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HomeMy WebLinkAbout20073093 3 i!IIPC/ , 2007 WELD COUNTY PROPERTY ASSESSMENT STUDY ..,rl S .y--�_ • ROCKY MOUNTAIN VALUATION SPECIALISTS mi 4s- A_GE/von_ apiseNt- 09 _9&-0 7 2007-3093 ROCKY MOUNTAIN VALUATION SPECIALISTS Ilt September 15, 2007 Mr. Kirk Mlinek Director of Research Colorado Legislative Council Room 029,State Capitol Building Denver, Colorado 80203 RE: Final Report for the 2007 Colorado Property Assessment Study for Colorado's sixty four counties Dear Mr. Mlinek: Rocky Mountain Valuation Specialists LLC is pleased to submit the Final Reports for the 2007 Colorado Property Assessment Study for all sixty four counties that make up the State of Colorado. These reports represent the result of a two-part analysis and audit for each county: A procedural analysis and a statistical analysis. The procedural analysis, for each county, included all classes of property and specifically looked at how the assessor developed economic areas, confirmed and qualified their sales, developed their time adjustments, and performed their periodic physical property inspections. The audit also reviewed the procedures for discovering, classifying and valuing agricultural outbuildings, discovering subdivision build-out and subdivision discounting procedures. Valuation methodology for residential properties and commercial properties was examined. Procedures for producing mines, oil and gas leaseholds and lands producing, producing coalmines, producing earth and stone products, severed mineral interests, and non-producing patented mining claims were also reviewed. Starting in 2007, procedural analyses of agricultural outbuildings were performed for each county. • POCKY MOUNTAIN VALUATION SPECIALISTS Statistical analysis was also performed, for each county, on vacant land, residential properties, commercial/industrial properties, and agricultural land. A statistical analysis was performed to check for personal property compliance on the top 11 counties: Adams, Arapahoe, Boulder, L. Denver, Douglas, El Paso, Jefferson, Latimer, Mesa, Pueblo, and Weld. All other counties received a procedural study. Throughout this project RMVS has remained committed to its belief that for an ad valorem system to be successful, values must be equitable and market-driven in all parts of Colorado. Only then is the taxpayer assured of a fair property tax. RMVS appreciates the opportunity to be of service to the State of Colorado. drik 1"/". Mark R. Linne MAI, CAE,ASA, CRE,FRICS Managing Director Rocky Mountain Valuation Specialists LLC t ROCKY MOUNTAIN VALUATION SPECIALISTS TABLE OF CONTENTS Introduction 3 Regional/Historical Sketch of Weld County 5 Ratio Analysis 7 Time Trending Verification 9 Sold/Unsold Analysis 10 Agricultural Land Study 12 Agricultural Land 12 Agricultural Outbuildings 13 Sales Verification 17 Economic Area Review and Evaluation 18 Natural Resources 19 Vacant Land 20 Subdivision Discounting 20 Possessory Interest Properties 21 Personal Property Audit 22 RMVS Auditor Staff 24 Appendices 25 2007 Weld County Property Assessment Study—Page 2 ROCKY MOUNTAIN VALUATION SPECIALISTS INTRODUCTION do not reflect the proper valuation period ee �lorado level of value. The C.R.S. 394-104 (16)(a)(b) and (c) outlined Colorado Constitution directs that each how this was to be accomplished property tax levy shall be uniform upon all ye stating real and personal property not exempt from hat during each property tax year, the director of research of the legislative council taxation. The constitution goes on to direct shall contract with a private person for a that the actual value of all applicable real valuation for assessment study to be and personal property shall be determined conducted as set forth in this subsection under general laws, which shall prescribe (16). The study shall be conducted in all such methods and regulations as shall secure counties of the state to determine whether just and equalized valuations (Colo. Const., or not the assessor of each county has, in Art. X, Sec. 3 (1)(a)). fact, used all manuals, formulas, and other r directives required by law to arrive at the In order to check that all applicable valuation for assessment of each and every property has been valued with just and class of real and personal property in the equalized valuations, the Constitution states county. The person conducting the study that commencing in 1983 the general shall sample each class of property in a assembly shall cause a valuation for statistically valid manner, and the aggregate assessment study to be conducted. Such of such sampling shall equal at least one study shall determine whether or not the percent of all properties in each county of assessor of each county has complied with the state. The sampling shall show that the th property tax provisions of this4 various areas, ages of buildings, economic constitution and of the statutes in valuing conditions,and uses of properties have been property and has determined the actual sampled. Such study shall be completed, value and valuation for assessment of each and a final report of the findings and and every class of taxable real and personal conclusions thereof shall be submitted to property consistent with such provisions. the state board of equalization, by Such study shall sample at least one percent September 15 of the year in which the study of each and every class of taxable real and is conducted. personal property in the county (Colo. Const.,Art. X, Sec. 3 (2)(a)). The legislative council sets forth two criteria The that are the focus of the audit group: State Board of Equalization (SBOE) reviews assessments for conformance to the To determine whether each county assessor Constitution. The SBON will order is applying correctly the constitutional and revaluations for counties whose valuations 2007 Weld County Property Assessment Study—Page 3 ROCKY MOUNTAIN VALUATION SPECIALISTS statutory provisions, compliance out and subdivision discounting procedures. requirements of the State Board of Valuation methodology for vacant land, Equalization, and the manuals published by improved residential properties and the State Property Tax Administrator to commercial properties is examined. arrive at the actual value of each class of Procedures for producing mines, oil and gas property. leaseholds and lands producing, producing coal mines, producing earth and stone To determine if each assessor is applying products, severed mineral interests and non- correctly the provisions of law to the actual producing patented mining claims are also values when arriving at valuations for reviewed. assessment of all locally valued properties subject to the property tax. Statistical analysis is performed on vacant land, residential properties, commercial The property assessment audit conducts a industrial properties, agricultural land, and two-part analysis: A procedural analysis and personal property. The statistical study a statistical analysis. results are compared with State Board of Equalization compliance requirements and The procedural analysis includes all classes the manuals published by the State Property of property and specifically looks at how the Tax Administrator. assessor develops economic areas, confirms and qualifies sales, and develops time RMVS has completed the Property adjustments. The audit also examines the Assessment Study for 2007 and is pleased to procedures for adequately discovering, report its findings for Weld County in the classifying and valuing agricultural following report. outbuildings, discovering subdivision build- 4 4 2007 Weld County Property Assessment Study—Page 4 ROCKY MOUNTAIN VALUATION SPECIALISTS REGIONAL / HISTORICAL SKETCH OF WELD COUNTY Regional Information South Platte and Arkansas rivers on the east side of the Rockies. Weld County is located in the Front Range region of Colorado. The Colorado Front The Front Range includes Adams, Range is a colloquial geographic term for Arapahoe, Boulder, Broomfield, Denver, the populated areas of the State of Colorado Douglas, El Paso, Jefferson, Latimer, which are just east of the foothills of the Pueblo, and Weld counties. The Colorado Front Range, from which the region takes Front Range communities include (in a its name. The region contains the largest roughly north-to-south order): Fort Collins, cities and the majority of the population of Greeley, Loveland, Longmont, Boulder, Colorado, aligned in a north-south Denver-Aurora Metropolitan Area, Castle configuration on the western edge of the Rock,Colorado Springs, Pueblo. Great Plains, where they meet the Rockies. Geologically, the region lies mostly within the Colorado Piedmont, in the valley of the 121 Naw y„N n'^' W MYOe NA1n tl WASHINGTON Eastern Plains ..NW 4 gji YR wJON aNtlN�^�r s NM 'UMW { tl —N Mc' 1 , 2007 Weld County Property Assessment Study—Page 5 ROCKY MOUNTAIN VALUATION SPECIALISTS Historical Information Weld County has a population of The county seat is Greeley, named for approximately 228,943 people with 45.3 Horace Greeley of the New York Tribune, people per square mile, according to the whose agricultural editor, Nathan C. U.S. Census Bureau's 2005 estimated Meeker, was so impressed with the population data. agricultural potential of the area that he began a publicity campaign in the paper to Weld County, one of the original seventeen found a colony. This group, known as The territorial counties, was established in 1861 Union Colony, bought a town site and with an area of 4,002 square miles. The named it in Greeley's honor. (William county was named for Lewis Ledyard Weld, Bright, Colorado Place Names, 3rd Edition, the first secretary of Colorado Territory. Johnson Books,2004,p.184 and 78) e T JUMJboy Walden allitrICK LOGAN St A adaywa MOffAT r RUVTT IACKSON � WLLD Seethe* FIIILUPS M .ray 6{ 21 )S U �� at L to • Staamb;as Wye • Oft** MOIGAN *7 CRAIID •OULO Fat'Momma I MO RIANCO Opy a ,gyp YUMA Eagle 'Soli. au" Gore M ADAM WASHINGTONU M • G GAR fNVfR S .. Caster Poe kl ow / F A s; • • DOUG ELRERT Hugo _ • 11I 1=UUSON r :.L . •. MU* LINCOLN cay.aa. .. �� w ie • ....-+- — .. :' ECpl, ELWO f . ..................... / N «� ` ° eu• ..RRs�wR t 1, II __S/.s. -. } dr. Gnan CN liroAb CROWLfl l II YYII .. t�}, - ) • I:}c t scree 1)Qs usAiwus w :... J ,: PUElLO wax �. CUSTER / 1, `.'.Ll I 71 N [a Junta • WENT Dc ' s;.j.+ . OTERO R PROW IRS '� • ,, !- -5Y-s•J• .' . . . 4 P ! NUERFANO 4 W 7 i .c.y., i< 3t • Sione61,04 y sr•t MO +, .�. 'n+'. • Y T _ •_ r. _ _ 7ST1lLA 7iuwaa (AS ANIMAS EACH W� ... .- ..- .. t7 h b l 2007 Weld County Property Assessment Study— Page 6 Ail . — --- . - N 410 ROCKY MOUNTAIN VALUATION SPECIALISTS RATIO ANALYSIS Methodology failed by these latter measures, but were All significant classes of properties were counseled if there were anomalies noted analyzed. Sales were collected for each during our analysis. Qualified sales were property class over the appropriate sale based on the qualification code used by each period, which was typically defined as the county, which were typically coded as either 18-month period between January 2005 and Q,> or "C." The ratio analysis included all June 2006. Counties with less than 30 sales sales. The data was trimmed for counties typically extended the sale period back up to with obvious outliers using IAAO standards 5 years prior to June 30, 2006 in 6-month for data analysis. In every case, we increments. If there were still fewer than 30 examined the loss in data from trimming to insure that only true outliers were excluded. sales, supplemental appraisals were performed and treated as proxy sales. Any county with a significant portion of Residential sales for all counties using this sales excluded by this trimming method method totaled at least 30 per county. For were examined further. No county was commercial sales, the total number analyzed allowed to pass the audit if more than 5% of was allowed, in some cases, to fall below 30. the sales were "lost because of trimming. There were no sale quantity issues for For the largest 11 counties, the residential counties requiring vacant land analysis or ratio statistics were broken down by condominium analysis. Although it was economic area as well. required that we examine the median and Conclusions coefficient of dispersion for all counties, we For this final analysis report, the minimum also calculated the weighted mean and price- acceptable statistical standards allowed by related differential for each class of the State Board of Equalization are: property. Counties were not passed or ALLOWABLE STANDARDS RATIO GRID Unweighted Coefficient of 4 Property Class Median Ratio Dispersion Commercial/Industrial Between.95-1.05 Less than 20.99 Condominium Between .95-1.05 Less than 15.99 Single Family Between.95-1.05 Less than 15.99 Vacant Land Between .95-1.05 Less than 20.99 2007 Weld County Property Assessment Study—Page 7 410 ROCKY MOUNTAIN VALUATION SPECIALISTS The results for Weld County are: Weld County Ratio Grid Number of Unweighted Price Coefficient Qualified Median Related of Time Trend Property Class Sales Ratio Differential Dispersion Analysis Commercial/Industrial 137 0.976 1.029 10.3 Compliant Condominium N/A N/A N/A N/A N/A Single Family 10,015 0.971 1.007 7.8 Compliant Vacant Land 663 1.000 1.010 9.4 Compliant Econ Number Price Related Coefficient of Me Area of Sales dian Differential Dispersion 0 973 .971 1.006 .062 2 2649 .968 1.007 .078 3 2591 .978 1.007 .071 4 632 .966 1.009 .090 5 114 .972 1.006 .117 6 1960 .969 1.012 .094 7 51 .977 1.024 .138 8 51 .952 1.009 .136 9 277 .973 1.007 .087 Excl 717 Overall 10,015 .971 1.008 .080 After applying the above described compliance with SBOE, DPT, and methodologies, it is concluded from the Colorado State Statute valuation guidelines. 4 sales ratios that Weld County is in Recommendations None 2007 Weld County Property Assessment Study—Page 8 ROCKY MOUNTAIN VALUATION SPECIALISTS TIME TRENDING VERIFICATION Methodology and a further examination is warranted. This validation methodology also considers While we recommend that counties use the the number of sales and the length of the inverted ratio regression analysis method to sale period. Counties with few sales across account for market (time) trending, some the sale period were carefully examined to counties have used other IAAO-approved determine if the statistical results were valid. methods, such as the weighted monthly median approach. We are not auditing the Conclusions methods used, but rather the results of the After verification and analysis, it has been methods used. Given this range of determined that Weld County has complied methodologies used to account for market with the statutory requirements to analyze trending, we concluded that the best the effects of time on value in their county. validation method was to examine the sale Weld County has also satisfactorily applied ratios for each class across the appropriate the results of their time trending analysis to sale period. To be specific, if a county has arrive at the time adjusted sales price considered and adjusted correctly for (TASP). market trending, then the sale ratios should Recommendations remain stable (i.e. flat) across the sale period. If a residual market trend is None detected, than the county may or may not have addressed market trending adequately, 2007 Weld County Property Assessment Study—Page 9 ROCKY MOUNTAIN VALUATION SPECIALISTS SOLD / UNSOLD ANALYSIS Methodology unsold sample. This sample was at least 1% of the total population of unsold properties Weld County was tested for the equal and excluded any sale properties. The treatment of sold and unsold properties to unsold sample was filtered based on the insure that"sales chasing" has not occurred. attributes of the sold dataset to closely The auditors employed a multi-step process correlate both groups. The ratio analysis to determine if sold and unsold properties was then performed on the unsold were valued in a consistent manner. properties and stratified. The median and mean ratio distribution was then compared All qualified residential and commercial between the sold and unsold group. A non- class properties were examined using the parametric test such as the Mann-Whitney unit value method, where the actual value test for differences between independent per square foot was compared between sold samples was undertaken to determine and unsold properties. A class was whether any observed differential was considered qualified if it met the criteria for significant. If this test determined that the the ratio analysis. The median value per unsold properties were treated in a manner square foot for both groups was compared similar to the sold properties, it was from an appraisal and statistical perspective. concluded that no further testing was If no significant difference was indicated, warranted and that the county was in then we concluded that no further testing compliance. was warranted and that the county was in compliance in terms of sold/unsold If a class or sub-class of property was consistency. determined to be significantly different by this method, the final step was to perform a If either residential or commercial multi-variate mass appraisal model that differences were significant using the unit developed ratio statistics from the sold value method, or if data limitations made properties that were then applied to the the comparison invalid, then the next step unsold sample. This test compared the was to perform a ratio analysis comparing measures of central tendency and the 2006 and 2007 actual values for each confidence intervals for the sold properties qualified class of property. All qualified with the unsold property sample. If this vacant land classes were tested using this comparison was also determined to be method. The sale property ratios were significantly different, then the conclusion arrayed using a range of 0.8 to 1.5, which was that the county had treated the unsold theoretically excluded changes between properties in a different manner than sold years that were due to other unrelated properties. changes in the property. These ratios were also stratified at the appropriate level of These tests were supported by both tabular analysis. Once the percent change was and chart presentations, along with saved determined for each appropriate class and sold and unsold sample files. sub-class, the next step was to select the 2007 Weld County Property Assessment Study—Page 10 1 ROCKY MOUNTAIN VALUATION SPECIALISTS Sold/Unsold Results Property Class Results Commercial/Industrial Compliant Condominium N/A Single Family Compliant Vacant Land Compliant Conclusions Recommendations After applying the above described None methodologies, it is concluded that Weld County is reasonably treating its sold and unsold properties in the same manner. 2007 Weld County Property Assessment Study—Page 11 ROCKY MOUNTAIN VALUATION SPECIALISTS AGRICULTURAL LAND STUDY Acres By Subclass Value By Subclass Sprinkler waste 4% 35000000 it4lzd 30,000,000 a% 25,000,000 'w.. ', 15000000 I Dry Farm 10,000 000 28% I #r 5,000,000 4. 0 sox ' Sprinkler Flood Dry Farm Meadow Grazing Waste `Meadow Hey Hay 1% Agricultural Land County records were reviewed to determine checked to ensure that the commodity major land categories such as irrigated farm, prices and expenses, furnished by the dry farm, meadow hay, grazing and other Property Tax Administrator (VIA), were lands. In addition, county records were applied properly. (See Assessor Reference reviewed in order to determine if: Aerial Library Volume 3 Chapter 5.) photographs are available and are being Conclusions used; soil conservation guidelines have been used to classify lands based on productivity; An analysis of the agricultural land data crop rotations have been documented; indicates an acceptable appraisal of this typical commodities and yields have been property type. Directives, commodity determined; orchard lands have been prices and expenses provided by the PTA properly classified and valued; expenses were properly applied. County yields reflect a ten year average and are typical compared favorably to those published by landlord expenses; grazing lands have been Colorado Agricultural Statistics. Expenses properly classified and valued; the number used by the county were allowable expenses of acres in each class and subclass have and were in an acceptable range. Grazing been determined; the capitalization rate was lands carrying capacities were in an properly applied. Also, documentation was acceptable range. The data analyzed required for the valuation methods used and resulted in the following ratios: any locally developed yields, carrying capacities, and expenses. Records were also 2007 Weld County Property Assessment Study—Page 12 lit ROCKY MOUNTAIN VALUATION SPECIALISTS Weld County Agricultural Land Ratio Grid Number County County RMVS Abstract O1 Value Assessed Total Code Land Class Acres Per Acre Total Value Value Ratio 4107 Sprinkler 85,365 68.91 5,882,413 6,081,926 0.97 4117 Flood 259,440 120.67 31,306,599 32,606,900 0.96 4127 Dry Farm 558,312 12.77 7,129,930 7,721,884 0.92 4137 Meadow Hay 15,558 40.41 628,708 628,708 1.00 4147 Grazing 964,546 4.82 4,646,035 4,646,035 1.00 4167 Waste 81,006 1.63 132,277 132,277 1.00 Total/Avg 1,964,227 25.32 49,725,961 51,817,729 0.96 Recommendations None Agricultural Outbuildings Methodology A sample of various use types of agricultural Following are the Sections of the ARL outbuildings with varying ages were considered in the agricultural outbuilding reviewed to see if the guidelines found in study, the results of the audit and any the Assessor's Reference Library (ARL) recommendations: Volume 3, pages 5.73 through 5.78 were being followed. Physical Inventory Issues: The Assessors Reference Library Volume 3 1. Describing, classing and identifying the page 5.73 states: physical location of the improvements, and All characteristics that are found at the site are to 2. Identifying the quality and condition of property be listed regardless of whether or not they contribute components that contribute to value. to value. Data collection activities performed during the physical inventory of the agricultural structures Photographs of the subject properly are useful found on a firm or ranch include the following documentation, in addition to the listed information, and are especially effective where subjective valuation 2007 Weld County Property Assessment Study—Page 13 ROCKY MOUNTAIN VALUATION SPECIALISTS fudgment is applied. However, photographs are The county is not currently in compliance in optional, at the discretion of the assessor. their inspection cycle. The Division recommends a jiiveyear gcle of Recommendations for Physical agricultural structures physical inspections. All Inventory Compliance: agricultural structures located in the county should The auditor recommends that the county be physically inspected at least every five years. have a compliant inspection plan in place for the 2008 audit cycle and present this in Conclusions for Physical Inventory writing to the auditor during the 2008 audit. Compliance: Cost Service Used,Height Multiplier and Area/Perimeter Multiplier Issues The following ARL Volume 3 page 5.74 8. It provides refinements in cost to the general addresses Cost Service Used Issues, Height descriptions for various building components. multiplier Issues, and area/perimeter 9. Costs are inclusive of direct and indirect cost, multiplier issues: i.e. materials, labor, contractor's overhead and profit, design fees, and permits, etc. The Assessors Reference Iibray Volume 3 page 5.74 states: Counties may develop and use their own cost tables if they are well documented, supportable, and The Division recommends counties use the Marshall consistent with or similar to those used by the d� .Swift Valuation Service for the fallowing surrounding counties to ensure equalization of reasons: values. 1. Use of a single cost service promotes uniformity Whenever local cost tables are used and they differ of agricultural structures valuations among from surrounding counties, supporting counties. documentation must be submitted. 2. Statewide equalization will result from uniform valuations. Conclusions for Cost Service Used 3. Marshall & Swift is recognized as an Compliance: authoritative source within the appraisal The county is currently in compliance in profession. the use of an approved cost resource. 4. It provides for diferent types of construction (classesA-B-C-D-S). Recommendations for Cost Service 5. It provides uniform definitions of quality Used Compliance: (excellent-good-average-low cost). None 6. It provides height multipliers. If height multipliers are not utilized, the county must Conclusions for Height Multiplier Used document the reason. Compliance: 7. It provides area/perimeter multipliers. If area The county is currently in compliance in the perimeter multipliers are not utilized, the use of an approved height multiplier. county must document the reason. 2007 Weld County Property Assessment Study—Page 14 ROCKY MOUNTAIN VALUATION SPECIALISTS Recommendations for Height Multiplier The county is currently in compliance in the Used Compliance: use of an approved area/perimeter None multiplier. Conclusions for Area/Perimeter Recommendations for Area/Perimeter Multiplier Used Compliance: Multiplier Used Compliance: None Local Multiplier Compliance Issues: The Assessors Reference library Volume 3 Marshall & .Swift-developed multipliers, weighted page 5.75 states: labor and material costs and all local sales taxes have been included. Local multipliers are applied to agricultural structure costs that are derived from Marshall & The use of out-ofstate multipliers is not .Swift to adjust these costs to reflect local cost recommended. Documentation must be available jbr conditions. any cost multipliers used other than those provided by the Division or directly by Marshall & Swift. The Division provides cost multipliers to be applied However, local multipliers are unnecessary if costs to Marshall &Swift cost values, depending on the are locally developed location of each county, at each change in level of value. These multipliers are then used for the Conclusions for Local Multiplier following intervening year, as well The current local Compliance: multipliers may be found in Addendum 5-C, Rural The county is currently in compliance in Structures Local Multipliers. their use of the local multiplier. Counties are to use the Division published cost Recommendations for Local Multiplier multipliers unless specific county cost multipliers Compliance: have been purchased from Marshall & Swift or None locally researched and developed When using Depreciation Compliance Issues: The Assessors Reference Library Volume 3 following methods as defined in The Dictionary of page 5.76 states: Real Estate Appraisal, Third Edition, Appraisal Institute, 1993, may be used to measure accrued Adjustments for depreciation should be in depreciation: accordance with Marshall & Swift Valuation Service valuation procedures, unless locally developed 1. Observed Condition: The condition of a economic lives and depreciation schedules are well property ascertained from a detailed inspection, supported and have been validated through field physical condition. The observed condition inspection. method requires both a physical inspection and sound appraiserjudgment. Supporting documentation should be available for all locally developed depredation schedules. The 2007 Weld County Property Assessment Study—Page 15 ROCKY MOUNTAIN VALUATION SPECIALISTS 2. Economic Age-Life Method (Straight Iine): A method of estimating accrued depreciation in Conclusions for Proper Depreciation which the ratio between the effective age of a Schedule Compliance: building and its total economic life is applied to The county is currently in compliance in the current cost of the improvements to obtain their use of a proper depreciation schedule. a lump-sum deduction. Recommendations for Proper Thir is the method employed fry Marshall&Swift Depreciation Schedule Compliance: The Division recommends the use of Marshall & None Swift depreciation tables. 2007 Weld County Property Assessment Study—Page 16 i ROCKY MOUNTAIN VALUATION SPECIALISTS SALES VERIFICATION According to Colorado Revised Statutes: The assessor is required to use sales of real A representative body of sales is required property only in the valuation process. when considering the market approach to appraisal. (8)(O Such true and typical sales shall include only those sales which have been (8) In any case in which sales prices of determined on an individual basis to reflect comparable properties within any class or the selling price of the real property only or subclass are utilized when considering the which have been adjusted on an individual market approach to appraisal in the basis to reflect the selling price of the real determination of actual value of any taxable property only. (39-1-103, C.R.S.) property, the following limitations and conditions shall apply: Part of the Property Assessment Study is the sales verification analysis. RMVS has (a)(1) Use of the market approach shall used the above-cited statutes as a guide in require a representative body of sales, our study of the county's procedures and including sales by a lender or government, practices for verifying sales. sufficient to set a pattern, and appraisals shall reflect due consideration of the degree RMVS has conducted a study of the sales of comparability of sales, including the verification procedures in 2007 for Weld extent of similarities and dissimilarities County. This study was performed by among properties that are compared for checking selected sales listed as verified by assessment purposes. In order to obtain a the county for the 2007-2008 valuation reasonable sample and to reduce sudden period. Specifically, RMVS selected 45 sales price changes or fluctuations, all sales shall listed as verified but unqualified. Of the 45 be included in the sample that reasonably sales checked, 44 gave reasons that were reflect a true or typical sales price during the clear and supportable. The remaining 1 sale period specified in section 39-1-104 (10.2). had insufficient documentation. Sales of personal property exempt pursuant Conclusions to the provisions of sections 39-3-102, 39-3- 103, and 39-3-119 to 39-3-122 shall not be Weld County appears to be doing an included in any such sample. adequate job of verifying their sales. There are no recommendations or suggestions. (b) Each such sale included in the sample Recommendations shall be coded to indicate a typical, None negotiated sale, as screened and verified by the assessor. (39-1-103, C.R.S.) 2007 Weld County Property Assessment Study—Page 17 ROCKY MOUNTAIN VALUATION SPECIALISTS ECONOMIC AREA REVIEW AND EVALUATION Methodology adequately identified homogeneous Weld County has submitted a written economic areas comprised of smaller narrative describing the economic areas that neighborhoods. Each economic area make up the county's market areas. Weld defined is equally subject to a set of County has also submitted a map illustrating economic forces that impact the value of these areas. Each of these narratives have the properties within that geographic area and this has been adequately addressed. been read and analyzed for logic and appraisal sensibility. The maps were also Each economic area defined adequately compared to the narrative for consistency delineates an area that will give "similar between the written description and the values for similar properties in similar map. areas." Conclusions Recommendations After review and analysis, it has been None determined that Weld County has 2007 Weld County Property Assessment Study—Page 18 ROCKY MOUNTAIN VALUATION SPECIALISTS NATURAL RESOURCES Earth and Stone Products Producing Oil and Gas Procedures Methodology Methodology Under the guidelines of the Assessor's The Colorado Revised Statues (CRS) in Reference Library (ARL), Volume 3, Article 39, Section 7, and the Assessor's Natural Resource Valuation Procedures, the Reference Library (ARL), Volume 3 were income approach was the primary method the basis for valuing the production of gas applied to find value for production of earth property. For gas, the gross volume of and stone products. The number of tons thousand cubic feet (MCI) sold was was multiplied by an economic location multiplied by the current average field price factor that represented the landlord's per unit sold. For Oil, the gross volume of royalty. The landlord's share was multiplied barrels sold was multiplied by the current by a recommended FIoskold factor to average field price per unit sold. Any determine the actual value. The Hoskold federal, state or local government ownership factor was determined by the life of the (royalty) was deducted from the gross value reserves, or the lease. The value was sold to arrive at actual value. primarily based on two variables: life and Conclusions tonnage. The operator determines these since there is no other means to obtain County valued oil and gas production using production data through any state or private acceptable appraisal procedures. agency. Recommendations: Conclusions None County has applied the correct formulas and state guidelines to earth and stone production. Recommendations None 2007 Weld County Property Assessment Study—Page 19 ROCKY MOUNTAIN VALUATION SPECIALISTS VACANT LAND Subdivision Discounting In 2007 subdivisions were reviewed. The summation method. Subdivision land with review showed that subdivisions were structures was appraised at full market discounted pursuant to the Colorado value. Revised Statutes in Article 39-1-103 (14). Conclusions Discounting procedures were applied to all subdivisions where less than 80 percent of Weld County has implemented proper all sites were sold, using the present worth procedures to adequately estimate absorption periods, discount rates, and lot method. The market approach was applied values for qualifying subdivisions. where more than 80 percent of the subdivision sites were sold. An absorption Recommendations period was estimated for each subdivision None that was discounted. An appropriate discount rate was developed, using the 2007 Weld County Property Assessment Study—Page 20 140 ROCKY MOUNTAIN VALUATION SPECIALISTS POSSESSORY INTEREST PROPERTIES Possessory interest property discovery and county under audit has also been queried as valuation is described in the Assessor's to their confidence that the possessory Reference Library EARL) Volume 3 section interest properties have been discovered and 7 pages 71 through 104 in accordance with placed on the tax rolls. the requirements of 39-1-103 (17)(a) (II) Conclusions C.R.S. Possessory Interest is defined by the Weld County has implemented an adequate Property Tax Administrator's Publication ARL Volume 3, Section 7.79: A private discovery process to place possessory interest properties on the roll. Weld County property interest in government-owned property or the right to the occupancy and also is correctly and consistently applying use of any benefit in government-owned the correct procedures and valuation methods in the valuation of possessory property that has been granted under lease, interest properties. permit, license, concession, contract, or other agreement. This county under audit Recommendations has been reviewed for their procedures and None adherence to guidelines when assessing and valuing possessory interest properties. The 2007 Weld County Property Assessment Study—Page 21 440 • ROCKY MOUNTAIN VALUATION SPECIALISTS PERSONAL PROPERTY AUDIT Weld County was studied for its procedural counties to be included in this study are compliance with the personal property Adams, Arapahoe, Boulder, Denver, assessment outlined in the Assessor's Douglas, El Paso,Jefferson, Latimer, Mesa, Reference Library (ARL) Volume 5, and in Pueblo, and Weld. All other counties the State Board of Equalization (SBOE) received a procedural study. requirements for the assessment of personal property. The SBOE requirements are Weld County is compliant with the outlined as follows: guidelines set forth in ARL Volume 5 regarding discovery procedures, using the Use ARL Volume 5 including current following methods to discover personal discovery, classification, and documentation property accounts in the county: procedures, and including current economic lives table, cost factor tables, depreciation • Public Record Documents table, and level of value adjustment factor • MLS Listing and/or Sold Books table. • Chamber of Commerce/Economic Development Contacts The personal property audit standards • Local Telephone Directories, narrative must be in place and current. A Newspapers or Other Local listing of businesses that have been audited Publications by the assessor within the twelve-month period reflected in the plan is given to the • Personal Observation or Word of auditor. The audited businesses must be in Mouth conformity with those described in the plan. • Questionnaires, Letters and/or Phone Calls to Buyer, Seller and/or Aggregate ratio will be determined solely Realtor from the personal property accounts that have been physically inspected. The The county uses the Division of Property minimum assessment sample is one percent Taxation (DPT) recommended classification or ten schedules, whichever is greater, and and documentation procedures. The DPT's the maximum assessment audit sample is recommended cost factor tables, 100 schedules. depreciation tables and level of value adjustment factor tables are also used. For the counties having over 100,000 population, RMVS selected a sample of all Weld County submitted their personal personal property schedules to determine property written audit plan and was current whether the assessor is correctly applying for the 2007 valuation period. The number the provisions of law and manuals of the and listing of businesses audited was also Property Tax Administrator in arriving at submitted and was in conformance with the the assessment levels of such property. This written audit plan. The following audit sample was selected from the personal triggers were used by the county to select property schedules audited by the assessor. accounts to be audited: In no event was the sample selected by the contractor less than 30 schedules. The 2007 Weld County Property Assessment Study—Page 22 ♦ ROCKY MOUNTAIN VALUATION SPECIALISTS • Businesses in a selected area • Accounts with obvious Weld County's median ratio is 1.00. This is discrepancies in compliance with the State Board of • New businesses filing for the first Equalization (SBOE) compliance time requirements which range from .90 to 1.10 • Accounts with greater than 100 with no COD requirements. change • Incomplete or inconsistent Conclusions declarations Weld County has employed adequate • Accounts with omitted property discovery, classification, documentation, • Businesses with no deletions or valuation, and auditing procedures for their additions for 2 or more years personal property assessment and is in • Non-filing Accounts - Best statistical compliance with SBOE Information Available requirements. • Accounts close to the $2,500 actual Recommendations value exemption status • Accounts protested with substantial None disagreement 2007 Weld County Property Assessment Study—Page 23 r, __._._.. ... a ROCKY MOUNTAIN VALUATION SPECIALISTS RMVS AUDITOR STAFF Mark Linn,MAI, CRE, CAE,ASA, FRICS, Corporate Managing Director of RMVS Stephen M. Snyder, CAE, SRA, RMVS, Director of Audit Suzanne J. Howard,Audit Administrative Manager for RMV.S M. Steven Kane, ChiefStatistician for RMT/.S,Audit Division James Gresham,Audit Chief Data Analyst for RMVS Garth Thimgan, CAE, General Audit Support and Consultant for'MI AS' Helen D. Powszukiewicz, General Audit Support Administrative Assistant Carl W. Ross,Agricultural Coordinator and Supervisor for RMV.S Cathie E. Ross, Genera/Audit Support Administrative Assistant Katie Linn,Administrative Assistant • 2007 Weld County Property Assessment Study—Page 24 ROCKY MOUNTAIN VALUATION SPECIALISTS APPENDICES 2007 Weld County Property Assessment Study—Page 25 4111* ROCKY MOUNTAIN VALUATION SPECIALISTS STATISTICAL ANALYSIS FOR WELD COUNTY 2007 I. OVERVIEW Weld County is located in northeastern Colorado. The county has a total of 115,540 parcels, according to data submitted by the county assessor's office in 2007. The following graph provides a breakdown of property classes covered in this preliminary analysis: Property Class Distribution 70,000— 60,000— 50,000— 40,000- 30,000- 20,000— 10,000— 0 4,028 Vacant Land Residential Commllnd Other The vacant land class of properties was dominated by residential land. Residential lots (coded 100) accounted for 77.8% of all parcels. No other subclass accounted for more than 20% of the total. For residential improved properties, single family properties accounted for 92% of all residential properties. No sub-class breakdowns were indicated. Commercial and industrial properties represented a smaller proportion of property classes in comparison. 2007 Weld County Property Assessment Study—Page 26 ROCKY MOUNTAIN VALUATION SPECIALISTS II. SALES FILE The following sale analyses were based on the requirements of the 2007 Property Assessment Study, based on information provided by the Weld County Assessor's Office. There were 19,710 sales in the file. Of these, 10,746 were qualified sales by the county. Further data reductions will be described in each property class section. III. RESIDENTIAL SALES RESULTS The following steps were taken to analyze the appropriate residential sale dataset for Weld County: Steps Results 1. Selected sales coded as "Q" 10,746 Sales 2. Selected improved sales (Status = "I") 10,251 Sales 3. Selected sale with subclass codes 1212 to 1230 10,015 Sales The 10,015 sales were analyzed using the required measurements for the level of assessment, as well as for the quality of the assessment,as follows: OVERALL Ratio Statistics for CURRTOT/TASP Median .971 Price Related Differential 1.007 Coefficient of Dispersion .078 Econ Number Price Related Coefficient of Area of Sales Median Differential Dispersion 0 973 .971 1.006 .062 2 2649 .968 1.007 .078 3 2591 .978 1.007 .071 4 632 .966 1.009 .090 5 114 .972 1.006 .117 6 1960 .969 1.012 .094 7 51 .977 1.024 .138 8 51 .952 1.009 .136 9 277 .973 1.007 .087 Excl 717 Overall 10,015 .971 1.008 .080 The above ratios are in compliance with the standards set forth by the Colorado State Board of Equalization (SBOE) for overall sales. The following graphical exhibits describe further the sales ratio distribution for all of these properties: 2007 Weld County Property Assessment Study—Page 27 MONOREERIMERSERP 4110 ROCKY MOUNTAIN VALUATION SPECIALISTS RESIDENTIAL SALE RATIO ANALYSIS 2,500— 2,000- 1,500- 1 Y Cr e 1,000— 500— Mean=0.9746 Std.Dev.=0.10934 N=10,015 0 0.00 0.50 1.00 1.50 2.00 2.50 SaleRatio 2007 Weld County Property Assessment Study—Page 28 ROCKY MOUNTAIN VALUATION SPECIALISTS Sale Ratio by Sale Price- Residential Properties 2.50 • 2.00 • • • • 0 1.50 A • • • • 1.00 • . r • • • • • 0.50 • ••1• 0.00 • 0.00 500000.00 1000000.00 1500000.00 2000000.00 2500000.00 Tap • The above graphs indicate that the distribution of the sale ratios was within state mandated limits,and that there were no significant price-related differential issues. Residential Market Trend Analysis To determine if market trending was adequately accounted for by the assessor when analyzing the residential dataset, we regressed the sale ratios across the 18-month sale period. The following analysis, broken down by economic area, indicates that there were no significant market trend factors present in the sale ratios: 2007 Weld County Property Assessment Study—Page 29 L 410 ROCKY MOUNTAIN VALUATION SPECIALISTS Coefficient Unstandardized Standardized Coefficients Coefficients EconArea Model B Std. Error Beta t Siq. 1 (Constant) .983 .007 147.612 .000 saleperiod -.002 .001 -.100 -2.682 .007 0 1 (Constant) .979 .005 197.718 .000 saleperiod -.001 .001 -.051 -1.576 .115 2 1 (Constant) .960 .004 243.667 .000 saleperiod .001 .000 .061 3.133 .002 3 1 (Constant) .981 .004 269.069 .000 saleperiod .000 .000 -.006 -.292 .770 4 1 (Constant) .967 .009 107.556 .000 saleperiod .000 .001 -.014 -.348 .728 5 1 (Constant) 1.018 .029 34.737 .000 saleperiod -.004 .003 -.144 -1.539 .127 6 1 (Constant) .999 .006 173.271 .000 saleperiod -.002 .001 -.094 -4.180 .000 7 1 (Constant) .989 .042 23.390 .000 saleperiod -.001 .004 -.042 -.295 .769 8 1 (Constant) 1.010 .050 20.216 .000 saleperiod -.005 .005 -.156 -1.103 .275 9 1 (Constant) .967 .013 75.951 .000 saleperiod .002 .001 .102 1.707 .089 a. Dependent Variable: SaleRatio Please note that Economic Areas 2 and 6 had statistically significant trends indicated, but the actual magnitude of each adjustment was not practically significant. Sold/Unsold Analysis In terms of the consistent treatment of residential sold and unsold properties, we compared the median actual value per square foot for both groups. The following indicates that overall, Weld County has valued sold and unsold residential properties in a consistent manner: Group No. of Median Props Act Val/SF Unsold 53,545 $127 Sold 9,153 $131 2007 Weld County Property Assessment Study—Page 30 411 ROCKY MOUNTAIN VALUATION SPECIALISTS IV. COMMERCIAL/INDUSTRIAL SALES RESULTS The following steps were taken to analyze the appropriate commercial and industrial sale dataset for Weld County: Steps Results 1. Selected sales coded as "Q" 10,746 Sales 2. Selected improved sales (Status = "1") 10,251 Sales 3. Selected sale with subclass codes 2000 to 3999 137 Sales 137 sales were analyzed using the required measurements for the level of assessment, as well as for the quality of the assessment. Median .976 Price Related Differential. 1.1129 Coefficient of Dispersion .103 The above ratios are in compliance with the standards set forth by the Colorado State Board of Equalization (SBOE) for the overall sales. The following graphical exhibits describe further the sales ratio distribution for all of these properties: 2007 Weld County Property Assessment Study—Page 31 ROCKY MOUNTAIN VALUATION SPECIALISTS COMMERCIAL SALE RATIO ANALYSIS 70- 80- 60- a II 10- 1 c Q LL 30- 20- 10— Mean=09479 Std.Dev. 014662 N-197 0 0.40 0.60 0.80 1.00 1.20 140 190 SaleRafio 2007 Weld County Property Assessment Study—Page 32 411) ROCKY MOUNTAIN VALUATION SPECIALISTS Sale Ratio by Sale Price- Commercial Properties • 1.40 , • 1.20 t JN o •t ' " 1.00 • 0.80 • • • 0.60 • • ♦ $0 $5,000,000 $10,000,000 $15,000,000 $20,000,000 $25,000,000 Tasp Commercial Market Trend Analysis The assessor did not apply a market trend factor to the commercial sales, based on our analysis of the commercial and industrial sale data. Our sale ratio analysis verified this conclusion, as follows: Coefficient? Unstandardized Standardized Coefficients Coefficients Model B Std. Error Beta t Sig. 1 (Constant) .940 .018 51.046 .000 saleperiod .001 .002 .036 .507 .612 a. Dependent Variable: SaleRatio 2007 Weld County Property Assessment Study—Page 33 ROCKY MOUNTAIN VALUATION SPECIALISTS Commercial Market Trend Analysis • 140- • 20- _ • • • • • • • • • • • • • • • • • i • • ion- : • i i • I : i i • _ • a • a • • • f� + • • • • $ • • • 080- • • • • •• • It • a • • • • • • • • • • • • • • 080 •- • • • 1 I I 0 s ID 15 20 sal•p•riod Sold/Unsold Analysis In terms of the consistent treatment of commercial/industrial sold and unsold properties, we used the same comparison methodology used for residential properties. The following indicates that commercial and industrial sold and unsold properties were valued consistently, based on the mean and median value per square foot: iitelitAgtt t `- n.1, MaX I440. X/ _ , f Unsold 3,187 $47 $65 $10 $496 Sold 151 $55 $68 $10 $316 2007 Weld County Property Assessment Study—Page 34 ROCKY MOUNTAIN VALUATION SPECIALISTS V.VACANT LAND SALE RESULTS Ste s Results 1. Selected sales coded as "Q" 10,746 Sales 2. Selected improved sales (Status = "V") 1,130 Sales 3. Selected sales with abstract codes less than 4000 1,022 Sales 4. Selected sales with Previous Improvement Value = 0 663 Sales The 663 vacant land sales were analyzed using the required measurements for the level of assessment, as well as for the quality of the assessment. The following ratio analysis indicates the results: Ratio Statistics for NEWCURTO/TASP Median 1.000 Price Related Differential 1.010 Coefficient of Dispersion .094 The above table indicates that the vacant land ratios are in compliance with the standards set forth by the Colorado State Board of Equalization (SBOE) for the overall sales. The following histogram and scatter plot describe the sales ratio distribution for all of these properties: 2007 Weld County Property Assessment Study—Page 35 41, ROCKY MOUNTAIN VALUATION SPECIALISTS VACANT LAND SALE RATIO ANALYSIS 200— 150— u C e 7 V 100— L. 50— Mean=0.9947 Std.Dev.=0.15109 N=663 0 0.00 0.50 1.00 1.50 2.00 VSaleRatio 2007 Weld County Property Assessment Study—Page 36 440 ROCKY MOUNTAIN VALUATION SPECIALISTS Sale Ratio by Sale Price-Vacant Land Properties 2.00- • • 1.50- ••s • ul• S • • • • h • • Ts 4 '41 • • • is• • • s • • 44 a • • • 0.50- • 0.00-, • I I I I I l I $0 $200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000 $1,400,000 VTasp Vacant Land Market Trend Analysis To verify that market trending was not present in the vacant land sale data, we again relied on the sale ratio regression model. The following indicates that overall there was no significant market trend factor: Coefficients' Unstandardized Standardized Coefficients Coefficients Model B Std. Error Beta t Siq. 1 (Constant) .994 .010 95.833 .000 Vsaleperiod 6.55E-005 .001 .002 .057 .955 a. Dependent Variable:VSaleRatio 2007 Weld County Property Assessment Study—Page 37 We Ill ROCKY MOUNTAIN VALUATION SPECIALISTS Vacant Land Market Trend Analysis 200— • • ' ' ISO— • • • • • • • • • • • • • • • • • • • • • : a • • • _ re• 1m till ! • ilI � II ! ' ' ! !l • •i ; . �• • • • • . om- • ' • 15 S•unesr-l9NE-S • 000- • I I I I 0 10 15 20 Vsal•period Sold/Unsold Analysis In terms of the consistent treatment of vacant land sold and unsold properties, we examined the median and mean change in value between 2006 and 2007 for vacant land property values between these two groups by economic area, as follows: EconArea Group N Median Mean Minimum Maximum 0 UNSOLD 1597 1.0000 1.0327 .57 1.89 SOLD 41 1.0750 1.1215 .92 1.88 Total 1638 1.0000 1.0349 .57 1.89 2 UNSOLD 2966 1.0095 1.1032 .60 1.94 SOLD 337 1.1500 1.2277 .63 1.94 Total 3303 1.0275 1.1159 .60 1.94 3 UNSOLD 2510 1.0000 1.0966 .54 2.00 SOLD 114 1.1429 1.2031 1.00 1.88 Total 2624 1.0000 1.1012 .54 2.00 4 UNSOLD 3112 1.0000 1.0528 .52 2.00 SOLD 26 1.0833 1.1038 1.00 1.73 Total 3138 1.0000 1.0532 .52 2.00 2007 Weld County Property Assessment Study—Page 38 5. II ROCKY MOUNTAIN VALUATION SPECIALISTS 6 UNSOLD 1611 1.0000 1.0662 .54 1.88 SOLD 30 1.0667 1.1633 .59 1.80 Total 1641 1.0000 1.0680 .54 1.88 8 UNSOLD 181 1.0000 1.0679 .67 1.50 SOLD 3 1.0000 1.0238 1.00 1.07 Total 184 1.0000 1.0672 .67 1.50 9 UNSOLD 478 1.0000 1.1087 .60 1.93 SOLD 32 1.0000 1.1714 .95 1.66 Total 510 1.0000 1.1126 .60 1.93 Total UNSOLD 13054 1.0000 1.0735 .52 2.00 SOLD 587 1.1000 1.2032 .59 1.94 Total 13641 1.0000 1.0791 .52 2.00 Based on the above analysis, we concluded that the Weld County Assessor has valued sold and unsold vacant land properties in a consistent manner. VI. AGRICULTURAL IMPROVEMENTS ANALYSIS The final statistical verification concerned the assigned actual values for agricultural residential improvements. We compared the median improved value per square foot for this group and compared it to the median improved value per square foot for residential single family improvements in Weld County. The following indicates that both groups were valued in essentially the same manner: 2007 Weld County Property Assessment Study—Page 39 ROCKY MOUNTAIN VALUATION SPECIALISTS Descriptives Abstrimp Statistic Std. Error ImpVaISF SFR Mean $573 33.54425 95%Confidence Lower Bound $508 Interval for Mean Upper Bound $639 5%Trimmed Mean $97 Median $97 Variance $70,548,822 Std. Deviation $8,399 Minimum $0 Maximum $324,626 Range $324,626 a Interquartile Range $30 Skewness $20 .010 Kurtosis $471 .020 Ag Res Mean $153 46.63072 95%Confidence Lower Bound $61 Interval for Mean Upper Bound $244 5%Trimmed Mean $99 Median 97 Variance $2,685,414 Std. Deviation $1,639 Minimum $1 Maximum $57,608 Range $57,607 Interquartile Range $52 Skewness $35 .070 Kurtosis $1,228 .139 VII. CONCLUSIONS Based on this 2007 audit statistical analysis, residential, commercial/industrial, vacant land and agricultural residential properties were in compliance with state guidelines. This included sale ratio compliance, time trend validation, and agricultural residential valuation consistency. 2007 Weld County Property Assessment Study—Page 40 Hello