PUBLIC FORUM SLIDE PRESENTATION -- FY2011
Power Point Presentation
Outline Purpose tonight to give an overview of the assessing process and mention the changes from FY10 to FY11
This is a brief presentation of a lengthy and complex process, but you can take a copy of the presentation
and we encourage questions along the way as well as at the end
We don't have final property values at this time, but no later than mid-Dec.
Need to wait for DOR approval
Proposed values should be online with link from town's website to Vision no later than mid-November
2 Assessors value property using a mass appraisal process. We don't spot assess each property, but use
a broad brush approach to setting the values. We use a computer model that captures many
details about each property in order to make the process as objective and accurate as possible.
Mass appraisal is different from fee appraisal which many property owners are familiar with,
such as when a bank does an appraisal for a mortgage.
Property values are adjusted every year values and are dependent on the market activity
We start by taking the arms length sales from the prior year; want to point out that assessments
REFLECT the market, they are not intended to indicate a current or future sale price
The computer model is adjusted to bring those sales to 100% of market value
The updated factors in the model are then applied to all properties town-wide to provide the new
values for all properties
One thing Assessors do NOT do: decide how much to raise (Twn Mtg)
We set the property values which are used to apportion the tax levy
We provide the calculation of the tax rate to the BOS, who is the board that actually votes to set the tax policies,
i.e., whether to shift the tax burden between classes of property
3 Everything Assessors do must meet MA laws under DOR guidance and direction
We analyze the sales using many different sorts: type of property, location and size of lot, size, style, age of house
The DOR requires that the assessments must be w/in certain parameters around 100% of mrkt val
4 Assessors must also classify each property according to its use with the class types from the DOR
This pie chart shows the types for FY11, which has been similar for several years
91% of Concord's assessments is residential
These proportions are important in relation to tax shifts that the BOS must vote on; many town have a "split"
rate, meaning the tax rate for the CIP section is higher than the residential rate. With less than 9%
CIP, such a shift would have to be so large in order to make any difference for a residential tax bill
that the CIP section would see an enormous increase in their tax bills. The BOA has historically
recommended that the BOS not do this since the majority of Concord's commercial properties are
smaller operations and this would be a disproportionate increase for them.
We're also required to value exempt properties, which is not shown here --
about $800 thousand (about another 14%)
5 The actual amount needed to be raised from property taxes is called the tax levy
The methodology used to calculate this is governed by the state
The calculations starts with the prior year's levy limit and is limited by Prop 2-1/2
You calculate the permitted levy with these steps; the town may raise through taxes UP TO this amount.
How much Concord is actually below the permitted levy varies from year to year.
6 Dividing total property value into the levy, or amount town mtg voted to spend
These are the actual #'s from last year and the estimated FY11 #'s
Total value increases 0.3%
Demonstrates that even if the values stay about the same, the tax rate increases
according to how the town's budget increases
Valuations are not set with the goal of raising or lowering taxes; the actual tax raised is determined by TM
and becomes the numerator in this equation and is fixed.
Proposition 2-1/2 limits property taxes in 2 ways, how much the taxes can increase year to year and an absolute
maximum of 2-1/2% of the Town's total valuation
In FY10 Concord was at 1.31% of the Towns total valuation
7 This slide shows how the individual property tax is calculated
I want to emphasize that Assessors do not value property in order to raise or increase funds for the Town.
We value properties based on the market. Then those values are used to apportion what the Town has
voted to raise through Town Meeting.
8 Calendar to clarify the time frames that are dictated to us by the state -- FY11 values based
on Calendar 2009 sales w/ the ast date 1/1/10
A note about the preliminary tax bills: they are NOT based on property values. They are based on
the property taxes paid for the property for the prior fiscal year. A Town is allowed to add a percentage
increase up to 21/2% based on an estimate of what the Town has voted at Town Meeting.
9 What our analysis says is that for CY09, sales prices for SFR in Concord seemed pretty stable
Concord has historically and continues to be less subject to economic volatility than most other locations
However, since it appears that real estate values in 2009 are relatively flat, the BOA continues to adjust
this year's values slightly lower than 100% of market
This slide also shows some of the other sources of revenue to the Town that influence the actual tax rate
10 These median sale prices demonstrate the stability here in Concord from the prior year to this year.
Note that these are based on the sample of sales that happen and do not represent a statistical
analysis of all assessments, so their variance year to year may not agree with the variance in
assessments year to year.
11 These are the final statistics for FY11 for Concord that are submitted to the DOR.
ASR & COD
12 The major change this year affected the land valuation component. One of the stratifications used in the sales
analysis is location; the factors that reflect the different multipliers for location we call market area factors.
Standard practice is for the market area with the factor of 1 be where the median price is closest to the
Town's overall median. Over time the MA's have shifted so the area that had that median price had a
multiplier of 1.28. Therefore, all the factors were adjusted to reflect the shift in that scale, and the land
curve (the price/sq. ft. for the primary lot, curved to reflect the fact that the smaller the lot the higher the
price/sq. ft.) was adjusted accordingly. In most cases these shifts offset each other and there was very
little affect on the valuation of the primary land line.
As always, there were some minor shifts of properties from one market area to another.
A site index is another factor that is available to use on the land reflecting an additional adjustment for something
about a property that is different from the overall market area. An example is a discount if a property
abuts a railroad or an add-on for a waterfront property. These are used sparingly and must always
have market support for such an adjustment.
In the FY08 revaluation Concord was told by the DOR that our excess land rate seemed too high, although they
could not prove that our number was incorrect. Wanting excess land rates to be consistently low across the
Commonwealth has been a common directive from the DOR throughout the in recent years. If the DOR does
approve of something in your valuation methodology, they will withhold approval of your values and therefore
prevent setting the tax rate, forcing the town to issue another preliminary bill in the third quarter. This is not a
good situation for many reasons. In that light, the Assessors lowered the excess land rate this year in
preparation for the revaluation in FY12.
Another pet peeve of the DOR is using more than one rate (cost/sq. ft. or cost/acre) unless there is concrete support in
the market for such a rate. For this reason the BOA has tried to eliminate the use of what had been called a
"wetlands" rate. We've actually been studying this particular issue for years and anecdotally not been able to
see market support for such a reduced rate.
With any changes in any year, the goal is to get to the correct value.
Reasons for changes in valuation of a property from year to year:
new construction, renovation or addition reviewed by the assessors as a result of a building permit
(this is by far the most common cause of an increase in assessed value);
parcel splits or combinations, and changes in parcel use;
data updates as a result of the town-wide cyclical inspection process that is continually being carried out
by the Board;
correction of prior errors or omissions that may have existed in the property listing;
sales analysis that may have changed the weightings of one or more of the various factors contributing
to the determination of value, such as location, size, and style.
13 This graph demonstrates how the land curve works. It shows the relationship between the cost per square foot and
the total value of the building lot. Although the cost/sq. ft. increases as the size of the lot decreases, the
overall value of the lot increases as the size increases
CONTACTS Call, email or stop by anytime.
Much reference material available in our office as well as on the web, and staff members will be glad to help in person
or over the phone
MORE ON WEB IN NEXT MONTH: CY09 Sales by next week
APPENDIX Lots more info in the appendix
16 Assessors’ Duties -- Part of Financial Team of the Town
18 Interim Year
19 Sample Land Values FY10 to FY11
% change varies slightly from location to location, but land only approx 50% of value, so affect on ttl only half
20 Site Indices /Condition Factors
% Change Histogram
21 SFR: 65% less than 3% increase or a decrease
22 Res Condos:
23 Vacant Land:
24-25 Property Record Card
26 CAMA Cost Formula
27 Interpretation of Cost Formula
FACTORS AND ASRs
31 Size Adjustment Factor
33 Valuation versus Tax Bill