City of Oak Creek
Common Council Report
Meeting Date: 08/15/06
Item No.: 5
Recommendation: That the Common Council authorize execution of the Articles of Agreement with Tyler Technologies, Cole-Layer-Trumble (CLT) division, to provide for revaluation services for the 2007 assessment year for a fixed fee cost of $125,000.00, with funding to be taken from the 2000 CIP Control Account.
Background: Since the 1997 revaluation, the Council has approved reassessments every three years; CLT was awarded the contract each time. Prior Councils determined that a three-year cycle to keep values current was prudent and reasonable. The plan for each three-year increment was to have one year “off”, and two years to accomplish revaluation activities.
The purpose of routinely scheduled reassessments is to adjust values based on actual sales.
The general philosophy has been to proceed routinely with assessment ratio maintenance projects, rather than citywide interior and exterior inspection projects, for these primary reasons:
First, the goal for all assessments is that they accurately reflect fair market value, to ensure that each property owner pays his/her fair share of the property tax—not more, and not less.
Second, an assessment ratio maintenance project is less costly for the City and less bothersome for property owners. Third, by state law, if the assessment ratio drops below 90% for two years, the State Department of Revenue will notify the municipality that it must come into compliance or the State can order a revaluation with a firm of their choosing. Since our assessment ratio for 2005 was 96.30%, and 2006 is expected to come in around 88.00%, it is advisable to continue the cycle to return to 100% values.
The real estate market has been unusually active in recent years, resulting in sale prices far exceeding assessed values. Currently, media predictions are that the boom has leveled and prices may even drop somewhat. A revaluation for 2007 will mean that the sale prices used to establish values will be taken both from the boom year of 2005 and from the leveling year of 2006, to offer confidence that the assessed values will be close to true market values. A process known as delineation of neighborhoods would be used—due to building construction, particularly in new subdivisions, what may have been classified as the “newest and best” in 2004, may be lagging in sales in 2006, while other newer areas are leaping. Much of the work will be done by analysis, rather than inspection, although visual inspection “drive-by” activities would be included. Properties that have sold since 1/05 or for which reviews are requested by homeowners would be inspected. The Univers mass appraisal program used by CLT is rather unique in the valuation process in that it can derive 4 comparables for each property, not just within the exact neighborhood, but from other areas within the city, for comparison’s sake.
The last revaluation was effective for 2004, with values seen on the December 2004 tax bills.
The next three-year cycle would follow this schedule:
2005 = “Off” year—no revaluation activities
2006 = First year of the two-year process; the first revaluation work would begin approximately in September, 2006, after the 2006 Board of Review.
2007 = Second year of the two-year process; new values to be seen on the December 2007 tax bills.
Fiscal Impact:
The 2004 revaluation total cost was approximately $117,000. To level the amount needed in the budget, funding of $50,000-$75,000 per year was routinely added to the Capital Improvement Program for each year for revaluation activities, with funding eliminated for non-revaluation years. In 2006, however, restoring the amount to the CIP was overlooked.
For the 2007 revaluation cost of $125,000, funding could be taken entirely from the 2000 Control Account, therefore requiring no budget amount needed in the 2007 CIP.
.
|
Prepared by & Fiscal Review by:
Beverly A. Buretta, CMC City Clerk/Comptroller |
Respectfully submitted,
Patrick DeGrave City Administrator |