Village of Waunakee 2012 Revaluation Educational Information Session Presented by Associated Appraisal Consultants, Inc. Dean Peters

Revaluations & the Assessment Process Assessments are done annually at market value or a percentage of market value Assessments must be equitable Values must be based on January 1 st each year Assessments may be contested or appealed each year during the Open Book & Board of Review

Four Types of Annual Assessment 1.Annual Review / Maintenance 2.Interim Market Update 3.Exterior Revaluation 4.Full Revaluation

Annual Review / Maintenance Annexed Properties & New Subdivisions Changes in Exemption Status Demolitions, Fire Damage, Water Damage New Construction Change in Class, Legal Description, Zoning Reassessment of all Business Personal Property

Interim Market Update Reliable Records Revaluation with in last 5 years Includes all requirements of Annual Review/ Maintenance PLUS Analysis of sales ratios and adjustments to assessments in all neighborhoods or property types where assessment equity is insufficient

Exterior Revaluation Reasonably reliable assessment records Full revaluation with in last 6 – 9 years Includes all requirements of Annual Review/ Maintenance PLUS exterior inspection of all properties and reassessment of all properties at full value

Full Revaluation Appropriate when: –Assessment records are outdated or incomplete –or, assessment uniformity is inadequate –or, a full revaluation has not been completed within the past 10 years May be required by state statute and enforced by the Wisconsin Department of Revenue

Full Revaluation Requirements Includes all requirements of Annual Review/ Maintenance, PLUS Physical inspection of all buildings and vacant parcels of land Interior inspection of all primary buildings New photos & measurements of all buildings Reassessment of all properties at full value

Customer Service A live person always answers the phone. Our office staff handles all inquiries from: taxpayers, realtors, and appraisers. We handle all appointments for Open Book. We have a toll free phone number for use during normal business hours. No frustrating menu systems.

2012 Revaluation Process Informational letters to be mailed to all property owners Field work and property inspections conducted Analysis of sales and calculation of new assessed values based on local market conditions Property owners notified by mail of new assessed values Appeal process (Open Book & Board of Review)

How to Identify our Staff Assessors wearing photo ID tags & company clothing Red fleet vehicles displaying Associated Appraisal logo & name Assessors carry letter of introduction on Village of Waunakee letterhead Tag left at door if no one is home

Photo ID Tag

Red fleet vehicles Your Partner in Municipal Mass Assessment

Staff Project Managers are Assessor Level 2 or Level 3 certified. Property Listers are certified Assessor Level 1 or Technician. Project Technicians are all Department of Revenue certified. Personal Property Staff members are Department of Revenue Certified.

Property Inspection Process Property Owner Home –If okay, assessor will complete the walk through at that time Property Owner Not Available or Not Home –Tag left with toll free phone number –Schedule specific appointment time Evening appointments available Interior walk-through of homes typically takes 10 minutes or less Most measurements taken from the exterior

Interior Walk Through Assessor must consider all factors that affect market value –Square footage, room count, quality, condition, etc. Assessors have no interest in personal belongings or housekeeping Assessors will be courteous and professional Refusal of inspection results in loss of appeal rights per Wisconsin Statutes 70.47(7)(aa)

Notice of Changed Assessment Mailed for all properties when all field work and market analysis is complete Mailed at least 15 days before the Open Book. Board of Review will hear all final objections to assessed value

Open Book New assessment roll is available for public viewing Property owners may meet with assessor to discuss revised assessment Adjustments to assessments may be made at this time if warranted Open Book is an informal process

Board of Review Formal hearing ideally reserved for situations when assessor and property owner cannot agree Testimony is given orally, under oath, by property owner and assessor Property owner must provide opinion of value and factual evidence Assessor is presumed correct Decision will be made by majority vote Clerk must be notified of intent to object at least 48 hours before the beginning of BOR

Assessed Value In a revaluation, assessed values should represent the market value of property as of January 1 st Assessed values must be calculated using professionally accepted appraisal practices and the best information the assessor can practicably obtain

Appraisal Methods Three universal approaches to real estate appraisal & valuation: 1. Sales Comparison Approach 2. Cost Approach 3. Income Approach

Sales Comparison Approach Uses recent sales of comparable properties to interpret market value of a subject property that has not recently sold Comparable properties are those with similar attributes, in the same market area, that would likely be considered by potential buyers of the subject property in a competitive market

Sales Comparison Adjustments In the Sales Comparison Approach, sale prices of comparable properties are adjusted for differences between the sale property and the subject property Adjustments are made for GLA, bed/bath count, garage stalls, lot size, quality, age, condition, lot size, story height, etc.

Sales Comparison Adjustments When sale comparables are superior to the subject, the sale price of the comparable property is adjusted down When sale comparables are inferior to the subject, the sale price of the comparable property is adjusted upward Goal is to estimate value of subject based on sale prices of comparable properties

Cost Approach In the Cost Approach, market value is estimated by taking the replacement cost of the buildings & improvements, minus depreciation, and adding in the value of the land Cost Approach is based on the principle of substitution, which states that a buyer will not pay more for a property than what it would cost to acquire an acceptable substitute with like utility

Usefulness of Cost Approach Less reliable than Sales Comparison Approach, especially for appraisal of older homes with heavier depreciation Must be used when there is a lack of recent comparable sales Often used for unique properties and commercial properties

Income Approach In the income approach, market value of investment property is estimated by converting expected future benefits of property ownership into an expression of present value, using income capitalization Capitalization rates and gross rent multipliers are derived from sales of rental property and leased commercial property

Income Approach Example Direct Capitalization Method Example: Rental property with $45,000 gross annual income, $10,000 expenses, in a market with cap rate of 11.5% –Net Operating Income/Cap Rate = Value –$35,000/.115 = $304,000 market value

Assessed Value Summary Assessments will be made using professionally acceptable appraisal practices according to state law and the Wisconsin Property Assessment Manual Revaluations are a form of Mass Appraisal, in which a comprehensive & precise valuation model is created based on a body of sales data and in-depth analysis

Assessed Value Summary The goal of the Revaluation is to appraise and assess all property in a fair and equitable manner at market value. Market Value is the highest price that a property is likely to bring in a competitive market between a knowledgeable and willing buyer and seller.

Property Taxes Property taxes –State –County –Municipality –School district & vocational/ technical college Tax levy amounts are based on annual budgets State, county & school tax levies are apportioned according to equalized values After apportionment of tax levies, the tax burden for each municipality is divided up according to individual assessed values

Equalized Values Determined annually by the Department of Revenue for each municipality in Wisconsin Should represent the total taxable value of each municipality at 100% full value Published annually on August 15 th Adjusted annually for changes in market conditions, new construction, & other factors unique to each municipality

Purpose of Equalized Value Apportionment of tax levies to overlying taxing jurisdictions such as counties & school districts. Example: Dane County -Comprised of 61 individual municipalities -Would it be fair to collect 1/61 of County tax from each municipality? -No. Amount paid by each municipality is determined by its percentage of the county’s equalized value

Purpose of Assessed Value Divides each municipality’s total tax burden among individual taxable properties Must be uniform in order to accomplish a fair distribution of tax burden Should be as close as possible to market value (10% variance is tolerated by statute) Assessed values do not affect the total amount of property taxes collected

Taxes in a Revaluation Year Revaluations will affect each property’s percentage share in the municipality’s total tax burden Revaluations will have no effect on the total amount of property taxes collected The goal of a revaluation is equitable distribution of taxes according to market value of each property on January 1st

Example: Dinkyville Property Assessments before Revaluation A $350,000 B $250,000 C $250,000 D $150,000 Total Assessed Value = $1,000,000

Dinkyville’s Distribution of Taxes before Revaluation Total assessed value is $1,000,000. This is also called the “Tax Base” Total property tax burden is $25,000 How is the Mill Rate determined? –Tax Levy/Tax Base –$25,000/$1,000,000 = or 2.5%

Dinkyville Property Taxes A 350,000 x.025 $8,750 B 250,000 x.025 $6,250 C 250,000 x.025 $6,250 D 150,000 x.025 $3,750 Assessed Value * Mill Rate = Taxes Due

Assessed Value After the Revaluation A $300, % B $225, % C $225, % D $150,000 No change A $350,000 B $250,000 C $250,000 D $150,000 Assessed Value Before the Revaluation Total Assessed Value Now = $900,000

Will Dinkyville Property Taxes be Affected by Revaluation? Overall assessed value decreased by 10% Total tax burden remains constant at $25,000 Therefore, the Mill Rate must increase –Tax Levy/Tax Base = mill rate –$25,000/$900,000 = or 2.8% Taxes are redistributed based on new assessed values and new mill rate

After the Revaluation A 300,000 $8,250 - $500 B 225,000 $6,250 No Change C 225,000 $6,250 No Change D 150,000 $4,250 + $500 A 350,000 $8,750 B 250,000 $6,250 C 225,000 $6,250 D 150,000 $3,750 Before the Revaluation No change in total taxes collected

Conclusion Accurate, fair & equitable assessment of all properties will result in fair and equitable distribution of property taxes in Waunakee

Questions Associated Appraisal Consultants, Inc