IAAO /
URISA
9th
Annual Integrating CAMA /
A Quarter Century
of Mass Appraisal
“10 years of MRA
Models in
Submitted
by: David B. Wissel, Assessor
Certified
General Appraiser #CG01315752
Introduction
I’ve
been fortunate to be employed by, and to be a part of the Assessment
Administration and Appraisal industry for over twenty-five years. I began my career as an entry-level employee
in the Park County Assessor’s Office in June 1979. By January of 1980 I was promoted to the
position of Deputy Assessor. In October
of the same year I was appointed to lead the Office of Assessor, by filling a
vacancy. I’ve had the honor of serving
the citizens of
The
job has been, and continues to be, challenging, fulfilling, and rewarding. I truly have come to appreciate the saying,
“the more I know, the more I don’t know”.
It has become the order of the day, some days more than others! I learn something new every day.
The
purpose of this publication is to share some of my experiences, specifically
regarding the application of Multiple Regression Analysis (MRA) valuation
models, developed in
I
believe the MRA method produces the best possible results for our jurisdiction,
for the greatest number of properties. A
saying from my favorite uncle, “the best’est for most’est” certainly
applies. How can we produce a quality
mass appraisal product, within our available resources? Not only that, how can we recognize and
reflect the vast differences of property types, location, and other numerous
factors?
There
will always be exceptions to any mass appraisal application. Any method of appraisal will never be able to
satisfy all concerns. There are some
properties that simply will not “model well”.
In my experience, each property owner has administrative remedies
available to exercise if they believe their value is incorrect. It is also my experience that a very small number
often utilize these rights on an annual basis regardless of our total value
estimate.
I
will not offer or suggest intricate details and formulas. The “Old Dogs Learn New Tricks” theme for
this presentation will be explored. I am
living proof that “old dogs” (or, perhaps even fossils like me) can adapt, and
progress with innovation.
Mr. Gloudemans, and other leaders in this field will cover more
technical presentations, and new MRA tips.
However, I will offer a listing of some of the significant influences
that affect value, both positive and negative, which we use.
We
have discovered, in our analysis of our local real estate markets, that we do
have units of logical comparison. In
order to account for those similarities, we have identified five different
geographic / economic areas. We also
apply additional local and other neighborhood and sub-area adjustments
too.
The
true test, however, was in actually writing, and FINISHING this effort. Thank you Dave Hawker,
Tyler Technologies – Eagle Division, for the opportunity to be a part of this
conference, in more ways than one.
Sit back, enjoy the ride, enhance the volume of your favorite rock and
roll, and I hope you have some fun!
1.
“
Established
in 1861,
Federal
lands comprise 51% of the county’s landmass.
State-owned lands account for approximately 8%. The remaining 41% is held in fee simple
ownership.
Notable
features on Federal lands include the 644,000-acre Pike National Forest; Lost
Creek; Mt. Evans; and Buffalo Peaks Wilderness Areas; Eleven Mile Canyon
Recreation Area; Bristlecone Pine Scenic Area; Wilkerson Pass Visitors Center;
and the Colorado Trail.
Several
named mountain ranges define the perimeter of
Other
mountains and ranges include
Within
this ring of mountain ranges is
The
northeastern third of
The
southern third of
Metropolitan
utilities own and operate five large water storage reservoirs (Antero,
Elevenmile, Tarryall, Spinney, and
Personally,
I have genuinely enjoyed living and raising my family in
I
want to illustrate the profound differences, between the imagery penned by
them, and what this true place is. What
in the world is a park, let alone
After
the Ute Indians, and the mountain men, it was the gold rush miners who were the
early permanent settlers of this area.
Following them came the cattle ranchers and hay farmers. Both groups initiated flood irrigation
systems and water delivery structures, like flumes and ditches. This water was applied to various uses throughout
“First
in time, first in right” is a common theme associated with water rights in
After
being developed, surface water became the lifeblood of the region, and
At
the present time, over 90% of the surface water has been removed from the land
in
Conservation
easements, a $3,500,000 state Legacy / Heritage Grant program, the South Park
Heritage Program, Mosquito Range Heritage Initiative, and the preservation of
the Wahl / Coleman Ranch are just a few examples of the local preservation
efforts. In total, over $6,000,000 in grant
dollars have been leveraged for these types of projects in
Significant
subdivision development occurred in
Don’t
tell anyone, but I live in one of the most beautiful areas in
2.
Brief Background
–
“Make sure you hit those
performance targets, or else!”
My
personal experiences being a part of the evolution of the Assessor’s Office
provide insight into our past. We need
to look backwards, to see where we’ve been.
That will be our guide for where we are headed into the future. I had little idea what opportunities this
path would unveil.
“Back
in the day”, as my college freshman daughter Jennifer likes to say to me, saw little resemblance to the modern office setting we
experience today. Virtually all of our
workflows were manual. Little, if any,
automation systems existed, not to mention affordability.
Sales
ratio information was supposed to be sent consistently to the state Division of
Property Taxation. This would assist the
state in developing cost manuals, to be used by the local assessor to fairly
value improvements. We were at a 1973
level of value, or effective date.
Land
values were based on comparable sales, but no current time market data was
utilized. All values were several years
behind in their effective date, when compared to the current time. Values determined by the assessor had little
relationship to how property was being bought and sold.
Little
application of common appraisal principles was apparent, except the Cost
Approach. There was no requirement in
place for any type of appraisal compliance.
Even if there were rules to be followed, no one could enforce penalties,
as there were none.
For a
multitude of reasons, in 1982, the Colorado General Assembly referred a
constitutional question to the voters, identified as Amendment #1. It contained vast institutional and
procedural changes. It also specifically
limited the value of Residential property to the Cost and Market approaches to
value.
The
main component required the implementation of an annual compliance audit of the
local assessor, to be supervised by the state.
It also re-organized the State Board of Equalization (SBOE), its mission
statement, and prescribed who the individual members are, or their
representative.
Compliance
with newly adopted measures of central tendency and assessment level would to
be enforced. The punishment for
non-compliance could be punitive. If the performance standards were not met,
then the state would insure that the local assessor would have the
responsibility to “re-appraise” all of the affected properties.
If
the SBOE finds, after providing due process, that a county is in
non-compliance, it issues an order of reappraisal. The county has to agree to develop a plan of
mitigation. There has historically been
assistance and supervision under the direction of the SBOE via the Property Tax
Administrator, (
Once
the plan of reappraisal has been successfully completed, and the county is
found in compliance, state school aid funding is reviewed. If the school district(s) in the county received
excess school aid, then the county government MUST refund that amount, with
interest. The individual school
district(s) don’t repay the money, the county government does. It is an effective enforcement mechanism.
The
basis of allocating the state’s 66% contribution to the statewide total program
costs for Kindergarten – 12 education systems is total assessed value per
pupil. By equalizing the values within
the state, this method for distributing the state’s general fund annual
appropriation would be legal, under state law.
By enforcing equitable appraisal compliance within each county, the
state provides a uniform minimum funding level per pupil. Local school districts have the ability to
levy additional funding, via the property tax, upon a positive vote of the
people.
The
bottom line: the less total assessed value per student, the more state aid is
provided. On the reverse side, the more
total assessed value per pupil, the less or no state aid is provided. Two school districts encompass our county
area.
For
example, my local school district (RE-2) receives little or no state aid, and
their primary funding source is local property tax dollars. The district supports three separate campus
locations, and has the largest geographic area.
Yet, my other
Needless
to say, the driving force from the state’s perspective is to achieve uniform
appraisals within each county, and throughout the state. It is my opinion that our twenty-year audit
and compliance process has greatly contributed to the appraisal excellence we
practice today. It wasn’t easy, as the
growth and evolution came with trade offs.
I, too, experienced an order of reappraisal twice. However, in hindsight, this journey was an
opportunity to learn and experience events we never could have envisioned. In hindsight, it has been worth the pain and
torture!
The
primary goal of each Colorado Assessor is to pass the annual audit! I am pleased to say that one order of
reappraisal has been issued to one county for the past three years.
I
believe another factor, which has helped each county assessor and their staff
appraisers, is mandatory licensing by the state. In 1990, I was involved in the establishment
of a uniform program to license all appraisers, regardless of whom they worked
for. The bottom line: each appraiser in
The
most personally important achievement was becoming a certified general
appraiser. The process of being able to
demonstrate my appraisal knowledge and skills equal to any other appraiser is
gratifying. We are the last state in the
3.
1995 – The Start
of Utilizing
“You want to do what with that
PC?”
When
I arrived at the Park County Assessor’s Office, the only computers we had were
terminals hooked by a dedicated phone line to a neighboring, more sophisticated
We then blasted into the
world of personal computers on the very capable Apple II e model. That was in 1982, when were going to set the
world on fire with our “
automated appraisal applications”. We
then entered our historic “paper” appraisal card data onto a private vender
software system (REAP program), via the Apple computers. The data was captured on 5.25 “ discs, which were then boxed and sent to
This system evolved into our
first “automated” Cost Approach based reappraisal, accomplished on a computer
system in 1983. In hindsight, we really
thought we had a good thing! Let’s just
say it provided a useful, for the time, appraisal result. However, we did learn a few things to do, and
not to try again, along the way.
Later that same year, the
very first state audit / compliance report indicated 62 out of 63 counties
would be found in some type of non-compliance.
We realized we had to get used to the idea of the changes on our
horizon. Our appraisal skills had to
progress forward. We had to upgrade
significantly our tools, and it would require funding, imagination, and
creativity.
It did force us to group with
other county government peers, facing the same issues. A mountain region group was formed to
explore our options. The end result was
that an in-state software vendor (AmericanFundware, long since deceased!) was
retained to provide an administrative software package. A second vendor based in
We used this basic platform
from 1985 - 1998! What I find even more
amazing is that we did find a good home for the reliable old Data General mainframe hardware when we upgraded! I must admit my first thought was to donate
it to the bottom of one of our five storage reservoirs.
Our applications certainly
evolved, and if I do say so myself, we did accomplish some trendy innovations
over the years. We ultimately
transitioned from a two-vendor system, to an all KVS installation. After a few more years, we ended our
contractual arrangement with KVS, and used local hardware and software
consultants to modify and upgrade our systems.
At the same time, we were the
first Office in the local courthouse to invest in a new tool called a personal
computer. We bought a couple of systems
from a little company in
In the mid-1980’s I had the
opportunity to take several IAAO classes.
One of them was being taught by Bob Gloudemans. It was there that the seed of applying MRA
was planted, and from there it has grown.
Our systems at the time were far too limited to implement such a technological
scheme, so we needed to again look toward upgrading to more modern software /
hardware options.
The mid-1980’s
also saw several legislative changes enacted in our state. We had moved from a four-year reappraisal
cycle, to a two-year cycle. This
seemingly minor difference, in regard to our appraisal effective date and the
current time real estate market, generated huge taxpayer appeals all over the
state. We can joke now that we did
“survive the level of ‘85”, but with the scars to prove it!
In 1987, (with an effective
date of 1985) our office experienced the largest number of property tax appeals
in my career. We received over 4,000
property appeals out of a total of 36,000 accounts. We processed appeals from May – October. This “mini” property owner uprising lasted
until the early 1990’s. At that time the
real estate market adjusted downward, due to an economic downturn. Our ad valorum value began to reflect “real”
market values; at least that was the public’s perception. I can also state with confidence that our
appraisal products improved during those years.
Experience counts!
Our first application of MRA
based appraisals was for a 1994 effective date, in our 1995 reappraisal
project. We generated our indicated
values in
This limitation became
another opportunity to upgrade our systems.
At this same time, PC based, “mini” computer / server vendor systems
were becoming available, and a viable and reasonable option. In that regard, I continued to attend IAAO
conferences, and our state assessor conferences, shopping for a new
system. Since I don’t control my annual
budget, what could I possibly obtain funding for? What would be within a reasonable cost, and would
it grow with us? Which system offered
the best use of technology and innovation for the future?
We continued our search by
scheduling visits with local vendor systems.
A relatively new vendor, but well known to me, (I’ve know the principle
owners for several years, prior to this business venture) asked for an
opportunity to come to Fairplay to demonstrate their products. This small but energetic
I demonstrated several
software packages, from numerous vendors.
It was a difficult choice.
Ultimately, I picked an appraisal software package, RealWare, offered by
Colorado Customware Incorporated, (CCI), of
It was my original plan to have our software consultant,
Concurrently, we had been
planning to launch our Office web site product.
The plan for this application was to use our in-house administrative and
RealWare appraisal software data to support an on-line searchable web
site. Good Turns Software is our web
site developer. He also supports the
The web site debuted on
I am very proud of our web
products. It is my baby, and my pride
and joy! I make available most of the public
record data contained in our Office. My
goal is to make access to our information without pain, and without a phone
call! I also have general information,
and other useful and helpful items. I
also have a link to the paper I presented at the IAAO conference in 2001, in
I believe strongly in the
rising star that CCI has become. I can honestly
say that this company has certainly arrived.
They are moving towards becoming one of the top software developers in
their field. We believed in them, from
their early days to now! They are
adding new clients, and their product improves with each new user. I am proud we are one of eight counties in
4.
Valuing Vacant
Land
“From the Continental Divide, everything is
downstream”
I never take for granted that
the west boundary of my county is the east slope of the Continental
Divide. To have seen the world, from
having been on top of the world on most of these mountains, is unforgettable.
Our location places us at the
headwaters of the
With this diversity are also
other site components, such as location, access to live water or private
fishing rights, public lands, solar exposures, and many other factors. We have separated the county into various
geographic areas, which have similar social, economic and market influences.
We have divided our county
into two major regions, coincidently following school district boundaries.
We have observed the cause
and effect of this reality. Prices have
increased as the higher quality parcels have been purchased. However, the prices being paid are continuing
to increase, regardless of lessening parcel quality. As long as a building site can be
established, the market has reflected consistent appreciation in total sales
price.
Our other major region is
Vacant land represents 37% of
our total value base. We have over
25,000 vacant, platted parcels, with approximately 22,000 located in
Our choice of MRA
applications for vacant land has been a multiplicative model. I believe, along with our modeling staff,
this process returns the best possible appraisal products for our county. I have included a listing of those factors
that we have developed, and use as value influences.
While vacant platted
residential parcels are the significant portions of our total property class
value, we do have other applications for MRA models. It has been used in our development of both
commercial land, and non-producing mining claims. In both of these instances, we are using a
five year time period. In
We are fortunate that
beginning in 1973, when the county hired a private appraisal firm to perform a
complete site-by-site reappraisal, they accounted for our diverse areas. This firm, as a part of their data and
inventory collection plan, identified individual parcel characteristics and
site data. This process has continually
evolved from what was originally labeled Land Value Calculations (
This data provides, at the
individual parcel level, several factors to help identify those unique
characteristics inherent with each parcel.
By reviewing the market transactions, we develop measurable adjustments
to value, based upon those components.
We do develop our adjustments by economic area, the neighborhood level,
and even the subdivision level too, as necessary.
Once the MRA models have been
thoroughly tested in
This feature has greatly
enhanced our MRA modeling workflow. It
eliminates the extra steps of reproducing each and every model component, and
the possibility (and frustration) of transposition errors.
Final land values are then
posted to the administrative portion of RealWare. This data is also verified that it reflects
the indicated value via the MRA models.
5.
Valuing
Residential Improvements
“The Good, The Bad, & The
Ugly, and what it sells for”
I’m sure each of you have
reviewed sales documents, compared the purchase price to the picture, and said
WHAT? What #$%^ paid THAT amount of money for
THAT property?
I can count on one hand the
number of “tract” type housing developments within
I honestly believe that there
is not one single property which mirrors any other in all of
How do we value apples with
oranges? Simply peel the skin, and get
down into the fruit! It isn’t easy! Frankly, we do the best with what we have to
work with.
Another factor we must face
is we are limited to ONLY the market approach to value. Another constitutional change occurred in
1992, when the voters adopted a different Amendment #1, the Taxpayers Bill of
Rights (TABOR). It also contained a
multitude of significant policy changes, regarding property tax limitations,
spending limitations, and voter approval for any tax increases.
One of the other main factors
is that it specifically limited the appraisal of residential property to ONLY
the Market Approach. No more could we
use the two approaches authorized by the 1982 constitutional amendment.
The method of MRA model we
use in residential improvements is additive.
Generically, we use a range
of base square foot values by property type, style, age, condition, location,
and additional items as identified. I
have included a copy of the influences we have applied the past several years.
6.
Something New in
2005
“Old dogs can learn new
tricks!”
Our modeling staff attended
an advanced
For the past twenty years we
have been required by law to use an18-month data collection period. We have generally experienced a shortage (can
you ever have enough sales?) of available and qualified sales. It has also increased the difficulty of
having to place round pegs into square holes.
It gets especially frustrating to those people trying to build several
different models. We use one for each
economic area, for both vacant land and improved residential properties.
It is my opinion, as long as
the time trend applications are valid (and thoroughly tested), the data set is
qualified and verified, it should ease the problem solving associated with MRA
modeling. Could that be possible?
I made the decision late in
October 2004 that we will be utilizing a 48-month time frame in our
2005-reappraisal project. It just makes
plain old
The preliminary results are
supporting the theory. I believe we will
provide supportable appraisals with a significantly greater number of market
transactions. It will provide a lower
rate of value increase than the 18-month period alone. I believe it will also provide a lower rate of
decline, if and when our local markets engage in a correction. That hasn’t happened in the past few years,
but I feel it is inevitable.
We have experienced steady
economic growth, in regard to new residential building activity. New building permits are averaging
approximately 700 – 900 new units per year.
In 2004 we added a countywide total of $84,000,000 of new construction
value. This is the largest amount of new
construction I have experienced during my time as the Assessor.
We also hope to accomplish
greater consistency in our sales confirmation process. While using an 18-month sales activity
period, we were always “missing” a six-month sales gap. By using four full years as our base data
set, we will add two years, and drop two years.
Our goal is to have greater understanding (filtering) of sales activity,
and to better confirm the terms of each sale.
We have also decided to scan all of our disclosure documents, (RPTD’s or
TD1000 forms). They are confidential
documents within our law. However, if we
create our own internal data set, we will be able to retrieve them at any time
without digging in a box. If you can
find the right box!
We have altered our workflow
activities accordingly, and increased the methods of direct contact with the
buyers / sellers. Sales confirmation
surveys will be sent at the time of data entry, to be timely with current time
sales activity. We had been sending
sales verification letters before. We
feel this process will become an automatic portion of our workflow, not a
sporadic effort.
7.
The Upside &
the Downside
“More work on the front end! Will it produce positive appraisal
products? Will we have to re-educate our
taxpayers?”
I’ve spent the past twenty
years educating my constituents about the 18-month “window” of time that we
have historically used to build our market models. Now, I’ll have to change my shtick to include
this new four-year time period wrinkle.
There has been a greater time
requirement placed on the modeling and appraisal staff. It required the staff to confirm the “missed”
six months time period, in each economic area.
It also required historical sales data and records to be re-located, and
placed into a useable order. The
“re-confirming” of previous sales with the buyer and seller has added some
additional time to the project too.
We have tried to assign our
appraisers to a specific economic area.
This is to try to improve the consistency of who sees what. I call it normalizing the data. In other words, if both you and I look at the
same property, we may have different perceptions of what we saw. Neither is wrong, nor absolutely correct. It
does impact the quality of the sales data.
It CAN and DOES drive the modeling team nuts!
This is an ongoing project,
as we continue to work toward identifying and reinforcing consistency within
individual opinions. That is no easy
task. We need to standardize the
application of what “typical” for the area really is, or what is average tree
cover as compared to heavy tree cover, as an example.
On the positive side, we will
have more data in order to better identify and substantiate our individual
adjustments. This will be helpful in all
level of appeals, and taxpayer interaction.
More sales data will also assist in more consistency in our final
appraised values. They should be less
volatile, and more stable, due to the longer view of the market.
Our goal is to continue to
produce a better appraisal product.
After this initial front-end impact on staff, it is my opinion that
there will be no downside at all.
8.
What Does the
Future Offer?
“The only limitations are time, money, imagination…”
Over the ten-year period of
time, I’ve seen the ability to continually improve the tools and applications
of MRA readily available in the appraisal systems marketplace. When you apply for a second mortgage, or a
new car loan on a home equity line of credit, how do you gain approval without
paying for a fee appraisal?
More than likely those types
of loan decisions were based on an Automated Valuation Model (
I’m not an expert at creating
MRA models. I attended this conference
two years ago in
However, I am confident in
believing that this application has provided the best tool we’ve ever had to
provide “fair, uniform, and equal appraisals, within the law”, for the past ten
years. We will continue to experiment,
and strive to improve with each application.
I see no logical reason to change our course.
9.
Closing Remarks –
Q & A
It has been my pleasure to
offer my thoughts, experiences, and opinions.
If you have further questions or comments, please contact me at your convenience. I would like to hear some of your
experiences, and the results. My
personal and contact data are listed at the end of this document.
10.
Acknowledgments
I want to sincerely thank my
entire Office staff, especially our appraisal section. I am very fortunate to have the outstanding
people of character and quality that we presently employ. The current staff is the best I’ve ever had
the pleasure of working with. A manager
is only as good as their human resources, and they are each to be commended for
their commitment and dedication to the people of
I certainly want to further
recognize, and to publicly express my heartfelt admiration, trust, and
confidence in our Modeling Crew; Chief Deputy
This is their third
reappraisal cycle together, and they continue to improve their MRA modeling
skills. I believe they are individually,
and collectively, the very best! They are
highly motivated, and committed to continued learning, in order to always
produce a quality work product. They
have continued to demonstrate their significant value to our county community.
I want to sincerely thank
I want to recognize and thank
Gary Nichols, Park County Community Development Director, for the digital
pictures and images. He has always been
a great photographer, and in the live presentation, you’ll see his work. He captured and provided the digital photos
of
My brother, Ken Wissel, for
getting me over the techno-phobia and actually opening PowerPoint! Not to mention helping me to prepare my visual
portion of the live presentation.
I wouldn’t even be able to
discuss this subject if not for Bob Gloudemans, Garth and Russell Thimgan. Each of you is an expert in this area. You have offered me the opportunity to learn
something useful each time we meet. You
three are the best in the business, in my opinion. And, since the Thimgans and I are both from
southeastern
Last, and certainly NOT
least, I also want to recognize Arlene Samuels, Data Entry Supervisor. She has my sincere gratitude and heartfelt
appreciation for every little detail and the feedback she provides. And, for everything you do for the
Office. She is an outstanding
proofreader, friend, and a great human being!
