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Triennial Revaluation

Massachusetts law requires that all property be assessed at full and fair cash value - what a willing buyer would pay to a willing seller. The rationale for full value assessments is equity. Two houses of equal value should be assigned equal assessments.

Every town and city in Massachusetts is required by law to develop a reasonable and realistic program to achieve the fair cash valuation of property. A complete review and analysis of existing property values and verification of property record information is preformed. All properties are revalued in accordance with law and Massachusetts Department of Revenue Guidelines.

Data Collection & Analysis of Property Values

Valuation is based on "full and fair cash value," the amount a willing buyer would pay a willing seller on the open market. Assessors first inspect the property to record specific features of the land and buildings that contribute to its value. Size, type, quality of construction, number of bedrooms, baths, fireplaces, type of heating system are all examples of the data collected and listed on individual property record cards.

Property review and inspection is accomplished through the use of technology in which photographs of all 48,000 real estate parcels within the City of Worcester, taken between the period of June 15 and July 1, 2010, are uploaded to a computer system that generates a clear, three-sided image of these parcels, allowing the Assessor’s Office and independent appraisers to gather information about a property’s style, grade of construction and condition of property from a computer station. Previously, an assessor would need to drive by all 48,000 properties to "window-survey" and assess these properties. The new method is far more efficient and less costly for the same views and the data can be ascertained from an office setting. Using the new technology, an assessor can perform an average of 60 assessments a day, versus an average of 25 assessments a day with the "window-survey" method. Additionally, any property improvements or upgrades are captured through the City's electronic permitting software.

How Values are Determined

The job of an assessor is to determine the market value of every parcel of property in the City as of January 1. In practice, there are three universally accepted approaches to value: market, income and cost.

Market Approach - market sales of similar properties which sold in the year prior to January 1 are analyzed, compared and adjusted to forecast what the property would sell for on January 1. When there are many sales, the market approach is the most accurate and dependable tool in the determination of value. Most residential property is valued by the market approach.

Income Approach - the income approach is most applicable to real estate that is normally bought and sold on the basis of its income-producing capabilities, such as retail stores, office buildings and industrial properties. The approach requires significant data such as rents, occupancy rates, operating expenses and investor requirements. The approach is most useful in valuing investment properties where sufficient market sales are not available.

The income approach considers the income stream that a property is likely to produce for an investor over a definite period of time. The process of capitalization converts the future benefits of ownership into present worth or market value. The elements of capitalization are income (I), rate (R) and value (V). The income approach formula is expressed as follows: value equals income divided by rate (V = I/R).

Cost Approach - The cost approach involves an estimate of the current reproduction or replacement cost of the building, deducting an estimate of depreciation (or loss of value from any cause) and then adding an estimated value of land. Reproduction cost is the amount of money necessary to erect a new structure that is an exact replica of the existing building. It is appropriate in the case of recent construction. Replacement cost is the expenditure necessary to build a new building in utility to the original and able to serve as a substitute in function. It is more applicable to older buildings.

Personal Property Revaluation

All personal property accounts are reviewed as part of the revaluation. Each year, prior to March 1, all commercial entities subject to taxation in a city or town must submit a list of all their personal property that is not exempt from taxation by completing a Form of List (FOL) (579KB). The City has contracted with an independent firm that specializes in assessment of personal property to affix values to the approximate 1,200 business entities that have filed their FOL. For those businesses that have not filed their FOL, the Assessor will affix a value based on estimates of personal property from similar type and size businesses. This standardized method the data will ensure that each account is assessed equitably to similar accounts and that values are consistently applied.

Final Correlation (Determination of Values)

The final step in the appraisal process is to analyze the value indications from the cost, market and income approaches and determine a single market value for the parcel of property. This portion of the process will be conducted by Assessing staff, in conjunction with firms that are well-versed and well-respected in the field of assessments.

Certification of Values

The Commissioner of Revenue determines triennially whether assessed values in the City represent full and fair cash valuation for each class of real and personal property. The City cannot implement the levy allocation provisions of the Classification Act unless the Commissioner has certified that local assessments reflect full and fair cash value. When the assessments are completed, the Assessor submits a request for certification review to the Department of Revenue (DOR). The Bureau of Local Assessment within the DOR conducts a statistical analysis and performs a preliminary field review. If all of the standards have been met, the Bureau notifies the City of preliminary certification.

Public Disclosure Process

After receiving preliminary certification, the City will implement a program of public disclosure intended to provide taxpayers an opportunity to inquire about proposed assessments. This process is anticipated to begin in February 2012.

As part of this process, property owners will receive a copy of their property records via mail (VISION Property Card Sample). In addition, property record cards will be posted on the City’s website.

Property owners will be notified of public sessions set around the City in which taxpayers can ask questions about their property valuations (at least five areas of the City by District). There will also be a special phone line dedicated for taking questions and tracking calls, and Frequently Asked Questions (FAQs) will be posted on the website.

The City will also extend hours of operations at the Assessor’s Division to accommodate taxpayers and answer any questions relative to property values. This will include evenings at the Worcester Public Library, and weekends if warranted.

Tax Classification Process

Once the public disclosure process is complete, the City will bring forward a completed tax classification package for City Council review and final approval. The tax classification hearings will not occur until the completion of the public disclosure period and prior to the fourth quarter billing (March 2012).

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