Assessor discusses valuation process

Editor's note: this is the second part of a three part series about the problems facing the Vernon County assessor.

The complete reappraisal of the commercial property in Vernon County is needed because some of the properties have been undervalued and some of them have been overvalued. That is common in any appraisal cycle according to the Ratio Study Manager for the Missouri State Tax Commission. "It's not a perfect process," said Shawn Ordway, "some go up, some go down, and some stay the same."

It's those properties that saw their appraised values rise after the ratio study and those that have been appraised at a lower value that prompted Vernon County Assessor Cherie Roberts to question the values arrived at by state appraisers and led the state tax commission to believe that the commercial properties in the county need to be reappraised.

The discrepancies are wide of the mark when trying to keep the average market value of the commercial properties of the county within the 90 to 100 percent range required by the tax commission. After the first ratio study, the individual value percentages varied from a low of 14.93 percent for one property to a high of 173.31 percent for another. The overall average for all properties was 62.34 percent.

Vernon County Assessor Cherie Roberts was unhappy with the results of the study, and after appealing the results, had representatives of the tax commission come back to the county and review the properties in question. Some of the properties, "they dropped, some of them didn't, but I kept arguing with them," said Roberts. Had Roberts accepted the 62.34 percent, it would have meant a 30 percent increase instead of the 11 percent now anticipated.

After the tax commission personnel completed the second appraisal, some of the properties that were estimated very high went down. In one instance, a property was valued at $394,500 after the initial appraisal. When Roberts complained that the value was too high, it was reappraised, and it came in at $132,900, just $4, 900 above the county assessor's original figure. Roberts continued to complain that the appraisals were unrealistic for property in this county and the study manager himself, Ordway came to the county in an "almost unheard of" third visit.

On another property that Roberts insisted they had valued too high, Ordway changed the figures. The initial appraisal of a parcel of property on West Cherry Street valued the land and building at $78,100. After Roberts' complaints and the second appraisal, the same property was estimated to be worth $46,400. Roberts appealed again and when Ordway did the final appraisal on that property, he put the value at $28,600, exactly the same as Roberts' original appraisal.

By the time the third ratio study was done the overall percentage for properties in the county stands at 81.89 percent. It will take an overall increase of 11 percent for Roberts to bring the county's ratio within the 90 to 100 percent the state deems acceptable. Some properties will see an increase and some won't. The increases are determined by the appraised value of individual properties using one of three accepted appraisal methods.

Properties are appraised in three different ways. The cost approach places a value on the land as if it had nothing on it and then the cost to replace the existing structures considering labor materials, fees, profit and other factors related to building a structure. If the structure is not new, depreciation is calculated and that amount taken from the replacement cost. The final figure is the appraised value.

The market approach to appraising property, also known as the sales comparison approach, evaluates a property by comparing it to like properties in the county that have recently sold. Consideratons are allowed for differences in structure size, location etc. This is often considered the most reliable appraisal approach.

The income approach to appraising property is geared more toward a piece of property that generates income. It is often used for apartment buildings, shopping centers and office buildings. Vacancies and operating expenses are subtracted from an estimate of gross income from rentals and the net income is converted to a value for the property. However, by definition, all commercial properties generate income. A different set of criteria is used for a business that owns the building it operates from.

These differences in methodology sometimes leads to discrepancies in valuation, according to Ordway. Then there is the time factor to consider. According to James Strahan, the Taney County, Mo. assessor, his field personnel have a short amount of time. During an ordinary cycle they often spend less than 10 minutes per property, to complete their appraisal. The ratio study appraisers "can take several days' if needed, said Strahan. Roberts and her staff are taking all the time they need to get thier figures as accurate as possible. "My number one goal," Roberts said, "is to work for Vernon County and treat everyone fairly."

Roberts said "its hard with the ratio study and the information they give us." Other assessors also have trouble with the ratio study. Strahan says the "process is faulty in the way they assess." Strahan says the ratio study results never say anything about the properties valued on the high side. They never say a value should be lowered; "they always say raise," he said. He also thinks the state pulls their studies from inflated values. And he was quick to say that all three valuation methods "should be fairly reflective of each other." Strahan also said that if everyone used the same system, things wouldn't be out of whack.

But things are out of whack, unless a property being appraised at more than 150 perccent of its fair market value is normal. In the final part of this series, readers will get a look at property value trends in the state and county, the effectiveness of methods used will be looked at as well as the efforts of Roberts and her staff to bring fairness to the way values values in the county have been established.