Property Tax Assessment Research Articles

Wal-Mart’s Impact on Local Revenue and Expenditure Instruments in Ohio, 1988–2003

This research estimates fiscal impacts of Wal-Mart in Ohio from 1985 through 2003. Using a panel of counties, and accounting for spatial autocorrelation in an instrumental variable model I estimate impact of Wal-Mart and Super-Centers on selected revenues and transfer payments. Among the findings is that the presence of a Wal-Mart increases local commercial property tax assessments resulting in collection increases of between $350,000 and $1.3 million. There is also an 18–43% reduction in per capita EITC claims in a county. However, Medicaid expenditures experience growth which amount to roughly 16 additional cases attributable to a single Wal-Mart. The magnitude and statistical certainty of these findings, suggests that local fiscal intervention, either through incentives or a “Wal-Mart Tax” is unwarranted.

From Summer Cottage Colony to Metropolitan Suburb: Toronto’s Beach District, 1889-1929

Over four decades beginning in the 1890s, the east-end Toronto district now known as "The Beach" was transformed from a summer second-home setting into a metropolitan suburb dominated by the middle classes (occupationally defined). Using a systematic random sample drawn from the municipal property tax assessment rolls for the study area at six intervals from 1889 to 1929, along with narrative examples and illustrative analyses of growth and change in urban form, this paper examines three compelling aspects of this transformation. First and foremost, this district is a fine example of pre-Second World War suburban growth: slow, piecemeal, and inconsistent in pattern and form, as now reflected in its eclectic built form and fine-grained mix of housing types. "The Beach" is also a place-based example of how metropolitan social geographies were being sorted out from within by user groups early in the twentieth century. Without becoming exclusively or solely a middle-class district, the Beach came to be dominated by the middle classes—typifying the "weave of small patterns" that characterized the social fabric of the early North American metropolis. Finally, the term cottage colony is used quite deliberately, for it appears that the Beach’s role as a summer leisure destination was instrumental in spurring its transformation into a middle-class suburb, imbuing it with particular qualities that enhanced (or ensured) its desirability. In effect, this district’s "summer cottage" period was a telling prelude to its emergence as a markedly middle-class district in Toronto of the 1920s and later.

Property Assessments and Information Asymmetry in Residential Real Estate

This paper presents a game theoretic model of property tax assessment that allows a tax appraiser to either choose a high or a low assessment. The owner either accepts or challenges this assessment. A “fixed effects” regression model is used to evaluate the differences in the assessed values of a sample of houses from Bexar County, Texas during 2000 and 2001. Where the owner of the house is identified as a state licensed property tax consultant, the assessed value, after adjusting for size, age, and other economic characteristics, ranged from a statistically robust 2.5% to 6.2% lower than neighboring houses.

Estimating Aggregate Levels of Property Tax Assessment Within Local Jurisdictions: An Extension of the Ihlanfeldt Model to Multiple Land Uses

Sales ratio studies are currently used by a majority of states to estimate jurisdiction-specifi c levels of property tax assess- ment (LOAs) that are used to equalize educational funding. Sales chasing and the failure to adjust sales for time may cause estimates to inaccurately refl ect true LOAs, leading to funding inequities. A recently developed econometric model with minimal data require- ments has been shown to accurately estimate LOAs for single-family property. This note provides evidence showing that the model ac- curately estimates LOAs for other major land use categories.

Taking Compensation Private

In light of the expansive interpretation of the public use requirement, the payment of just compensation remains the only meaningful limit on the government's eminent domain power and, correspondingly, the only safeguard of private property owners' rights against abusive takings. Yet, the current compensation regime is suboptimal. While both efficiency and fairness require paying full compensation for seizures by eminent domain, current law limits the compensation to market value. Despite the virtual consensus about the inadequacy of market compensation, courts adhere to it for a purely practical reason: there is no way to measure the true subjective value of property to its owner. Subjective value is neither observable nor verifiable to third parties and courts cannot rely upon owners' reports of the value they attach to their properties. To date, the challenge of screening truthful from exaggerated evaluation has proven insurmountable.This Article solves the undercompensation conundrum. It offers a novel self-assessment mechanism that enables the payment of full compensation at subjective value when private property is taken by eminent domain. Under the proposed mechanism, property owners would get to set the price of the property designated for condemnation. The government could then either take the property at the designated price, or abstain, leaving the property subject to two new proposed restrictions. First, for the life of the owner, the property could not be sold for less than the self-assessed price, adjusted on the basis of the local housing price index. Second, the self-assessed price - discounted to take account of the peculiarities of property tax assessments - would become the new benchmark for the owner's property tax liability. The Article shows that under most conditions, these restrictions will induce honest reporting by owners, while reducing the transaction costs created by the compensation process. The result is a dramatically more efficient law of eminent domain that is also far more respectful of private property rights.

What Price Nondisclosure? The Effects of Nondisclosure of Real Estate Sales Prices*

Objective. Only a select set of states still do not require mandatory public disclosure of real estate sales prices. In this article we examine the possible public‐sector consequences of failing to make real estate sales prices publicly accessible.Methods. We propose a set of possible public‐sector consequences of sales price nondisclosure (property tax assessment inequities, tax revenue leakages, administrative inefficiencies, and related ancillary effects). We identify examples, provide limited empirical evidence (simple regressions and distributional analyses) on the restricted data available, and discuss the relevant legal considerations at a variety of administrative and geographic scales.Results. The limited statistical results and examples provide evidence of possible inequities in effective tax rates and tax revenue leakages that may be connected to sale price nondisclosure.Conclusions. We argue that there is a strong prima facie case for legitimate public concerns attached to real estate sales price nondisclosure.

The Use of an Econometric Model for Estimating Aggregate Levels of Property Tax Assessment Within Local Jurisdictions

A majority of the states equalize funding of local jurisdictions by conducting sales ratio studies to estimate levels of property tax assessment. Because of sales chasing and the failure to adjust sales for time, sales ratios may inaccurately estimate true levels of assessment, resulting in funding inequities. Building upon recent advances in the real estate price index literature, an econometric model is proposed as an alternative to sales ratios as a method of estimating levels of assessment. Results from a sample of Florida counties show that levels of assessment are accurately estimated by the model, even for small counties.

Vertical Inequity in Property Taxation: A Neighborhood Based Analysis

This paper applies a model to test for vertical inequity in property taxes using a set of residential sales from Bloomington, Indiana. The initial purpose is to compare results with those using the presently accepted regression approach as applied by Smith (2000) to the same data. The new outcomes demonstrate there can be significant inequity in a jurisdiction that remains hidden under previous testing methods. Also, the new procedure generates multipliers to adjust for identified inequities. Findings imply that tests for value related inequity in property tax assessment should be conducted using multiple spatial scales.

'Assessing' Discrimination: The Influence of Race in Residential Property Tax Assessments

In this Article, I document evidence that residential property in majority-minority neighborhoods is assessed at higher effective rates than like property in majority-white neighborhoods. I examine data on sales price and assessed value for more than fourteen hundred homes sales in New Haven, Connecticut from 2000-2001. My chief finding is that residents of minority neighborhoods - namely, African American and Latino - face assessments that are significantly higher than the market value of their residences, while residents of majority white neighborhoods are assessed at significantly less than market value. As a solution to assessment discrimination, I propose that assessments be meted out not on the purported market value of the underlying residence as is the case currently in most jurisdictions, but based on the actual cash costs of making home purchases.

Confronting Information Asymmetries: Evidence from Real Estate Markets

There are relatively few direct tests of the economic effects of asymmetric information because of the difficulty in identifying exogenous information measures. We propose a novel exogenous measure of information based on the quality of property tax assessments in different regions and apply this to the U.S. commercial real estate market. We find strong evidence that information considerations are significant. Market participants resolve information asymmetries by purchasing nearby properties, trading properties with long income histories, and avoiding transactions with informed professional brokers. The evidence that the choice of financing is used to address information concerns is mixed and weak.

An Analysis of Acquisition Value Property Tax Assessment for Homesteaded Property

This article explores the implications of acquisition value assessment for homesteaded property established in 1983 in Muscogee County, Georgia. The resulting freeze in assessed values has created sizeable assessment inequality that varies systematically with the value of the parcel. The difference between market value and acquisition value assessments is substantially larger for households with longer tenure and is associated with households with higher income, who are older, and who are white. The freeze has a small effect on the size of the property tax base and does not appear to reduce the probability of a home’s being sold.

Voluntary Development Restrictions and the Cost of Habitat Conservation

The management of economic activity on private land plays an important role in the effort to maintain and improve environmental quality in the United States. The paper develops a conceptual framework and an econometric model of the value of undeveloped land to show how preexisting development restrictions affect the cost of protecting habitat. The model is applied to the case of preserving vernal pools in California's Sacramento County by prohibiting development on agricultural land. Ignoring the existence of California's program of differential property tax assessment of farmland is shown to result in a large overestimate of the cost of habitat protection.

Applying Models for Vertical Inequity in the Property Tax to a Non-Market Value State

The objective is to contribute to the discussion on property tax inequity by employing the methodologies developed to test for vertical inequity in a tax system that currently does not rely on some form of market value in the assessment process. There is strong evidence that the property tax and the “True Tax Value” assessment procedure employed in Indiana contains progressive vertical inequities rather than regressive inequities as is typically perceived. This is unique, as previous findings tend to support the notion that the property tax is regressive. It provides potentially pertinent information in light of the ongoing discussion surrounding the restructuring of Indiana's property tax assessment and property tax debates elsewhere.

Confronting Information Asymmetries: Evidence from Real Estate Markets

This paper studies the role of asymmetric information in commercial real estate markets in the U.S. and Canada. We propose a novel and exogenous measure of information based on the quality of property tax assessments in different regions and time periods. Employing direct and indirect information variables, we find strong evidence that information considerations are significant in real estate. We show that market participants resolve information asymmetries by purchasing nearby properties and by avoiding trades with informed professional brokers. There is some indication that purchasers also make use of informed intermediaries. The evidence that the choice of financing is used to address information concerns is mixed and fairly weak.

Economies of Scale in Property Tax Assessment

We estimate the costs of performing property tax as- sessments using a translog cost function over a sample of 138 county-level assessment offices in Georgia. We find that there are substantial economies of scale. For example, computed at the sample means, a ten percent increase in the volume of assessments results in an increase of approximately three percent in total costs. The model considers both the number of parcels and the value of parcels as alternate measures of volume; both measures give similar results. We also estimate a two-product cost function, with residential and nonresidential property assessment as the different outputs. These results show no evidence of economies of scope, and calculated econo- mies of scale are very close to the single output results.

Vertical Equity in the Taxation of Single-Family Homes

Vertical equity in ad valorem real property taxation is the concept that all properties within a taxing jurisdiction are assessed in equal proportion to their fair market value. This study examines the assessment of single-family homes in Bellingham, Washington, utilizing a database of 1,118 home sales in the southern half of Bellingham that sold during the time period January 1990 through June 1994. The results of several empirical tests suggest the presence of regressive vertical inequity. It appears that higher market value homes are assessed at a lower proportion of their value (sales price) than less expensive homes. These results suggest that property taxation at the local level magnifies the regressivity of Washington State's already highly regressive state tax system. Why does this apparent regressive vertical inequity exist? The authors offer several possibilities including the propensity of wealthy homeowners to challenge property tax assessments, the difficulty of valuing the amenities inside an upper-end home, the heterogeneity of the upper-end home market coupled with a small number of transactions, and the lack of ample staff and other resources at the County Assessor's office.

MEASURING THE PERFORMANCE OF THE PROPERTY TAX ASSESSMENT PROCESS

Most studies of property tax assessment performance focus on one-dimensional measures of assessment performance, such as the coefficient of dispersion. In this paper, the efficiency of the assessment process is analyzed incorporating both measures of output or performance and measures of resource cost. First, the coefficient of variation is adjusted to account for differences in the degree of difficulty of the assessing environment. Then a measure of efficiency in the assessment process is derived and implemented for assessment jurisdictions in the state of Illinois. The paper concludes with a discussion of the use of measures of output and efficiency in ranking assessment performance.

Use-Value Property Tax Assessment: Effects on Land Development

In this paper I provide a theoretical analysis of the effects of use-value property assessment on land development decisions and subsequent land use. First, use-valuation assessment is incorporated in an optimal timing model. Then the effects of that assessment method on the timing of development are investigated through comparative static analysis. Implications of the irreversible nature of development are considered. The paper concludes with policy considerations.

Socioeconomic status and prediction of ventricular fibrillation survival.

The association between socioeconomic status and cardiac arrest is less well known than some other associations with cardiac arrest. We used property tax assessments as a measure of socioeconomic status in a study of victims of out-of-hospital cardiac arrest found in ventricular fibrillation. We studied patients attended by the Seattle Fire Department's emergency medical services system between May 1986 and August 1988. During the period studied, 356 episodes met the study criteria; 114 (32%) of these patients survived without major neurologic deficit. Residential property tax assessments were available for 253 of the patients. After adjustments were made for age, witnessed collapse, bystander-initiated cardiopulmonary resuscitation, time from call to paramedic arrival, activity, location of collapse, and chronic morbidity, an association of survival with greater assessed value per living unit was observed. An increase of $50,000 in value per unit was associated with a 1.6-fold increase in survival rate. Not only are persons in the lower socioeconomic strata at greater risk for cardiac mortality, but they are also less likely to survive an episode of out-of-hospital cardiac arrest.

Property Tax Assessment Rates and Residential Abandonment

Abstract Netghbothood abandonment rates is New York City are predieted Within a model which investigates the imporatnce of property tax assessments building conditions adn tenant characteristies in owners’abandonment decision The results indicate that tax assessment rate are a mojor determinant of abon donment, and point to policy changes capable of showing the spread of aban donment in vulnerble netghbot hoods