DAR File No. 32063

Tax Commission, Property Tax

R884-24P-27

Standards for Assessment Level and Uniformity of Performance Pursuant to Utah Code Ann. Sections 59-2-704 and 59-2-704.5

NOTICE OF PROPOSED RULE

DAR File No.: 32063
Filed: 10/15/2008, 02:21
Received by: NL

RULE ANALYSIS

Purpose of the rule or reason for the change:

The proposed amendment is a result of a recent review of Section 59-2-303.1 and standards set by the International Association of Assessing Officers.

Summary of the rule or change:

The proposed amendment changes the term "reappraisal" to a "detailed review of property characteristics" since the term "reappraisal", as used in this rule, is inaccurate; and modifies the standards for measurement of dispersion to more closely conform to standards set by the International Association of Assessing Officers (IAAO).

State statutory or constitutional authorization for this rule:

Sections 59-2-704 and 59-2-704.5

Anticipated cost or savings to:

the state budget:

None--The proposed amendments match Tax Commission practice.

local governments:

None--The proposed amendments match Tax Commission practice.

small businesses and persons other than businesses:

None--The proposed amendments match Tax Commission practice.

Compliance costs for affected persons:

None--County assessors already meet the standards revised in the proposed amendment.

Comments by the department head on the fiscal impact the rule may have on businesses:

No impact. R. B. Johnson, Commissioner

The full text of this rule may be inspected, during regular business hours, at the Division of Administrative Rules, or at:

Tax Commission
Property Tax
210 N 1950 W
SALT LAKE CITY UT 84134

Direct questions regarding this rule to:

Cheryl Lee at the above address, by phone at 801-297-3900, by FAX at 801-297-3919, or by Internet E-mail at clee@utah.gov

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

12/01/2008

This rule may become effective on:

01/01/2009

Authorized by:

D'Arcy Dixon, Commissioner

R884. Tax Commission, Property Tax.

R884-24P. Property Tax.

R884-24P-27. Standards for Assessment Level and Uniformity of Performance Pursuant to Utah Code Ann. Sections 59-2-704 and 59-2-704.5.

[A.](1) Definitions.

[1.](a) "Coefficient of dispersion (COD)" means the average deviation of a group of assessment ratios taken around the median and expressed as a percent of that measure.

[2.](b) "Coefficient of variation (COV)" means the standard deviation expressed as a percentage of the mean.

[3.](c) "Division" means the Property Tax Division of the [State Tax Commission]commission.

[4.](d) "Nonparametric" means data samples that are not normally distributed.

[5.](e) "Parametric" means data samples that are normally distributed.

[6.](f) "Urban counties" means counties classified as first or second class counties pursuant to Section 17-50-501.

[B.](2) The [Tax Commission]commission adopts the following standards of assessment performance.

[1.](a) For assessment level in each property class, subclass, and geographical area in each county, the measure of central tendency shall meet one of the following measures.

[a)](i) The measure of central tendency shall be within 10 percent of the legal level of assessment.

[b)](ii) The 95 percent confidence interval of the measure of central tendency shall contain the legal level of assessment.

[2.](b) For uniformity of the property [being appraised under the cyclical appraisal plan for the current year]assessments in each class of property for which a detailed review is conducted during the current year, the measure of dispersion shall be within the following limits.

[a)](i) In urban counties:

[(1)](A) a COD of 15 percent or less for primary residential [and commercial ]property, and 20 percent or less for commercial property, vacant land, and secondary residential property; and

[(2)](B) a COV of 19 percent or less for primary residential [and commercial ]property, and 25 percent or less for commercial property, vacant land, and secondary residential property.

[b)](ii) In rural counties:

[(1)](A) a COD of 20 percent or less for primary residential [and commercial ]property, and 25 percent or less for commercial property, vacant land, and secondary residential property; and

[(2)](B) a COV of 25 percent or less for primary residential [and commercial ]property, and 31 percent or less for commercial property, vacant land, and secondary residential property.

(iii) For a rural or small jurisdiction with limited development, or for a jurisdiction with a depressed market, the county assessor may petition the division for a five percentage point increase in the COD or COV for one year only. After sufficient examination, the division may determine that a one-year expansion of the COD or COV is appropriate.

[3.](c) Statistical measures.

[a)](i) The measure of central tendency shall be the mean for parametric samples and the median for nonparametric samples.

[b)](ii) The measure of dispersion shall be the COV for parametric samples and the COD for nonparametric samples.

[c)](iii) To achieve statistical accuracy in determining assessment level under [B.1.]Subsection (2)(a) and uniformity under [B.2.]Subsection (2)(b) for any property class, subclass, or geographical area, the minimum sample size shall consist of 10 or more ratios.

[C.](3) Each year the [Division]division shall conduct and publish an assessment-to-sale ratio study to determine if each county complies with the standards in [B]Subsection (2).

[1.](a) To meet the minimum sample size, the study period may be extended.

[2.](b) A smaller sample size may be used if:

[a)](i) that sample size is at least 10 percent of the class or subclass population; or

[b)](ii) both the [Division]division and the county agree that the sample may produce statistics that imply corrective action appropriate to the class or subclass of property.

[3.](c) If the [Division]division, after consultation with the counties, determines that the sample size does not produce reliable statistical data, an alternate performance evaluation may be conducted, which may result in corrective action. The alternate performance evaluation shall include review and analysis of the following:

[a)](i) the county's procedures for collection and use of market data, including sales, income, rental, expense, vacancy rates, and capitalization rates;

[b)](ii) the county-wide land, residential, and commercial valuation guidelines and their associated procedures for maintaining current market values;

[c)](iii) the accuracy and uniformity of the county's individual property data through a field audit of randomly selected properties; and

[d)](iv) the county's level of personnel training, ratio of appraisers to parcels, level of funding, and other workload and resource considerations.

[4.](d) All input to the sample used to measure performance shall be completed by March 31 of each study year.

[5.](e) The [Division]division shall conduct a preliminary annual assessment-to-sale ratio study by April 30 of the study year, allowing counties to apply adjustments to their tax roll prior to the May 22 deadline.

[6.](f) The [Division]division shall complete the final study immediately following the closing of the tax roll on May 22.

[D.](4) The [Division]division shall order corrective action if the results of the final study do not meet the standards set forth in [B]Subsection (2).

[1.](a) Assessment level adjustments, or factor orders, shall be calculated by dividing the legal level of assessment by one of the following:

[a)](i) the measure of central tendency, if the uniformity of the ratios meets the standards outlined in [B.2.]Subsection (2)(b); or

[b)](ii) the 95 percent confidence interval limit nearest the legal level of assessment, if the uniformity of the ratios does not meet the standards outlined in [B.2]Subsection (2)(b).

[2.](b) Uniformity adjustments[, or reappraisal orders,]or other corrective action shall [only apply to the property being appraised under the cyclical appraisal plan for the current year. A reappraisal order shall be issued]be ordered if the property fails to meet the standards outlined in [B.2]Subsection (2)(b).[ Prior to implementation of reappraisal orders, counties shall submit a preliminary report to the Division that includes the following:

a) an evaluation of why the standards of uniformity outlined in B.2. were not met; and

b) a plan for completion of the reappraisal that is approved by the Division.

3.](c) A corrective action order may contain language requiring a county to create, modify, or follow its [cyclical appraisal]five-year plan for a detailed review of property characteristics.

[4.](d) All corrective action orders shall be issued by June 10 of the study year, or within five working days after the completion of the final study, whichever is later.

[E.](5) The [Tax Commission]commission adopts the following procedures to insure compliance and facilitate implementation of ordered corrective action.

[1.](a) Prior to the filing of an appeal, the [Division]division shall retain authority to correct errors and, with agreement of the affected county, issue amended orders or stipulate with the affected county to any appropriate alternative action without [Tax Commission]commission approval. Any stipulation by the [Division]division subsequent to an appeal is subject to [Tax Commission]commission approval.

[2.](b) A county receiving a corrective action order resulting from this rule may file and appeal with the [Tax Commission]commission pursuant to [Tax Commission ]rule R861-1A-11.

[3.](c) A corrective action order will become the final [Tax Commission]commission order if the county does not appeal in a timely manner, or does not prevail in the appeals process.

[4.](d) The [Division]division may assist local jurisdictions to ensure implementation of any corrective action orders by the following deadlines.

[a)](i) Factor orders shall be implemented in the current study year prior to the mailing of valuation notices.

[b)](ii) Other corrective action[, including reappraisal orders,] shall be implemented prior to May 22 of the year following the study year.[ The preliminary report referred to in D.2. shall be completed by November 30 of the current study year.]

[5.](e) The [Division]division shall complete audits to determine compliance with corrective action orders as soon after the deadlines set forth in [E.4.]Subsection (5)(d) as practical. The [Division]division shall review the results of the compliance audit with the county and make any necessary adjustments to the compliance audit within 15 days of initiating the audit. These adjustments shall be limited to the analysis performed during the compliance audit and may not include review of the data used to arrive at the underlying factor order. After any adjustments, the compliance audit will then be given to the [Tax Commission]commission for any necessary action.

[6.](f) The county shall be informed of any adjustment required as a result of the compliance audit.

 

KEY: taxation, personal property, property tax, appraisals

Date of Enactment or Last Substantive Amendment: [March 28, 2008]2009

Notice of Continuation: March 12, 2007

Authorizing, and Implemented or Interpreted Law: 59-2-704; 59-2-704.5