Mont. Admin. r. 42.18.134

Current through Register Vol. 23, December 6, 2024

Rule 42.18.134 - 2017-2018 RESIDENTIAL AND COMMERCIAL REAPPRAISAL

(1) The department will implement its reappraisal plan in ARM 42.18.122. The reappraisal of class four residential and commercial property consists of:

(a) field reviews, as appropriate, including:

(i) determining accuracy of existing information in CAMA, and on the property record card (PRC);

(ii) observing condition;

(iii) reviewing quality of construction and depreciation assignment; and

(iv) collecting additional data as needed.

(b) collection, verification, and analysis of sales information;

(c) collection, verification, and analysis of income and expense information;

(d) data entry in the CAMA system, including:

(i) correcting, updating, or adding property data;

(ii) reviewing edit reports; and

(iii) adding supplementary data, including outbuildings.

(e) development and review of land valuation models to be entered into CALP tables, as CALP is defined in ARM 42.18.128;

(f) development of sales models/benchmarking;

(g) development of income and expense models/benchmarking;

(h) collection of construction and building material costs;

(i) generation and review of property record card (PRC), comparable sales sheets, and income and expense valuation sheets;

(j) a statewide equalization review; and

(k) final determinations of value.

(2) Multiple field reviews of each property will be kept to an absolute minimum.

(3) The collection, verification, analysis, and data entry of cost information, sales information, and income and expense information is an important component of the CAMA system. The department shall formulate procedures for collection, verification, and validation of cost information, sales information, and income and expense information. Accuracy of cost information, sales information, and income and expense information is critical to the development of:

(a) accurate land valuation;

(b) benchmarking;

(c) accurate cost models;

(d) accurate sales comparison models;

(e) accurate income and expense models;

(f) individual property final value determinations; and

(g) defense of final value estimates.

(4) Residential and commercial lots and tracts are valued through the use of land valuation models. Homogeneous areas within each county are geographically defined as neighborhoods. The land valuation models reflect January 1, 2016, land market values, and consist of a land valuation method dependent upon the market data available within the neighborhood and deemed comparable. The method(s) the department may utilize for the valuation of land are listed below:

(a) sales comparison approach;

(b) multiple regression analysis (MRA);

(c) abstraction/extraction; and

(d) allocation.

(5) The development of cost models, sales comparison models, income and expense models, and regression models using CAMA is a requirement for property valuation during the reappraisal cycle. While separate models may be used for separate neighborhoods and market areas, the methodologies underlying the models must be uniform across the state.

(a) Cost information is used to determine the replacement cost new less depreciation (RCNLD) of class four buildings and improvements. The replacement cost new (RCN) reflects how much it would cost today to build a building similar to the taxpayer's building(s) due to age, physical conditions, and/or other forms of depreciation. The value of the taxpayer's building(s) and land are added together to establish the total value of the taxpayer's property.

(b) For the sales comparison models, the key components that influence value and the appropriate level of influence are determined through use of multiple regression analysis. The department may develop separate sales comparison models and separate income and expense models for each neighborhood and/or market area. If the taxpayer's property has different characteristics, for example, a different quality of construction or square footage than any of the comparable sales properties (comps), the department adjusts the value of the comps. The adjustments reflect how much each of the differences in characteristics affects the value of a property. The adjustments are made based upon information obtained from the market. Once the values of the comparable sales have been adjusted to account for the differences in characteristics, the comparable sales values are used to value the subject property.

(c) The income and expense information is compiled to create local and statewide income models that allow the department to estimate typical net incomes for various types of commercial properties. The net income streams are capitalized to determine the present value of the future benefits of the property.

(d) Regression models are developed for specifically identified market areas. The models identify how much value each property characteristic contributes to a property's total value. The taxpayer's property (subject property) value is determined by summing up the values identified by the model for each of the subject property's characteristics. The value of the taxpayer's building(s) and land are added together to establish the total value of the taxpayer's property.

(6) Property record card (PRC) and comparable sales sheets and income and expense valuation sheets are generated and reviewed by appraisal staff. These sheets include:

(a) physical characteristics and component information;

(b) sales information;

(c) income and expense information; and

(d) valuation information.

(7) The PRC review consists of analyzing and collecting component information such as quality of construction and condition of improvements. This review allows the appraiser to compare property information to an estimate of value. Discrepancies in data or the collection of additional information required by the review results in updating the CAMA system data.

(8) Final determinations of value are conducted once all required field and program needs of the CAMA system are met. The appraised value for residential and commercial property may include the applicable indicators of value using the:

(a) cost approach;

(b) sales comparison approach; or

(c) income approach.

(9) The appraised value supported by the most defensible valuation information serves as the value for ad valorem tax purposes.

(10) In appraising residential and commercial properties, the department will utilize the Appraisal Guide, published on September 23, 2016, and located at revenue.mt.gov.

(11) This rule applies to tax years January 1, 2017, through December 31, 2018.

Mont. Admin. r. 42.18.134

NEW, 2012 MAR p. 2641, Eff. 12/21/12; REP, 2014 MAR p. 2990, Eff. 12/12/14; AMD, 2016 MAR p. 2339, Eff. 1/1/2017

AUTH: 15-1-201, 15-7-111, MCA; IMP: 15-7-111, 15-7-112, 15-7-201, 15-9-101, MCA