By Jared Brey
To you, your house is your home, a unique place, your proverbial and literal shelter from the storm.
To an assessor, though, your house is just a sum of its parts, a variety of factors run through something called a hedonic regression to come up with a single number: its "actual value."
And that process of establishing actual value -- for each and every property in
In some ways, the process is simple: use a number of factors -- the age, condition, square footage of the house, etc. -- and especially recent comparable home sales near your block -- to come up with the market value of your home: the amount you could get if you put up a "For Sale" sign tomorrow.
In many ways, though, the process is complicated. And, at the end, what OPA will emerge with is an educated guess.
The OPA has been working to make an accurate assessment of the market value of every property in
His office has already performed an initial field inspection, and is currently calculating preliminary values before performing a second round of field inspections between Labor Day and the end of October to look for "anomalies."
McKeithen said the OPA plans to mail out the new assessments mid-February 2013.
How does it come up with the actual value for your property?
The OPA begins by sending out its 109 field assessors to look at the physical attributes of each house. These inspectors have now walked every block in the city to determine the style and characteristics as well as the condition of each home.
Assessors record myriad characteristics of each property: the year it was built, number of stories, number of bedrooms, façade materials, square footage, side yards, back yards, driveways, and so on. Some of this information can be gleaned from the street, but the assessors in some cases knock on doors to get details directly from the property owners. The Office also hung short questionnaires on doorknobs asking for more information. McKeithen said he doesn't yet know what the rate of return is on those door hangers.
The assessors also assign one of seven "condition codes" to each property, ranging from newly constructed all the way down to gutted and ready for demolition, with various gradations in between. The condition code helps the OPA to calculate the relative value of homes of the same style.
Finally, the assessors look for clues of any improvements completed on different properties: whether there are new windows, doors, or roofs, repointed bricks, or signs advertising remodeling companies, for example.
In its headquarters at the
Using City-recorded data, as well as sales records compiled by TrendMLS, the OPA breaks the city's close to 500,000 residential properties up into six-to-eight block Geographical Mapping Areas, or GMAs. These GMAs are what McKeithen calls "pockets of activity" in which sale prices are comparable.
"We look at the sales activity in these particular GMAs and make sure that we're comparing apples with apples," McKeithen said.
The Office uses property transaction records to approximate the value of similar houses.
For example, if a two-story, brick row house in good condition sells for $100,000, the OPA assumes, the same style house on the next block over is worth roughly the same amount.
The boundaries of the GMAs are reconfigured every year, and there are currently 646 of them, according to McKeithen. When conditions change in a particular area--when new homes are built, for example--the city reorganizes the GMAs accordingly.
If you live in a two-story, brick row house, and a developer builds a giant, multimillion dollar condominium complex at the corner of your block, you don't need to worry that the new property will automatically inflate the assessed value of every home in your GMA.
"We're going to have properties that have issues, as we say," said McKeithen. "And so, we may have to pull those out from the GMA, and for lack of a better term, attempt to do those by hand."
However--and this is where things get most complicated--if condo towers are going up in your neighborhood, then land values are likely going up as well--and the value of the land your house sits on is part of the equation in determining its overall value.
The OPA compares its own assessments against land values provided by local economist Kevin Gillen, vice president of Econsult Corporation. Gillen was contracted to calculate land values for the City, which he does by doing a "hedonic regression" analysis on the same property sales data collected by the City and used by the OPA.
This analysis, Gillen explained, allows him to sort the total value of a property (i.e. the price paid for it) into separate values for its individual, constituent characteristics. These include "dwelling characteristics," such as lot size and the age of the building, and "locational characteristics," such as proximity to a subway stop and general neighborhood quality of life, which is calculated using U.S. Census data.
Once Gillen has the total value broken down into individual values, he subtracts the values of all characteristics related to the building itself. He then computes an overall land value by adding together the values of the lot size and the locational characteristics. The land value, therefore, is that which remains after the structure value is subtracted from the total property value.
Sound complicated? It is.
Gillen said that land typically accounts for between 10 and 30 percent of the total value of a property. Where the percentage is high, you often find gentrification: the fact that an old row house in Northern Liberties may cost twice as much as an identical old row house in another part of town means that the location value--as reflected in the home's land value there--has gone up, while the structure value, as a percentage of the total, has decreased.
As Gillen wrote in an email: "This is why City Council was so concerned about providing gentrification relief when they were considering adopting
In the end, though, it is outside the purview of the Office of Property Assessment to consider whose taxes are going up and whose are going down when doing its assessments.
"The assessor can't have a heart, honestly," said Richie McKeithen. "That's why, oftentimes, in a lot of localities, we're not even under the people who set a budget. We're assigned to just deal with the real property: what is it worth? what will it sell for? Period."
The OPA won't reveal any reassessed values until it reveals them all, which it plans to do early next year. At that point, McKeithen said, it's on homeowners to speak up if their reassessments seem off. Homeowners have the right to appeal the Board of Revision of Taxes if they feel their new assessments are askew or do not accurately reflect true value.
The new numbers are due to arrive by mail beginning in mid-February.
Photo: Northern Liberties