Assessment Modeling January 1, 2011 Base Revaluation SAAA Annual Workshop May 17, 2012

2006 Base Models  Land models based upon historic Saskatchewan Assessment Manual. Base rate derived by stratification and the sales array fit to stock size adjustments.  One hybrid residential direct comparison model, which encompassed all buildings of residential construction type (including single detached, semi-detached, townhouse, multiple exterior entry and garden style type buildings).  Three separate gross rent models for commercial construction walk-up apartment buildings.  All other buildings valued by market valuation standard in the jurisdiction were defaulted to market adjusted replacement cost based upon the Marshall Valuation Service Manual.

Land Modeling  Stock size curves seemed like a forced fit to data. The curves do not adapt with sales trends through size change within a stratification.  Swift Current fit the curve to the data within a stratification by applying regression curves based upon specific sales trends.  Rationale is applied to all land types throughout city resulting in improved variance in all land types.  Resulting shifts to land are outlined with its respective classification type.

Residential Modeling  Data analysis for regression modeling did not indicate variance in type considered. All residential construction types used in the 2006 base model were maintained for 2011 base model.  Results of preliminary modeling indicated model degradation in terms of building values that were in excess of 50 years of age.  The dataset was split and remodeled in two separate hybrid models. Each model is distinct, as the data characteristics that affect value in the model for the older subset, did not necessarily affect value in the other.  Resulting variation has improved significantly from the previous assessment cycle.

Residential Variance

Residential Shifts

Multi-Residential Modeling  Stratification of multi-residential is constant from the previous cycle: consisting of single title rental apartment, rental condominium and owner occupied condominium models.  Rents and expenses were updated to 2011 base year.  GIM, direct capitalization and market adjusted cost models were built for each stratification.  The direct capitalization model was selected as variance for this model as variance was marginally better than the other models.  Variance improved dramatically from previous assessment cycle.

Multi-Residential Variance

Multi-Residential Shifts

Commercial Modeling  Drastic change in rationale in commercial property results in migration from market adjusted cost to direct capitalization to hotels, retail, office, restaurant and manufacturing/warehouse properties in Swift Current.  Change in valuation approach will amplify the market growth in the commercial sector as variance in construction type is not as prevalent.  Applied models still require review. Transparency was the rationale during modeling, but the result was complexity. The models were built up to gross rent then market expenses deducted. Starting these models at net rent will yield similar results and be much simpler.

Commercial Variance

Commercial Shifts

Summary  Residential and Multi-residential models are a natural progression from past cycles. No significant rationale changes were undertaken in these groups and as such, the only shift in these aspects are due to market growth.  Commercial properties and vacant land underwent a redesign from last cycle’s rationale. The resulting values accentuate and amplify the market growth.

Overall Property Variance

Assessment Modeling  Questions?