E, A , Kentucky I-E, I-S I-E, I-S ategory Welfare funds Health aid State-municip appeals by lo Nevada New Hampshi New Jersey. Local State New York . . North Dakc for appeals by muni zation among school ategory State levy utility valu State and if codes used in copy is as folio produce an equa ilue base for apportioning Sta -E - Ratio findings used to change lues whenev for a specified intrajurisdictional subgr Area may include entire jurisdiction or a portion thereof. Dis property is used, or in particular instances, can be used. Examples i 2 Relevance not indicated by data obtained. 'Formerly used in school aid apportionment formula. Ls a portion of the jurisdic single-family residential, c 28 STATE AND LOCAL RATIO STUDIES Table 10. Scope of Ratio Studies Conducted by Local Jurisdictions icopa County. Bernardino County. San Diego County San Mateo County Santa Clara County. Santa Cruz County.. Denver County . . Jefferson Count Pueblo County. . < (Main.it. 1.- Semi-annua City city. Douglas Count rity. New York City city. orth Carolina: Mecklenburg County. Hio: Franklin County 4 ... Oregon: Lane County Multnomah County. Inserted on Obtainable Obtainable Published Obtainable Published Franklin County tudy under ing tax year 1975. Wor INTRA-AREA CLASSIFICATIONS 29 Table 11. Intra-Area Classifications for Which Selected Local Jurisdictions Derive Ratios, by Jurisdiction Jurisdiction Neighbo hoods o assessi Alabama: Madison County Arizona: Maricopa County , California: Alameda County Fresno County Kern County , Orange County Riverside County Sacramento County San Bernardino County San Diego County San Mateo County Santa Clara County Santa Cruz County Colorado: Denver County Pueblo County Connecticut: Hartford city District of Columbia: Washington city Florida: Broward County Jacksonville-Duval County Georgia: Chatham County Fulton County Illinois: Cook County Winnebago County Des Moines city Kentucky: Jefferson County Louisiana: Caddo Parish Maine: Portland city Michigan: Detroit city Flint city Grand Rapids city Lansing city Minnesota: Minneapolis city St. Louis County See footnotes at end of table (*) t 1 ) Appraisal manual types Appraisal manual types appraisal manual types Value ranges Appraisal manual types Structure age; construction type Appraisal manual types; structu age; value ranges ppraisal manual types Appra age al types; struct Appraisal manual types jal types; struc anges; seasonal Appraisal manual types; structure age; value ranges; size classes Appraisal manual types; structure age; value ranges Size classes; house styles ue ranges; financing terms 30 STATE AND LOCAL RATIO STUDIES Table 11. Intra-Area Classifications for Which Selected Local Jurisdictions Derive Ratios, by Jurisdiction-Continued iistricts Nebraska: Douglas County. . . Lancaster County. Appra Appra anual types anual types North Carolina: Mecklenburg County. Value ranges Appraisal manual types ranges Franklin County ... Oregon: Lane County Multnomah County... Rhode Island: Providence city.... Texas: Fort Worth city. . . . Wichita Falls city. Virginia: Arlington County. Fairfax County. . . Richmond city. . . . Hampton city Appraisal manual types Appraisal manual types; Appraisal manual types; anges ; structure age Value ranges Appraisal manual types Coverage, ii any, not indicated by data obtained. Classification indicated applies to entire jurisdi 'See footnote 4, table 10. USE CATEGORIES Table 12. Property Use Categories for Which Selected Local Jurisdictions Derive Ratios, by Jurisdiction Single- family Alabama: Madison County Arizona: Maricopa County Pima County California: Al ameda County Fresno County Kern County Orange County Riverside County Sacramento County San Bernardino County.... San Diego County San Mateo County Santa Clara County Santa Cruz County Colorado: Denver County Jefferson County Pueblo County Bridgeport city Hartford city District of Columbia: Washington city Florida: Broward County Jacksonville-Duval County Georgia: Chatham County Fulton County Muscogee County Illinois: Cook County Winnebago County Iowa: Des Moines city Kentucky: Jefferson County Louisiana: Caddo Parish Maine: Portland city Michigan: Detroit city Flint city Grand Rapids city Lansing city Minnesota: Hennepin County Minneapolis city St. Louis County Missouri: Kansas City city See footnotes at end of Yes Mineral rights Yes ( l ) Yes (*) Yes C) Yes (') Yes ( 2 ) Yes C) Yes (M Yes 1 1 Yes (M i 1 ) Yes C) Exempt propert Yes C) Yes Timberland Yes t 1 ) '*) (') f 1 ) t 1 ) (*) ( l ) t 1 ) Seasonal and recre ational property (M 32 STATE AND LOCAL RATIO STUDIES Table 12. Property Use Categories for Which Selected Local Jurisdictions Derive Ratios, by Jurisdiction — Continued Single- iily Nebraska: Douglas County Lancaster County New York: New York City city North Carolina: Mecklenburg County Ohio: Franklin County Oregon: Lane County Multnomah County Rhode Island: Providence city Texas: Fort Worth city Wichita Falls city Virginia: Arlington County Fairfax County Richmond city Hampton city Washington: King County Wisconsin: Madison city Milwaukee city 'Relevance, if any, not inc 2 Nine residential types, ni 'Commercial and industrial t 1 ; o Public utilities i obtained. (San Diego) types jingle category. industrial types, four other categories. LOCAL RATIO STUDIES 33 Table 13. Major Characteristics of Ratio Studies Conducted by Local Jurisdictions Value indicators used Use of sa les data Jurisdiction Sales included (before screening) Scree Ung occu rrence Price verification At time of When price verified During statistical treatment by means indicated Alabama : Madison County Sales, appraisals All Yes P, Tr(S) Arizona: Maricopa County Sales All Yes Tr(S) Pima County 1 Sales 1 All 1 Tr(S) 1 California: Alameda County Sales Sample Yes Yes Tr(L), Q, C Fresno County Sales Sample Yes Yes Tr(L), P, Q, C Kern County Sales Sample P, Q, C P, Q, C Orange County Sales Yes Riverside County Sales, appraisals Sample Yes Q, C Sacramento County Sales All Yes P, T, Q, Tr(L), C San Bernardino County. Sales All Yes Yes P, C San Diego County Sales All Yes Yes P, T, Q, Tr(L), C San Mateo County Sales All Yes Yes T, Q, C Santa Clara County Sales, appraisals Sample Yes Yes P, T, Q, Tr(L), C, c >ntacts with Santa Cruz County Sales, appraisals Sample Yes Yes P, T, Q, Tr(L), C, t Ltle company records Colorado: Denver County Sales Sample Yes Yes Yes P, T, Q, Tr(S), C Jefferson County Sales Sample Yes Tr(S) Connecticut: Bridgeport city Sales, appraisals Sample Yes Tr(S) Hartford city Sales, appraisals All P, T, Tr(S) District of Columbia: Washington city Sales All Yes Yes Tr(L) Florida: Broward County Sales All Yes T, Tr(S) Jacksonville-Duval County Sales All Yes Yes Yes P, Tr(S) Georgia: Chatham County Sales, appraisals All Yes P, T, title company records Ful ton County Sales, appraisals Sample Yes P, T, Tr(s) Muscogee County Sales, appraisals All Yes P, T, Tr(s) Illinois: Cook County Sales All Yes Yes Tr(S) Winnebago County Sales Sample T, Tr(S) Des Moines city Sales All Yes P, T, Tr(S) Kentucky: Jefferson County 2 Sales All Tr(S) Louisiana: Caddo Parish Sales Yes Yes P, T Maine: Portland city Sales Sample Yes P, Tr(S) Michigan: - Detroit city Sales, appraisals All Yes P, Tr(S) Flint city Yes Yes P, T, Tr(S) P, T, Tr(S) Grand Rapids city Sales All Yes Lansing city Sales All Yes P, Tr(S) Minnesota: Hennepin County Sales Sample Yes Yes P, T, Tr(S) Minneapolis city Sales All Yes P, T St. Louis County Sales All Yes Yes Tr(s) Missouri: Kansas City city Sales Sample Yes T, Q, C See footnotes at end 34 STATE AND LOCAL RATIO STUDIES Table 13. Major Characteristics of Ratio Studies Conducted by Local Jurisdictions— Continued Value indicators Use of sales data Jurisdiction Sales included (before screening) Screer ing occurrence Price verification by means i At time of enumeration When price verified During statistical treatment idicated Nebraska: Douglas County Sales All Yes Tr(S) Lancaster County Sales Sample Yes Yes Yes T, Tr(S) New York: New York City city Sales All Yes P, T, Tr(L), public records sea rch North Carolina: Mecklenburg County.... Sales All Yes P, Q Oregon: Lane County Sales All Yes Yes Yes P, Q, title company records Multnomah County Sales, appraisals All Yes T, Q, C Rhode Island: Providence city Sales All Yes P, T Texas : Fort Worth city Sales, appraisals All Yes P, VA and FHA listings, multipl service ; listing Wichita Falls city. . . . Sales All Yes Yes Yes P, T, title company records Virginia: Arlington County Sales All Yes Yes P, Tr(S, Lj Fairfax County Sales All Yes P, T, Tr(S, L) Sales All P, T, Tr(S, h), Lusk reports T, Tr(S, L) Hampton city Sales, appraisals All Washington: King County Sales, appraisals Sample Yes Q, C Wisconsin: Madison city Sales Sample Yes Tr(S), title company records Milwaukee city Sales All Yes T, Tr(S), abstract files Explanation of codes in copy is as follow C - correspondence P - personal interview Q - questionnaire T - telephone Tr(L) - documentation, local transfer tax Tr(S) - documentation, State transfer tax 'Study encompasses sales of owner-occupied single-family 2 Content and interval of study currently under review. SALES AND TRANSFER CATEGORIES 35 Table 14. Categories of Sales or Other Transfers Excluded From Ratio Studies Conducted by Selected Local Jurisdictions Alameda County Kern County Orange County Riverside County Sacramento County San Bernardino County. San Diego County San Mateo County Santa Clara County Santa Cruz County olorado: Denver County Jefferson County Bridgeport city Hartford city District of Columbia: Florida: Jacksonville-Duval Cou Chatham County Fulton County Muscogee County Illinois: Des Moines city Maine: Portland city Michigan: Minnesota: Kansas City city Nebraska: Douglas County Lancaster County Mecklenburg County Frankl in County See footnotes at end c property altered physically after deter- mination oi assessed value, but before Deeds recorded after satisfaction of land nu. Mils ,.i pi.»p.-i 36 STATE AND LOCAL RATIO STUDIES Table 14. Categories of Sales or Other Transfers Excluded From Ratio Studies Conducted by Selected Local Jurisdictions — Continued grantor and/or grantee Transfers of legal^ Relatives — Nonprofit organization Misceflanec Unit of Religious or chari- Other Oregon: ( 2 ) Ves ( 2 ) Yes ; 2 ) :■) Yes I 2 ) ( 2 ) Yes []) , 2 ) ( 2 ) 2 ) { V I') Yes Yes Yes Yes 17 separate types Multnomah County Texas: Richmond city King County Sales in each of 37 categories, unless verified as usable Milwaukee city "includes tax sales, and i,in Caddo 4 Analysis conditions acceptance or |H>SM.ble use, subje STATISTICAL MEASURES 37 Table 15. Statistical Measures Derived by Selected Local Jurisdictions as Part of Ratio Studies Jurisdiction Ratio of aggregate dispersion, from ratio Alabama: Madison County Arizona: Maricopa County Pima County California: Alameda County Fresno County Kern County Orange County Riverside County Sacramento County San Bernardino County.. San Diego County San Mateo County Santa Clara County Santa Cruz County Colorado: Denver County Jefferson County Connecticut: Bridgeport city Hartford city District of Columbia: Washington city Florida: Broward County Jacksonville-Duval County Georgia: Chatham County Fulton County Muscogee County Illinois: Cook County Winnebago County Iowa: Des Moines city Kentucky: Jefferson County 4 Louisiana: Caddo Parish: Maine: Portland city Michigan: Detroit city Flint city Grand Rapids city Lansing city Minnesota: Hennepin County Minneapolis city St. Louis County Missouri: Kansas City city See footnotes at end of ( l ) C) f 1 ) ( 1 ) Median o Median (M Mean (M Median (') Median Yes Median Yes Mean 3 I 1 ) Median (') Median Yes Median Yes Median Yes Yes Yes C) Median C) Median Yes (*) Yes (') (*) Median (') c 1 ) Mean (*) Yes Mean C 1 ) Median C) C) in STATE AND LOCAL RATIO STUDIES Table 15. Statistical Measures Derived by Selected Local Jurisdictions as Part of Ratio Studies— Continued Coefficient Nebraska: Douglas County. . . Lancaster County. (*) New York: New York City city. North Carol! Franklin County. Oregon: (') :ity«. Washington: King County. irginia: Arlington County. Fairfax County. . . Richmond city. . . . Hampton city Lty. ( T ) Yes Existence, if any, in local study not indicated by data obtained. 2 Applies to single-family, owner-occupied residences only. 3 0n completion of program revision, coefficient of intra-area dispersion will be based on median ratio rather than mea ■"Measures shown refer to most recent study, completed in 1973. Change in administration occurred in Jefferson County (Kentucky) in December 1973; in Providence (Rhode Island), January 9, 1975. 5 Full spectrum of statistical measures (though not necessarily each of those specified) will be calculated locally whe computerization of assessment system is complete. LOCAL RATIO STUDIES 39 Table 16. Purposes and Implementation of Ratio Studies Conducted by Selected Local Jurisdictions Maricopa County California: Alameda County Fresno County Kern County Orange County Riverside County Sacramento County San Bernardino County. San Diego County San Mateo County Santa Clara County.... Santa Cruz County Colorado: Denver County Jefferson County Georgia: Chatham County. , Fulton County. . . Muscogee County. Cook County Winnebago County. Michigan: Detroit city Flint city Grand Rapids cit Lansing city. . . . Minnesota: Hennepin County. St. Louis County Kansas City city , See footnotes at end of table. Evaluation of reappraisal effectiveness Individua Lghbor- Othe 40 STATE AND LOCAL RATIO STUDIES Table 16. Purposes and Implementation of Ratio Studies Conducted by Selected Local Jurisdictions— Continued Jurisdiction Equalizatio of assessed values Accomplishment of program obje Selection of Possibility for use in taxpayer ldividual use itegories Other 1 jurisdic groupl Nebraska: Douglas County. . . . Lancaster County.. New York : New York City city North Carolina: Mecklenburg County Ohio: Franklin County... Oregon : Lane County Multnomah County.. Rhode Island: Providence city... Texas : Fort Worth city. . . Wichita Falls city Virginia: Arlington County.. Fairfax County. . . . Hampton city Richmond city Washington: King County Milwaukee city.... 2 , Yes ( 2 ) ( 2 ) 2 ) Yes 2 i Yes ( 2 ) Yes Yes Yes Yes ( 2 ) Yes ( 2 ) Yes ( 2 ) ( 2 ) ( 2 ) = . ■lick in> . TRANSFER TAX CATEGORIES Table 17. State Transfer Taxes and Recordation Requirements 41 Penalty for fa Rhode Island. South Carolin South Dakota. 50 cents per $500 t per $100 4 nts per $500 2 per $500 per $500 2 $500 z 55 cents per $500 $1.00 per $500 2 50 cents per $500 $50 3 mc o $500, nths $200 to $500 Up t $500, i r $l,000 s (') per $100 2 Imprin per $500 2 Stamps Stamps per $500" Stamps per $500 Certif per $500 Stamps 5 percent Stamps C 6 ) $100 to $500 None specifi None specifi Certificate &100, 30 days $500 to $1,000, Up to $500, 1 y Adjudged disorderly per Imprinting Hall of 1 percent, plus 15 cents per $100 E r etur 50 cents per $500 2 Not sp< 50 cents per $500 2 Stamps $1.10 per $500 Stamps 10 cents per $100 2 Entry Up to $5,000, 1 $100 to $1,000 None specifi Up to $500, $20 to $100 10 to 25 percen None specified Gross misdemean $100 to $1,000, A I 1 ula v 1 Affidavi to 5 years Dec See table 18. if any, not indicated by ilifornia, Delaware, Distr "Transfers of $500 or •s of $100 or less are exe 8 percent in 1974, and 1. a obtained. transfers under $100 are exempt. 3 Local governmen of Columbia, Maryland, New York, Ohio, Pennsylvania, South Carolina, 42 STATE AND LOCAL RATIO STUDIES Table 18. Transfer Taxes and Recordation Requirements of Local Jurisdictions All trans- fers 411 excluding exceptions Specifie exempt Penalties (for false statement etc.), fines and/or incarceration as indicated Delaware: Wilmington District of Columbia: Washington Maryland: Specified counties and Baltimore city New York: New York City Ohio: Counties Local governments 9 . South Carolina: Counties Virginia: Counties and cities Washington: West Virginia: Declaration on face of deed other instru- Sales price Sales price price Sales Declaration or face of deed other instru- None specified Recordation tax None specified Not specified Receipt (part of statement of Notation on deed Affidavit Real property None specified 1/3 of State (basic) re- cordation ta (hence 5 cent per $100) Declaration of ( 3 ) Penalty f perjury Up to $1,000, Up to $500, up 6 months Up to $1,000, up flOO to $1,000, up to 6 months "Reasonable penalty" as provided locally Tax and any penalties become lien on property $100 to $1,000, les price minus represented by 'Transfers of $100 or less are exempt. 2 Any city within a county levying the tax may impose a city transfer tax at a rate one credit against county tax. information not indicated by data obtained, ^Minimum tax $1. 6 Local rates as follows: $1.10 per $500 - Allegany, Anne Arundel, Baltimore, Dorcheste Wicomico Counties; $1.65 per $500 - Baltimore city and Calvert, Caroline, Charles, Kent,