2007_Schedule_Reval_Manual_Appendix3
ScheduleofValues,Standards,andRules
Appendix 3 - Computer Assisted Mass Appraisal (CAMA) Modules
New Hanover County, North Carolina
Effective January 1, 2007
Table of Contents
From time to time, to address unforseen situations, the Tax Administrator of New Hanover County may
deem it necessary to add one or another computer application not discussed in this Schedule of Values.
All such new applications are hereby incorporated into this Schedule of Values except that no new
application may negativelyaffect the integrityof (equalityamong) the valuations arising from the
implementation of and continuing use of this Schedule, as approved.
Introduction..................................................................1
CALP (Computer Assisted Land Pricing)...........................................3
IAS Technical Documentation: CALP Algorithm(s).............................5
Cost Approach for Commercial / Industrial Buildings.................................9
5.1 Calculation, CLT Method..........................11
Main Building
Commercial Depreciation....................................14
5.2 Building Calculation..............................16
Other Features
Cost Approach for Residential Buildings..........................................18
IAS Technical Documentation: Cost Algorithm(s) for Residential Buildings........20
(5.3) Calculations...................................21
Main Dwelling
(5.4) Calculations....................................24
Other Feature
(5.5) Calculations.................................26
Dwelling Addition
Calculate Addition?s RCNLD.................................27
(5.6) Final Dwelling Calculations...................................28
Cost Approach for Other Buildings and Yard Improvements (OBY).....................31
IAS Technical Documentation: Cost Algorithm(s) for OBY Improvements.........32
The Market Approach.........................................................36
Choosing Candidate Variables.............................................43
Use of MRA Constraints and the Market Approach Report......................45
The Income Approach.........................................................47
Market Value via the Income Approach............................48
Fee Simple
Income Modeling.......................................................48
IAS Technical Documentation: Income Algorithm(s)...........................50
(5.8) Income Valuation from Models................................50
(5.9) Income Valuation from Actuals................................59
IAS CAMA Database..........................................................76
Calibrating Appraised Values to the Real Estate Market.............................139
Other Modules..............................................................142
CAMA Module Screen Prints..................................................145
Appendix 3 - CAMA ModulesPage 1
Introduction
New Hanover County purchased the (IAS) in time for the 2007
Integrated Assessment System
(and following) county-wide revaluations. IAS is a software package designed to assist in the
appraisal of real and personal property, and to provide a way to maintain ownership records and
record and apply any exemptions a given property is qualified to enjoy.
?IAS? consists of:
? IAS4 - an extensive, ORACLE-based database which is composed of numerous tables that
house and support the various data collected and maintained by the Tax Administrator?s
Office;
?two interfaces to this database:
?a stable set of forms generally known as the ?Client-Server? environment; and
??iasWorld? - a new and largely untested (at implementation), web browser environment.
?software applications - the county uses two of the main IAS modules, which are:
?Assessment Administration (AA) for maintaining name, address, legal description, etc. data;
?Computer Assisted Mass Appraisal (CAMA) for Real and separately, for Personal Property.
Thisaddresses the revaluation of all real property in New Hanover County,
Schedule of Values
the effective date of which is January 1, 2007. Therefore the IAS Assessment Administration
module and the Personal Property sub-module, neither of which are required to execute any part
of this revaluation of the county's real property, will not be discussed further.
The Computer Assisted Mass Appraisal (CAMA) Module for Real Property
All known CAMA systems generally use two main types of ?tables? (see TABLE in Appendix
2) to appraise real property:
?Data Tables - The job of the field appraiser is to accurately describe each parcel of real
property to the CAMA system, and to review the resulting estimate(s) of value. The appraiser
responsible for each neighborhood will make an OK / NOT OK decision regarding each
parcel?s value. Then, after notification, each property owner will make the same decision...
Appendix 4 contains the various codes the field appraiser uses as part of the descriptive
process. There are other, non-coded fields (for example, the square footage of a structure)
involved in this description.
?Validation and/or Control Tables - Appraisal management develops mathematical ?models? to
Page 2New Hanover County Tax Office
represent each typical type of land and residential, commercial, and industrial structure. Taken
as a whole, these models give the CAMA module an ?appraisal manual? where the codes, rates
and coefficients interact with each parcel?s descriptive data, in turn, through algorithms, to
produce a value estimate for every parcel of real property in the county.
Appendix 5 contains rate and coefficient ranges to be ?looked up? and applied by the CAMA
module, which will use the valuation methods and calculation routines in this Appendix.
The Appraiser?s Toolbox
All fee and mass appraisal practitioners have only three basic ways to analyze the value of parcel
(although disparate versions and/or techniques do exist). They are:
?The Cost Approach
?The Market (Sales Comparison) Approach
?The Income Approach
Each approach has strengths and weaknesses which will vary by location and from one type of
property to another, so it is rare that the three approaches will indicate an identical result. It is
Appendix 3 - CAMA ModulesPage 3
also rare for the three approaches to result in wildly disagreeing indications of market value.
Many times one or another approach may not be applicable to the analysis of a given parcel and
occasionally, as in the case of highly specialized buildings designed to serve one specific
purpose alone, only the Cost Approach is applicable to an analysis of a given property.
If two or three of the approaches indicate significantly different values the appraiser who
reviews the components of each approach usually finds additional factors that must be
considered. Not all properties are a candidate for the application of all three approaches, but the
appraiser will find market support for his or her final estimate of market value by reviewing at
least two of the three approaches and comparing the results. Wherever possible the County?s
appraisal staff is required to find support in the market for each parcel under his or her care
earlier (before mailing Notices) rather than later (upon appeal).
Land is valued first and ?as vacant?, and is valued separately from the appraisal of the property
as improved by building(s) and other improvements to the raw land. While the most common
method of appraising land is the Market Approach (using sales of vacant land), a form of the
Cost Approach and/or the Income Approach may be used for this function as well.
The Tax Administrator?s Office is required to divide every parcel?s appraised value into it?s
components (land and building). However the somewhat artificial allocation of a given parcel?s
total value (final market value) into its land and building components must not be compared to a
similar allocation of total value in any other appraisal opinion. Any such comparison is invalid.
Should an owner elect to appeal value, only the total value is in question - not its components.
The Cost Approach analyzes the contribution of any buildings (and yard items) separately from
the contribution of the land, and the allocation of the value components is inherent in the
approach. All parcels in the county will have an indication of value via the Cost Approach.
The Market and Income Approaches each analyze the value of the whole property. In order to
derive a building value estimate from either of these indications of value, the value of the land
must be subtracted from the total value. Should the Market of Income Approach, or both, thus
indicate a very low contribution for the buildings, the land may be misimproved (the buildings
will no longer represent the of the land). The appraiser may be required to
highest and best use
apply a significant amount of Functional or Economic Obsolescence. See Appendix 2.
CALP (Computer Assisted Land Pricing)
The graphic on the following page presents a high-level view of the way in which IAS? CAMA
module appraises land. The row of card-like objects across the bottom of the page represents
parcel data in the Land Table. The barrel-like object at the top of the page represents several
Validation Tables, and the row of card-like objects across the center of the page represents
Control Table entries designed to house appraisal management?s land rates.
Steps 1, 2, and 3 (as expressed on the graphic) follow the CALP program?s logical path for
responding to an appraiser?s changes to a parcel?s land data.
Appendix 3 - CAMA ModulesPage 5
IAS Technical Documentation: CALP Algorithm(s)
()
emphasis added
The calculation routine reads the lines of land information to be calculated (one by one) from screen
,Land Data and Computations
CA14
Get the detailed land information.
CA14:
Land TypeLand Code
Influence CodesInfluence Percent
If Land Type = F
Effective FrontageEffective Depth
Depth Table
(if entered)
If Land Type = S
Square Feet (Sq Ft)
If Land Type = A
Acres
If Land Type = U
Units
If Override Rates are present:
SizeRate
IncrementalDecremental
Get the parcel level descriptive information for land. ( or the parcel page of
CA12/CA12
)
CA14:CA14
NeighborhoodZoning
MunicipalityLocation
Utility CodesStreet / Road
Spot Location Adjustment
(default to 1 if blank)
Size Adjust AcresAG Use Flag
Get the Cost Table Version for the Tax Year, being processed:Version
AA44:
Using the Cost Table Version and the Neighborhood, get the following:
LP51:
Neighborhood Model for Land Type (lot, square foot, acres, gross, or units)
Percentage adjustment for Neighborhood Model
Land Code ModelStandard Depth Table
Using the
Cost Table Version
LP57:
, and the Land Code Model,Land Type and Land Code
being processed, get the following:
Acre TableBy Line Flag
AG Use FlagFAR Flag
Page 6New Hanover County Tax Office
IAS Technical Documentation: CALP Algorithm(s)
()
emphasis added
If the AG Use Flag from4, parcel page, is set to ?Y?, and the AG Use Flag on
LP51:CA1
is set to ?Y?, use the Agricultural Model Number instead of the Model
LP57
designated by Land Type.
Agricultural Model
Using the Cost Table Version, and the Location Code from, get the Location
LP54:CA42
Model Number. Check to see if the Neighborhood Model for the Land Type = ?1".
If so, set the Location Model to ?0". If the Neighborhood Model is not equal to ?1",
if any of the Neighborhood Models(lot, square feet, acres, gross) is greater than ?1",
set the Location Model as found on , otherwise, set to ?0".
LP54 Location Model
Using the Cost Table Version, and the Jurisdiction and Municipality Codes from
LP53:
, get the Zoning Model Number. Using the Location Model, check to
CA12LP52
verify that the Location Model and the Zone Model are both present in a Model;
otherwise the Zone Model is set to ?0".
Zone Model
Using the Cost Table Version, and the Street Code from, get the Street Model
LP55:CA12
Number. Using the Neighborhood Model, check to verify that the
LP52
Neighborhood Model and the Street Model are both present in a Model; otherwise
the Street Model is set to ?0".
Street Model
Using the Cost Table Version, and the Utility Codes from, get the Utility
LP56:CA12
Model Number. The calculation routine examines the Utility Codes on the parcel,
determines the one with the lowest (numbered, which means the highest)Priority
Code on and uses the matching Utility Model. Using the Neighborhood
LP56
Model, check to verify that the Neighborhood Model and the Utility Model are
LP52
both present in a Model; otherwise the Utility Model is set to ?0".
Utility Model
Using the Cost Table Version, get the Size and Rates corresponding to the Neighborhood,
LP52:
Zone,Location, Street and Utility Models retrieved. If any Model numbers were null, or if
no match was found, the default will be zero.
Base SizeBase Rate
Incremental RateDecremental Rate
Rates may have been created on special screens for easier maintenance, by residential zoning
Note:
model criteria ( through), commercial neighborhood model assignments (
LP61LP65LP71
through) and residential typical land size ( through). Rates that are created
LP75LP81LP85
in this manner appear as line items on the Land Pricing Model Rates screen,.
LP52
If the By Line flag is ?L? on for the Land Type and Land Code being
LP59:LP57
processed, get the Number of Acres for the Line from, description page. If the
CA14
By Line flag is ?P? on for the Land Type and Land Code being processed, get
LP57
the Size Adjustment Acres from, parcel page, or . Using the Acre Size
CA14CA12
Adjustment table specifiedon and the Number of Acres get the Acre Size
LP57
Adjustment. If an exact match for the Total Acres is not found, the adjustment for
the next largest size in the table is used. If no acre size table was specified, the Acre
Size Adjustment is 1.
Acre Size Adjustment
Appendix 3 - CAMA ModulesPage 7
IAS Technical Documentation: CALP Algorithm(s)
()
emphasis added
Calculate the Adjusted Rates:
Base Rate[times]Acre Size Adjustment[times]Spot Location[times]Incremental Rate [times]
Acre Size Adjustment for the Neighborhood Model=
Adjusted Base Rate
Incremental Rate X Acre Size Adjustment X Spot Location X Percentage Adjustment for the
Neighborhood Model=Adjusted Incremental Rate
Decremental Rate[times]Acre Size Adjustment[times]Spot Location[times]Percentage
Adjustment for the Neighborhood Model=Adjusted Decremental Rate
Using the formula for the specific Land Type, calculate the value for the Line
If Land Type is ?F?
Get the Depth Factor for the override Depth Table, if entered on , or the
LP59:CA14
Standard Depth Table from. If the Depth Table= ?000", the Depth Factor is
LP51
set to 1. If the Depth Table does not contain an exact match for the depth, the lowest
depthin the table greater than the parcel depth is used.
Depth Factor
Calculate the land value, using Override Base Size and Rates, if entered, otherwise the Model
Base Size and Adjusted Rates. If the Depth Table= ?000", the Depth Factor is set to ?1?. If
the Depth Table does not contain an exact match for the depth, the lowest depth in the table
greater than the parcel depth is used.
Effective Frontage [less] Base Size =Size Difference. If Size Difference> 0, use Incremental Rate as
Size Adjustment Rate; If Size Difference< 0, use Decremental Rate as Size Adjustment Rate.
((Base Size[times]Adjusted Base Rate) + (Size Difference[times]Size Adjust. Rate))
[times]Depth Factor=
Base Price
If Land Type is ?S?
Calculate the land value, using Override Base Size and Rates, if entered, otherwise the Model
Base Size and Adjusted Rates. If the Base Size is blank, use the Sq Ft from the Land Line.
Square Feet [less] Base Size =Size Difference. If Size Difference> 0, use Incremental Rate as
Size Adjustment Rate; If Size Difference< 0, use Decremental Rate as Size Adjustment Rate.
((Base Size [times] Adjusted Base Rate) + (Size Difference[times]Size Adjust. Rate)) =
Base Price
If Land Type is ?A?
Calculate the land value, using Override Base Size and Rates, if entered, otherwise the Model
Base Size and Adjusted Rates. If the Base Size is blank, use the Acerage from the Land Line.
Acres - Base Size =Size Difference. If Size Difference> 0, use Incremental Rate as Size
Adjustment Rate; If Size Difference< 0, use Decremental Rate as Size Adjustment Rate.
((Base Size [times] Adjusted Base Rate) + (Size Difference[times]Size Adjust. Rate)) =
Base Price
(Base Size [times]Adjusted Base Rate) + (Size Difference[times]Size Adjustment Rate) =
Base Price
If Land Type is ?G?
Calculate the land value, using Override Base Rate, if entered, otherwise the Model
Adjusted Rate.
Adjusted Base Rate=Base Price
Page 8New Hanover County Tax Office
IAS Technical Documentation: CALP Algorithm(s)
()
emphasis added
If Land Type is ?U?
Calculate the land value, using Override Base Size and Rates, if entered, otherwise
the Model Base Size and Adjusted Rates. If the Base Size is blank, use the number of
units from the Land Line.
Units [less] Base Size =Size Difference. If Size Difference>0, use Incremental Rate
as Size Adjustment Rate; if Size Difference< 0, use Decremental Rate as Size
Adjustment Rate.
(Base Size [times] Adjusted Base Rate) + (Size Difference [times] Size Adjustment Rate) =
Base Price
For all Land Types:
Calculate Influence Adjustment:
Base Price [times] (1 + Influence Percent) =
Adjusted Base Price
Retrieve the Property Class.
CA12:Class
Retrieve the Neighborhood Class Factor using the cost table Version,Neighborhood, and
CA41:
Class. A Neighborhood of ?********? indicates all neighborhoods, and a Class of ?****?
indicates all classes. If the check screen and column are filled in, verify that the data
matches the parcel data for the Adjustment Factor. If Low and High Limits are entered,
verify that the land value falls within the limits.
Neighborhood/Class Factor
Calculate Neighborhood/Class Factor Adjustment:
Adjusted Base Price [times]NBHD Class Factor =
Final Land Value
Calculate the Exemption Value:
Final Land Value [times] Exemption Percent =
Exemption Value
If any Land Code has FAR Flag set to ?Y?, calculate AFAR and AFARSF:
AFARSF *
AFAR *
* = New Hanover County makes no use of these fields.
Appendix 3 - CAMA ModulesPage 9
Cost Approach for Commercial / Industrial Buildings
The graphic on the next page presents a high-level view of the way in which the County uses
IAS? CAMA module to appraise commercial or industrial buildings. Each card-like object in the
graphic represents one building. The Cost Approach is the system?s default appraisal method.
The basic underlying premise of the Cost Approach is that a typical buyer is not justified in
paying more for a property than the cost of acquiring the land and constructing the building(s).
First, a buyer must acquire the land and prepare it for its . This may include
highest and best use
razing existing buildings. Therefore land is appraised separately, as of the .
date of appraisal
Next our typical buyer must collect the materials and provide the labor to assemble them into a
structure finished to market standards. The time, labor, and ?profit? in constructing the building
all contribute value to the whole property and that value is included in the analysis, whether or
not the owner paid for these out-of-pocket (directly, indirectly, or did the work themselves).
There are two schools of thought regarding the ?cost new? of a building and the appraiser will
choose one or the other path before beginning analysis. While this choice is generally reserved
for properties that require specialized analysis, an appraiser may estimate
Reproduction Cost
(RCN) to reproduce a building that is the subject of the analysis as nearly as modern
Newexactly
materials available will allow. New Hanover County chooses to estimate
Replacement Cost New
(RCN), which estimates the cost to replace the of the building(s) under analysis.
function
Next, since few buildings are new on the , the appraiser must estimate the loss
date of appraisal
in value due to ?depreciation?. There are three types of generally recognized ?depreciation?:
(1), both and; (2) , both
Physical DepreciationcurableincurableFunctional Obsolescence
and; and , always. An amount for
curableincurableEconomic Obsolescenceincurable
(RCNLD) is the end result of this analysis.
Replacement Cost New Less Depreciation
Bothandarise from one or another deficiency
Physical Depreciation Functional Obsolescence
within the boundaries of a given parcel. On the other hand, (or )
EconomicLocational
arises from factors outside of the boundaries of a given parcel. Because the source
Obsolescence
of anyis therefore beyond the control of the owner, it is always
Economic Obsolescence
considered to be .
incurable
The measure of () and () is the
PhysicalcurableDepreciationFunctionalcurableObsolescence
cost-to-cure the problem. The measure of ()is the ?Age / Life?
PhysicalincurableDepreciation
concept which, in this CAMA system, comes from the appraiser?s opinion of the
effective age
(from the ) and the ,, and (CDU) of the structure. This
Effective Yearconditiondesirabilityutility
type of depreciation follows the market, not an Accountant?s concept of
Straight Line
or any of his other methods of depreciating property.
Depreciation
Appendix 3 - CAMA ModulesPage 11
IAS Technical Documentation: Cost Algorithm(s) for Commercial Buildings
()
emphasis added
5.1 Main Building Calculation, CLT Method
The following formula defines the cost calculation for a commercial building.The location of each
data element needed is identified by screen. In the calculation, each interior / exterior Line is valued
separately for a building (card), and each building is valued separately for the parcel. In following
these instructions manually, valueeach (screen) Line with its corresponding Lines, and
CA34CA32
then sum for the building data.Where multiple Lines are shown (for and ), use as
CA31CA34CA32
many Lines as needed for the building.
Get the Cost Table Version(COMVER) for the subject Tax Year.
AA44:
Get the Structure Code,Grade,Effective Year, if present, or Year Built
CA31:
Struct ______Grade ______Year ______
Get the Effective Year, if present, otherwise Year Built, if present, and
CA34:
substitute for Effective Year for this Line.
CA31
Get the following exterior data, determining the Floor Level Code
according to the table below
From Level:Level CodeFrom Level:Level Code
A - AtticUM - MezzanineU
B - BasementBP - PenthouseU
C - CrawlB01 - First FlF
E - Enclosurenone020-099U
FloorFloorUseUse
LineLevel(s)Level CodeAreaPerimeterTypeGroup
___________________________________________
___________________________________________
___________________________________________
WallExt.Const-Eff.
LineHeightWallructionYearPhysicalFunctional
________________________________________
________________________________________
________________________________________
Get the followinginterior datafor each Line
CA34:
Page 12New Hanover County Tax Office
IAS Technical Documentation: Cost Algorithm(s) for Commercial Buildings
()
emphasis added
Get Rates for Commercial Cost Version and Use Type.
CA64:
UseFinish %PartitionsHeat CodeAir Cond.PlumbingLighting
LineType / Rate / Rate / Rate / Rate / RateRate
___________________________
__________________________________________
___________________________
__________________________________________
___________________________
__________________________________________
Get the Commercial Schedule Level Factor (CSLF)
CA42:
Factor: LEVEL, Variable: COM
Get the Grade Factor Factor: GRADE, Variable ( Grade)
CA31
Get the Valuation Year Factor: COST, Variable, VALYR
If JURVALYR (multi-jurisdictional installations) variable not present, use VALYR
Get the Basic Structure Code (BSC) for the VER and Structure Code
CA61:
BSC:
Get the Base Rate for the Basic Structure Code,Floor Level, and
CA62:
Construction / MaterialBase Rate:
Calculate the Basic Structure Rate (BSR):
Base Rate X CSLF (rounded to nearest penney)
________ X ______Rounded BSR:
Get the Base Wall Rate (BWR) for the Exterior Wall Code and BSC.
CA63:
(Basement level will have zero Wall Rate)BWR:
Calculate the Perimeter Area Ratio(PAR) by dividing
the Perimeter by the Area, rounding to the nearest 0.0001.
________ (Perimeter) / _______ (Area) =Rounded PAR:
Calculate the Adjusted Wall Rate (AWR) by multiplying the PAR [times] the
Wall Height [times] the BWR (Wall Rate), rounded to pennies.
______ (PAR) X ______ (CSLF) =AWR:
Get the Base Rate for Use for the Use Type and VER.Base Rate:
CA64:
Appendix 3 - CAMA ModulesPage 13
IAS Technical Documentation: Cost Algorithm(s) for Commercial Buildings
()
emphasis added
Calculate the Basic Use Rate by multiplying the Base Rate for Use
[times] the CSLF, rounded to pennies
______ (Basic Rate for Use) X _____ (CSLF)= rounded BUR:
Calculate Adjustments:
Interior Finish Adjustment (IFA) = Rate [times]CSLF rounded to pennies
CA64
[times]Unfinished Area Percent(UFAP) [divided by] 100, rounded to pennies.
UFAP = 100 [less] Interior Finish Percent 100 [less] ____ (UFAP) =
____ (Rate) [times] (CSLF) [times] ____ (UFAP) [divided by] 100 = IFA
Partition Adjustment(PA) = Partitions Rate [times] CSLF
CA64
(rounded to pennies)______ (Rate) X ______ (CSLF) = PA:
Heating Adjustment (HA) = CA64 Heating Rate [times] CSLF rounded
to pennies_______ (Rate) X ______ (CSLF) = HA:
Air Conditioning Adjustment(ACA) = Air Conditioning Rate
CA64
[times] CSLF rounded to pennies____ (Rate) X ____ (CSLF) = ACA:
Plumbing Adjustment(PBA) = Plumbing Rate [times] CSLF
CA64
rounded to pennies_____ (Rate) X ______ (CSLF) = PBA:
Lighting Adjustment(LTA) = Lighting Rate [times] CSLF
CA64
rounded to pennies_____ (Rate) X ______ (CSLF) = LTA:
Calculate Square Foot Rate (SFR) as:
[plus][plus][less][plus][plus][plus][plus][plus][equals]
BSRAWRBURIFAPAHAACAPBALTASFR
___ [plus]____ [plus] ____ [less] ___ [plus]___ [plus] ___ [plus] ____ [plus]____ [plus] ____
[equals] :
SFR
Adjust by Floor Level Factor if appropriate, rounding to pennies:
Floor Level:CodeFloor Level Factor
AU Effective Area =Area X .4
CBApply 0.2 to Structural Cost
EnoneNo Structural Cost, only Wall
Calculate Base Price as Effective Square Feet(for Attics,Area [times] 0.4.
CA34
for Non-Attic,Area [times] Number of Stories [times]ASFR.
CA34
Attics: ______ (Area) X 0.4X ______ (Stories) X ______ (ASFR)=
Others: ______ (Area) X ______ (Stories) X ______ (ASFR)=
Adjusted SFR:
Page 14New Hanover County Tax Office
IAS Technical Documentation: Cost Algorithm(s) for Commercial Buildings
()
emphasis added
Other Features Values () are added to the value of the Interior / Exterior
CA32
Line () where the Line Number equals the Other Feature Line Number.
CA34
Add Building Other Features values. (See 5.2 - BOF Calculation)
CA32
________ (Base Price) + ________ (Total BOFs)Building Subtotal:
Multiply Subtotal [times] Grade Factor to get RCN
________ (Subtotal) X _______ (Grade Factor)=RCN:
Commercial Depreciation
Commercial depreciation is generated by cross-referencing the Structure Code and the
Construction Type (both found in), not by Neighborhood () as is residential
CA31LP51
depreciation. defines each Structure Code and its depreciation tables by Construction
CA61
Type. Therefore the calculations applied to each RCN should be as follows.
CA34Page 4:
Get Depreciation Override, if present, or Table Percent Good from
Depreciation Worksheet below for PhysicalDepreciation
Get the Structure Code (COMDAT.STRUCTURE). This is applicable
CA31:
to all sections in a building (Lines on a Card).Structure Code:
Get the Construction Type (COMINTEXT.CONSTR) applicable only to
CA34:
its own section (Lin e).
Get the DPT (Depreciation Table) for the Cost Version,Structure Code,
CA61:
and Construction Type.DPT:
(a)For Construction Type codes of 1 and 4, use the FRM Column
(CISTRUCT.FRAME) for determining the DPT;
(b)For all other Construction Type codes, use the FIRE RES column
(CISTRUCT.BRICK) for determining the DPT;
?Expected life for depreciation of...? is definedin years,which is traditionally the
NB:
name of the Depreciation Table to be used, i.c. 40, 50, 60...
Neighborhood is used to get the CDU Table to be referenced on .
CA67
Get the CDU Table for the Cost Version and Neighborhood. If no
LP51:
record exists for the COMVER Version, use LANDVER.
Get the CDU for the Physical and Functional Codes, using COMVER
CA67:
and CDU Table.
LinePhysicalFunctionalCDU
________________
________________
________________
Appendix 3 - CAMA ModulesPage 15
IAS Technical Documentation: Cost Algorithm(s) for Commercial Buildings
()
emphasis added
Determine the Age of the Building AGE:
a)(VALYR) [less] (COMINTEXT.EFFYR) from each Section (Line) on
, if present,
CA34ELSE
b)(VALYR) [less] (COMINTEXT.YRBLT) from each Section (Line) on
, if present,
CA34ELSE
c)(VALYR) [less] (COMDAT.EFFYR) for the Building on , if
CA31
present,
ELSE
d)default to: (VALYR) [less] (COMDAT.YRBLT) for the Building on
CA31
Get the Depreciation Percent(Percent Good) for the CDU and Age.
CA44:
Depreciation:
Get the Functional and Economic Depreciation Percentages
CA34:
(Percent Good)
Calculate RCNLD as RCN [times] Depreciation Percents:
Get the Obsolescence Depreciation Percent(Percent Good)
CA34:
Calculate RCNLD as RCN [times]Depreciation Percents.
________(RCN)
X ________(% Good from Table or Override)
X ________(Functional % Good, if entered)
X ________(Economic % Good, if entered)
RCNLD:
The sum of all the Commercial Interior /ExteriorRCN?s and RCNLD?s for a given Card (Building) of
a parcel are written to the Main Building Record()
CA31
Calculate Average Depreciation for the building.
100 * Total RCNLD / Total RCN (this includes any and/or entered on CA31)
FunctionalEconomic Obsolescence
Get Market Adjustment Override
CA31:
If Market Adjustment> 0, compute:
RCNLD = RCN * Market Adjustment
(this override is a composite of depreciation from all sources)
Get Neighborhood Adjustment Factor for the Neighborhood,Class, (Property
CA41:
Class for building, if it exists, otherwise parcelProperty Class), Screen,
CA31
and column BLDGVAL. Get Lo and HIValues. Compute:
If RCNLD not <LO and not > HI
RCNLD [equals]RCNLD [times]Neighborhood Adjustment
Page 16New Hanover County Tax Office
IAS Technical Documentation: Cost Algorithm(s) for Commercial Buildings
()
emphasis added
5.2 Building Other Features Calculation
Other Features are added to the value of the Interior / ExteriorLine
() where the Line Number equals the Other Feature Line Number.
CA34
Get the Cost Table Version(COMVER) for the Tax Year in question.
AA44:
Get the subject Structure Code,Meas 1,Meas 2, and Identical Units
CA32:
Get the Unit of Measure and Rate for the VER and Structure
CA65:
CA32CA65
IDENTUNIT
LLINESTRUCTMEAS 1MEAS 2UNITSMEASRATE
__________________________________________
__________________________________________
__________________________________________
If there is an entry in the + / -field, then thatentry and the entry in the
Meas 1 field [times] the Number of Identical Units constitutes the value
for that Line.
(±) ____________ (Meas 1) X ____ (Identical Units)=Value:
For Unit of Measure, calculate Value as:
1-Quantity:
Line/StrucQuantityRate
(___ / ___)_____ X_____=Value:
(___ / ___)_____ X_____=Value:
(___ / ___)_____ X_____=Value:
2-Area:
Line/StrucAreaRateMeas 1Meas 2
(___ / ___)_____ X_____ X_____ X_____=Value:
(___ / ___)_____ X_____ X_____ X_____=Value:
(___ / ___)_____ X_____ X_____ X_____=Value:
3-Lineal:
Line/StrucRateMeas 1
(___ / ___)_____ X______=Value:
(___ / ___)_____ X______=Value:
(___ / ___)_____ X______=Value:
Appendix 3 - CAMA ModulesPage 17
IAS Technical Documentation: Cost Algorithm(s) for Commercial Buildings
()
emphasis added
4-Cylinder Area:
Line/StrucMeas 1Rate
(___ / ___)_____ X______ X0.07854=Value:
(___ / ___)_____ X______ X0.07854=Value:
(___ / ___)_____ X______ X0.07854=Value:
5-Cylinder Volume:
Line/StrucMeas 1RateMeas 2
(___ / ___)_____ X______ X0.07854 X______=Value:
(___ / ___)_____ X______ X0.07854 X______=Value:
(___ / ___)_____ X______ X0.07854 X______=Value:
6-Elevators:
Line/StrucRateNumber of Stops?Per Stop? Rate
(___ / ___)____ +(_____________ X_____________)=Value:
(___ / ___)____ +(_____________ X_____________)=Value:
(___ / ___)____ +(_____________ X_____________)=Value:
7-Escalators:
Line/StrucRateHeight in Feet?Per Stop? Rate
(___ / ___)____ +(__________ X_____________)=Value:
(___ / ___)____ +(__________ X_____________)=Value:
(___ / ___)____ +(__________ X_____________)=Value:
Add the Building Other Feature values [times] the Grade Factor on to the
CA31
related Interior / Exterior line of the same Line Number.
CA34
Page 18New Hanover County Tax Office
Cost Approach for Residential Buildings
The graphic on the next page presents a high-level view of the way in which the County uses IAS?
CAMA module to appraise residentialbuildings. Each card-like objectin the graphic represents one
residential building. The Cost Approach is the system?s default appraisal method.
While a full book may be written about the Cost Approach, its basic underlying premise is that, while
exceptions such as ?a captive buyer? do exist, there is no justification for a typical buyer to pay more for a
given property than the cost of acquiring the land and constructing the building(s).
First, a buyer must acquire the land and prepare it for its highest and best use. This may includerazing
existing buildings. Therefore land is appraised separately, as of the dateof appraisal.
Next our typical buyer must collect the materials and provide the labor to assemble them into a structure
finished to market standards. The time, labor, and ?profit? in constructing the building all contribute
value to the whole property and that value is included in the analysis, whether or not the owner paid for
these out-of-pocket (directly, indirectly, or did the work themselves).
Thereare two schools of thought regarding the ?cost new? of a building and the appraiser will choose one
or the other path before beginning analysis. An appraiser may estimate Reproduction Cost New (to
exactly reproduce a building that is the subject of the analysis as nearly as modern materials available will
allow). However this choice is generally reserved for properties that require specialized analysis. New
Hanover County chooses to estimate Replacement Cost New (RCN), which estimates the cost to replace
thefunction of the building(s) under analysis.
Next, since few buildings are new on the dateof appraisal, the appraiser must observe the effective age
and the condition,desirability, and utility (CDU) of the structure with an eye toward estimating an
appropriate amount of depreciation. There are three types of generally recognized ?depreciation?: (1)
PhysicalDepreciation, both curable and incurable; (2) Functional Obsolescence, both curable and
incurable; and Economic Obsolescence, always incurable. A building?s Replacement Cost New Less
Depreciation(RCNLD) is the end result of this analysis.
Both PhysicalDepreciation and Functional Obsolescence arise from one or another deficiency within the
boundaries of a given parcel. On the other hand,Economic (or Locational)Obsolescence arises from
factors outside of the boundaries of a given parcel. Because the source of any Economic Obsolescence is
therefore beyond the control of the owner, it is always considered to be incurable.
The measure of Physical (curable)Depreciation and Functional (curable)Obsolescence is theCost-to-
Cure the problem. The measure of Physical (incurable)Depreciation is the ?Age / Life? concept, which
rarely follows an Accountant?s concept of Straight Line Depreciation or any of his other methods of
depreciating property. The real estate market is known for not following accounting rules. The measure
of Functional(incurable)Obsolescence is found in pairing sales of similar properties (one having the
problem, and one not) or in ?rent loss? researched in much the same way.
Page 20New Hanover County Tax Office
IAS Technical Documentation: Cost Algorithm(s) for Residential Buildings
()
emphasis added
The purpose of the Areasum fields is to allow the user to know the totalarea of a parcel, as the
jurisdiction defines that area. Certain assumptions are made regarding what area is to be added, and
other areas are user defined.
3
On CA21, the dwelling screen,Areasum = area of the dwelling (SFLA) + ADDN.AREASUM, which
is the area of each addition (CA22) times the percententered in the addition cost tables (CA34)
(RCADDN.SUMPCT).
3
On CA31, the commercial main building screen,Areasum = COMINTEXT.AREASUM, which is the
area of each COMINTEXT line (for all floors) (CA34), times the percent entered in the interior /
3
exterior cost table(CA64) (CINTEXT.SUMPCT) + COMFEAT.AREASUM which is the area of
eachother feature (CA32) times the percent enetered in the other features cost table (CA65)
(CIFEAT.SUMPCT).
On CA24, the Other Building and Yard Improvements (OBY) screen, Areasum = area of the OBY
times the percent defined for that OBY code (CA45) (RCOBY.SUMPCT).
Exemption Calculations
Threecolumns in APRVAL need to be calculated for exemptions: Land, Building, and
Total
If Exemption Percent has been entered by the user, compute
Exempt Land=Exemption Percent[times]Final Land Value
Exempt Building=Exemption Percent[times]Final Building Value
Exempt Total=Exemption Percent[times]Final Parcel Value
Otherwise
3
Exempt Land=Exempt Values from individual Land Lines on CA14
3
Exempt Building=Exempt Values from CA21, CA22, CA24, CA31 and CA34
Apply any factors which were applied to the Final Land Value to exempt land
Apply any factors which were applied to the Final Building Value to exempt building
Exempt Total = Exemption land + Exempt Building
Appendix 3 - CAMA ModulesPage 21
IAS Technical Documentation: Cost Algorithm(s) for Residential Buildings
()
emphasis added
(documentation is unnumbered)
(5.3)Main Dwelling Calculations
There are two cost algorithms available in IAS. The residential cost method to be used is identified on
AA44, the Jurisdiction screen. The first type, MAN, for Manual, is the same algorithm used in
previous releases of IAS, and is available for the purpose of maintaining value stability across years.
The second type, CLT, is an enhanced version of the original manual method, which includes
application of Grade Factor at the line level, and depreciation of individual additions.
The following formula defines the cost calculation for a dwelling using the CLT method. The location
of each dataelement needed is identified by screen.
Neighborhood
CA12:
Story Height
CA21Page 1:
AtticCode
Finished Basement Living Area
CA21Page 2:
User Other Feature Area
GFLA (Ground Floor Living Area)
CA21Page 3:
VALYR (Factor JURVALYR)
CA42:
If not found:VALYR
(Factor Cost, Variable VAL YR)
ResidentialCost Table Version (CALC)
AA44:
STORYSF
CA42:
( for for the ,)
RateSFLAStoryVersion
ATTICSF (Rate for AtticCode, for Version)
All Rates retrieved from use a Residential Model Number. A hierarchy has been established to
CA42
determine how this number is retrieved. This hierarchy is as follows
The calculation will look for a card-based Model Number using the
CA21:
DWELDAT.MODOVER () for a model
CA21
If DWELDAT.MODOVER does not return a valid Model, then the calculation will look for
SY23:
a card-based Model Number using the DWELDAT.STYLE () to retrieve a model on
CA21
. (Calculation Name = RESMOD, Table Name = STYLE, Field Name =
SY23
DWELDAT.STYLE, Factor = Residential Model being used).
If the OverrideValue on DWELDAT is NULL or does not return a valid Model, and no
LP51:
Model has been set up for Style, then the LPNBHD.RESMOD Model () will be used
LP51
in the calculations.
If the LPNBHD.RESMOD default Model is NULL or points to a Model that doesn?t exist in
SY23:
the RCFACT Table for Dwellings(main building) or RCADDN for Additions, then it will
use the default Model defined in (SYSFACT). (Calculation Name = DEFAULT,
SY23
Table Name = DWELDAT, Field Name = RESMODEL, Factor = Model Number.)
Residential Model
Page 22New Hanover County Tax Office
IAS Technical Documentation: Cost Algorithm(s) for Residential Buildings
()
emphasis added
Compute the SFLA of the Dwelling(main building)
(GFLA [times]STORYSF) + (GFLA [times] ATTICSF)=SFLA:
Get the Line Number,Floor,Addition Code and Area
CA22:
Get the Part SFLA Percentage
CA43:
Multiply the Addition Area times the Part SFLA Percentage
LineFloorCodeAreaPart SFLA AdditionSFLA
X =
X =
X =
X =
Get User Other Feature Area Percent, Factor OTH-FEAT, Variable UFPCT
CA42:
Percent
Calculate the Area Adjustment for the User Other Feature
Percent [times] User Other Feature Area=
AreaAdjustment
Add the individual areas to obtain the Total Square Foot Living Area
3
DwellingSFLA [plus]Addition SFLA[plus]Area Adjustment
Get the Area Sum Percent and calculate First Floor Area:
CA43:
3
GFLA [plus] (First Floor Addition Area [times] Sumpct/100)
=
First Floor Area
Get Base Rate, FactorCOST, Variable BASE
CA42:
Get Schedule Level Factor / 100, LEVEL, RES
Get Area Factor Components AREA,COEFF:
AREA,CONST:
AREA,SQRT:
Get Ground Floor Living Area (GFLA)
CA21Page 3:
Multiply GFLA times COEFF, add Square Root of GFLA times SQRT, and add CONST
(_________ X ________) + (___________________ X _____) + ___________ =
(rounded to three decimal places):
Area Factor
Get Story Height and Construction
CA21Page 1:
Get Grade
CA21Page 3:
Appendix 3 - CAMA ModulesPage 23
IAS Technical Documentation: Cost Algorithm(s) for Residential Buildings
()
emphasis added
Get Story Height Factor, SH-FACT, (story height)
CA42:
Get Construction Factors, SH-BRICK, (story height)
EXTWALL Rate and add 1.00
Get Grade Factor, GRADE
Multiply SH-BRICK Rate times EXTWALL Rate and add 1.00
___________ X ___________ + 1.00 =
Construction Factor
Base Rate
Multiply:
[times]Schedule Level Factor
[times]Area Factor
[times]Story Height Factor
[times]Construction Factor
[times]Grade Factor
[equals]Adjusted Base Price
Get user-defined fields that have a calculation (function for throughis not null).
User 1 User 20
SY83:
FLR1AREA / MGFA=
Calculate arearatio:AREARATIO
URCNMULTUSERFACT = USERn
URCNAREAUSERFACT = USERn *
arearatio
URCNAMTUSERAMT = USERn
URCNFLR1USERAMT = ?USERn? * FLR1AREA * GRDFACT * (1 + (CDPCT * .01))
FRCNMULTUSERFACT = RCFACT.RATE
(where FACT = ?DUSERn? and CODE = USERn)
FRCNAREAUSERFACT = RCFACT.RATE
(where FACT = ?DUSERn? and CODE = USERn)X
area ratio
FRCNAMTUSERAMT = RCFACT.RATE
(where FACT = ?DUSERn? and CODE = USERn)
FRCNFLR1USERAMT = RCFACT.RATE
(where FACT = ?DUSERn? and CODE = USERn)
* FLR1AREA * GRDFACT * (1 + CDPCT * .01))
FRCNRTAREAUSERAMT = RCFACT.RATE
(where FACT = ?DUSERn? and CODE = USERn)
* USERn * GRDFACT * (1+ CDPCT * .01))
FRCNAMTFCTUSERAMT = RCFACT.RATE
(where FACT = ?DUSERn? and CODE = USERn)
* GRDFACT * (1 + (CDPCT * .01))
URCNAMTFCTUSERAMT = USERn * GRDFACT * (1 + (CDPCT * .01))
UMULT * *
Rate from RCFACTValue in User FieldGrade Factor
* (1 + NVL(DWELDAT.CDPCT,0) * .01)
Page 24New Hanover County Tax Office
IAS Technical Documentation: Cost Algorithm(s) for Residential Buildings
()
emphasis added
If more than one user field has a calculation, multiply the factors, and sum the amounts.
(documentation is unnumbered)
(5.4)Other Feature Calculations
Other Features are entered on CA21, Page 2.
Other Features? Rates are found on based on FACTOR ?OTH-FEAT? and their unique
CA42
VARIABLE names given in the equations below:
Get the Heating Code
CA21Page 1:
Get the Schedule Level Factor (SLF), factorLEVEL, variable RES:
CA42:
Get the Air Conditioning Codes, factor AIRCODE
Multiply Masonry Trim Area [times]SLF [times] TRIMB [times] Grade Factor
_______ X _______ X _______ X _______ =
Masonry Trim Value
Multiply Unfin Area[times]SLF [times] Unfin Rate [times] Grade Factor
_______ X _______ X _______ X _______ =
Unfinished Area Value
If Heating Code match one of the Air Conditioning Codes (AIRCODE) on CA42.
does not
Multiply Rec Room Area [times]SLF [times BREC Rate [times] Grade Factor
_______ X _______ X _______ X _______ =
Basement Rec Room Value
If Heating Code match one of the Air Conditioning Codes (AIRCODE) on CA42.
does
Multiply Rec Room Area [times]SLF [times BRECA Rate [times] Grade Factor
_______ X _______ X _______ X _______ =
Basement Rec Room Value
If Heating Code match one of the Air Conditioning Codes (AIRCODE) on CA42.
does not
Multiply Finished BSMT Living Area [times]SLF [times BLIV Rate [times] Grade Factor
______ X ______ X ______ X ______ =
Finished BSMT Living Area Value
If Heating Code match one of the Air Conditioning Codes (AIRCODE) on CA42.
does
Multiply Finished BAST Living Area[times]SLF [times BLIVA Rate [times] Grade Factor
______ X ______ X ______ X ______ =
Finished BSMT Living Area Value
If Heating Code match one of the Air Conditioning Codes (AIRCODE) on CA42.
does not
Multiply User Other Feature Area[times]SLF [times UFEAT Rate [times] Grade Factor
______ X ______ X ______ X ______=
User Other Feature Area Value
If Heating Code match one of the Air Conditioning Codes (AIRCODE) on CA42.
does
Multiply User Other Feature Area[times]SLF [times UFAIR Rate [times] Grade Factor
______ X ______ X ______ X ______ =
User Other Feature Area Value
Appendix 3 - CAMA ModulesPage 25
IAS Technical Documentation: Cost Algorithm(s) for Residential Buildings
()
emphasis added
Fireplaces:
1.Multiply Wood Burning Fireplace Stacks[times]WBFP1 Rate
______ [times] ______ [equals]
2.Compute Openings minus Stacks and multiply Result [times] WBFP2 Rate
______ [less] ______ [equals] ______ [times] ______ [equals]
3.Multiply Prefab Fireplaces [times] METFP Rate:
______ [times] ______ [equals]
4.Add 1, 2, and 3 (above), and multiply the Total times SLF and Grade Factor:
____[plus] _____[plus] _____[plus] _____[equals] _____ [times] _____[times] _____[equals]
Basement Garage:
Multiply the Rate for (BGAR concatenated with the Basement Garage Number of Cars)
(e.g. BGAR2) times the SLF times Grade Factor:
______ [times] ______ [times] ______ [equals]
Basement Garage Value
Miscellaneous Other Features:
Multiply Rate for factor MISC, variable (, Misc 1 description) times SLF times Grade
CA21
Factor times Misc 1 Quality:
______ [times] ______ [times] ______ [equals]
Misc 1 Value
Multiply Rate for factor MISC, variable ( Misc 2 description)
CA21
times SLF times Grade Factor times Misc2 Quantity:
______ [times] ______ [times] ______ [equals]
Misc 2 Value
Add all the Value s above to get Total Other Features Value:
Page 26New Hanover County Tax Office
IAS Technical Documentation: Cost Algorithm(s) for Residential Buildings
()
emphasis added
(documentation is unnumbered)
(5.5)Dwelling Addition Calculations
The following formula defines the cost calculation for additions
Get the Heating Code
CA21:
Get the Grade and Cost and Design Factor:
Get the residential Cost Table Version(RESVER) for the subject tax
AA44:
year.
Get the Schedule Level Factor(SLF), factorLEVEL, variable RES:
CA42:
Get the Air Conditioning Codes, factor AIRCODE
Get the Line Number,Floor,Addition Code and Area of the additions
CA22:
and enter them below in the L#, Floor Code, and Area spaces below.
Get the First Floor Adjustment Flag, the First Floor and Upper Floor
CA43:
Constants,Square Foot Rates, and Square Root Terms, and the AC Rate for the
subject code, and enter them in the FF Adj.First Floor and Upper Floor
Constant,Square Foot Rate, and Square Root, and AC%spacesbelow.
First FloorUpper Floor
L#FlrCodeAreaFFAdjConstSF RateSqr RtConstSF RateSqr RtA/C Rate
If no code is presentto the left of the subject code of the lineon that is being
Note:CA22
calculated, use the First Floor Rates. If a code is present to the left of the Addition being
calculated and the FFAdj. for that Code is ?Y?, use the Upper Floor Rates.
(L#/Flr/Code:)(+ (*) + (*)) * ) =
ConstantAreaRateVareaSq. Rt. TermSLFBase Value
1.
(___/___/___)(________ + (_____ * ____) + (______ * ___________)) * _____ = __________
(___/___/___)(________ + (_____ * ____) + (______ * ___________)) * _____ = __________
(___/___/___)(________ + (_____ * ____) + (______ * ___________)) * _____ = __________
If the Heating Code on matches one of the Air Conditioning codes (AIRCODE) on ,
2.CA21CA42
multiply the Area times the A/C Rate times the SLF
( (SLF), factor LEVEL, variable RES)
Schedule Level Factor
the
(L#/Flr/Code:)[times] the [times] the
AreaA/C RateSLF
(___/___/___)_______ * ________ * ________ =
(___/___/___)_______ * ________ * ________ =
(___/___/___)_______ * ________ * ________ =
Add the results of 1 and 2 above for each line.
3.
(1) ________ + (2) ________ = __________ Addition Value
(___/___/___)
(1) ________ + (2) ________ = __________ Addition Value
(___/___/___)
(1) ________ + (2) ________ = __________ Addition Value
(___/___/___)
Appendix 3 - CAMA ModulesPage 27
IAS Technical Documentation: Cost Algorithm(s) for Residential Buildings
()
emphasis added
For Code 99, multiply the number in the Area fieldtimes 100:
________ X __100___ =Addition Value
(___/___/___)
________ X __100___ =Addition Value
(___/___/___)
Get the Grade, if it exists; otherwise use Grade from CA21
CA22:
Get the Grade Factor, factor = GRADE
CA42:
Get the Cost and Design Percent
CA21:
Calculate the Cost and Design Factor as: (100 + C & D Percent) / 100
For each Line of Additions, multiply:
Addition Value times Grade Factor times Cost and Design Factor times User Factor:
________ X ________ X ________ X ________ = Addition Value *
________ X ________ X ________ X ________ = Addition Value *
* = Add all the Values thus marked together for the:Total Addition RCN Value
For each Addition:
Get CDU if it exists, otherwise get from
CA22:CA21
Get Year Built if it exists, otherwise get from
CA21
Get the Percent Complete
Calculate Addition?s RCNLD:
Page 3:Get Override Depreciation Table, if present.
CA21
For Cost Version and Neighborhood,
LP51:
get Neighborhood Depreciation Table, if no Override Table
Get Neighborhood CDU
Page 2:Get Depreciation Override, if present, or Depreciation
CA22
Override from, Page 3, if present, or Table Percent
CA21
Good from, below for PhysicalDepreciation.
CA44
Page 2:Effective Year Built, if present, else Year Built, or default to Year
CA22
Built on, Page 1.
CA21
Subtract Year Built from VALYR:_____ [less] _____ [equals]Age:
Page 2:CDU, if present, or default to CDU, on , Page 3, if present,
CA22CA21
or default to Neighborhood CDU from.
LP51
Query the Depreciation Table for this parcel.
CA44:
Locate the correctby finding the row of theof the
Depreciation PercentAGE
, or the next higheravailable, and the column for the subject.
AdditionAgeCDU
Page 28New Hanover County Tax Office
IAS Technical Documentation: Cost Algorithm(s) for Residential Buildings
()
emphasis added
Get the Functional Obsolescence and Economic Obsolescence (percent good), if any.
CA21:
Functional Obsolescence Percent:
Economic Obsolescence Percent:
Multiply Addition Value [times]Depreciation Percents:
______ (RCN) [times] ______ (Physical% Good from table or Override, if present) [times]
_______ (Functional % Good, if entered) [times] ______ Economic % Good, if entered)
=Replacement Cost New Less Depreciation(RCNLD)
If Percent Complete entered, and less than 100, multiply RCNLD times Percent Complete:
________ X ________ = (partial) RCNLD
(documentation is unnumbered)
(5.6) Final Dwelling Calculations
From Main Dwelling Calculations, get:
Adjusted Base Value
Schedule Level Factor(SLF)
Area Factor
Story Height Factor
Get parcel?s Neighborhood
CA12:
Get Class; if blank get Class from CA12
CA21:
Dwelling Factor based on Neighborhood and Class, or use 1.00)
CA41:
Get Heating Code
CA21Page 1:
Get AtticCode
Get Cost and Design Percent
CA21Page 3:
Get Percent Complete
Get Plumbing Factors,PLUMB, FIXT
CA42:
PLUMB, ADDFX
PLUMB, COUNT
Get Basement Factor,BSMT, (Basement Amount)
Get Heat FactorHEAT, (Heating Amount)
Get Attic FactorATTIC, (Attic Amount)
Get Grade FactorGRADE, (Dwelling Grade)
To Verify Total Fixtures Calculation:
Multiply Number of Full Baths[times]3 Fixtures____ X ____ =
Multiply Number of Half Baths [times]2 Fixtures____ X ____ =
Appendix 3 - CAMA ModulesPage 29
IAS Technical Documentation: Cost Algorithm(s) for Residential Buildings
()
emphasis added
Add Full Bath fixtures [plus] Half Bath fixtures [plus]Additional Fixtures [plus] ADDFX
_____ + _____ + _____ + _____ = Total Fixtures
Calculate Plumbing,Basement,Heat, and Attic Values:
Multiply Fixt Rate [times]Schedule Level Factor[times] (FIXTOT-COUNT)[times]Grade Factor
______ X ______ X (______ [less] ______) X ______ =Plumbing Value
Multiply BSMT Rate [times]Area Factor[times]Schedule Level Factor[times]Grade Factor
______ X ______ X ______ X ______ =Basement Value
Multiply Heat Rate[times]SLF [times] Story Height Factor [times] Area Factor[times]Grade Factor
______ X ______ X ______ X ______ X ______ = Heat Value
Multiply ATTIC Rate [times]Area Factor [times] SLF [times] Grade Factor
______ X ______ X ______ X ______ = AtticValue
From Other Features calculations, get Total Other Features Values:
Add the Values above to calculate the Dwelling RCN Subtotal:
Get Depreciation Override, if present, or Table Percent Good from CA44, below.
CA21Page 3:
Depreciation Percent:
Valuation Year(Factor ?COST?, Code = ?VALYR?)
CA42:
Effective Year
CA21Page 1:
Year Built
If Effective Year is present, subtract Effective Year from
VALYR, otherwise, subtract Year Built from VALYR.
_______ [less] ______ = Age
CDU
CA21Page 3:
Query the Depreciation Table for this parcel (see additions for Depreciation Table).
CA44:
Locate the correct Depreciation Percent by finding the row of the Age of
the dwelling, or the next higher Age available, and the column for the
subject CDU.Depreciation Percent:
Multiply Cost and Design Factor[times] .01; add 1.00 for Cost and Design Percent:
Multiply Subtotal [plus] User Amount[times]Cost and Design Percent[times]User Factor:
(_______ + _______) X _______ X _______ = Replacement Cost New (RCN)
Page 30New Hanover County Tax Office
IAS Technical Documentation: Cost Algorithm(s) for Residential Buildings
()
emphasis added
Multiply Dwelling RCN [times] Depreciation Percent:
______ X ______ = Replacement Cost New Less Depreciation (Dwelling RCNLD)
Get Functional and Economic Obsolescence Percentages
CA21:
Multiply RCNLD [times] Funct. Obs.[times]Economic Obs.giving RCNLD
________ X ________ X ________ = RCNLD
Multiply RCNLD [times]Percent Complete
________ X ________ = Adjusted RCNLD
Add Adjusted RCNLD to the sum of Addition RCNLD?s
Note:AdditionRCNLD has already been adjusted for Percent Complete)
+
________ ________ = Total Dwelling RCNLD
Multiply Total Dwelling RCNLD [times] Class Factor from (default 1.00):
CA41
________ X ________ = Dwelling Value
The sum of the Dwelling Value of all the Cards is written to APRVAL.DWELVAL
(Values: Dwelling on, Page 2).
CA11
The Dwelling Value [times] Building Class Factor is written to APRVAL.BLDGVAL
(Building Cost on)
CA11
Appendix 3 - CAMA ModulesPage 31
Cost Approach for Other Buildings and Yard Improvements (OBY)
The name ?Other Buildings and Yard Improvements? itself defines exactly what these items are. If a
structure does not qualifyto be encoded as a ?Building?, it should be encoded as an OBY item.
If a residential structure has interior finish, a viable kitchen and bathroom facilities, it
Business Rule:
shall be encoded as a Building (such will NOT be an OBY Item). However if a structure does not have
both a viable kitchen and/or bathingfacilities (it must have both) it must be encoded as an OBY Item.
While certain residential and commercial / industrial structures may be encoded as OBY items, most such
items are miscellaneous improvements to raw land (such as detachedgarages, utility buildings, in-ground
swimming pools, asphalt and/or concrete paving, storage tanks, et cetera).
Palm Beach, Florida, commissioned the vendor of IAS to create a sub-module to appraise high rise
residential condominiums. This IAS user?s appraisal staff created a design for this sub-module that
recognizes the correct appraisal attributes but has an unusually inefficient design in control table
structure. The vendor then fit this new sub-module within the OBY sub-module of IAS. Because this
design is highly inefficient and poorly integrated into the larger CAMA system, the appraisal staff of New
Hanover County elected to create a separate application to fill this growing need. Please see the Other
Applications chapter in this Appendix and Condo Appraisal Rules in Appendix 4.
Other than the incidental injection of high rise condominium properties as OBY Items, Cost Approach
algorithms for OBY improvements are more simple than that for either residential or commercial
buildings. Therefore the Tax Administrator has prepared no high level, overview graphic in an attempt to
more simply explain how the system appraises OBY items.
Please refer to the OBY Code listing in Appendix 4 where all of the OBY items carry Quality Grades and
certain of the items also carry ?modification? (MOD)Codes.
As with residential and commercial buildings, OBY Quality Grades allow the appraiser to quantify the
quality of original materials and workmanship used in creating the improvement as ?A? (most costly)
through ?E? (least costly).
MOD Codes allow the appraiser to respond to additionalelements thatcontribute to the value of the OBY
Item. Forexample OBY Code = G2 (Two Story Detached Garage)Ifa G2 is completely finished AND
has a functioning kitchen and a full bath, it becomes a Garage Apartment style building. Otherwise the
G2 code has seven MOD Codes available to allow the appraiser to include modifications to the basic
garage structure such as electrical service (without interior finish), heat and/or air conditioning, interior
finish (floor and wall coverings, and electricity), and plumbing (full bath, half bath, or fixture count).
Page 32New Hanover County Tax Office
IAS Technical Documentation: Cost Algorithm(s) for OBY Improvements
()
emphasis added
(documentation is unnumbered)
(5.7) OBY Calculations
Get the Cost Table Version for the subject Tax Year.JURIS.OBYVER
AA44:
Get the Schedule Level Factor(SLF), Factor: LEVEL, Variable:OBY SLF:
CA42:
Get the subject Line Number,Structure Code,Width,Length,Area, and
CA24:
Number of Units and enter them below.
Get the Unit Code(U/C)and Rates for the VER and Structure. Rates are given under the
CA45:
heading COST EQUATION. Enter them on the appropriate lines below.
CA24CA45CA24
LlineStrucWidthLengthAreaU/CRate 1Rate 2Rate 3# Units
OBY.OBY.OBY.OBY.OBY.RCOBY.RCOBY.RCOBY.RCOBY.
LLINECODEMEAS1MEAS2AREAUNITSR1R2R3UNITS
______________________________________________________
______________________________________________________
______________________________________________________
The actual area used in the Rate calculation will be different on the Unit Code for the OBY structure
being valued. Calculate OBY.AREA based on the Unit Code(RCOBY.UNITS) for the OBY.CODE.
For Unit Code 1 (Area)Use the actual Area of the structure, if entered, or the Area is
calculated as Width [times] Length.
For Unit Code 2 (Lineal)Use the Area of the structure, as entered.
2
For Unit Code 3 (Cylinder Area)Area = 0.785 [times]Width [times] Length
For Unit Code 4 (Quantity)Area is not used.
For Unit Code 5 (Depth/Lineal)Area = Length and Width will be used in the calculation
instead of Area.
2
For Unit Code 6 (Cylinder Volume)Area = 0.785 times Width(times]Length
For Unit Code 7 (Flat Value)Data in Area fieldis the actualvalue
Calculate OBY.RCN using the formula based on Unit Code:
For Unit Code 1 (Area) - calculate Value as:
++=
/
Rate 1 (Rate 2 X Area)(Rate 3 X Area)RCN
Line / StructRCOBY.R1RCOBY.R2OBY.AREARCOBY.R3OBY.AREA OBY.RCN
++
(___ / ___)_______(_______ X_________)(_____ X________) =
++
(___ / ___)_______(_______ X_________)(_____ X________) =
++
(___ / ___)_______(_______ X_________)(_____ X________) =
Appendix 3 - CAMA ModulesPage 33
For Unit Code 2 (Lineal) - calculate Value as:
=
Rate 1 X AreaRCN
Line / StructRCOBY.R1OBY.AREA OBY.RCN
_____
(___ / ___)_______ X =
_____
(___ / ___)_______ X =
_____
(___ / ___)_______ X =
For Unit Code 3 (Cylinder Area) - calculate Value as:
2
++=
Rate 1 (Rate 2 X Width X Length)(Rate 3 X Width)RCN
Line / Struct
RCOBY.R1RCOBY.R2OBY.MEAS1OBY.MEAS2OBY.R3OBY.MEAS1 OBY.RCN
++
(___ / ___)_______(_______ X_______ X______)(____ X_______)=
++
(___ / ___)_______(_______ X_______ X______)(____ X_______)=
+
(___ / ___)_______ +(_______ X_______ X______)(____ X_______)=
For Unit Code 4 (Quantity) - calculate Value as:
=
# Units X Rate 1RCN
Line / StructOBY.UNITSRCOBY.R1 OBY.RCN
_____=
(___ / ___)_______ X
_____=
(___ / ___)_______ X
_____=
(___ / ___)_______ X
For Unit Code 5 (Depth / Lineal Feet) - calculate Value as:
+=
X
[(Rate 1) X Length[(Rate 2) X WidthLength]RCN
Line / StructRCOBY.R2
RCOBY.R1OBY.MEAS2OBY.MEAS1OBY.MEAS2 OBY.RCN
+
(___ / ___)_______ X______[(_______ X_______ X______)]=
+
(___ / ___)_______ X______[(_______ X_______ X______)]=
+
(___ / ___)_______ X______[(_______ X_______ X______)]=
For Unit Code 6 (Cylinder Volume) - calculate Value as:
22
++=
Rate 1(Rate 2 X Length X Width)(Rate 3 X Width)RCN
Line / StructOBY.MEAS2OBY.MEAS1
RCOBY.R1RCOBY.R2OBY.MEAS1RCOBY.R3 OBY.RCN
++
(___ / ___)_______(______ X_______ X_______)(______ X______)=
++
(___ / ___)_______(______ X_______ X_______)(______ X______)=
++
(___ / ___)_______(______ X_______ X_______)(______ X______)=
For Unit Code 7 (Flat Value) - calculate Value as:
=
AreaRCN
Line / StructOBY.AREA OBY.RCN
=
(___ / ___)_______
Get the Cost Table Version for the subject Tax Year.JURIS.OBYVER:
AA44:
Page 34New Hanover County Tax Office
Get the subject Line Number,Structure Code,Width,Length,Area, and MOD
CA24:
Code and enter them below
Get the MOD Code Rate and Constant for the Version,Structure Code, and MOD
CA45:
Code. Enter them on the appropriate lines below. If more than one MOD Code
existsfor a Structure, use one line for each MOD Code.
CA24 - OBYCA45 - RCOBYMOD
Line #StructWidthLengthMOD CodeRateConstant
OBYMOD1
OBYMOD2
OBYMOD3
LLINECODEMEAS1MEAS2OBYMOD4RATECONST
Note:The area used here is the Area on the Screen or else calculated as Width times Length.
CA24
For each MOD Code calculate value as:
+=
(Rate X Area)(Constant)MOD Code
Line / StructOBY.AREA
MOD CodeRCOBYMOD.RATERCOBY.MOD.CONST
Value
(___ / ___ ________)(__________ X________) +______________=
(___ / ___ ________)(__________ X________) +______________=
(___ / ___ ________)(__________ X________) +______________=
(___ / ___ ________)(__________ X________) +______________=
Get Grade,PhysicalCondition, and Functional Utility
CA24:
OBY.GRADE: _____OBY.COND: _____ OBY.FUNCT: _____
Get Grade Factor, based on OBY Code and GradeRCOBY.GRADE:(A - E)
CA45:
Get Neighborhood Number(Code)PARDAT.NBHD:
CA12:
Get CDU and Depreciation TablesRCOBY.CDUTBLE:
CA45:
RCOBY.DEPRT:
Appendix 3 - CAMA ModulesPage 35
Get Override Rate OVERRIDE RATE:
CA24:
_______ X__________ X________=:
RCN
If Not Null, calculate:
OBY.RATEOVROBY.AREAOBY.UNITS
ELSE
Value X Grade Factor X Units
Calculate:
_____ X__________ X_____= OBY Value:
OBY Value X SLF (Schedule Level Factor)
Calculate:
_________ X____=OBY.RCN:
OBY.RCN/(Units X Area)
Calculate:
________/(____ X____)=OBY.RATE:
Get CDU for physical Condition / Functional Utility combination from
CA67:
Neighborhood CDU Table (default is A / A if null)CICDU.CDU:
Get Depreciation based on Age and CDU from Neighborhood Depreciation Table
CA44:
RCDEPR.EXDEPR(...V_DEPR):
Move Depreciation Value to OBY.DEPR:
Get Functional and Economic Obsolescence factors
CA24:
Functional : _____ (OBYFUNDEP)Economic: _____ (OBY.ECNDEP)
Get OverridePercent Good, if not = zeroMarket Adj OBY.MKTADJ:
CA24:
Get Class PARDAT.CLASS:
CA12:
Calculate RCNLD:
RCN X Mkt Adj(or Depr) X Funct X Econ= RCNLD
OBY.RCNOBY.MKTADJ (DEPR)OBY.FUNDEPOBY.ECNDEPOBY.RCNLD
______ X________ X______ X______=RCNLD:
Get Adjustment Low and High for Neighborhood and Class for OBYVAL; if factor has
CA41:
secondary check, verify value within parcel data
If RCNLD not less than Low and not Greater Than High, get Factor
Low: _____High: _____Factor:_____
NBHDFACT.LONBHDFACT.HINBHDFACT.FACT = OBY.ADJFACT
RCNLD X Adj Factor=RCNLD
OBY.RCNLDOBY.ADJFACTOBY.RCNLD
___________X_____________= RCNLD:
Page 36New Hanover County Tax Office
The Market Approach
Through the individual variables (items of comparison), the Market Approach analyzes the value
of the whole property. The resulting indication of value includes the land value and the
contribution of all improvements (buildings and other yard improvements). While the Tax
Administrator must, under statute, artificially divide the total value into value attributable to land
and, separately, building. This allocation of total value is not to be compared to the allocation of
total value in any other appraisal. Any such comparison is invalid.
Much of the following discussion is taken from IAS vendor documentation of the market
modeling programs.
For the , analyzing the market value of a given parcel via the market approach is a
fee appraiser
skilled labor intensive effort. Therefore, forpurposes, IAS uses a statistical
mass appraisal
technique called coupled with ?market modeling? to generate a market
Multiple Regression
approach indication of value each property having sufficient sales of similar property.
Multiple Regression Analysis (MRA) is used to derive or calculate the coefficients in a linear
equation, which gives one observable value (usually sales price) as a function of any number of
other criteria (usually market factors such as size, age, condition, and quality). In the market
valuation application, the system uses recent sales of properties and the associated property
descriptions as input data. The market modeling program derives coefficients, which are then
used to help value subject properties.
The technique is called MRA. The advantage here is that the user can specify to the
constrained
program that the coefficients, which it produces, must be within certain ranges; e.g. the value of
an attached garage must fall between 8 and 20 dollars per square foot. The most important idea
to understand concerning the market modeling program is that the modeling is computer assisted
but is not automated.
Market modeling uses the Sales Extract file created by the Market Extract program as input data
to calculate market models for the various clusters and model sets, which are previously defined
and discussed in Appendix 2. The models are then copied into the Model Terms Table for use
by the Market Valuation programs to produce the final market value estimates and comp. sheets.
It is not necessary, nor desirable, nor even possible to describe the mathematical basis of the
market modeling program. The most simple explanation of the statistical processes at work in
this program encountered to date may be found in the published article reporting a 1970's era
study undertaken at the (Boulder). This article is reproduced in its
University of Colorado
entirety with the written permission of Dr. Thomas E. Hendrick, one of the authors.
Dr. Hendrick is now at Arizona State University.
Appendix 3 - CAMA ModulesPage 37
Multiple Regression:
CLYDE W. RICHEY, Ph. D.
THOMAS E. HENDRICK, Ph. D.
A Listing Tool
Boulder, Colorado
(reproduced with permission)
Multiple regression analysis is a statistical method
which measures the relationshipbetween three or
more variables. The technique can be used to
calculate the probable selling price of a listing.
One of the questions mostwork force.In addition, both$2,728 for a one-car garage
frequently asked by salespeople is,subdivisions are close to the$745 for each full bath
?How do I determine the properexpresswaywhich provides easy$553 for a fireplace
dollar amount to adjust the price foraccess to Denver.$550 for a dishwasher
physical, locational and time-of-$741 for each three months since 1
sale differences between theData of soldproperties in bothJanuary 1973, due primarily to
property being listed andsubdivisions were taken from MLSinflation
comparable sales?? Standardsheets made available by a Colorado$1,429 for being in Table Mesa
answers include, ?After somereal estate firm with offices inrather than Martin Acres
experience you will know howBoulder, Denverand other Colorado$6.59 for each dollar of property tax
much more the typical buyer willcommunities. One hundred fortypaid.
pay for, say, a fireplace.? Otherthree ranch home properties,all
answers have been, ?Ask yourreasonably similar, were selected.Once this equation
How it works:
broker what a fireplace is worth.?They were all sold during the periodwas provided it was possible to use
Take an appraiser to coffee and askstarting 1 January 1973 and endingit to predict the probable selling
him;? and finally, ?Find out from a31 December 1974.price of any other ranch house in
contractor or cost manual the cost ofTable Mesa or Martin Acres that
a fireplace.? These answers haveThe average sales price of the 143subsequently came on the market.
proven less than adequate. As aranch homes was $31,431.They
consequence, it was decided to testhad an average of 1,131 square feetAs an example of its use, a listing
the feasibility of using multipleof living areaon the first floor.agent could employ the equation to
regression analysis to provide theFifty seven percent had a basementpredict the probable selling price of
dollar adjustments.and 421 square feet was the averagea listing. Assume, for example, that
finished living area in thethe agent has thefollowing
Multiple regression analysisis abasements. Thirty-seven percent ofinformation about a property to be
statistical method which measuresthe ranches had a fireplace, 42listed.
the relationship between threeorpercent had a dishwasher and almost
more variables. (See Appendix Aall had either a carport or garage.Located in Table Mesa, Ranch
for a brief discussion of regressionAdditional MLS data used includeddesign with 1,000 square feet of first
analysis ) Following this definitionthe number of full baths, dollarfloor living area.There is a
the multiple regression studyamount of property taxes, time ofbasement, but noneof it has been
reported here measured thesale and the subdivision in whichmade into finished living area.
relationship between the sellingtheproperty was located.There is a one-car carport and one
price of MLS listingsas the pricefull bath. The house has a fireplace
relatesto square feet of living area, Using abut no dishwasher. The listing date
The regression equation:
basement ,garage ,location and otherstandard stepwise multiple
1
features.regression package on the143
houses, the following appraising
equation was determined:
Martin Acres and Table Mesa:
Two Boulder subdivisions, MartinValue=$10,862 plus:
Mr. Richey is Professor of Real Estate
and Urban Land Economics at the
Acres and Table Mesa, were chosen$6.27times the square feet of first
University of Colorado, Boulder and
for the analysis. Both arefloor living area
Denver campuses, Mr. Hendrick is
convenient to the University of$1.608 for an unfinished basement
Associate Professor of Management and
Colorado campus and several$2.47 times the square feetof
Organization at Colorado.
federal government facilitiesfinished living area in the basement
supporting in total a substantial$1,364 for a one-car carport or
Page 38New Hanover County Tax Office
returning to the original question
about dollar adjustments for the
Given these data, the calculated
market data method of valuation,
probable selling price would be:
can regression analysis be used to
provide the dollar adjustments for
Probable Sales Price$10,862
plugging into the traditionalmarket
plus $6.27 times 1,000 square feet of first floor living area + 6,270
data grid? To answer this question,
itis necessary to go back to the
plus $1,608 for a basement + 1,608
regression equation. According to
plus $0 due to none of the basement being finished + 0
the equation, each squarefoot of
first floor living area adds $6.27 to
plus $1,364 for a carport + 1,364
the value, an unfinished basement
adds $1,608 to value and so on.
plus $745 for one full bath + 745
These dollar amounts are called
plus $553 for a fireplace + 553
coefficients and are listed here.
Alongside each coefficient is its
plus $0 due to no dishwasher + 0
standard error, the practicaluse of
plus $741 times four (calendar) quarters + 2,964
which will be explained later.
plus $1,429 for Table Mesa + 1,429
Aspointed out previously, the
plus$6.59times $500 property taxes + 3,295
coefficient for the first floor living
area is $ 6.27. This means that, on
Probable Sales Price$29,090
the average, each squarefoot
difference in first floor living area
is 1 January 1974. Last year?sFurther, the odds are 95 out of 100between houses was responsible for
property taxes were $500.that the listed house will actuallya $6.27 difference in their sales
sell for between $29,090 minusprice. For example, if house X had
Probable Sales Price equals $29,090,twice the standarderror to $29,090100 square feet more first floor
that is,based upon what 143plus twice the standard error. Thisliving area than house Y, then this
comparablessold for, the subjectworks out to be between $25,674100 square feet alonewould
property would probably sell forand $32,506 and means again thatcontribute $627 more to the selling
$29,090. Would the house sell forthe odds are 95 out of 100 that theprice of X.
exactly $29,090? Probably nothouse will actually sell for a dollar
because it is impossible to predictamount between $25,674 andThis $6.27 represents what buyers
exactly what the buyer will pay or$32,506. Stating the oddspaid for each additional square foot
what a seller will finally accept.differently, they are 2.5 out of 100of living area, not what each extra
Although the selling prices indicatedthat the house will finally sell for asquare foot cost.For cost
by the equationwill not be 100figure less than$25,674 and theyinformation,we can go to the
percent on target, it is possible withare also 2.5 out 100 that the houseBoeckh Valuation Manual, which
regression analysis to provide awill sell for a figure more thanstates that to build a square foot of
range ofprobable selling prices.$32,506.comparable house at the time and
This is done with what is called theplace of the study would cost just
standard error of the estimate. ForThis can be helpful information if,over $14.70.
the 143 homes included in this studyforexample, the seller wants
thestandard error of the estimate is$32,500. The analysis tells us thatBut, to repeat, the regression study
$1,708.based upon the sales of the 143indicates that the typical buyer paid
housesstudied, the chances of theonly $6.27 for each extra square
The $1,708 means that the odds aresubject house selling for $32,500 orfoot. This is the beauty of the
2 to 3 that the house will actually sellmore are very small---actually onlycoefficient: it represents what
for between $29,090 minus $1,7082.5 out of 100.buyers are offering and sellers are
and $29,090 plus $1,708. That is,accepting for square footage, not its
the odds are 2 to 3 that the actualcost. Next, a look at the practical
Coefficients as data adjustments:
selling price will be betweenTo this point, regression analysisuse of the standarderror of $1.37 for
$27,382 and $30,798.has been described as it wasthe first floor living area.
originally intended to be used. But,
Appendix 3 - CAMA ModulesPage 39
The $1.37 standard error states thatvalue. As an example, if house MComparable A sold for $35,400 two
every square foot of first floor livingwas charged$100 more propertyweeks ago. It has 1,290 square feet
area will not add exactly $6.27 to thetaxesthan house N, then house Mof living area on the first floor.
selling price. One buyer will see 50soldfor$659 more. But how canAlthough it has a basement, none of
additional square feet of livingareathese coefficients be used by thethe basement has been finished.
as being very valuable and anotherlisting agent?Comparable A has a one-car garage.
will regard it with indifference. ThisIt has no second bath, but does have
$1.37 says that, based upon the 143 Assume thea fireplace and a dishwasher. The
Using the coefficients:
ranch house sales, the chances aresubject property that theagentproperty is inTable Mesa. Last
two out of three that each square footwantsto list has 1,092 square feetyear?sproperty taxes was $525.
will add from $6.27 minus $1.37 toof living area on the first floor and
$6.27 plus $1.37 to the selling price.a basement with 1,092 square feetComparable B sold for $31,800 six
That is, each squarefoot of first floorof finished living area. There aremonths ago. It has 1,040 square feet
living area will add from $4.90 totwo full baths, a onecare-carof firstfloor living area. It also has
$7.64 to the selling price.garage, fireplace and dishwasher.a basement with 1,040 square feet of
The subjectproperty is in Tablefinished living area. There is a one-
Leaving the first floor living area andMesa. The property tax bill lastcar garage, but no second bath, no
moving to the finishedbasementyear was $525.fireplaceor dishwasher.
living area, its coefficient is $2.47Comparable B is in Martin Acres.
per square foot, which says that eachThe listing agent has informationIts property tax last year was $482.
square foot of finished basement areafrom the MLS sold book about
adds an average of $2.47 to thethree recently sold comparables.Comparable C sold for $38,900 ten
selling price. According toHe picks the comparables that aredays ago. It has 1,390 square feet if
Boeckh?s, the cost of finishing athe closest possible duplicates offirst floor living area. There is a one
square foot of basement at the timethe subject property.(A smallcar garage, a second bath, no
of the study ranged from $3.20 toaddition to the regression computerdishwasher or fireplace. Its property
$4.00 a square foot. Again, we see aprogramcould be developed totaxbill last year was $619.
substantial difference between costhave the computer select the
and what people will pay.comparables so as to eliminate allSince comparable A has 198 more
possible differences between thesquare feet of first floor living area
The coefficient or unfinishedcomparables and the subjectthan the subject property, the
basement, carport, garage, bath,property.)adjustment is a minus $6.27 times
fireplace and dishwasher are198 square feet, for a minus $1,242.
straightforward. If a house had any
of these items, the house sold on the
average for the dollar amount of the
STANDARD ERROR
coefficient more than a house
ITEMCOEFFICIENTOF THE COEFFICIENT
without the amenity.
Sq. ft. of 1st floor living area$6.27$ 1.37
This$741 coefficient for each
Unfinished basement1,608.00522.00
quarterof a year since 1 January
Sq. ft. of finished BSMT living area2.470.50
1973 is different. It is the time
adjustment. It tells us that in the
1-car carport1,364.00178.00
average, the value of all the ranch
houses in these two subdivisions
1-car garage2,728.00356.00
increase $741 every three months
Full Bath745.00577.00
during the two years of the study.
Fireplace553.00335.00
The Table Mesa coefficient shows
Dishwasher550.00331.00
that a house in Table Mesa sold for
$1,429 more, on the average, than
Each Quarter since
houses in Martin Acres, finally, the
January 1, 1973741.0074.00
property tax coefficient points out
TableMeas instead of Martin Acres1,429.00337.00
that each dollar of property tax paid
indicated an addition of$6.59 to
Each dollar of property taxes6.592.21
Page 40New Hanover County Tax Office
Both the subjectandA have a$3,243. Further use of the standardand $550, respectively. As the
basement, consequently, there is noerror of $.50 indicates that only onesubject property tax is $43 higher
adjustment. Since only the subjector two buyers out of a hundred willthan B?s, the adjustment is plus
has finished living area in thepay the entire $4,000 for the$283. When B?s adjustments are
basement, actually 1,092 square feet,finished basement. Being practical,added to its sales price, the indicated
the adjustment is $2.47 times 1,092theseller will not get his fullvalue for thesubject property is
square feet, or plus $2,697. But$4,000 back. Since these odds are$37,400.
what if the seller of the subjectbased upon 143 sales they do have
property objects to this lowa solid basis in fact.Without going into detail about
adjustment figure? If he has acomparable C. It is enough to note
commercial firm finish the basementThe only other adjustment requiredthat its adjustments added to its
he may have had to pay $4,000for the comparable A is its lack ofselling price for the subject property
based upon Boeckh?s per square-foota second bath. This adjustment isof $37,400.
cost figure of from $3.20 to $4.00.plus $745.The comparable A
adjustments added to its sales price The correlation step is
Correlation:
It is at hispoint that the standardof $35,400 give an indicated valuenext, and it reveals that comparables
errorof the coefficient can help.for the subject property of $37,600.A and C are the best. Their time of
Table 1 shows that the standarderrorsale was very recent while B?s was
of the coefficient for finished livingTurning next to comparable B, itssix months ago.
area in the basement is $.50. Astime of sale of six months ago
discussed previously, this means thatrequires an adjustment of two timesFurther, A and Care in the same
two out of three buyers will pay$741, for a plus $1,482. Also,subdivision as the subject property,
between $1.97 and $2.97 a squarecomparable B is in Martin Acres,while B is outside the subdivision
foot for a finished basement. Givenwhich calls for an adjustmentofand,therefore,requires an
the 1,092 square feetfir the subjectplus $1,429. Since comparableBadjustment. Finally, A and C both
property, this means thattheodds aredoes not have a second bath,require a fewer total number of
2 out of 3 that the finished area in thefireplace, or dishwasher, theadjustments than B. The dollar
basement will bring from $2,151 toadjustments are plus $745, $553,figure that the listing agent will
Table 1
SUBJECTCOMPARABLE ACOMPARABLE BCOMPARABLE C
Sale Price$ 35,400$ 31,800$ 38,900
FirstFloor1,0921,2901,0401,390
- $ 1,242+ $ 326- $ 1,869
Living AreaSq. Ft.Sq. Ft.Sq. Ft.Sq. Ft.
YesYesYesYes
Basement
1,0920+ $ 2,6971,040+ $ 1281,150- $ 143
Living Area
Sq. Ft.Sq. Ft.Sq. Ft.Sq. Ft.
Garage or
GarageGarage0Garage0Garage0
Carport
Second BathYesNo+ $ 745No+ $ 745Yes0
FireplaceYesYes0No+ $ 553No+ $ 553
DishwasherYesYes0No+ $ 550No+ $ 550
TimeNow2 Wks.06 Mos.+ $ 1,4822 Wks.0
TableMartinTable
SubdivisionTable Mesa0+ $ 1,4290
MesaAcresMesa
Property Tax$525$5250$482+ $ 283$619- $ 620
$ 37,296 $ 37,371
$ 37,600
Rounded ($ 37,300) Rounded ($ 37,400)
Appendix 3 - CAMA ModulesPage 41
most likely pick as the probablederived the equation. (2.) If theneighborhoods in the community.
selling price of the subject house willregression equation included livingIn this way, the cost could be shared
be between $37,400 (C?s indicationarea, basement, garage, secondby all members and the coefficients
of value) and $37,600 (A?sbath, fireplace,dishwasher,could be distributed using the same
indication of value). A reasonablesubdivision and property taxes,facilities now used to distribute
listing amount may be higher,saythen the marketdata adjustmentMLS information.
$38,500, while realizing that thegrid sheet must include all of these
most probable selling price will beitems. (3.) Using the market data A
Plusses of regression analysis:
very close to $37,500.adjustment grid as a guide, allmajor advantage of using regression
adjustments between the subjectanalysis to develop the market data
and comparable properties in theadjustments is that the adjustments
Warnings from the experts:
Warnings about using theregression equation must becan be updated as each new MLS
coefficients for market dataconsidered when pickingsale is entered into the computer.
adjustments must be mentioned.comparables and adjusting forAnother advantage is that the new
First, some regression analysisdifferences between comparablessalesperson can have access to
experts express warnings about suchand the subject property.market adjustments basedupon
useofthe coefficients. They arguesales and that he canhave these
that the coefficientsof the regressionIf these rules are followed, then theadjustment immediately, without
equation are interrelated.opportunities for errors from usingwaiting to develop his own
Continuing, they may add that thisthe regression coefficients asexperiences. Other advantages are
interrelationship has minimalmarket data adjustments should bethat regression analysis coefficients
harmful influence when hesignificantly reduced.are based on buyerand seller
coefficientsare all used together indecisions not on costs. The costs
the sale equation, but to pull out each Twomay or may not reflectthemarket.
Economics of this analysis:
coefficientand use it independentlyuses of regression analysis haveThe regressioncoefficients?
can lead to errors.been presented. The first requiresreflection of market behavior is
the complete regression equation,probably their number one
In theory, the experts are correct.and therefore makes it necessaryadvantage.
But the authors believe that the usethat each listing agent have access
of the coefficients combined with theto a computer terminal so that he When using the market
Summary:
broker?s judgment can lead to bettercan feed his listing data into thedata method to calculate the
value estimates. The reason for thiscomputer. The computer will thenprobable selling price of a listing, it
belief is that now the broker oftencalculate the most probable sellingis necessary to know what the public
startswith cost data and then makesprice. This method is very likelyis willing to pay and what the seller
a judgment as to whether the fullthe most accurate use of theis willing toaccept for differences
cost, or 50 percent, or 20 percentofregression analysis, although evenbetween the house being listed and
cost best reflects market behavior.this use must be made withtherecently sold comparables.
In contrast, the regression coefficientknowledge of its possibleConsequently, it is necessary for the
2
gets right to the point of what buyerslimitations. It is also the mostlistingagent to know the dollar
are paying. When considering theexpensive use of regressionadjustments for differences between
possible errors of cost versusanalysis. The authors have somecomparable and the subject to arrive
regression coefficients, the authorsdoubt that the expense could beat the probable selling price for the
feel (though we have no statisticaljustified by the results.listed house and to intelligently
proof) that in most instances thediscuss the listing price with the
coefficients will be the moreThe alternate use of regressionseller and later with the buyer.
accurateof the two.analysis may be more acceptableWhile the dollar amounts of
fromthe point of view of cost. Ifadjustments can be obtained by
The authors arebrokers canshare the cost ofexperience and by adjusting cost
Rules to follow:
convinced that the possible errors inregression analysis, and theestimates, a third way, regression
theuse of regression coefficients ascoefficients derived, there from, theanalysis, has been the basis of this
market dataadjustments can bebenefits may outweigh the costs.article.
reduced by following three rules: (1.)Perhaps the local board or the MLS
The subjectproperty and comparableservice could assume the
must be from the same subdivisionsresponsibility for the regression
used in the regression study thatanalysis of the various
Page 42New Hanover County Tax Office
Figure 1
12345
SellingSq. Ft.OfColumn 2
PriceLiving AreatimesColumn 3
Property(thousands)(thousands)Column 3Squared
1$ 29.21.029.21.00
234.01.344.21.69
337.31.555.92.25
427.7.924.9.81
531.01.134.11.21
TOTALS5$ 159.25.8188.36.96
Average Selling Price = $ 159.2 ÷ 5 = $31.84 (thousands)
Average Square Foot = 5.8 ÷ 5 = 1.15 (thousands
Figure 2
Calculating the Coefficients
b = [no. of propertiesX sum of col 4] - [sum of col. 3 X sum of col. 2]
2
[no. of properties X sum of col. 5] - [sum of col. 3]
= [5 X 188.3] - [5.8 X 159.2]
2
[5 X 6.96] - [5.8]
= 941.5 - 923.36 = 18.14 =$15.63
34.8 - 33.64 1.16
a = average selling price -b X average square footage
= 31.84 - [15.63X 1.16]
= 13.71 or $13.710
Regressionanalysis, when teamedto inflationary and supplyandoutweigh the benefits if each
with a computer, has the advantagedemand forces.individual firmhas itsown
of making calculations based uponcomputerized regression program.
hundreds of sales so that the buyingOne problem withusing regressionIf several firms share in the costs,
and selling decisions of hundreds ofcoefficient as market datathen the benefits may exceed the
sellers and buyersof MLSadjustments is the interrelationcosts. Perhaps MLS could be the
properties can be evaluated. Thisbetween the coefficients.one organization to initiate
would be an impossible task anyConsequently, the authors point outregression analysis. The MLS
other way.thatsuch use of the coefficients islisting and sales information
not consistent with regressiondistribution channel, which goes to
Furthermore, the computertheory. But, the authors do feel thatthe member brokers and
regression analysis enables thethis use of the coefficients is a goodsalespeople, could handle this extra
adjustments to be updatedweekly ormarriage between statistical theoryinformation.
monthly, whenever the latest MLSand the listing salesperson?s
sales data is entered into thejudgment.Finally, multiple regression has the
program.This is an excellentpotential of being a powerful listing
procedure for keeping up withThe primary disadvantage oftool in your marketing tool chest. It
changing buyer preferences andregressionanalysis is probably itsis suggested that you consider it.
G
increasing and decreasing prices diecost. Very likely the cost will
Appendix 3 - CAMA ModulesPage 43
For purposes of discussion, suppose$13,710 + [$15.63 X 1,350] =
Appendix:
Regressionanalysis is a statisticalthe five properties described in$34,810.
technique designed to determine thecolumns 1 ,2, and 3 in figure1 are to
mathematical relationship between abe used to developtheregressionThecalculations required to
?dependent? variable (selling priceformula.determine the coefficients for each
in our application) and one or moreindependent variable in a multiple
?independent? variables (squareAfter column 4, 5, the totals and theregression formula are too complex
feet, basement, garage, location andaverage selling price and square feetto present here. While the simple
other features, in our application).for the five properties are calculated,example shown above can be
the a and b coefficients arecalculated by hand in a few minutes
In the simplestcalculated with the formulas shownwith a hand calculator,multiple
Simple regression:
case, where there is only onein Figure 2.regression analysis normally
independent variable (square feet ifrequires the use of a computer
living space, for example), theThe regression formula forprogram designed for this purpose.
regression formula is: Probableestimating the selling price of otherWe utilized a commonly available
sellingprice for a particular propertyproperties whose square feetofprogram (Biomedical Multiple
x
= a + b square feet of living spaceliving space is known would be:Stepwise Regression Package) to
for a particular property.determinethe regression
Probable Selling Price = $13,710coefficients, the standard error of
The coefficients a and b are+[$15.63 X sq ft of living space].the estimates and the standarderror
calculated from a sample ofof the coefficients discussed in this
properties where the actual sellingFor example, if a property?s squarearticle.
price and square feet of living spacefeet of living space is 1,350, the
is known.expected selling price would be:
Notes:
The funds for the study came from the Colorado Real Estate Commission and were used to pay three real estate
1.
students, Jeffrey Robinson, David Rimel and William Lappen, to collect, code and analyze data on the University of
Colorado computer. The Real Estate Commission funds were also used for the computer time.
Jack Lessinger, ?A Final Word on Multiple Regression and Appraisal,?,
2.
The Appraisal Journal
Vol. 3 (July, 1972), pp. 449 - 461.
Choosing Candidate Variables
Perhaps the best way to discuss the selection of variables or factors is to illustrate with a sample
set, and point out the reasons for the inclusion of the various terms. (A variable as used here is
any element in the extract produced by the Market Extract program.)
In order to say that we have achieved a useful model, we would want to include all those factors
which have a significant impact on the selling prices of single-family residential properties in
our county. The factors may vary from one cluster (grouping of similar neighborhoods) to
another, but have certain elements in common. Among these significant factors are:
?Size - Expressed as living area measured in square feet.
?Land Value - As determined within the Cost Approach analysis, via the CALP module.
Page 44New Hanover County Tax Office
?Number of Bathrooms - within a given market stratum, there is a certain value attached to the
addition of a full or half bath.
?Fireplaces - As with bathrooms, a certain value (corresponding roughly to the actual cost) is
associated with the presence of one or more fireplaces. Metal fireplaces or stoves can be
included separately as their cost is usually lower (however their market value may be higher).
?Recreation room and finished basement area - The buyer makes adustments for the presence of
these factors. If, however, these areas are already included in the total living area of the
property, the actual adjustment may be negative (basement area is usually less desirable than
ground floor or other living area).
?Garages - Usually separate categories should be maintained for attached and detached garages
and carports, as the market value (per square foot) generally reflects the different costs for
these additions.
Other factors, which may necessitate significant adjustments from one property to another,
include:
?Pool and deck areas - on a per square foot basis.
?Open and enclosed porches - on a per square foot basis.
?Other building and yard improvements (OBY) - On a cost basis.
?Type of basement - As a gross adjustment to differentiate between none, crawlspace, partial or
full.
?Heating - As a gross adjustment, negative for no permanent heat system, positive for central air
conditioning. This correction might also be made on a per-square-foot basis.
?Number of Living Units - An adjustment to the value that an otherwise equivalent property
would have because multiple living units exist within the same property.
Two important factors, and,, and , (CDU) have not
Quality Grade ConditionDesirabilityUtility
been included above for this reason. Both and are each better included as a separate
GradeCDU
term, and as multiplied by the Since a ?s is established
square feet of living area.GradeFactor
based on the components of cost model, the term used is [times], thus
Grade FactorLiving Area
eliminating the need to include as a separate term. In order that the new term truly
living area
estimates the contribution of to value, it is beneficial to remove the effects of (Living
CDUSFLA
Area) for a typical house ( = ) by linearizing so that = 0 (zero),
CDUAverageCDUAverage CDU
Good CDU = 1, etc.
Age, included and multiplied by living area, is essentially a depreciation term. If neighborhoods
are included where extensive remodeling has taken place, an effective age term (based on the
year remodeled) may be more appropriate.
Appendix 3 - CAMA ModulesPage 45
To reflect the fact that property values change as a function of time due to economic conditions
(e.g., inflation), it is wise to include a term to ?correct? the sales price to a given base date. The
difference of the date of sale (in months) from the base date can be used as a variable. Once
again however, the net adjustment is more appropriate if we model the term date of sale (in
months) multiplied by living area (in square feet). This term can have quite different values
during different economic conditions.
Use of MRA Constraints and the Market Approach Report
The possibility of a lack of sufficient information within the sales database exists. This will not
allow for the computation of coefficients which are both meaningful and reasonable. If the
model builder designates the coefficient of a factor in the model by B (e.g., dollars per square
i
foot of garage area), we might expect and want that coefficient to fall within certain bounds:
B B B
iliiu
where B is the lower bound or constraint for the th coefficient and B is the upper bound. The
iliiu
values from B to B will be referred to as the .
range
iliu
The type of action which the program should take when the value calculated for a given B falls
i
outside the limits must be specified. This action may depend upon whether the value calculated
in the is above or below the level of significance. For implementation, the
partial F-test
constraints are divided into four types which (except for Type 0) differ only in their action when
the variable fails to meet the chosen level of significance. These types are described as follows:
TypeAction if Variable is Insignificant
0Set B to 0. No constraint if significant.
i
1Constrain to nearest limit if outside range.
2Constrain to mid-range if outside range.
3Constrain to mid-range whether inside or outside range.
Constraint Types 1,2, and 3 provide for the logical possibilities that may be contemplated by an
analyst using constrained regression. The assignment of constraints to variables is a judgmental
process left to the discretion of the model developer. In general, model developers will make the
first few modeling runs with no constraints to observe the results obtained from the more
standard techniques. The results are reviewed to see if there are any variables missing which are
deemed important or if variables are in the model with unacceptable coefficients. The ranges
applied to the constraints are based on an appraiser?s judgment of realistic value adjustments
which apply to the particular class of properties for which the model is being developed.
The following page presents a preliminary view (expect changes) of the configuration of the IAS
Market Approach as customized for New Hanover County. This one-page analysis shows a
?subject parcel? (each parcel, in turn, is a subject) and up to five of the best comparable sales
available from the . The variables (items of comparison) are displayed in
Neighborhood Group
horizontal rows while each parcel?s variable data are displayed in vertical columns.
Page 46New Hanover County Tax Office
NEW HANOVER COUNTY, NORTH CAROLINA
Parcel IDSUBJECT PARCELcomp 1COMP 2COMP 3COMP 4COMP 5
(Situs Address)(Situs Address)(Situs Address)(Situs Address)(Situs Address)(Situs Address)
Neighborhood(NBHD Code)(NBHD Code)(NBHD Code)(NBHD Code)(NBHD Code)(NBHD Code)
Total Acres(Land Size)(Land Size)(Land Size)(Land Size)(Land Size)(Land Size)
Living Units(# Families)(# Families)(# Families)(# Families)(# Families)(# Families)
DWELLING
DESCRIPTION
Story Height(Story Height Code)(Story Height Code)(Story Height Code)(Story Height Code)(Story Height Code)(Story Height Code)
Style(Building Style)(Building Style)(Building Style)(Building Style)(Building Style)(Building Style)
Year Built/ref(Year Built/Eff Year)(Year Built/Eff Year)(Year Built/Eff Year)(Year Built/Eff Year)(Year Built/Eff Year)(Year Built/Eff Year)
Year Remodeled(Yr Rem if any)(Yr Rem if any)(Yr Rem if any)(Yr Rem if any)(Yr Rem if any)(Yr Rem if any)
Exterior Wall(Wall Material)(Wall Material)(Wall Material)(Wall Material)(Wall Material)(Wall Material)
SFLA(Sq. Ft. Living Area)(Sq. Ft. Living Area)(Sq. Ft. Living Area)(Sq. Ft. Living Area)(Sq. Ft. Living Area)(Sq. Ft. Living Area)
MGLA(Main Ground Floor)(Main Ground Floor)(Main Ground Floor)(Main Ground Floor)(Main Ground Floor)(Main Ground Floor)
Rec Room Area(Rec. Room Area)(Rec. Room Area)(Rec. Room Area)(Rec. Room Area)(Rec. Room Area)(Rec. Room Area)
Grade(Quality Grade)(Quality Grade)(Quality Grade)(Quality Grade)(Quality Grade)(Quality Grade)
CDU(Condition, Des, Utl)(Condition, Des, Utl)(Condition, Des, Utl)(Condition, Des, Utl)(Condition, Des, Utl)(Condition, Des, Utl)
Basement(Crawl / Part / Full)(Crawl / Part / Full)(Crawl / Part / Full)(Crawl / Part / Full)(Crawl / Part / Full)(Crawl / Part / Full)
Bed Rooms(Bed Room Count)(Bed Room Count)(Bed Room Count)(Bed Room Count)(Bed Room Count)(Bed Room Count)
Family Rooms(Family Rm Count)(Family Rm Count)(Family Rm Count)(Family Rm Count)(Family Rm Count)(Family Rm Count)
Total Rooms(Room Count)(Room Count)(Room Count)(Room Count)(Room Count)(Room Count)
Full Baths(Full Bath Count)(Full Bath Count)(Full Bath Count)(Full Bath Count)(Full Bath Count)(Full Bath Count)
Half Baths(Half Bath Count)(Half Bath Count)(Half Bath Count)(Half Bath Count)(Half Bath Count)(Half Bath Count)
Total Fixtures(Plumb Fixt Count)(Plumb Fixt Count)(Plumb Fixt Count)(Plumb Fixt Count)(Plumb Fixt Count)(Plumb Fixt Count)
WBFP Openings(Brick Fire Boxes)(Brick Fire Boxes)(Brick Fire Boxes)(Brick Fire Boxes)(Brick Fire Boxes)(Brick Fire Boxes)
FP Prefab(Metal Fire Boxes)(Metal Fire Boxes)(Metal Fire Boxes)(Metal Fire Boxes)(Metal Fire Boxes)(Metal Fire Boxes)
Excavated BSMT(Basement SF)(Basement SF)(Basement SF)(Basement SF)(Basement SF)(Basement SF)
Pilings BSMT(SF Among Pilings)(SF Among Pilings)(SF Among Pilings)(SF Among Pilings)(SF Among Pilings)(SF Among Pilings)
Conc. Block BSMT(SF CB/Frame Enc)(SF CB/Frame Enc)(SF CB/Frame Enc)(SF CB/Frame Enc)(SF CB/Frame Enc)(SF CB/Frame Enc)
Elevators(Elevator Count)(Elevator Count)(Elevator Count)(Elevator Count)(Elevator Count)(Elevator Count)
Heat(Heat Type(Heat Type(Heat Type(Heat Type(Heat Type(Heat Type
fuel(Het Fuel)(Het Fuel)(Het Fuel)(Het Fuel)(Het Fuel)(Het Fuel)
Market Adjust(if any)(if any)(if any)(if any)(if any)(if any)
Closed Porch Area(Enclosed Porch SF)(Enclosed Porch SF)(Enclosed Porch SF)(Enclosed Porch SF)(Enclosed Porch SF)(Enclosed Porch SF)
Detached Garage(Det Garage SF)(Det Garage SF)(Det Garage SF)(Det Garage SF)(Det Garage SF)(Det Garage SF)
Deck Area(SF of Deck)(SF of Deck)(SF of Deck)(SF of Deck)(SF of Deck)(SF of Deck)
PRICINGDATA
RCN(Cost Approach $)(Cost Approach $)(Cost Approach $)(Cost Approach $)(Cost Approach $)(Cost Approach $)
Depreciation(Cost Approach $)(Cost Approach $)(Cost Approach $)(Cost Approach $)(Cost Approach $)(Cost Approach $)
RCNLD(Cost Approach $)(Cost Approach $)(Cost Approach $)(Cost Approach $)(Cost Approach $)(Cost Approach $)
Land Value(Cost Approach $)(Cost Approach $)(Cost Approach $)(Cost Approach $)(Cost Approach $)(Cost Approach $)
Building Value(Cost Approach $)(Cost Approach $)(Cost Approach $)(Cost Approach $)(Cost Approach $)(Cost Approach $)
OBY Value(Cost Approach $)(Cost Approach $)(Cost Approach $)(Cost Approach $)(Cost Approach $)(Cost Approach $)
Dwelling Value(Cost Approach $)(Cost Approach $)(Cost Approach $)(Cost Approach $)(Cost Approach $)(Cost Approach $)
Cost Value(Cost Approach $)(Cost Approach $)(Cost Approach $)(Cost Approach $)(Cost Approach $)(Cost Approach $)
VALUATION
Sale Price(Sale price)(Sale price)(Sale price)(Sale price)(Sale price)
Sale Date(Date of Sale(Date of Sale(Date of Sale(Date of Sale(Date of Sale
Adj Price(if different)(if different)(if different)(if different)(if different)
Distance(How Comparable?)(How Comparable?)(How Comparable?)(How Comparable?)(How Comparable?)
Weighted Est(Market Approach $)
Market Value(Market Approach $)
Field Control
Map Number
Alt ID(Map ID)(Map ID)(Map ID)(Map ID)(Map ID)(Map ID)
Zoning(Zoning Code)(Zoning Code)(Zoning Code)(Zoning Code)(Zoning Code)(Zoning Code)
is a measure of how comparable each sale is. Sales are ranked in order
DistanceDistance
Appendix 3 - CAMA ModulesPage 47
The Income Approach
The Income Approach analyzes the value of the whole property to an investor interested in the
net cash flow the property is capable of producing. The resulting indication of value includes the
land value and the contribution of all improvements (buildings and other yard improvements).
While the Tax Administrator must, under statute, artificially divide the total value into value
attributable to land and, separately, building. This allocation of total value is not to be compared
to the allocation of total value in any other appraisal. Any such comparison is invalid.
The Income Approach makes use of financial formulas that have served the banking industry for
hundreds of years. In its most basic form, the banking formula is:
[equals][times]
Interest Income Interest Rate Principal
The real estate appraiser will restate this formula slightly, as:
[equals][times]
IncomeCapitalization Rate Value
Through the application of elemental algebra rules, if one knows the value of any two of the
components of the above formula one can solve the equation for the third (unknown) component.
The typical real estate appraiser seeks to estimate , so correctly restates the formula as:
Value
[equals][divided by]
ValueNet Operating Income Capitalization Rate
The Market Approach relies on actual sale prices to analyze what typical buyers are paying
typical sellers for properties similar to the one being appraised. Likewise, the Income Approach
relies on actual rents being paid for similar properties (some of which, hopefully, have sold).
Through such market research the appraiser can predict both the a given property is
Net Income
capable of producing and the the typical investor is using when buying
Capitalization Rate
similar properties.can be extracted from the market using the same formula:
Capitalization Rate
[equals][divided by]
Capitalization Rate Net Income (Sold Property)Value (Sales Price)
If an insufficient number of sales of similar properties with known have occurred,
Net Income
the appraiser has other tools by which a typical investor?s investment goals (parameters that
must be met or the typical investor will seek an alternate investment) can be analyzed to form an
opinion of an appropriate for the ?subject property? (each property, in turn,
Capitalization Rate
is the ?subject? of an appraisal).
The Income Approach, thereby, becomes more of a sometimes very useful feasibility study tool
than either the Cost Approach or Market Approach can provide. The typical investor will not
pay more than the indicated value without rethinking his or her investment goals. Such
investment goals do change over time, but more because of reasoning than emotion.
Page 48New Hanover County Tax Office
Fee Simple Market Value via the Income Approach
New Hanover County is appraising all properties for market value, meaning that all
fee simple
rights of ownership are considered to be intact. To lease a property is to divide the rights of
ownership (the owner exchanges the for the ).
right of possession right to receive income
However exactly like a ten year old, sale is an indication of the market at the time of
arms-length
sale, the income a given property may be producing under a lease signed in a past year is an
indication of that prior market. An older lease will be considered if brought forward on appeal,
but current market rents will carry more weight.
If current market rent is demonstrably above actual rent being paid under a lease executed in the
distant past, the value of the property is demonstrably divided into value and
leasehold leased
value. To analyze and value such an encumbered property using only contractual rents is to
fee
value the interest only, which would be aexemption of the value.
leased feede facto leasehold
NCGS 105-274 advises that all property is taxable unless specifically exempted.
Leasehold
value enjoys no such exemption. Further, N.C.G.S. 105-302 (c)(13) advises that real property
owned under a time-sharing arrangement (which this situation is closest to) is to be listed in the
name of the managing entity. Therefore all properties will be appraised usingand
market rents
to obtain an estimate of the a property is capable of
market expensesmarket net income
producing as of January 1, 2007 as though the property were available for lease on that date.
Income Modeling
The Tax Administrator?s Office has contracted with , a local
Ingram McKenzie & Associates
appraisal firm with considerable data resources, to provide appropriate models of
Net Operating
and for each of the clusters of commercial and industrial
IncomeCapitalization Rates
neighborhoods as discussed in Appendix 2.
The CAMA module?s Income Approach is able to analyze either the actual income generated by
a given property or a model of the market income the property should be capable of producing.
Because the 2007 revaluation is the first opportunity to use such a valuable tool, the county?s
appraisal staff will use the model income and capitalization rate to ensure that the indication of
value via the Cost Approach is well supported in the market. If a given property is appealed, any
actual income and expense information presented will be reviewed and encoded. The appraiser
will compare the results to the information from the model structure.
The graphic on the following page presents a high-level view of the way in which IAS? Income
Approach appraises the land. The row of card-like objects across the bottom of the page
represents parcel data in the Land Table. The barrel-like object at the top of the page represents
several Validation Tables, and the row of card-like objects across the center of the page
represents Control Table entries designed to house appraisal management?s land rates.
Page 50New Hanover County Tax Office
IAS Technical Documentation: Income Algorithm(s)
()
emphasis added
(5.8) Income Valuation from Models
(Documentation Number = 5.1)
(5.8.1) Gross Income Calculation
(Documentation Number = 5.1.1)
Get the Cost Version for the Tax Year being processed.JURIS.INCVER:
AA44:
Get Neighborhood PARDAT.NBHD:
CA12:
Get Effective Year, if present, otherwise get Year Built
CA31:
NVL(COMDAT.EFFYR, COMDAT.YRBLT)
Get Investment Rating COMDAT.PROPRATE:
Get Number of Units and Number of Identical Units COMDAT.UNITS:
COMDAT.NUMIDENT:
Get distinct income Use Groups from all lines, all cards of the parcel.Income
CA34:
Uses are automaticallyretrieved from CINTEXT () when Use Type is
CA64
entered, if commercial valuation method is CLT. If commercial valuation method
is MSW,Income Use Groups come from CIMSBASE () using MS Section,
CA52
Table, and Class and Quality Type. If Use Group is 0 or null in CIMSBASE,
CIMUSE is searched, based on MS section and Table.COMINTEXT.INCUSE:
Get Model Type for each Use Group.CIGROUP.MODTYPE:
CA71:
Get Model Number for corresponding Cost Version,Neighborhood,Investment
CA72:
Rating, and Use Group CINBHD.MODEL
UseModelModel
GroupTypeNumber
_______________
_______________
_____
__________
Calculate Gross Income by Model Type
Model Type A
Sum the Units for that Income Use. Get the number of Efficiency,One Bedroom,Two
CA33:
Bedroom,ThreeBedroom, and Four Bedroom apartments, the Number of Baths,Half Baths,
and Other. If Identical Units from is greater than 1, multiply Units [times] Number of
CA31
Identical Units.
Move COMAPT.CNT into efficiencies if COMAPT.BED = 0
into 1 BR, if COMAPT.BED = 1
into 1 BR, if COMAPT.BED = 2
into 1 BR, if COMAPT.BED = 3
into 1 BR, if COMAPT.BED = 4
Move COMAPT.BATH, COMAPT.HALF, COMAPT.OTHER
Appendix 3 - CAMA ModulesPage 51
Use# of
GroupEffic1BR2BR3BR4BRHalfOtherUnits
________________________________________
________________________________________
________________________________________
Get the rents foreach size apartment, and the adjustments. CIMOD.APTEFF,
CA73:
APT1BR, APT2BR, APT3BR, APT4BR, APTHALF, APTOTHER
Effic1BR2BR3BR4BRHalfOther
___________________________________
Calculate the Annual Income by Use Group
+
(((# of Effic [times] EfficRent) [times] # Or Units [times] 12)
+
((# of 1BR [times] 1 BR Rent) [times] # of Units[times] 12)
+
((# of 2BR [times] 2 BR Rent) [times] # of Units[times] 12)
+
((# of 3BR [times] 3 BR Rent) [times] # of Units[times] 12)
+
((# of 4BR [times] 4 BR Rent) [times] # of Units[times] 12)
+
((# of Baths [times] Bath Adjustment) [times] # of Units[times] 12)
+
((# of Half Baths [times] Half Bath Adjustment) [times] # of Units[times] 12)
((# of Other Amenities [times] 1 BR Rent) [times] # of Units[times] 12)
[equals]Gross Income:
Example:
COMAPT.CNT [times] CIMOD.APTEFF [times] COMDAT.NUMIDENT [times] 12
[equals] COMAPT.INCOME:
Model Type H
Get Room Rate COMOD.RMRATE:
CA73:
Get Income Adjustment, if not nullCOMUSE.INCADJ:
CA35:
Calculate the annual income from rooms:
# of Units X Rate X Inc. Adj. X 365=Room Income
COMDAT.UNITSCIMOD.RMRATECOMUSE.INCADJ365COMUSE.RENT
__________ X_________ X_________ X365 =
Calculate Net Rented Areas, and sum for each Income Use
CA34:
Use GroupAreaX% Net Rented=Net Area
COMINTEXTCOMINTEXTCOMINTEXTCOMUSE
.INCUSE.AREA.RENTPCT.SFNET
__________________X________=
__________________X________=
__________________X________=
Get Square Foot Rate for each Model CIMOD.SFRATE:
CA73:
Page 52New Hanover County Tax Office
Calculate the Gross Income for each Use Group
Net Square FeetXSF Rate _____= Gross Income
COMUSE.SFNETCIMOD.SFRATECOMUSE.RENT
____________X___________=
____________X___________=
____________X___________=
Additional Gross Income:
Get Number of Covered Parking Spaces and Uncovered Parking Spaces
CA31:
COMDAT.PARKCOVER ________ COMDAT.PARKUNCOV_______
Get Structure Code for cardCOMDAT.STRUCTURE:
CA31:
Get Use Group for Structure CodeCISTRUCT.INCUSE:
CA61:
Get Model Number for corresponding Cost Version,Neighborhood,
CA72:
Investment Rating and Use Group CINBHD.MODEL:
Get the Monthly Parking Rates from the Model
CA73:
CIMOD.COVERED ________ CIMOD.UNCOV _______
Calculate Parking Income
((______ X_____) + (_____ X) X 12
# of Covered Spaces Covered Rate # of Uncovered Spaces # of Uncovered Spaces
COMDAT.PARKCOVER CIMOD.COVERED COMDAT.PARKUNCOV CIMOD.UNCOVER
= COMUSE.PARKING
Add Parking Income to corresponding Gross Income by Use
+=
Use GroupGross IncomeParking Income Total Gross Income
COMUSE.INCUSECOMUSE.RENTCOMUSE.PARKINGCOMUSE.POSINCOME
+=
__________________________________
If Income Use Group assigned by Structure Code on does not
Note:CA31
have a match on ,Parking Income will not be included.
CA34
Potential Gross Income
Get Vacancy Percent from Model COMOD.VACANT:
CA73:
COMUSE.VACINC:
Get Vacancy Percent Adjustment COMUSE.VACOVR:
CA35:
Get the Age Table to be used.COMUSE.AGETABLE:
CA73:
Get the Valuation Year for the Cost Version: Fact=?COST?, Code= ?VALYR?
CA42:
Appendix 3 - CAMA ModulesPage 53
Calculate Age as Valuation Year minus Effective Year, if present, otherwise minus
Year Built. Calculatean Average Age as the sum of the Age [times] the Square
Feet for each card, divided by the Total Square Feet for the parcel.
3
(((Valuation Year - NVL(COMDAT.EFFYR,COMDAT.YRBLT))
3
X COMINTEXT.SF) / (COMINTEXT.SF))Age:
Get the Age Factor from the table for the Cost Version. If Exact Age is
CA74:
not entered in table, use the next highest Age.CIAGE.AGE:
COMUSE.AGEINC:
Calculate Occupancy %
100 -(Vacancy % X Vacancy Adj X Age Factor)
COMUSE.VACINCCOMUSE.VACOVERCOMUSE.AGEINC
100 -(_____ X_____ X_____)= Occupancy %:
Calculate Net Income by Use Group:
Use GroupGross IncomeXOccupancy %= Potential Gross Income
COMUSE.INCUSECOMUSE.POSINCOMECOMUSE.POSINCOME
_______________X__________=
_______________X__________=
_______________X__________=
Additional Income Calculations
Get Additional Income from Model CIMOD.ADDINC:
CA73:
COMUSE.ADDINC:
Get Additional Income Override COMUSE.INCOVR:
CA35:
Calculate Additional Income. If Income Override= 0, use Model Income Rate,COMUSE
otherwise use Income Override.INCOVR
Additional Income Rate ______X Square Feet_____ =
COMUSE.ADDOVR (COMUSE.ADDINC)COMUSE.SFNET
Model Type H:
CA73:Get Food and Beverage Percent from ModelCIMOD.RMRATIO:
COMUSE.FOODINC:
CA35:Get Food and Beverage % Adjustment from Model; if blank use 1
COMUSE.FOODOVER:
Calculate Income from Food and Beverage:
Net Income for Hotel Use X(F & B Percentage X F & B Adjustment) = F & B Income
COMUSE.RENTCOMEUSE.FOODINCCOMUSE.
COMUSE.FOODOVERFOODINCOME
________________ X_____________=
Page 54New Hanover County Tax Office
Effective Gross Income
Calculate Effective Gross Income for each Use Group:
UsePotentialAdditionalF & B Income Effective
++
GroupGross IncomeIncomeIncome=Gross Income
COMUSECOMUSE.COMUSE.COMEUSE.COMUSE.
.INCUSEPOSINCOMEADDINCOMEFOODINCOMEGROSINCOME
++
__________________________________=
++
__________________________________=
++
__________________________________=
(5.8.2) Expense Calculation
(Documentation Number = 5.1.2)
Management Expense
Get the Management Expense Rate from the ModelMgt Expense Rate:
CA73:
CIMOD.EXPPCT
COMUSE.EXPINC
Get the Adjustment to ExpensesExpense Adjustment:
CA35:
COMUSE.EXPOVER
Calculate Age-Adjusted Management ExpesnesExpense Adjustment:
Mgmt Exp. Rate X Expense Adj. X Age Factor X Effective Gross Income=Management
COMUSECOMUSECOMUSECOMUSE Expense
COMUSE.EXPMGT
.EXPINC.EXPOVER.AGEINC.GROSINCOME
__________ X________ X________ X____________=
Utility Expense
Get the Utility Expense Rate COMUSE.UTILINC:
CA73:
Get the Adjustment to Utility ExpenseCOMUSE.UTILOVER:
CA35:
Calculate Age-adjusted Utility Expense:
Utility XUtility XExpense XAge XGross=Utility
Exp RateAdjustmentAdj.FactorSquare FeetExpense
COMUSECOMUSECOMUSECOMUSECOMUSECOMUSE
.UTILINC.UTILOVER.EXPADJ..AGEINC.SFGROSS.EXPUTIL
_____ X_____ X_____ X_____ X_____=
Appendix 3 - CAMA ModulesPage 55
(5.8.3) Net Income Calculation
(Documentation Number = 5.1.3)
Calculate Net Income
IncomeEffective -(Management +Utility)=Net
UseGross Income ExpenseExpenseIncome
COMUSE.COMUSE.COMUSE.COMUSE.COMUSE.
INCOMEGROSINCOMEEXPMGTEXPUTILINCOME
_________________ -________ +________=
_________________ -________ +________=
_________________ -________ +________=
(5.8.4) Final Income Calculation
(Documentation Number = 5.1.4)
Direct Capitalization
Sum the Net Income for each Income Use to give Total Net Income for the parcel.
Get Jurisdiction Code and Property Class:PARDAT.JURIS:
CA12:
PARDAT.CLASS:
Get Tax Rate based on Jurisdiction Code and Property Class on.
CA75:CA12
If Jurisdiction is not entered, use the first digits of Parcel ID(number of
digits is defined on ). If Tax Rate is not found, default to 0.
SY11
CITAX.TAXRATE:
Get Column for Cap Rate lookup. The acceptable values are STRUCT
SY11:
and LUC.
The default is STRUCT.
If the value is STRICT:
Get Override Structure Code, if it existsIEPRCL.OVRSTRUCT:
CA11:
Get the Use Group of the Override Structure Code, if it exists,otherwise the
Structure Code from Card 1.
If the value us LUC:
Look up Use Group associated with LUC where calcname - CAPRATE
SY23:
Get Cap Rate, using the Model for the Use Group from either the
CA73:
Structure Code or the Land Use Code.CIMOD.CAPRATE:
Page 56New Hanover County Tax Office
Calculate the Income Value
Parcel Net Income /(Tax Rate +Cap Rate)=Unadjusted Income Value
3
(COMUSE.INCOME)CITAX.TAXRATECIMOD.CAPRATEIEVAL.CAPMOD
__________ /(________ +________)=
Get the Land Values for all Land Types/Land Codes, which have
CA14:
Commercial Residual Flag set to ?Y?
3
(LANE.PRICE) where LAND.COMRES = ?Y?Residual Land:
IEVAL.RESIDUAL
Write Unadjusted Income Value to,Direct CapitalizationIncome
IE19
Value from the Model. Write Residual Value to.
IE19
Mortgage Equity
If Mortgage Percent, Rate and Term are part of the Model, then the Cap Rate was calculated from
those terms to produce a Mortgage Equity Rate. Verifythat these values (CIMOD.MTGPCT,
MTGRATE, MTGTERM) are not null, and move the calculated Direct Capitalization Value into
IEVAL.MTGEQMOD
Gross Income Multiplier
Calculate the Gross Income Multiplier for each line of COMUSE, then sum for the parcel.
Get the Effective Gross Income COMUSE.GROSINCOME:
CA35:
Get the Gross Income Multiplier CIMOD.GIM:
CA73:
Calculate Income Estimate:
EGI X GIM=GIM Income Value
COMUSE.GROSINCOMECIMOD.GIMCOMUSE.GIMVAL
_______________X_____________=
Write Final Income Value to,GIM Income Value from the Model.
IE19
Gross Rent Multiplier
Calculate the Gross Rent Multiplier for each Line of COMUSE, then sum for the parcel.
Get the Gross Rent MultiplierCIMOD.GRM:
CA73:
Add the Monthly / Annual FlagCIMOD.GRMFLG:
If GRMFLG = A
Get the Potential Gross Income COMUSE.RENT:
CA35:
Calculate the Estimated Income for each Line(if Model for that Use includes GRM)
Appendix 3 - CAMA ModulesPage 57
Gross RentXGRM= Income Estimate
COMUSE.RENTCIMOD.GRMCOMUSE.GRMVAL
___________X____________=
___________X____________=
___________X____________=
If GRMFLG = M
Get the Rent and Number of Units COMAPT.RENT:
CA33:
COMAPT.UNITS:
Compute the Total Rent for the parcel (all cards) where the Use Group (COMAPT.INCUSE) is equal
to the Use Group (COMUSE.INCUSE) being procesed in COMUSE.
3
(COMAPT.RENTXCOMAPT.UNITS)=MonthlyRent
3
(_____________X______________)=
Calculate the Estimated Income for each COMUSE Line (if Model for that Use includes GRM)
Gross Rent X GRM=Income Estimate
Monthly Rent (calculated)CIMOD.GRMCOMUSE.GRMVAL
__________X_________________=
__________X_________________=
__________X_________________=
Sum the individual line estimates to get Total Income Estimate:
3
GRM Income Estimates=Final Income Value
COMUSE.GRMVAL IEVAL.GRMMOD
Write Final Income Value to,GRM Income Value from the Model
IE19
Appraised Value
If Income Value is 0 on and GIMMOD and GRMMOD are calculated as 0, or if
CA11
IEVAL.ACTFLAG = ?M? and IEVAL.METHOD = ?CAP?, write Direct Capitalization Final Value to
: IEVAL.INCOMECALC and to : APRVAL.COMINCVAL.
IE19CA11
Get the Override Value for Residual Land, if entered OverrideResidual:
IE19:
IEVAL.RESIOVR
Get the Total Personal Property ValueOverride PP:
PP13:
IEVAL.PPOVR
Get the OverridePersonal PropertyValue, if entered Override PP:
IE19:
IEVAL.PPOVR
Page 58New Hanover County Tax Office
Calculate Final Income Value:
Unadjusted Income Value+Residual Land Value -Personal Property=Final Income Value
IEVAL.IEVAL.RESIDOVRIEVAL.PPOVRIEVAL.
INCOMECALC(RESIDUAL)(PERSPROP)INCOMETOT
____________+___________ -_________________=
____________+___________ -_________________=
____________+___________ -_________________=
Compute APRVAL.INCOME - APRVAL.COMINCVAL + APRVAL.RESGRMVAL
If Reason Code designates Income as Final Parcel Value (APRVAL.REVCODE = 4), distribute value
between land and buildings as follows:
Compute Land Value=Cost Land
APRVAL.APRLAND=APRVAL.LANDVAL
Compute Building Value=Income Value-Land Value
APRVAL.APRBLDG=APRVAL.INCOME-APRVAL.APRLAND
Some of the calculated fields in the Income Approach are then written to the IE Module, creating a new
parcel entry, if necessary:
IE18 - IEPRCL
Structure Code(COMDAT.STRUCTURE) - STRUCT
3
Total Area((COMINTEXT.AREA)) - TOTAREA
3
Net Area((COMUSE.SFNET)) - NETAREA
Cap Rate(CIMOD.CAPRATE) - CAPRATE
Tax Rate(CITAX.TAXRATE) - CAPTAX
Gross Income Multiplier(CIMOD.GIM) - GIM
Gross Rent Multiplier(CIMOD.GRM) - GRM
IE18 - IEPRCL
Residual Land Value RESIDUAL
Final Value from GIM GIMMOD
Final Value from GRM GRMMOD
Final Value from Direct Capitalization CAPMOD
Final Value from Mortgage Equity MTGEQMOD
Appendix 3 - CAMA ModulesPage 59
(5.9) Income Valuation from Actuals
(Documentation Number = 5.2)
(5.9.1) Gross Income Calculation
(Documentation Number = 5.2.1)
Income is calculated and summed for all Lines on where the Include Flag
IE11:IE11
(IERENT.RENTFLG) = Y. Get Units / Size Flag,Units or Size Entered,Rate per Unit or
Square Feet and Frequency for each Line of Income. If IERENT.FREQUENCY = D, use
365 as Frequency Factor; if IERENT.FREQUENCY = M, use 12 as Frequency Factor; if
IRENTFREQUENCY = Y, use 1 as Frequency Factor.
If IERENT.UNITFLAG = U
Units:# of Units X$/Unit X Frequency Factor=Gross Income
IERENT.HOWBIGIERENT.RATEIERENT.PGI
________X________X__________=
________X________X__________=
________X________X__________=
If IERENT.UNITFLAG = S
Size:Area X$/Sq. Ft.X Frequency Factor=Gross Income
IERENT.HOWBIGIERENT.RATEIERENT.PGI
________X________X__________=
________X________X__________=
________X________X__________=
Get Vacancy / Collection Loss for each Line IERENT.VACLOSS:
IE11:
Calculate Effective Gross Income:
Gross Income X(100 - Vacancy/Collection Loss)=Effective Gross Income
IERENT.PGI IERENT.VACLOSSIERENT.EGI
________X(100 - ________________)=
________X(100 - ________________)=
________X(100 - ________________)=
Get Apartment Income Units/Size Flag,# of Units,Size, and MonthlyRent
IE13:
Calculate Gross Income
IfIEAPT.UNITFLAG = U:
Units:# of Units X MonthlyRent X12=Gross Income:
IEAPT.APTUNITSIEAPT.APTRENTIEAPT.INCGROSS
__________X____________X12=
__________X____________X12=
__________X____________X12=
Page 60New Hanover County Tax Office
If IEAPT.UNITFLAG = S:
Size:Area X Rent ($/SqFt)X12=Gross Income:
IEAPT.APTSFIEAPT.APTRENTIEAPT.INCGROSS
__________X____________X12=
__________X____________X12=
__________X____________X12=
Get Vacancy / Collection Loss for each Line IEAPT.VACLOSS:
IE13:
Calculate Effective Gross Income:
Gross Income X(100 - Vacancy/Collection Loss)=Effective Gross Income
IEAPT.INCGROSS IEAPT.VACLOSSIEAPT.EGI
________X(100 - ________________)=
________X(100 - ________________)=
________X(100 - ________________)=
Sum Gross Income and Effective Gross Income, checking the Include Income Flag
(IERENT.RENTFLG) for value not equal to ?N?, and write to . Calculate Vacancy /
IE18
33
Collection Loss for the parcel as 1 -(Effective Gross Income /Gross Income).
Retrieve Pass-through Income from. Add to Gross Income, and recalculate Effective
IE18
Gross Income using calculated Vacancy / Collection Loss. Writeto IE18.
Sum (IERENT.PGI where IERENT.RENTFLG <> ?N? + Sum (IEAPT.INCGROSS
where IEAPT.RENTFLG <> ?N?) = IEPRCL.PGI
Sum (IERENT.EGI where IERENT.RENTFLG <> ?N?) + Sum (IEAPT.EGI
where IEAPT.RENTFLG <> ?N? = IEPRCL.EGRI
1 - (IEPRCL.EGRI/IEPARL.PGI)=IEPRCL.VACLOSS
(IEPRCL.PGI_____+IEPRCL.PASSTHRU _____)X(1 - IEPRCL.VACLOSS) = IEPRCL.EGRI
(5.9.1) Expense Calculation
(Documentation Number = 5.2.2)
Get Category, Type,% or SqFt. Flag,% or Rate, and Expense Set, for
IE12:
owner expenses only. Put in order by Expense Set.
IfIEEXPN.EXPWHO = O:
Expense SetCategoryType% / SqFtPercent/Rate/$ Amount
IEEXPN.IEEXPN.IEEXPN.IEEXPN.IEEXPN.
EXPSETCATEGORYTYPECOSTFLAGEXPRATE
________________________________________
________________________________________
________________________________________
Appendix 3 - CAMA ModulesPage 61
Calculate Expenses, using each Income Line onandthat has the same expense set
IE11IE13
as. If IERENT.UNITFLAG = U and IEEXPN.COSTFLAG = SQF for the same
IE12
Expense Set, return a warning ?Area not entered for income detail?.
If % (IEEXPN.COSTFLAG = PCT):
X=
PercentEffective Gross IncomeExpense
IEEXPN.EXPRATEIERENT.EGIIEEXPN.EXPENSE
________X__________=
________X__________=
________X__________=
If % (IEEXPN.COSTFLAG = SQF):
X=
RateAreaExpense
IEEXPN.EXPRATEIERENT.HOWBIG
IEAPT.APTSFIEEXPN.EXPENSE
________X__________=
________X__________=
________X__________=
If % (IEEXPN.COSTFLAG = AMT):
=
RateExpense
IEEXPN.EXPRATEIEEXPN.EXPENSE
________=__________
________=__________
________=__________
Sum each unique Category / Type of Expenses, and write to. Sum
IE18
all Expenses for Total Expenses on.
IE18
Sum(IEEXPN.EXPENSE)whereIEEXPN.CATEGORY= FIX into IEPRCL.EXFIX
Sum(IEEXPN.EXPENSE)whereIEEXPN.CATEGORY= OPR into IEPRCL.EXFIX
Sum(IEEXPN.EXPENSE)whereIEEXPN.CATEGORY= RSV into IEPRCL.EXFIX
Sum(IEEXPN.EXPENSE)whereIEEXPN.CATEGORY= OTH into IEPRCL.EXOTHER
Sum(IEEXPN.EXPENSE)into IEPRCL.EXTOT
(5.9.2) Net Income Calculation
(Documentation Number = 5.2.3)
Get Parking,Food and Beverage, and Additional Income, sum each for the Income Use
CA35:
Groups.
The sum of Food and Beverage plus Additional Income is displayed on as Model Other
Note:IE18
Income
__________________________
ParkingFood and BeverageAdditional Income
Sum(COMUSE.PARKING)Sum(COMUSE.FOODINCOME)Sum(COMUSE.ADDINCOME)
Page 62New Hanover County Tax Office
Calculate Effective Gross Income
IE18:
Effective Gross
+++=
Rental IncomeReimbursementParkingOther IncomeEffective
IEPRCL.IEPRCLIEPRCL.IEPRCL
Gross Income
EGRIEXREIMBPARKINGOTHERINCIEPRCL.EGI
________+________+________+________
Use Effective Gross Income and Total Expenses. Calculate Net OperatingIncome.
IE18:
Effective-Total=Net Operating
Gross IncomeExpensesIncome
IEPRCL.EGIIEPRCL.EXPTOTIEPRCL.NOI
__________-__________=
(5.9.3) Direct Capitalization Method
(Documentation Number = 5.2.4)
Present Worth Factor (IELEASEMO.PRESWORTH) for the first month
IE24:
is calculated as follows:
PVPresent Worth
RateDiscount Rate / 12
NperNumber of Periods (1 for One Month)
PmtPayment (-1)
FVFuture Value (0)
Type0 (Payments due at the end of the period)
PVX[(1 + Rate)** Nper]+(Pmt [1 + (Rate X Type]X([1 + Rate) Nper - 1] / Rate) + Fv = 0
The simplified equation, based on default values described:
PV = (1 / (1 + Rate)
Subsequent months are calculated as Present Worth Factor for the
previous month [times] the Present Worth Factor for the first month.
For each month,
(Rent Loss+Final Low+Commiss)XPresWorth=PRESVAL
Calculate discount for Lease Up, if data is entered
3
IELEASEMO.PRESVAL ________= IELEASE.LEASEUP:
Get Override Cap Rate, if entered, otherwise Cap Rate from Model.
IE18:
IEPRCL.CAPOVR or IEPRCL.CAPRATE:
Get Effective Tax Rate IEPRCL.CAPTAX:
Appendix 3 - CAMA ModulesPage 63
Calculate Overall Cap Rate as Cap Rate+Tax Rate
IEPRCL.CAPOVR(CAPRATE) ____ + CAPTAX ____= IEPRCL.CAPTOT
Get Net OperatingIncome, using Override, if present
IEPRCL.NOIOVR(NOI):
IEPRCL.CAPACTSTB
Calculate the Stabilized Income Value
IEPRCL.NOIOVR(NOI) ______ / IEPRCL.CAPTOT _____ =
=Stabilized Income Value:
Subtract the Discount for Lease Up:
IEPRCL.CAPACTSTB _____ - IEPRCL.LEASEUP =
= Unadjusted Income Value IEVAL.CAPACT:
(5.9.4) Mortgage Equity Analysis
(Documentation Number = 5.2.5)
Get Percent of Loan to Total Value (ratio) for up to three mortgages
IE21:
Calculate Constant Rate for each mortgage
(1 = (Mortgage Rate / 12))** 12 =Intermediate Value 1:
IEMORT.INTRATEn:
(Intermediate Value 1)**Mortgage Term=Intermediate Value 2:
IEMORT.TERMn:
(Intermediate Value 2 * Mortgage Rate) / (IntermediateValue 2 - 1)
IEMORT.INTRATEn=Mortgage Constant:
IEMORT.MTGCONSTn
Calculate Weighted Rate for each mortgage:
(% of Loan X Mortgage Constant=Weighted Rate
IEMORT.PERCENT1IEMORT.MTGCONST1IEMORT.MTGWGT1
_________X_____________=
IEMORT.PERCENT2IEMORT.MTGCONST2IEMORT.MTGWGT2
_________X_____________=
IEMORT.PERCENT3IEMORT.MTGCONST3IEMORT.MTGWGT3
_________X_____________=
Get Equity Yield Rate and Investment Percent.
IE21:
Equity Yield Rate IEMORT.EQRATE:
Investment % IEMORT.EQINVPCT:
Page 64New Hanover County Tax Office
Calculate Weighted Rate for the Equity:
(Investment %)XEquity Yield Rate= Weighted Rate
IEMORT.IEMORTIEMORT.
EQINVPCTEQRATEEQWGT
________x________=
Get Adjustment for the Period and Total Percent of Loan:
IE21:
Adj.for Period IEMORT.EQPERADJ:
Total % of Loan IEMORT.EQTOTPCT:
Calculate Sinking Fund Factor
33
(+) / (((1 + (+))**) -1)
Weighted RatesEquity RateWeighted RatesEquity RateHolding Period
(IEMORT.MTGWGT1 + IEMORT.MTGWGT2 + IEMORT.MTGWGT3 + IEMORT.EQWGT) /
(((1 + (IEMORT.MTGWGT1 + IEMORT.MTGWGT2 + IEMORT.MTGWGT3
=SFF iEMORT,EQSFF:
IEMORT.EQWGT))** IEMORT.EQHOLD) - 1)
Calculate the Weighted Rate for Equity Build Up:
Total % of Loan X Adj.for Period X SFF=Weighted Rate
IEMORT.IEMORT.IEMORT.IEMORT.
EQTOTPCTEQPERADJXEQSFFEQBLDUPWGT
__________X__________X________=
Calculate the Basic Rate:
3
Weighted Rate for Mortgage and Equity(*) - Weighted Rate of Equity Buildup=Basic Rate
(IEMORT.+IEMORT.+IEMORT.+IEMORT.-IEMORT..
MGTWGT1MTGWGT2MTGWGT3EQWGTEQBLDUPWGT
_________+_________+________+_______-________=
Get Appreciation/Depreciation Type and Rate
IE21:
Appr / Depr:
IEMORT.APDPTYPE
A/D Rate:
IEMORT.APDPRA
Calculate the Rate Adjustment for Capital Appreciation or Depreciation:
A/D Rate ______XSFF _______= Rate Adj.
IEMORT.APDPRTEIEMORT.EQSFFIEMORT.APDPWGT
Appendix 3 - CAMA ModulesPage 65
Calculate the Overall Rate:
If Appr/Depr (IEMORT.APDPTYPE) = A
Basic Rate __________-Rate Adj__________=Overall Rate:
IEMORT.FINALRATE
If Appr/Depr (IEMORT.APDPTYPE) = D
Basic Rate ___________+Rate Adj__________=Overall Rate:
IEMORT.FINALRATE
Get Net OperatingIncome IEPRCL.NOIOVR(NOI):
IE21:
Calculate the Final Income Estimate:
NOI _______/Overall Rate ________= Final Income Value:
IEPRCL.IEMORT.
NOIOVR (NOI)FINALRATE= IEVAL.MTGEQACT
Write Final Income Value to,Mortgage Equity Income Value from Actuals
IE19
(5.9.5) Gross Rent Multiplier
(Documentation Number = 5.2.6)
Get the Gross Rent Multiplier, using Override, if present
IE18:
IEPRCL.GRMOVR(GRM)
Get the GRM Flag, using Override if present, for Monthly or Annual
calculation
If Annual:
Get the Potential Gross Income IEPRCL.PGIOVR(PGI)
Calculate the Estimated Income:
Potential Gross Income X GRM=Income Estimate
IEPRCL.PGIOVR(PGI)IEPRCL.GRMOVR(GRM)IEVAL.GRMACT
____________X_______________=Final Income Est.
If Monthly:
Get the Monthly Income fromand, and calculate the
IE11IE13
Estimated Income:
Monthly Gross Income X GRM=Income Estimate
IEPRCL.PGIOVR(PGI)IEPRCL.GRMOVR(GRM)IEVAL.GRMACT
____________X_______________=Final Income Est.
3
(IERENT.HOWBIGXIERENT.RATE)(where IERENT.RENTFLAG = ?Y?)
+
3
(IEAPT.APTUNITSXIEAPT.APTRENT) X IEPRCL.GRMOVR(GRM)
=Final Income Value IEVAL.GRMACT:
Page 66New Hanover County Tax Office
Write Final Income Value to,GRM Income Value from Actuals
IE19
(5.9.6) Gross Income Multiplier
(Documentation Number = 5.2.7)
Get the Effective Gross Income, using Override if present
IE18:
Effective Gross Income IEPRCL.EGIOVR(EGI):
Get the Gross Income Multiplier, using Override if present
Gross Income Multiplier IEPRCL.GIMOVR(GIM):
Calculate Income Estimate:
EGIXGIM= Final Income Value
IEPRCL.EGIOVR(EGI)IEPRCL.GIMOVR(GIM)IEVAL.GIMACT
___________________X_____________________=
Write Final Income Value to,GIM Income Value from Actuals
IE19
(5.9.7) Discounted Cash Flow
(Documentation Number = 5.2.8)
Get the Projection Period. Perform the calculation for the number of years equal to the
IE22:
Projection Period, IEDCF.PROJPRD. For the firstyear, IEDCFYR.DCRYR =
IEDCF.TAXYR. For subsequent years, IEDCFYR.DCFYEAR = IEDCFYR.DCRYEAR +
1. As years are processed, keep count of the year, for adjustments.The number of the year
being processed is IEDCFYR.DCFYEAR - IEDEF.TAXYR +1.
The user enters Summary Information on , and then clicks on the [EXPAND] Button.
Note:Page 1
On, a record is created for each year of the Projection Period, beginning with the
Page 2
Current Tax Year.Potential Gross Income,Occupancy %,Effective Gross Income,Expense
Ratio,Net OperatingIncome, and Discount Factor are all brought in or calculated from
. Present Worth is calculated. Subsequent years are adjusted by the percentages
IE18
entered on the Summary Page. The user can override Potential Gross Income,Occupancy
%,Expense Ratio, and Discount Factor,. The Effective Gross Income,Net Operating
Income, and Present Worth will be recalculated.
IE22:Get Potential Gross Income (PGI)IEPRCL.PGIOVR(PGI):
Calculate IEDCFYR.PGI:
If IEDCF.INCADJ is , trend the Potential Gross Income:
Not Null
#
IEDCFYR.DCRYEAR - IEDCF.TAXYR = 1 IEDCF.DELAYPRD
If
IEDCFYR.PGI = IEPRCL.PGIOVR(PGI)
Then
IEDCFYR.PGI = IEPRCL.PGIOVR.(PGI) * (1+ ((IEDCF.INCADJ *
Else
((IEDCFYR.DCFYEAR - IEDCF.TAXYR + 1) - IEDCF.DELAYPRD))/100))
IEDCFYR.PGI = IEPRCL.PGIOVR(PGI)
Else
Appendix 3 - CAMA ModulesPage 67
Occupancy can be trended over a specified number of years to a final Occupancy Rate. For
the first year, the Occupancy Rate is the rate specifiedon. Then, if occupancy is to be
IE18
trended, the amount of change in Occupancy % is divided by the number of years over
which the trending will occur. The Occupancy is adjusted an equal amount each year. Once
the new Occupancy % has been reached, that Occupancy % will be used for any remaining
years in the Projection Period.
Calculate Occupancy %:100 - IEPRCL.VACLOSSOVR(VACLOSS):
IEDCF.OCCTREND is , trend the Occupancy % for the
IfNot Null
number of years in IEDCF.DELAYOCC, not counting the Current Year
IEDCFTY.OCCUPANCY = Occu % + ((IEDCF.OCCTREND - Occ%) /
Then
IEDCF.DELAYOCC) * (IEDCFYR.DCFYEAR - IEDCF.TAXYR)
IEDCFYR.OCCUPANCY = Occ. %
Else
Calculate Expense Ratio:
Expense Ratio = IEPRCL.EXPTOTOVR(EXPTOT) / IEPRCL.EGIOVR(EGI) X 100
If IEDCF.EXPADJ is , trend the Expense Ratio:
Not Null
Expense Ratio = Expense Ratio* (1 + ((IEDCF.EXPADJ *
(IEDCFYR.DCFYEAR - IEDCF.TAXYR + 1)) / 100))
Add Extraordinary Expense %, if applicable for the year.
IEDCF.EXTRAEXP is
IfNot Null
#
(IEDCFYR.DCFYEAR - IEDCF.TAXTY + 1) IEDCF.EXTRAYR
If
IEDCRYR.EXPRATIO = Expense Ratio+
Then
((IEDCF.EXTRAEXP / 100) * (IEDCFYR.DCFYEAR - IEDCF.TAXYR + 1))
IEDCFYR.EXPRATIO = Expense Ratio
Else
IEDCFYR.EXPRATIO = Expense Ratio
Else
Get Discount Factor (calculated in the Expansion Routine from the
Discount Rate entered on ):
Page 1
st
1 / [(1 + Discount Rate / 200 * (1 + Discount Rate / 100) ^ (Year - 1 Year)]
1 / [(1 + IEDCF.DISCRATE / 200 * (1 + IEDCF.DISCRATE / 100) ^
(IEDCFYR.DCFYEAR - IEDCF.TAXYR)]IEDCFYR.DISCOUNT:
Calculate Present Worth for each year:
(PGI ________X Occupancy % _________/100=Effective Gross Income (EGI)
IEDCFYR.PGIIEDCFYR.OCCUPANCYIEDCFYR.EGI
(EGI ________X Expense Ratio _____________/100=Total Expenses
IEDCFYR.EGIIEDCFYR.EXPRATIOIEDCFYR.EXPENSE
Page 68New Hanover County Tax Office
(EGI ________-Expenses _________/100=Net Operating Income(NOI)
IEDCFYR.EGIIEDCFYR.EXPENSEIEDCFYR.NOI
(NOI ________X Discount _________/100=Present Worth
IEDCFYR.EGIIEDCFYR.DISCOUNTIEDCFYR.PRESWORTH
Get the Reversion Value and Discount Rate at Reversion
IE22:
Reversion Value:
IEDCF.REVERSION
Reversion Discount:
IEDCF.REVERSCAP
Calculate the Discount Factor:
1 / [(1 + Reversion Discount/ 200) X (1 + Reversion Discount/ 100) ^ Projection Period]
IEDCF.REVERSCAPIEDCF.REVERSCAPIEDCF.REVERSYT
Discount Factor:
Calculate the Discounted Reversion Value:
Reversion Value _____X Discount Factor_____= DiscountReversion Value
IEDCF.REVERSIONIEDCF.REVDISC
Calculate the Income Estimate:
3
Present Worth ________+Discount Reversion Value ____=Final Income Value
Sum(IEDCFYR.PRESWORTHIEDCF.REVDISCIEDCF.DCFINCOME
Write Final Income Value to,Discounted Cash Flow Income Value from Actuals
IE19
(5.9.8) Residual Calculations
(Documentation Number = 5.2.9)
Get Residual TypeResidual Type:
IE23:
IERESID.RESTYPE
Follow calculations for Type specified.
Land Residual Straight Line - LSL
Get Net OperatingIncomeNOI:
IE23:
IEPRCL.NOIOVR.(NOI)
Get OverrideBuilding Value, if present, otherwise Cost Value:
IERESID.OVRBLDG(APRVAL.BLDGVAL)IERESID.INCBLDG
Appendix 3 - CAMA ModulesPage 69
Get Discount RateDiscount Rate:
IERESID/DISCRATE
Get Effective Tax RateTax Rate:
IERESID.TAXRATE
Get Economic LifeEconomic Life:
IERESID.ECONLIFE
Calculate Recapture Rate:
1/Economic Life _____=Recapture Rate:
IERESID.ECONLIFEIERESID.RECAPRATE
Calculate Building Cap Rate:
Discount Rate+Tax Rate+Recapture Rate=Building Cap Rate:
IERESID.IERESID.IERESID.IERESID.BLDGCAP
DISCRATETAXRATERECAPRATE
Calculate Income Attributableto Building:
Building Value X Cap Rate=BuildingIncome:
IERESID.IERESID.IERESID.BLDGATTR
INCBLDGBLDGCAP
Calculate Income Attributableto Land:
NOI-BuildingIncome=Land Income:
IEPRCL.IERESID.IERESID.LANDATTR
NOIOVR (NOI)BLDGATTR
Calculate Land Cap Rate:
Discount Rate+Tax Rate=Land Cap Rate:
IERESID.IERESID.IERESID.LANDCAP
DISCRATETAXRATE
Calculate Land Value:
Land Income/Cape Rate_____=Land Value:
IERESID.IERESID.IERESID.INCLAND
LANDATTRLANDCAP
Calculate Income Estimate:
Building Value+Land Value _____=Income Value:
IERESID.IERESID.IERESID.INCTOT
INCBLDGINCLAND
Page 70New Hanover County Tax Office
Write Final Income Value to,Land Residual Straight Line Income
IE19
Value from Actuals
Building Residual Straight Line - BSL
Get Net OperatingIncomeNOI:
IE23:
IEPRCL.NOIOVR.(NOI)
Get OverrideLand Value, if present, otherwise Cost Value
IERESID.OVRLAND(APRVAL.LANDVAL)IERESID.INCLAND
Get Discount RateDiscount Rate:
IERESID/DISCRATE
Get Effective Tax RateTax Rate:
IERESID.TAXRATE
Calculate Cap Rate:
Discount Rate+Tax Rate=Cap Rate:
IERESID.IERESID.IERESID.LANDCAP
DISCRATETAXRATE
Calculate Income Attributableto Land:
Land Value X Cap Rate=Land Income:
IERESID.IERESID.IERESID.LANDATTR
INCLANDLANDCAP
Calculate Income Attributableto Building:
NOI-Land Income=BuildingIncome:
IEPRCL.IERESID.IERESID.BLDGATTR
NOIOVR (NOI)LANDATTR
Get Economic LifeEconomic Life:
IE23:
IERESID.ECONLIFE
Calculate Recapture Rate:
1/Economic Life _____=Recapture Rate:
IERESID.ECONLIFEIERESID.RECAPRATE
Calculate Building Value:
BuildingIncome/Cap Rate= Building Value:
IERESID.IERESID.IERESID.INCBLDG
BLDGATTRBLDGCAP
Calculate Income Estimate:
Appendix 3 - CAMA ModulesPage 71
Land Value+Building Value _____=Income Value:
IERESID.IERESID.IERESID.INCTOT
INCLANDINCBLDG
Write Final Income Value to,Building Residual Straight Line
IE19
Income Value from Actuals, IEVAL.BLDSL
Land Residual Present Worth - LPW
Get Net OperatingIncomeNOI:
IE23:
IEPRCL.NOIOVR.(NOI)
Get OverrideBuilding Value, if present, otherwise Cost Value:
IERESID.OVRBLDG(APRVAL.BLDGVAL)IERESID.INCBLDG
Get Discount RateDiscount Rate:
IERESID/DISCRATE
Get Effective Tax RateTax Rate:
IERESID.TAXRATE
Get Economic LifeEconomic Life:
IERESID.ECONLIFE
Get Sinking Fund Interest RateInterest Rate:
IERESID.SFINT
Calculate Sinking Fund Factor:
(Interest Rate)/((1 +Interest Rate))IERESID.**Holding Period- 1)
IERESID.SFINTIERESID.SFINTIERESID.ECONLIFE
=Sinking Fund Factor IERESID.SFF
Calculate Building Cap Rate:
Discount Rate+Tax Rate+SFF=Building Cap Rate:
IERESID.IERESID.IERESID.IERESID.BLDGCAP
DISCRATETAXRATESFF
Calculate Income Attributableto Building:
Building Value X Cap Rate=BuildingIncome:
IERESID.IERESID.IERESID.BLDGATTR
INCBLDGBLDGCAP
Calculate Income Attributableto Land:
Page 72New Hanover County Tax Office
NOI-BuildingIncome=Land Income:
IEPRCL.IERESID.IERESID.LANDATTR
NOIOVR (NOI)BLDGATTR
Calculate Cap Rate:
Discount Rate+Tax Rate=Cap Rate:
IERESID.IERESID.IERESID.LANDCAP
DISCRATETAXRATE
Calculate Land Value:
Land Income/Cape Rate_____=Land Value:
IERESID.IERESID.IERESID.INCLAND
LANDATTRLANDCAP
Calculate Income Estimate:
Building Value+Land Value _____=Income Value:
IERESID.IERESID.IERESID.INCTOT
INCBLDGINCLAND
Write Final Income Value to,Land Residual Present Worth
IE19
Income Value from Actuals, IEVAL.LNDPW.
Building Residual Present Worth - BPW
Get Net OperatingIncomeNOI:
IE23:
IEPRCL.NOIOVR.(NOI)
Get OverrideBuilding Value, if present, otherwise Cost Value:
IERESID.OVRBLDG(APRVAL.BLDGVAL)IERESID.INCBLDG
Get Discount RateDiscount Rate:
IERESID/DISCRATE
Get Effective Tax RateTax Rate:
IERESID.TAXRATE
Calculate Cap Rate:
Discount Rate+Tax Rate=Cap Rate:
IERESID.IERESID.IERESID.LANDCAP
DISCRATETAXRATE
Appendix 3 - CAMA ModulesPage 73
Calculate Income Attributableto Land:
Land Value X Cap Rate=Land Income:
IERESID.IERESID.IERESID.LANDATTR
INCLANDLANDCAP
Calculate Income Attributableto Building:
NOI-Land Income=BuildingIncome:
IEPRCL.IERESID.IERESID.BLDGATTR
NOIOVR (NOI)LANDATTR
Get Sinking Fund Interest RateInterest Rate:
IE23:
IERESID.SFINT
Calculate Sinking Fund Factor:
(Interest Rate)/((1 +Interest Rate))IERESID.**Holding Period- 1)
IERESID.SFINTIERESID.SFINTIERESID.ECONLIFE
=Sinking Fund Factor IERESID.SFF
Calculate Building Cap Rate:
Discount Rate+Tax Rate+SFF=Building Cap Rate:
IERESID.IERESID.IERESID.IERESID.BLDGCAP
DISCRATETAXRATESFF
Calculate Building Value:
BuildingIncome/Cap Rate= Building Value:
IERESID.IERESID.IERESID.INCBLDG
BLDGATTRBLDGCAP
Calculate Income Estimate:
Land Value+Building Value _____=Income Value:
IERESID.IERESID.IERESID.INCTOT
INCLANDINCBLDG
Write Final Income Value to,Building Residual Straight Line
IE19
Income Value from Actuals, IEVAL.BLDPW
Property PresentWorth - PRP
Get Net OperatingIncomeNOI:
IE23:
IEPRCL.NOIOVR.(NOI)
Get Reversion ValueReversion Value:
IERESID.REVERSION
Page 74New Hanover County Tax Office
Get Reversion RateReversion Rate:
IERESID.REVRATE
Get Cap RateCap Rate:
IERESID.CAPRATE
Calculate Reversion Present Worth:
Reversion Value X Reversion Rate _____=Present Worth:
IERESID.IERESID.IERESID.REVDISC
REVERSIONREVRATE
Calculate Present Worth of Income Stream:
NOI ________/Cap Rate ________=Present Worth:
IEPRCL.IERESID.IERESID.PWINC
NOIOVR(NOI)CAPRATE
Calculate Income Estimate:
Present Worth ___+Reversion PresentWorth____=Income Value:
IERESID.IERESID.IERESID.INCTOT
PWINCREVDISC
Write Final Income Value to,Building Residual Present Worth
IE19
Income Value from Actuals, IEVAL.PRPPW
(5.9.9) Final Income Value
(Documentation Number = 5.2.10)
Get Final Income Value, based on user entry of Actual / Model Flag and
IE19:
Income Valuation Type.
Get Residual Land Value Residual Land Value:
IEVAL.RESIDUAL
Calculate Final Income Estimate:
Unadjusted+Residual=Final Income
Income Value_______Land Value ________Estimate :
IEVAL.IEVAL.IEVAL.
INCOMECALCRESIDUALINCOMETOT
Write Final Value, IEVAL.INCOMETOT to , APRVAL.COMINCVAL
CA11
Compute APRVAL.INCOME = APRVAL.COMINCVAL + APRVAL.RESGRMVAL.
If Reason Code designates Income as Final Parcel Value, distribute
value between Land and Building as follows:
Appendix 3 - CAMA ModulesPage 75
Final Income Method(IEVAL.METHOD) = LSL, BSL, LPW, or BPW
If
And APRVAL.RESGRMVAL = 0
Land Value:APRVAL.APRLAND=IERESID.INCLAND
Then
Building Value:APRVAL.APRBLDG=IERESID.INCBLDG
Land Value:APRVAL.APRLAND=APRVAL.LANDVAL
Else
Building Value:Income Value-Land
APRVAL.APRBLDGAPRVAL.INCOMEAPRVAL.APRLAND
Appendix 3 - CAMA ModulesPage 139
Calibrating Appraised Values to the Real Estate Market
(This page is empty on purpose.)
Page 140New Hanover County Tax Office
Appendix 3 - CAMA ModulesPage 141
The graphic on the facinug page presents the general steps in correlating (tuning) the CAMA
module's Cost Approach models to the real estate market in New Hanover County.
-The appraisal staff develops mathematical models of various kinds of property, and
STEP 1
enters rates intended to appraise each model for market value. For example, there
may be a model for one story homes (likely a ranch style), and another model for
two story homes (likely a colonial), et cetera.
Any cost manual or market information available may be used to determine the cost
and depreciation tables entered as a "first cut" at appraising all parcels.
-As the staff measures, lists, and enters parcel-level descriptive data into the CAMA
STEP 2
module, the entered descriptive data interacts with the rate data in the cost models to
produce an estimate of value. This interaction or parcel and rate data occurs each
time one or more descriptive data elements change, or it may occur via a batch
process where all parcels are revalued.
-One must test these first indications of value rigorously against the local market
STEP 3
(sale price vs. appraised value). Because the building model rates are county-wide
in scope, the county as a whole must be analyzed first. In each set of ratio studies
appraisal management will make a YES / NO decision whether the appraisal product
is the best possible. Any overall ratio study showing potential problems would be
useless if one could not study various strata in the database and respond to any
issues thus uncovered (but if no issue surfaces, there is no need to study details.)
Database strata must be studied by a ranking of importance and in order:
- Location - study location first and last;
- Size (square feet of living area)
-Quality (both Quality Grade and CDU, or Condition, Desirability and Utility); and
-Everything Else (a distant fourth place in importance).
-If the 2007 tax roll and any neighborhood therein is not, at first, statistically
STEP 4N
acceptable - analyze deeper strata and address any documented problem(s) via small
model rate changes or by analysis of a neighborhood's parcel-level descriptive data.
Retest the various strata until the decision is an unqualified .
YES
-After the statistical analys provides the best possible results considering the time and
STEP 4Y
resources available the rest of the events in the bottom half of the facing page,
such as mailing, will occur.
Notices of Value Change
The Tax Administrator's appraisers have the responsibility of ensuring that each of roughly
95,000 parcels in the County is appraised equitably and fairly. While we believe we do a caring
and thorough, each owner should make full use of their appeal rights if they believe that:
T
thetotal value of their property is somehow incorrect; or
T
their property is inequitably assessed, as compared to similar properties.
While the staff may or may not agree with the appealing owner they are required to give any
factual data provided by the appellant, and other facts surrounding the complaint as thorough a
review as time and resources permit. It is incumbent upon each property owner to do the same.
Page 142New Hanover County Tax Office
Other Modules and Applications
Akanda's Modules
Akanda is a Canadian subcontractor to the vendor who developed the IAS application. This
Canadian firm has developed several modules which provide alternate ways to view and/or work
with the appraisal data. These modules were bundled with the purchased software but they have
proven to be too new to usable in the county's 2007 revaluation effort. These web browser-based
modules include (but are not limited to):
- This module will provide a user friendly view of the data to members of the general
iMaintain
public and to other departments within the county. As the technology advances, may
iMaintain
become robust enough to be usable in future encoding efforts.
. - This module and associated software provides a way to move appraisal data from the
iField
main server to laptop computers. While in the field with the laptop the appraiser may modify the
data at will and, upon returning to the office, the module will upload the appraiser's changes.
is expected to provide a powerful tool for the next revaluation of the county.
iField
- This module will enable the appraisal staff to perform on-line sales ratio studies.
iAnalyze
Once the select criteria have been enhanced beyond what is currently available, this module may
become the analytical tool of choice for neighborhood analysis.
- This module will provide Internet access to the Tax Administrator's data.
iCare
- This module will provide messaging capabilities through and will also provide
iCare
iRespond
contact and correspondance management features.
Ad hoc Reporting
New technology brings the advantage of allowing the county's appraisal staff to view their parcel
descriptive data "in real time" (as of the last COMMIT action executed on the parcel)! In the
recent past, appraisal management could only run one or another hard copy report to answer the
frequent questions about what combination of parcels exhibit certain common characteristics.
Of course, appraisal management had no ability to sort the resulting report in different ways to
better understand the relationships in the data. If an existing report did not exist, depending
upon the urgency of the question, weeks could pass before the answer became available.
Ad hoc reporting tools provide the abiltiy to answer almost any question that appraisal
management can think of within minutes, and often less time is required!
Appendix 3 - CAMA ModulesPage 143
ORACLE has several very valuable tools for this purpose, including and
DiscovererQuery
. Microsoft Corporation also has two very valuable programs that suit this purpose well;
Builder
, and (through an ODBC connection to the ORACLE database).
ExcelAccess
Each of these tools have individual strengths and weaknesses, and require understanding the
underlying data. They represent a very powerful tool which allow the Tax Administrator to
more efficiently accomplish his goals (see the discussion of Goals in Appendix Two).
Microsoft'sand programs can provide a virtual cornucopia of other tools and
ExcelAccess
applications each able to also increase the efficiency of the Tax Administrator's staff.
Sales (and other) Analysis
The Tax Administrator's staff will use the hard coded ratio study programs bundled with the IAS
CAMA module or, if these programs prove to be too inflexible, will develop their own ad hoc
reporting capabilities using the above ORACLE and/or Microsoft programs.
Revaluation Management
Managing the flow of work involved in a revaluation effort is a major task.
The Tax Administrator's staff has developed an Access database to track where a given parcel is
in the field review and following encoding effort. The staff will create "pseudo workpacks" in
then read table data to automate the tracking process to the greatest extent possible.
iFieldiField
Source of Appraisal Data for GIS
Displaying on a map creates a new and highly useful appraisal tool. The Tax Administrator's
staff has developed an Access database to sum and/or combine appraisal data in new ways. This
data is then exported into the GIS system where the resulting maps may be printed or may be
carried into the field on laptop computers.
Mobile Home Parks
are often filled with tenant-built decks and utility buildings that are
Mobile home parks
permanently attached to the land. Most of the time, such items remain on the property when the
tenant vacates the rental space.
The IAS CAMA module has no provision to allow the appraiser to enter each of these items onto
a record for the space. It only allows the appraiser to enter each such item
mobile home park
onto the real estate parcel for the . There can be as many as several hundred
mobile home park
Page 144New Hanover County Tax Office
such items in a large - none of which may be directly and simply related to a given rental
park
space. This lack of ability to connect a given item (OBY
Other Building or Yard Improvement
item) to a given rental space gives rise to considerable confusion and error.
To address this serious issue, the Tax Administrator's staff developed an database which
Access
contains one record for each rental space in each mobile home park. This database is able to
value each deck or other OBY item within $1.00 of the same value had the OBY item been
encoded directly to the record in IAS.
mobile home park's
The appraiser places each such deck or other such OBY item directly on the database's record for
the affected rental space. The database sums the various decks and other such items into a total
value for the . The appraiser then enters this total value into the IAS CAMA Module as one
park
OBY record on the park's. Should the mobile home park owner question the detail
Parcel ID
behind this summed and entered value, the responding appraiser or clerk can print a detailed
report for the owner which shows the location of every such OBY item in the .
park
High Rise Condominium Buildings Near Water
The Palm Beach, Florida, Property Appraiser's Office (Assessor's Office) used an appraisal
methodology for high rise condominium projects that was originally developed in Volusia
County, Florida. Palm Beach contracted with the IAS vendor to include this sub-module in the
IAS CAMA system. The Palm Beach version of this condo sub-module is very poorly designed.
The Tax Administrator's staff has developed an access database that is more like the Microsoft
Excel-based system in use in Volusia County. The New Hanover County version of this high
rise condominium appraisal module values condo apartments in exactly the same manner as does
the routine in the IAS sub-module (but is much more efficient). The appraiser will then override
the resulting indication of value onto the appropriate parcel's record in the IAS CAMA system.
Timeshared Buildings
The IAS CAMA system is totally lacking any appraisal module or feature able to appraise
timeshared property correctly. The Tax administrator's staff will develop an application similar
to the Microsoft Excel-based system for valuing timeshared properties developed in Volusia
County, Florida. The appraiser will then override the resulting indication of value onto the
approrpiate parcel's record in the IAS CAMA system.
Appendix 3 - CAMA ModulesPage 145
CAMA Module Screen Prints
CA11, Page 1
Page 146New Hanover County Tax Office
CA11, Page 2, Part 1
CA11, Page 2, Part 2
Appendix 3 - CAMA ModulesPage 147
CA12, Page 1, Part 1
CA12, Page 1, Part 2
Page 148New Hanover County Tax Office
CA12, Page 2
CA14, Page 1
Appendix 3 - CAMA ModulesPage 149
CA14, Page 2
CA14, Page 3
Page 150New Hanover County Tax Office
CA14, Page 4
CA17, Page 1, Part 1
Appendix 3 - CAMA ModulesPage 151
CA17, Page 1, Part 2
CA17, Page 2
Page 152New Hanover County Tax Office
CA21, Page 1
CA21, Page 2, Part 1
Appendix 3 - CAMA ModulesPage 153
CA21, Page 2, Part 2
Page 154New Hanover County Tax Office
CA21, Page 3, Part 1
CA21, Page 3, Part 2
Appendix 3 - CAMA ModulesPage 155
CA22, Page 1
CA22, Page 2
Page 156New Hanover County Tax Office
CA24, Page 1
CA24, Page 2
Appendix 3 - CAMA ModulesPage 157
CA24, Page 3
CA24, Page 4
Page 158New Hanover County Tax Office
CA31, Page 1
CA31, Page 2
Appendix 3 - CAMA ModulesPage 159
CA32, Page 1
CA32, Page 2
Page 160New Hanover County Tax Office
CA33
CA34, Page 1
Appendix 3 - CAMA ModulesPage 161
CA34, Page 3(Page Two not available to New Hanover County)
CA34, Page 4
Page 162New Hanover County Tax Office
CA34, Page 5
Appendix 3 - CAMA ModulesPage 163
FM11
FM12
Page 164New Hanover County Tax Office
FM21, Part 1
FM22, Part 2
Appendix 3 - CAMA ModulesPage 165
FM22, Part 1
FM22, Part 1