(a) The following definitions shall apply: - (i) "Absorption Period": The time period at the time of initial offering of the lots until all lots are sold. More importantly, the absorption period is an estimate of the time frame needed to market the inventory to the eventual end users.
- (ii) "Absorption Rate": The rate at which properties for sale or lease have been or are expected to be successfully marketed, sold, or leased in a given area over a duration of time.
- (iii) "Appraiser": A certified Wyoming assessing official as designated by Wyoming Department of Revenue, Rules and Regulations, Chapter 13.
- (iv) "Appreciation": An increase in value due to an increase in cost to reproduce, value over the cost, or value at some specified earlier point in time, brought about by greater demand, improved economic conditions, increasing price levels, reversal of depreciating environmental trends, or other factors as defined in the market.
- (v) "Appraised Value": The estimate of the value of a property before application of any fractional assessment ratio, partial exemption, or other adjustment.
- (vi) "Arms-length Transaction": A transaction between unrelated parties who are each acting in his or her own best interests.
- (vii) "Capitalization rate": A ratio between anticipated future income, either accounting income or cash flow and present value. Capitalization ratios can be derived from any income level, but once they have been so derived they can only be applied to a comparable income level. Such rates may be developed by generally accepted appraisal methods, to include but not be limited to the following:
- (A) By comparing the incomes from recently sold comparable properties with their sales prices, adjusted, if necessary, to cash equivalents (market derived rate). This method of deriving a capitalization rate is preferred when the required sales prices and incomes are available.
- (B) By deriving a weighted average for the cost of debt and equity capital, as reflected in appropriate money markets (band-of-investment method), and adding increments, when appropriate, for expenses that are excluded from outgo because they (expenses) are based on the value that is being sought or the income that is being capitalized. The rates for debt and equity capital shall be weighted by the respective proportion of such capital usually employed by typical prospective purchasers and a capital recapture rate added.
- (viii) "Coefficient of Dispersion (COD)": The average deviation of a group of numbers from the median expressed as a percentage of the median. In ratio studies, the average percentage deviation from the median ratio.
- (ix) "Comparative unit method":
- 1) A method of appraising land parcels in which an average or typical value is estimated for each stratum of land.
- 2) A method of estimating replacement cost in which all the direct and indirect costs of a structure (except perhaps architect's fees) are aggregated and specified with reference to a unit of comparison such as square feet of ground area or floor area, or cubic content. Separate factors are commonly specified for different intervals of the unit of comparison and for different story heights, and separate schedules are commonly used for different building types and quality classes.
- (x) "Computer Assisted Mass Appraisal (CAMA)": A system of integrated components and software tools necessary to support assessment administration of both real and personal property and the appraisal of a universe of properties through the use of mathematical models that represent the relationship between property values and supply and demand factors.
- (xi) "Confidence Interval": The level of confidence that the population measure (such as the median or mean appraisal ratio) falls in the indicated range.
- (xii) "Construction Phase": The time period when subdivision site infrastructure is installed on the land. This could include underground utilities, street storm drainage, water retention facilities, open space, common amenities, and other improvements that make the individual subdivision lots ready for construction of homes or units.
- (xiii) "Depreciation": A loss of utility and hence value from any cause. Depreciation may take the form of physical depreciation, functional obsolescence, or economic obsolescence.
- (A) "Physical Depreciation": The physical deterioration as evidenced by wear and tear, decay or depletion of the property.
- (B) "Functional Obsolescence": The impairment of functional capacity or efficiency, which reflects a loss in value brought about by such factors as defects, deficiencies, or super adequacies, which affect the property item itself or its relation with other items comprising a larger property.
- (C) "Economic Obsolescence (External Obsolescence)": Impairment of desirability or useful life arising from factors external to the property, such as economic forces or environmental changes which affect supply-demand relationships in the market. The methods to measure economic obsolescence may include, but are not limited to:
- (I) Capitalization of the income or rent loss attributable to the negative influence;
- (II) Comparison of sales of similar properties which are subject to the negative influence with others which are not.
- (III) Identification of factors specifically analogous to the property, i.e. Investments, capacities, and/or industry relationships.
- (xiv) "Division": Is the Property Tax Division.
- (xv) "Economic Life": The period of time over which an asset's operation is economically feasible.
- (xvi) "End-user Sale": The sale of real estate to an owner-occupant who intends to occupy and use the land or building facilities for his or her own purposes, as opposed to a speculative investor sale in which real estate is bought as an investment to be held with the hope of selling at a profit to an end user in the future.
- (xvii) "IAAO": Refers to The International Association of Assessing Officers.
- (xviii) "Infrastructure": Street, water and sewer lines, and other public facilities and services necessary for the functioning of a community.
- (xix) "Land Economic Area (LEA)": A geographic area that may encompass a group of neighborhoods, defined on the basis that the lands within its boundaries are more or less equally subject to a set of one or more economic forces that largely determine the value of the lands within this area.
- (xx) "Level of Appraisal (LOA)": The common, or overall, ratio of appraised values to market values. Three concepts are usually of interest: the level required by law, the true or actual level, and the computed level based on a ratio study.
- (xxi) "Market Adjustment Factors (Neighborhood Adjustment Factor)": Market adjustment factors, reflecting supply and demand preferences, are often required to adjust values obtained from the cost approach to the market. These adjustments should be applied by type of property and area and are based on sales ratio studies or other market analyses. Accurate cost schedules, condition ratings, and depreciation schedules will minimize the need for market adjustment factors..
- (xxii) "Mass Appraisal": The process of valuing a universe of properties as of a given date using standard methodology, employing common data, and allowing for statistical testing.
- (xxiii) "Mean": A measure of central tendency. The result of adding all the values of a variable and dividing by the number of values.
- (xxiv) "Median": A measure of central tendency. The value of the middle item in an uneven number of items arranged or arrayed according to size; the arithmetic average of the two central items in an even number of items similarly arranged.
- (xxv) "Mobile Machinery": Heavy equipment, except shop or hand tools or attachments, which is self-propelled, towed or hauled and used primarily in construction and maintenance of roads, bridges, ditches, buildings or land reclamation.
- (xxvi) "Model": A representation that explains the relationship between value or estimated sale price and variables representing factors of supply and demand.
- (xxvii) "Neighborhood (NBHD)": The environment of a subject property that has a direct and immediate effect on value and/or a geographic area (in which there are typically fewer than several thousand properties) defined for some useful purpose, such as to ensure for later multiple regression that the properties are homogenous and share important locational characteristics.
- (xxviii) "Parameter": Numerical descriptive measure of the population, for example, the arithmetic mean or standard deviation. Parameters are generally unknown and estimated from statistics calculated from a sample of the population.
- (xxix) "Parcel": A contiguous area of land described in a single legal description or as one of a number of lots on a plat; separately owned, either publicly or privately; and capable of being separately conveyed.
- (xxx) "Point of Valuation": The point at which a mineral is brought to the surface of the ground and is taken out of the pit, shaft or portal. For surface mine, this point shall be the area actually producing a mineral product and will be broken down to the nearest legal forty (40) acre subdivision (quarter-quarter). For an in situ mine, the point shall be the legal forty (40) acres subdivision, lot or tract in which the wellhead or mine is located.
- (xxxi) "Present Worth": The present value of income that is expected to be received at some future date or dates, as ascertained by the process of discounting both the income and the anticipated expenses incident to its receipt, that is the amount of money that, if presently invested and allowed to accumulate at compound interest would yield net income in the same amounts and at the same intervals as is anticipated of a given property.
- (xxxii) "Ratio Study (Sales Ratio Study)": A study of the relationship between appraised or assessed values and market values. Ratio studies evaluate the level and uniformity of the appraisals or assessments. A sales ratio study uses sales prices as proxies for market values, with the appraised/assessed value being the numerator and the sales price being the denominator.
- (xxxiii) "Raw Land": Land on which no improvements have been made; land in its natural state before grading, construction, subdivision, or the installation of utilities.
- (xxxiv) "Replacement Cost New (RCN)": The cost, including material, labor and overhead that would be incurred in constructing an improvement having the same utility.
- (A) "Direct costs" include, but are not limited to, materials, labor, supervision, equipment rentals, installation of components, and utilities.
- (B) "Indirect costs": Include, but are not limited to, architecture and engineering, building permits, title and legal expenses, insurance, interest and fees on construction loans, taxes incurred during construction, advertising and sales expenses, and reasonable overhead and profit.
- (xxxv) "Replacement Cost New Less Deprecation (RCNLD)": Replacement cost new less physical incurable depreciation and external obsolescence.
- (xxxvi) "Reproduction Cost": The cost of constructing a new property, reasonably identical (having the same characteristics) with the given property except for the absence of physical depreciation, using the same materials, construction standards, design, and quality of workmanship, computed on the basis of prevailing prices and on the assumption of normal competency and normal conditions.
- (xxxvii) "Statistics": Numerical descriptive data calculated from a sample, for example, the median, mean, or Coefficient of Dispersion. Statistics are used to estimate corresponding measures, and termed parameters for the population.
- (xxxviii) "Stratify" (stratification, strata, stratum): To divide, for purposes of analysis, a sample of observations into two or more subsets according to some criterion or set of criteria.
- (xxxix) "Time-adjusted sale price": The [rice at which a property sold adjusted for the effects of price changes reflected in the market between the date of sale and the date of analysis.
- (xl) "Trade Level": Refers to the production and distribution stages of a product. The appraiser should recognize three distinct basic levels of trade: the manufacturing level, the wholesale level, and the retail level. Incremental costs (such as freight, overhead, handling, installation, and sales taxes paid on installed costs) are added to a product as it advances from one level of trade to the next, thereby increasing its value as a final, in-service product. Thus the value of good will differ, depending on their level of trade. The appraiser should value personal property at its current level of trade, theoretically to a buyer within the same level of trade.
- (xli) "Trended original cost method": The procedure for estimating replacement cost of property by trending its original or historical cost with a factor from an appropriate construction cost index. Subsequent additions and replacements less deductions or removals must be considered.
- (xlii) "Unit-in-place method": The procedure for estimating cost which combines direct and indirect costs into a single unit-in-place, which, when multiplied by the area of the portion of the building being priced, results in a total cost estimate for that portion.