New assessment system a challenge to understand
The Fayette County property tax assessment set to go into effect in 2003, based on computer models promulgated by the Cole Layer Trumble mass appraisal firm, is in many ways a vast departure from the old system. Just as the public is learning to come to grips with new property values before Wednesday’s deadline for filing appeals, the county’s assessors must familiarize themselves with an entirely new system based on CLT’s methodology.
“We’re having our assessors go through the training and making sure that they’re adhering to the guidelines and policies that are built into CLT’s system,” said chief
assessor James A. Hercik, CPE. “As long as we do that, we’ll be consistent and uniform with the computer models that are in place.”
While uniformity and consistency are the dual-pronged goals of the new system, in many ways it is just as hard for the neophyte to understand as the old one that dated to 1958 and is being cast aside after 44 years.
CLT’s system may even be harder to comprehend in some key respects, such as:
1. Vacant lots v. those with houses
Under the old system and its variants, there was virtually no distinction between the assessed value of a vacant lot versus the assessed value of a lot that contained a house or other structure.
In many of the county’s patch towns, for example, if you owned a vacant lot next door to the lot on which your house was built, both lots carried the same assessed value if they were of the same size. But under CLT’s system, the lot with a house on it has a much higher value than a similarly sized vacant lot.
But in more modern housing developments, the same principle doesn’t always hold true. A vacant lot in a hot residential development would be assessed more on par with lots on which houses have already been built. It all has to do with market values and demand, according to CLT’s formula.
Kathy Sherman-Cunningham, CLT’s Fayette project director, said, “The biggest thing is the location. Nobody wants to go in and put a nice new home in the patch town.”
Under CLT’s methodology, raw or undeveloped pieces of land are generally going to be assessed lower in places where there is little or no demand for lots on which to build. But in those same areas, CLT’s philosophy is that a lot on which a house already sits has a higher market value than the vacant lot next door.
2. Establishing land values
While CLT gave the county five recent comparable sales to justify the value placed on each residential or commercial property, the new system cannot produce five comparable sales to justify the new assessed value placed on vacant pieces of land.
Basically, CLT analyzed all vacant land sales in each of the neighborhoods and came up with a per-acre value. That number was then used as the basis for assigning vacant land assessments, using adjustments as called for by CLT’s computer models.
“We used every sale that we could grab hold of in that neighborhood or township,” said Sherman-Cunningham. “The comparable (sales) did nothing in setting your land value … The land values were already predetermined and preset. The land values were an entirely different process (than assessing houses and buildings).”
Hercik said his office can and will print the entire listing of land sales that CLT used to determine the land values in each of the county’s 42 municipalities. “Actually, they did look at all the land sales in the neighborhood or municipality,” said Hercik, who noted that CLT then converted those sales into a per-acre value used as a benchmark.
Hercik said that CLT used this approach to determine land values for residential parcels under 10 acres in size, as well as a separate listing that was used to determine land values for all parcels that were more than 10 acres in size.
Throughout the county, Sherman-Cunningham said, the assessed values for larger tracts of land fell into the following ranges: tillable land, $1,200 to $1,500 per acre; wooded land, $600 to $1,000 per acre; pasture land, $900 to $1,200 per acre; and waste land, $100 to $300 per acre.
3. The “residual” effect
Under the old system, calculating land values was fairly simple: if you owned a quarter-acre lot and your neighbor owned a half-acre lot, his assessment was or should have been twice yours. Not so under the CLT system, which predicates all of its land values on the “average-sized” parcel in a residential neighborhood.
The way it works is best described in a May press release from Patti Hall, the county’s director of information for the reassessment project. In it, Hall explained that if buyers are paying $25,000 for a quarter-acre lot, that doesn’t automatically mean that half-acre lots are assessed at $50,000.
Hall said that CLT looked at what half-acre lots were selling for in the neighborhood. And if that price was $30,000 that’s the land assessment CLT gave the property, even though it was only $5,000 higher than the $25,000 average sale price for quarter-acre lots.
A system of “increments” and “decrements” is a hallmark of the CLT model. So is the concept of “residual” value, which basically means that for parcels of less than 10 acres, CLT gave a higher assessed value to what was considered the neighborhood’s average-sized “home site” and a lesser value to the remaining acreage.
So if you had a house on a three-acre lot but the average residential lot size in your neighborhood was only one-quarter of an acre, the one-quarter acre immediately surrounding your house was assessed higher than the rest of your land.
The same concept was applied to parcels larger than 10 acres. There, the first acre was considered to be the “home site” and was thus assigned a much higher value than the remaining acreage, according to Hall.
4. Number of neighborhoods
Under the old system, Hercik estimates that the county had been carved up into approximately 350 residential neighborhoods for tax valuation purposes. “We probably had, on average, at least eight per township,” he said.
CLT’s system divided the county into only 99 residential neighborhoods for tax assessment purposes. Most of the county’s townships and its smaller boroughs are now considered a single residential neighborhood.
The single-neighborhood designation is now the case in 26 of the county’s 42 municipalities. Some entire townships – such as German, Georges, Menallen and Nicholson – are being treated as one neighborhood.
Another 10 municipalities have only two residential neighborhoods. These include the townships of Wharton, Saltlick, Luzerne and Bullskin.
Two municipalities – Redstone and Dunbar townships — have three residential neighborhoods.
The upshot of this system is that in single-neighborhood townships, property sales anywhere in the township can be used to justify or challenge an assessed value. As a practical example, of the five comparable sales CLT used to justify the assessed value on a house in Lambert, German Township, two came from Footedale, and one each came from Palmer, Leckrone and McClellandtown.
Giving examples under the old system, Hercik said that German Township had 10 residential neighborhoods, Springhill Township had seven, Washington Township had 10 and Wharton Township also had 10 – including three in Nemacolin Woodlands alone.
Under the CLT system, only three municipalities have a double-digit number of residential neighborhoods: South Union Township with 20, North Union Township with 12 and Uniontown City with 10.
Additionally, CLT has broken the county into 125 commercial neighborhoods, which is far more than the 99 residential neighborhoods utilized by its valuation system. North Union leads the way with 10 commercial neighborhoods, while South Union and Uniontown each have nine. No other municipality has more than five.
According to Sherman-Cunningham, the neighborhoods were created based on volume of recent property sales. In a matter of simple mathematics, those municipalities where more property sales had occurred were more likely to get more neighborhoods.
“Unless you have adequate (property) sales in a neighborhood, there’s no use in having a neighborhood,” said Sherman-Cunningham.