Hamilton County Utilizes the Base Ratio Tool

The Challenge

Nebraska County Assessors are responsible for valuing properties using mass appraisal techniques. Property taxes are based on these values. Every spring, Assessors notify all the landowners within their county of any valuation changes. Landowners can file a protest with the County Board of Equalization to protest these values.

Landowners may ultimately appeal to the Tax Equalization and Review Commission (“TERC”), a constitutional body created to provide an avenue of appeal for the property. TERC uses a standard review process to review evidence presented by the County and the landowner to determine the final valuation of the property.

Assessors use one of three generally accepted mass appraisal methodologies to determine the value of property: the Sales Approach, Cost Approach, and Income Approach. The most common is the Sales Approach which values properties based on recent sales of comparable properties in the area. All real property in Nebraska, with the exception of agricultural land, is assessed at or near 100% of actual value. For more information on how agricultural land is valued in Nebraska, read Valuing Ag Land in Nebraska or visit Nebraska’s Department of Revenue site.

Without proper documentation or analysis to confirm these values, Assessors are subject to conceding to protests from landowners, which can result in reduced property value. If a County or TERC decides in favor of the landowner, counties may lose valuable revenue from reduced taxes. Having evidence to justify valuation is important for any Assessor.

 

The gWorks Solution

Working closely with the Nebraska Department of Revenue, gWorks developed the Base Ratio Tool for gWorks’ Assessor WebGIS. This tool spatially displays parcels by the percentage of Assessed Value divided by Sale Price for any location, sale type, and date range within the county. This enables Assessors to analyze the effectiveness of assessment efforts and identify whether a property is valued correctly based on sale price, value, and sale prices of comparable properties. Assessors can quickly see parcels that are inside or outside the acceptable range of Assessed Value compared to Sale Price. Visualizing how close the two numbers are can help detect issues or patterns.

gWorks developed this tool upon special request from the State of Nebraska’s Property Assessment Division and provided the tool to all Nebraska Assessor WebGIS clients at no additional cost.

 

The Benefit

In 2019, a landowner in Hamilton County protested the value of their property. The lot was valued at $18,860 and the landowner wanted it reduced to $7,545, 40% of the current assessed value. The County had revalued all lots in the city from $.80 per square foot to $2 per square foot, so the values had been equalized.

This protest was taken to TERC. The landowner’s evidence consisted of photos of nearby properties along with comparables showing commercial properties that had no statistical basis or relevance to the property in question. The County presented an evidence book showing screenshots and statistical analysis taken directly from the Base Ratio Tool. This evidence showed the location of the subject property along with comparable sales and sales ratios of nearby properties. The Assessor marked actual sales that occurred during the previous two years and the previous five years along with information sheets on each of these comparable sales. The evidence presented by the Assessor clearly showed that the comparable properties had been valued and sold within the valuation range of the subject property.

Because of the strong evidence presented, the County won the case and the assessed value was upheld. As a result, the county was able to tax the property based on the higher value and increase their revenue. The Base Ratio Tool was a critical piece in winning this case. Moreover, it is an important tool in the Assessor’s valuation toolbox to equitably and fairly assess all properties.

During each annual protest season, an Assessor may receive hundreds of protests from landowners who want to reduce the value of their land. By using the Base Ratio Tool to gather indisputable evidence to uphold the Assessor’s value, counties can protect county revenues that impact roads, schools, emergency response, and more.

 

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