11-26-1984 Council Packet - Laserfiche WebLink

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Unequal property assessment, both within and among the various taxing jurisdictions, has been a concern of the legislature in past sessions due to overlapping tax levies by county, school and various special districts. For various aid formulas, the state has utilized sales ratios as an offsetting equalizing factor so that distribution of aids will be accomplished on as fair and equitable basis as possible. The legislature has also adopted a penalty provision effective in 1986 based on coefficient of dispersion which is calculated from the sales ratio and has discussed penalty provisions based on the sales ratio itself. However, sales ratios individually and collectively are inherently flawed, inaccurate, and at best are only general indicators. Many factors not associated with :c'vil value of a piece of property can affect the sales price of >;. property. A farmer may buy a 40 or 80 acre parcel for well 'market value' ao ar add on to a current farm and justify the by spreading the extra expense over the entire farm. A person with a very large rinwnpayment or access to good finar^ g may be able to purchase a house with a very low or non -exist underlying mortgage well under the 'market value'. On Lne other hand, someone with very limited downpayment may pay well over the market rate for a house with a high underlying assumable mortgage. Many other economic and personal reasons may enter into purchase price of property. Also, in many cases there just are not enough sales in a class of property to accurately determine a sales ratio in a given geographic area. Finally, to keep ratios from constantly jumping Lap or down from year to year and to level out statistically the activity, the Revenue Department disregards some sales that are out of line for various reasons and uses two year samples to create a ratio. At best, sales ratios and various, statistics such as the coefficient of disperson are only general indicators. They are tools to be used to determine cases of inconsistancy and provide a basis for constructive help to assessors. Imprecise sales ratios are generally in the ball park and computed in such a way as to be consistantly imprecise for all units. Therefore, as just one of several factors in aid formulas, they may be a necessary ingredient to provide as uniformly as possible an equitable distribution. However, because sales ratios and oefficient of disperson measurements are imprecise and were basically developed as tools to determine general trends, they should not be used as precision measurements for penalties or bonuses. E-1 COEFFICIENT OF DISPERSON PENALTY THE AMM URGES THE. LEGISLATURE TO REPEAL THE COEFFICIENT OF DISPERSION PENALTY PROVISION.IF THE LEGISLATURE DETERMINES A NEED EXISTS, THE COMMISSIONER OF REVENUE SHOULD BE MANDATED TO ORDER A REASSESSMENT OF AN AREA BY AN INDEPENDENT ASSESSOR IF THE COEFFICIENT OF DISPERSION INDICATORS FALLS TO SOME LEVEL BELOW NATIONAL STANDtRDS OF ACCEPTABILITY. THE COSTS OF SUCH