1. Valuation Forecasting
Ohio University Leadership Program
Mike Sobul, CFO/Treasurer, Granville EVSD & Consultant, PFR
March 21, 2018
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2. PUBLIC FINANCE RESOURCES: EMPOWERING THE PUBLIC'S FINANCIAL LEADERS
Overview
1) Residential Property Valuation Forecasting
2) Agricultural Valuation Forecasting
3) Pipeline Valuation Forecasting
4) Valuation Changes and Future State Aid
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3. Forecasting Residential Values
ODT publishes historical data of sales ratios and median home values by
County
Jurisdiction
City
Village
Township
Data comes from each “valid” sale of a piece of existing property in the state
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4. Forecasting Residential Values
ODT publishes the total value of new construction every year published by
Taxing district
School District
ODT publishes real property values by
School district
Both data files come from the real property abstracts filed by county auditors
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5. Forecasting Residential Values
Datasets available on ODT Website
Sales Ratio dataset
New Construction and Real Property
By school district and by taxing district
Both data files come from the real property abstracts filed by county auditors
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6. Forecasting Residential Values
Key column in sales ratio table is the far right
Median market to price ratio
These are medians of the ratio of the value, for tax purposes (before the 35% assessment rate) of each property that sold to the actual price
During a reappraisal or triennial update, ODT is looking for the rate to be in the percent range
The # of Sales column show the valid sales in the jurisdiction
Valid sales exclude sales of new homes and distress sales
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7. Forecasting Residential Values
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8. Forecasting Residential Values
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9. Forecasting Residential Values
This shows that almost all of the residential value in Berea is in either the cities of Berea, Brook Park, and Middleburg Hts.
Using abstract data for Berea also shows that all of those three cities are fully within the Berea School District
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10. Forecasting Residential Values
For the school district, use a weighted average of the sales ratios to determine a district-wide ratio
Based on the real property abstract, about one-third of the residential value of the district is in each of the three cities
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11. Forecasting Residential Values
You can build our own real time sales ratios
Arms length transactions, build a file of sales prices to the values of the properties on your county auditor’s website
Build relationships with local bank, mortgage companies, or appraisers. They can provide you with periodic updates of appraised values for sales or refinancing relative to taxable values without identifying particular properties to protect confidentiality
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12. Forecasting Residential Values
Note of caution, for small school districts and small jurisdictions
If there are not at least transactions in a year, the sales ratios are not going to be statistically significant
Pay more attention to countywide sales ratios, they are more likely to be applied in your local area
For general longer-term trends:
Three-year averaging slows the implementation of value declines
Three-year averaging slows the implementation of valuation increases once housing market turns
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13. What is Happening Going Forward
2017 Tentative Residential Valuation Changes
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14. Forecasting Residential Values
Forecasting New Construction
Use a combination of Line 3 (New Construction) and Line 14 (previous year’s value, land + building) from the real property by school district abstract to build an historical growth ratio series
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15. Forecasting Residential Values
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16. Forecasting Residential Values
New Construction has begun to increase very slowly
Watch new building permits in your overlapping jurisdictions
If you can acquire historical data on building permits, match those to the new construction data from the abstracts to assist in identifying long-term relationships
Property coming off exemption is treated for tax purposes like newly constructed property
Property going on exemption is essentially the same as destroyed property
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17. Forecasting Residential Values
Keep in mind the timeline for new construction
If a permit is applied for in the Spring of 2018, assuming construction begins in the fall, and it is completed in the Spring of
It first goes onto the tax rolls for a January 1, 2020 lien date for taxes collected in 2021
This means that even once the new construction market turns around, there will be a significant lag before you start seeing new revenue
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18. Forecasting Agricultural Property
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19. What is Happening Going Forward
In counties going through reappraisal or triennial update in 2017, CAUV values are expected to decline by an average of 31.7% statewide
In 2018 counties, CAUV values are expected to decline 21.5%
In 2019 counties, CAUV values are expected to decline 20.6%
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20. What is Happening Going Forward
In areas with strong growth in residential values and little agricultural property, tax rates will be rolled down by tax reduction factors to prevent gains in local revenue
In areas where agricultural values decline more than residential values increase, tax rates will increase to prevent local revenue from falling
In areas experiencing both of the above situations, the two will work opposite each other to keep tax rates stable
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21. What is Happening Going Forward
Counties going through reappraisals in 2018 or are likely to see increases in residential valuation
Just because residential values are rising does not mean that districts will get more money
Just because agricultural values are dropping does not mean agricultural dominant districts will get less money
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22. What is Happening with Pipelines
Two major pipelines are coming on line over the next few years that can have significant impacts on school districts
The Rover Pipeline was partially put in service during and is expected to be fully operational in Ohio in the next couple months
The Nexus Pipeline has been approved but the company is still going through site acquisition and right- of-way procurement
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23. PUBLIC FINANCE RESOURCES: EMPOWERING THE PUBLIC'S FINANCIAL LEADERS
Rover Pipeline
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24. PUBLIC FINANCE RESOURCES: EMPOWERING THE PUBLIC'S FINANCIAL LEADERS
Nexus Pipeline
Fulton County
Columbiana County
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25. What is Happening with Pipelines
Value is comprised of three things
Pipeline miles
Compressor stations
Meter and regulating stations
Value is depreciated over 30 years, starting at 98.3% and falling to 15%
The assessment rate is 88% and the full voted tax rate applies
There is no impact on reduction factors
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26. Valuation and the State Funding Formula
The sharp increases in CAUV values in 2014 and 2015 was the primary cause of nearly 200 additional districts going on the funding guarantee in FY 2018
Sharp increases in residential values in 2017 and 2016 will have a similar impact on more urban and suburban areas in FY 2020 (assuming the funding formula does not change)
Declining CAUV values will cause more rural districts to get poorer, especially combined with higher residential values
Three-year averaging of values will stretch the progression of the impacts over several years
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Key Takeaways
Barring changes in housing markets or the economy, residential values should continue to grow solidly
Agricultural values are likely to continue falling through
Pipelines are potentially a game-changer in some areas of the state
Public Finance Resources can help districts navigate through potential disruptions and changes
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28. PUBLIC FINANCE RESOURCES: EMPOWERING THE PUBLIC'S FINANCIAL LEADERS
Services
Five Year Forecast Software  More than a compliance document
Cash flow monitoring
Modeling scenarios
Graphics and dashboards
Planning tool
Consulting  Maximize your effectiveness
Financial consulting and cash flow monitoring
Forecast review and analysis, “what if” planning
Presentations to key stakeholders
Special Projects
Data Interpretation  Data driven decision making
Multi-year data sets to identify trends
Benchmark analysis reports to see how you compare
Graphics that are easy to read, understand and explain
Data driven decision making
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29. PUBLIC FINANCE RESOURCES: EMPOWERING THE PUBLIC'S FINANCIAL LEADERS
PFR Contact Information
Mike Sobul Consultant Public Finance Resources, Inc. PO Box 1822 Columbus, OH Phone:  
Debra Hoelzle Chief Operating Officer Public Finance Resources, Inc. PO Box 1822 Columbus, OH Phone:  
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