BUSI 443 - R&D
What advantages and disadvantages do you see in using mainframes/minicomputers versus PCs and LANs?
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Which of the following are the four actions an appraiser must take in defining an appraisal problem? (1) Identify property to be appraised, determine rights involved, define purpose and function of the appraisal, specify date of appraisal. (2) Preliminary survey and analysis, collect data, analyze market, perform highest and best use analysis. (3) Build valuation model, calibrate model, test model, correlate values. (4) Identify property to be appraised, perform highest and best use analysis, determine the title owner of the land, determine market value
Answer: (1) The steps an appraiser must take in defining the appraisal problem are: identify property to be appraised, determine rights involved, define purpose and function of the appraisal, and specify date of appraisal.
In evaluating bids for contracting out assessment valuation work, the assessor will clearly want to consider the technical expertise of the contractor. What other factors should the assessor consider?
Aside from the technical expertise of the contractor, the assessor should consider: • past performance: completed on time and of acceptable quality? • staff: depth, quality, experience, training • financial stability • references • site visits where work previously completed
Define CAAS and CAMA. What are the main differences between these terms?
CAAS -- Computer Aided Assessment System--very broad term for any system that can support the function of an assessment office CAMA -- Computer Aided Mass Appraisal, essentially the valuation component of a CAAS
For non-assessment real estate professionals, such as appraisers and real estate brokers, what assessment issues must be taken into consideration during the performance of their jobs?
A few assessment related issues that may be of interest to non-assessment real estate professionals are: • tax rates • assessment basis...highest and best use, or value in use • approaches to value commonly used (i.e., is it solely cost based assessments)
Explain the property taxation principles of ability-to-pay and benefits received. Provide two examples (one each) of situations where these principles are followed in raising local government revenue.
Ability-to-pay Taxpayers should pay taxes according to their ability. The property tax is a tax on wealth where ability is measured by the "wealth" of the taxpayer - the value of their real property. Example: ad valorem property taxes. Benefits received Taxpayers should pay taxes according to the benefits they receive. For example, those who use recreational facilities or require garbage pick up should pay separately for these benefits. Typically fees only cover a portion of the cost of providing the local government service. Example: user fees of any kind.
If you were designing a field card, what general aspects of the card would you consider to be most important and why?
General aspects most important in field card design: • intended use will determine set-up: • only to collect data? • collect data and perform calculations? • explain appraisals to taxpayers? • property history to be included? • the property identification number (unique number identifying property) is an essential component of the field card • order and coding is important for entering the information into a computer • information can follow a predefined format so that computer operator does not have to assign a code • computer screens should match field card • order is important for data collector: • should contain all necessary information • order should facilitate the recording of inventory • should allow for some deviations but contain virtually all options • one piece of paper, double-sided is ideal size
You are appraising a commercial building consisting of a restaurant and small number of offices. What kind of information do you need and what sources would you use to collect this information?
General data — social, economic, governmental and environmental • municipality • Statistics Canada — demographics, income, nationality, interest rates • public library Comparative data — data from other comparable real estate • lease/rental rates — leasing agents, Canada Mortgage and Housing Corporation • sales of comparable buildings — realtors, MLS services, real estate board, property purchase tax department of government, land registry office Cost data — site preparation, demolition, excavation, building costs, landscaping, licenses, fees, permits, professional fees • contractors, builders, developers • municipality • published cost manuals and indexes Income data — vacancy rates, bad debts, expenses • expenses — leasing agents, realtors, property managers • vacancy, bad debt rates — C.M.H.C., published sources, property managers
In setting up a GIS in an assessment office, why is cleansing the parcel data important?
Essentially, this is based on the old computer expression "Garbage In, Garbage Out". If you want good analysis, it must be based on good data.
What do you believe to be the main benefit of using computers in an assessment office and why?
Examples of benefits of using computers in an assessment office: • increased efficiency — lower assessment costs/parcel • information storage • ability to perform sophisticated calculations on large amounts of data • ability to perform statistical test to measure quality
Provide two examples of how legislation could prohibit an assessor from maintaining the valuation principles of the ad valorem system.
Examples of how legislation could prohibit an assessor from assigning a market value: • use value assessment: assess on the basis of current use rather than highest and best use; e.g., farmland. • required to use cost manual; may not reflect current market value • assessment restrictions are in place; e.g., assessment averaging, proposition 13, limits on assessment increases, etc.
Define "highest and best use" and briefly explain how an appraisal based on highest and best use differs from an appraisal based on value in use. List one example of each type of appraisal.
Highest and best use represents market value of a property at its most profitable legal use which may or may not be its current use. Highest and best use is a function of potential utility. An example of valuing according to highest and best use is market value assessment. Use value is the value of property in a specific use. An example of valuing according to use is the assessment of farmland even though a more profitable use is available.
The functions an assessor performs can be broadly classified as either judicial (including quasi-judicial) or administrative. Why is the distinction between judicial and administrative functions important?
Judicial decisions can be appealed to courts and tribunals for review. Administrative actions are not subject to review by courts unless specifically provided for in the statute.
Briefly describe what "lot and block" surveying is. What is the benefit of describing a property with a lot and block survey, instead of with metes and bounds?
Lot and block surveying is often used in urban areas to subdivide larger parcels of land into smaller units. Each lot would be surveyed using metes and bounds and this information would be recorded on a map (usually held at the land title office). The legal description of each lot can then be referenced to this map and referred to by number (e.g. Lot 22, Block 5, Map Book 10, Page 20), instead of requiring the full metes and bounds description. This makes describing property location easier, which is helpful for conveyancing or assessment purposes.
In your own words, briefly explain what modern day "metes and bounds" surveying is
Metes and bounds is a survey method which describes the boundaries of a property using compass bearings and distance measurements. Starting with a physically defined reference point, the surveyor proceeds in a straight line to the next defined point on the boundary of the property (e.g. to a corner of the property), noting the direction travelled (compass bearing) and measuring the distance. The surveyor proceeds from there to the next point on the property's periphery, again noting the direction and distance travelled. The surveyor proceeds to each successive point until they have returned to the beginning point (thus "bounding" or closing the property). These compass bearings and distances can then be used to objectively define the property's external dimensions.
For an assessment office or other business, provide an example of a mission statement and two supporting goals (operational objectives).
Mission statement To provide an accurate assessment roll as efficiently as possible while providing a stimulating work environment for employees and maintaining positive relationships with all outside individuals and organizations. Supporting Goals Maintain an assessment sale ratio of at least 95 percent and a coefficient of dispersion of less than 10 percent. Initiate a program of job rotation for clerical staff designed to broaden their skills and increase the level of interest in their work environment.
What are the potential problems of a multi-user system of computerized mapping and how can they be minimized?
Potential problems in a multi-user system Problem — user without specialized knowledge in a particular area updating system. Potential Solution — restrict user access to system; e.g., read only privileges instead of read and write privileges to ensure information can only be altered by those with special knowledge. Problem — information not kept up-to-date by user with specialized information. Potential Solution — audits by a centralized agency; staff each user department with a specialist from a centralized agency who reports to the centralized agency and provides advice to the user department; remove privileges for violations.
Discuss the differences between single-property appraisal and mass appraisal.
Single-property appraisal • value a single parcel only • valuation model developed can only value that single property • quality of appraisal determined by comparisons with sales of similar properties • generally, one client to satisfy • output is an appraisal report with one statement of value Mass appraisal • develop valuation model to mirror demand and supply forces over large area • adjustments because of differences in architecture, age, condition, location, etc. are standardized • standardized adjustments must reflect market and be explainable • statistical methods used for quality control • must satisfy many different groups: taxpayers, politicians, municipalities and other taxing authorities • must value according to statute • output is an assessment roll stating assessed value of all properties in jurisdiction
How are the problems created by tilt displacement and relief displacement corrected?
Tilt displacement is removed through rectification. Relief displacement is corrected with an orthophotograph which is a composite of thousands of tiny photographs.
One of the difficulties of using CAMA modelling to provide assessed values is the difficulty taxpayers have in interpreting and understanding valuation models. Describe how interpretation of models can be made easier.
To make the interpretation of models easier • keep model as simple as possible • use Base Home Technique which relates values to a typical or base home in each market segment • group properties to make base home more similar to subject properties • specify characteristics of base home • value base home based on model • subtract or add to base home value according to the characteristics of the subject
Do you think an impact notice is useful in alleviating the concerns taxpayers may have when they receive an updated assessment notice? Explain.
Usefulness of the impact notice depends on the notice itself and the reason for any changes in expected taxes. • the notice should be clear, simple and not cause confusion • tax rates should not be expected to be drastically altered • for taxpayers who receive exemptions and grants, the impact notice could be confusing • if a tax shift causes some substantial changes in property taxes, the impact notice could cause premature concern • for the majority of taxpayers in the majority of situations, the impact notice would be effective
From your real estate market observations, what factors have the most impact on sale price and how are these accounted for in adjustments?
Some factors that could come up on the discussion forum: • neighbourhood--schools, recreation centres, shopping • view • age of surrounding properties • traffic
What are the major features of model calibration using the cost approach to value?
Supply side of market — costs; determination of replacement cost new. Demand side of market — land value; depreciation; time and location adjustment.
2. Define the following terms: C hard edit C check digit C data type edit C table edit C cross edit
hard edit • catches serious errors; information is edited or rejected check edit • internal edit on critical value fields such as property identification number data type edit • ensures non-numeric data is not entered in numeric fields table edit • ensures data is one of allowable from pre-specified table cross edit • checks for internal consistency between data items
Is there any advantage to using sales ratio trend analysis to determine time adjustments rather than paired sales or resales?
Advantages of Sales Ratio Trend Analysis • can use all market sales • no need to adjust individual sales as in paired sale analysis • can see trends on a graph • nonlinear price changes can be identified and accounted for with more than one adjustment factor
What are the advantages of a geographic information system over other methods of computerized mapping?
Advantages of a Geographic Information System • integrates spatial and attribute data; e.g., location and soil type or number of bathrooms • can combine map layers depending on specific information needs • can access specific information about each property or group of properties • applicable to many different users such as assessors, planners, engineers, resource specialists, surveyors, the land registry office • can be used by assessors to model the impact of location on value
Are there any advantages or disadvantages to using a discounted cash flow model over a direct capitalization model in the income method of appraisal?
Advantages of discounted cash flow over direct capitalization • flexibility in estimating cash flows; e.g., can accommodate the cash flows of a new development that is not 100% leased in the first year • can take impact of resale into account separately; this is important if the resale is expected to provide the majority of the return • can vary financing, vacancy, expense assumptions and examine impact Disadvantages of discounted cash flow compared to direct capitalization • more complicated • requires a considerable amount of forecasting • requires much more information that may be difficult to obtain • may not provide more accuracy than direct capitalization Ultimately, must value property using the same methods as the market.
7. Identify whether each of the following statements is true or false. For those which you think are false, explain why and provide any necessary corrections. (a) The principle of determinate hierarchy states that task structure is inversely related to consideration. (b) The use of task forces violates traditional line/staff principles, but can be useful nonetheless in some assessment situations. (c) In assessment offices, staff functions generally produce the assessment product, while line functions provide personnel administration and quality assurance support. (d) If employees are required to report to more than one supervisor, conflicts may result because the principle of formal feedback mechanisms has been violated.
(a) False. The principle of determinate hierarchy states that gaps or overlaps in authority should be avoided. (b) True. (c) False. The opposite is true: line functions produce the assessment product, while staff functions provide personnel administration and quality assurance support. (d) False. If employees are required to report to more than one supervisor, conflicts may result because the principle of unity of command has been violated.
Computerized cost procedures can be either formula driven or cost manual driven. (a) How does a manual driven cost model operate? (b) What are some of the advantages of using a formula driven cost model over a manual driven cost model?
(a) Manual driven cost models use tables and other pricing schedules that are loaded into the computer exactly as they appear in the manual. The logic the manual applies for calculating values — looking up values in the table, rounding, interpolating, and totalling component values — is completely programmed into the computer. (b) Formula driven cost models replace tables by formulas that reflect the underlying cost approach to value. They are preferred because they are created locally using local properties and updated locally. There is no need to rely on an outside service to provide updates and local factors. The data inventory can be recorded in a format that suits the assessment jurisdiction rather than the manual company. Any irregularities in the manual driven approach ar eliminated with a formula driven approach. With trained staff, formula driven cost models are less expensive.
What are some of the different ways an assessor can obtain an up-to-date property inventory when time is very short?
Review by exception — check data to see if it is reasonable and consistent; only properties that fail these check are field reviewed. Inventory Mailer Program — mail property information requests to property owners; field review property where information supplied differs from assessment agency inventory. Phone checks and field checks — check existing information by telephone and conduct field checks where there are substantial inventory changes.
How would you approach setting up a modern data storage system for an assessment office given that their current records are all on paper?
The first issue would be do determine which storage medium to choose. CDs and DVDs offer extremely compact data storage and can support images, such as: property records; sales documents; reports; and property photos. The images can be retrieved quickly but cannot usually be modified directly. Microfilm and microfiche also provide alternatives to paper for storing large volumes of data. Microforms are an inexpensive, compact way to store data in a form that can be read directly. Copies can be produced quickly. However, images are relatively poor and cannot be updated, and they are not generally computer-readable. CDs and DVDs are likely a better alternative for this type of storage. The second issue would be to determine the process for establishing this data storage system. Some considerations include: how paper records will be input (e.g., scanning), how far back they will be input, staffing and equipment requirements, how the system will be maintained in future, and so on.
Why would an assessment agency prefer to purchase assessment software from a commercial source specializing in assessment programs rather than developing a system in-house?
• May not have sufficient programming staff to handle this type of project. • Time may be very important, normally less time required to get system operational. • System is completely tested, and likely in use in other jurisdictions. • As system is in use, will know exactly the system that will be available. • Usually less cost.
Describe the three basic management principles that should be applied when managing a revaluation.
1. Don't lose sight of the program's objectives: Managing a revaluation can be a hectic time. Managers can get distracted and lose focus on core revaluation objectives. The text suggests to "evaluate events in light of the objectives" and to be flexible. Revision of the project schedule may be necessary.xi 2. Plan for the unexpected: Not everything is going to run smoothly during a revaluation, and the text stresses the importance of remaining flexible and responding to situations. For example, if you planned on having field data collected by a certain date, however this task is taking longer than expected. It is important to revise the schedule, accounting for the extra time needed for data collection.xii 3. Keep everyone informed: The public, staff and elected officials should be informed regarding a revaluation. Keeping staff informed helps keep people motivated and focused on the objective. The public may be more receptive knowing the key goals, objectives and strategy of the revaluation and elected officials like to remain informed to answer questions from constituents. Public officials may be more inclined
The owner/occupiers of three residences located in three different taxation jurisdictions all have the same market value: Land value $ 240,000 Improvement value $ 170,000 Total market value $ 410,000 Given the following information, calculate the effective tax rate (or actual taxes) appropriate for each residence. For jurisdictions A and B, assume that the value for the Total Assessment is the value subject to tax and not the total appraised value of all the properties. For Jurisdiction C, note that the figure given for the total taxes is net of the $150 owner/occupier grant. A total of 110 properties in this jurisdiction were allowed this tax relief. Jurisdiction Total Taxes Total Assessment % Value Subject to Tax Exemptions/Relief A $26,540,000 $1,061,600,000 100% of land value 20% of improvement value n/a B $1,542,000 $96,375,000 75% of total value n/a C $337,700 $30,800,000 100% of total value $150 grant deducted from taxes of owner/occupiers
A Tax rate = = 0.025 240,000 0.025 = 6,000 170,000 0.2 0.025 = 850 Taxes = 6,000 + 850 = 6,850 B Tax rate = = 0.016 410,000 0.75 0.016 = 4,920 Taxes = 4,920 C Tax rate = = = 0.0115 410,000 0.0115 = 4,715 Taxes = 4,715 150 = 4,565
Do you believe a budget should focus on costs, benefits, or both? Why?
A budget should focus on both costs and benefits. A budget that focuses only on costs encourages operations to exaggerate needs and provides no feedback on how efficient the operation is. There is also no opportunity to allocate funds on the basis of benefits to the taxpayer. A budget that focuses only on benefits allows no opportunity to determine the cost of the benefits received. A budget that focuses on both costs and benefits assists in determining the greatest net benefit to the public. It also assists in rationing funding among organizations.
What is the difference between a strategic plan and an operational plan?
A strategic plan is a long range plan that creates the future for an organization rather than responds to it. An operational plan supports the strategic plan by specifying several objectives to be accomplished within the budget cycle. The operational plan has more detail and deals with workloads, measures of performance and necessary resources.
Regarding model calibration for the direct comparison approach, which statement is TRUE? (1) Simple linear regression analysis is the foremost mass appraisal application. (2) Base home tables are complicated and require simplification so that taxpayers can understand mass appraisal models. (3) Adaptive estimation procedure can be used to adjust cost data to the market. (4) Sales prices of comparable sales are not adjusted for physical and locational differences from the subject property, as it is important to maintain consistency.
Answer: (3) Option (1) is false because multiple regression, not simple linear regression, is the most common mass appraisal application. Option (2) is false because base home tables are in themselves simplifications intended to help users and taxpayers understand and accept mass appraisal models. Option (4) is false because the sales prices of comparables are adjusted for physical and locational differences from the subject property. Option (3) is the true statement. AEP is a technique that can be used to adjust cost data to the market.
The valuation subsystem interacts with which of the other subsystems: (1) Data management subsystem (2) Performance analysis subsystem (3) Administrative/support subsystem (4) All of the above.
Answer: (4) The valuation subsystem uses property characteristics from the data management subsystem. As well, the valuation subsystem uses sales data and ratio study results from the performance analysis subsystem. Finally, the values produced in the valuation subsystem are used in the performance analysis subsystem and the administrative/support subsystem.
Describe the principles of anticipation and substitution as applied in appraisal. Use examples of each in your answer.
Anticipation: • investors demand property because they anticipate future stream of benefits or future reversion on sale of property • e.g., all income producing property such as apartment buildings, offices, etc.; bare land Substitution: • this principle is used in all three approaches to value • a buyer will pay no more for a property than the cost of obtaining a functional equivalent to the subject property • e.g., pay no more for a house than cost of buying a lot and building a functionally equivalent house • an investor will substitute other types of investment for real estate if the return is greater, for similar risk.
Why is ad valorem system more equitable than proposition 13?
Appraisal textbook describes five criteria in an ideal property taxation system: administration, accountability, neutrality, fairness and a stable tax base. Proposition 13 fails to meet the criteria for fairness, a stable tax base and administration. Fairness Tax fairness refers to a system of taxation that is fair, clear and equivalent for all taxpayers. It does not favor one segment of the taxpaying population over another. Proposition 13 creates inequality. In this system, a property with the same market value can be taxed differently depending on when it is sold. Under Proposition 13, property is assessed for tax purposes when it changes ownership. As long as the property is not sold, future increases in assessed value are limited to an annual inflation factor of no more than 2%.ii "The system favours those with stable dwelling requirements while it discriminates against growing families and homeowners who have more reason to move. Stable Tax Base Property tax provides a major source of revenue for local governments. The income generated provides services to residents including fire protection, education, police, roads, water, sewers, recreation centres, parks, and many others. In Ontario, property and related taxes equal approximately forty percent of local government's revenueiv. Proposition 13 significantly reduced property tax revenue in California. These cuts were significant. They caused a reduction in state services and caused governments to raise other local taxes to make up for the lost funds. Administration Proposition 13 is neither simple nor efficient. The textbook The Foundation of Real Property Assessment and Mass Appraisal, makes two negative points regarding Proposition 13: Appraisal, valuation, appeal and administration functions have become more complex; and The process is prone to errors in inventory gathering and assessmentv. In conclusion, California's property tax structure reduced tax burdens for many of citizens in California; however, it created more complex assessments, diminished revenues and inequalities. Thank you for taking the time to review my letter. I hope you see my reasons for not supporting a similar taxation system to Proposition 13.
Three recent developments in data collection are hand-held data entry devices, optical scanning, and video imagery. Which of these three developments do you feel offers the greatest potential for improving data collection? Why?
Following are some advantages and disadvantages of each. Hand-held data entry devices • less paperwork • less errors (forgetting items while in field and data entry errors) • more efficient • expensive Optical Scanning • less efficient method of streamlining data entry • requires larger forms • manual checking required because it is not a manual process Video Imagery • can reduce need for field visits • useful for appeal process
In a situation in which an appraiser must assign a market value, indicate whether or not each of the following restrictions in use should be taken into consideration and discuss why or why not. (a) A registered right of way in favour of the provincial hydro authority. (b) Rents restricted by provincial rent control. (c) An unregistered agreement with the owner of neighbouring property to allow access along the driveway of the property.
Given the decision reached in Consolidated Shelter Corp. v. Rural Municipality of Fort Garry (1965) 49 O.L.R. (2d) 565 (Man. C.A.), assessors can ignore the effect of any restrictions on use that have been placed there by the owner. The assessor will, however, consider all restrictions that affect market value and bind subsequent owners. (a) taken into consideration; restricts the current and all future owners' use of the property; Alternative answer: if a student specifically states that the interest to be valued is the fee simple interest (e.g., as required in the B.C. Assessment Act), then it would be correct to state that this interest is not to be taken into consideration. Reference must be given to valuing the full fee simple interest. (b) taken into consideration; ultimately, the effect on value would be reflected in lower sale prices for rental properties; (c) ignored; unregistered and therefore does not affect subsequent owners.
(a) What is meant by "model specification" and "model calibration" in the context of mass appraisal? (b) Provide an example of what a model could look like in equation form. Supply your own variables.
Model specification — specifying a model which sets out the framework replicating the forces of demand and supply in the real estate market. The appraiser specifies: • which variables are important in determining value, • how they are related to one another, • how they are related to value, and therefore • which variable will be included in the model in what format. Models must reflect the way buyers and sellers value real estate. Model calibration — coefficients or values are assigned to the variables included in the specified model based on market analysis. (b) Example: MV = NBHD TIMEADJ (BLDGQUAL (SQFT B ) + (BEDROOMS 1 2 B ) + (BATHROOMS B ) + (SQFTLAND B ))
Evaluate a policy which sets limits on tax increases.
One policy that sets limitations on assessment increases is the Cap Assessment Program (CAP). Implemented by the Nova Scotia legislature in 2004, the program is designed to protect property owners from sudden and dramatic assessment increases in the market value of their property. The CAP is an effective solution for sudden tax shifts. For those that qualify, the Provincial Legislation places a "cap" on the amount that a residential property assessment can increase year over year. This legislation helps protect home owners from sudden increases in their property taxes. It has proven to decrease the gap in property tax increases between areas experiencing dramatic market growth and neighbourhoods with stable prices. This legislation does have one negative aspect: the CAP lends itself in inequality, since it "shifts a higher portion of the tax burden to property owners who do not qualify for the CAP".
What can be done to bridge the gap between appraisers and programmers?
One possibility is Design Teams that have members from both the "techie" and "front line" groups; another possibility is to hire business analysts who have both skill sets, although these are a rare commodity
What are the expected benefits of site value taxation as put forward by the proponents of this system? Under what circumstances do you feel site value taxation would be appropriate?
Proponents for site value taxation base their support on the allocative efficiency of the tax - the taxation of land only should promote development, redevelopment, and lead to the highest and best use of the land. This is based on two separate theories: the liquidity effect and the incentive effect. The Liquidity Effect This theory states that under land value taxation, the increased holding costs will provide an incentive for landowners to develop or sell property. A pure land tax will also decrease the value of land as the tax is capitalized into the value of the land. These two effects should make land more saleable, or liquid. The Incentive Effect The incentive effect holds that a reduction in the tax on improvements will lead to an increase in the supply of improvements. Land is fixed in supply and therefore a tax on land will not affect the amount of land supplied. Demand for improvements, however, is elastic. The more elastic the demand, the greater the effect land value taxation will have on the supply of improvements. Advocates for land value taxation argue that the liquidity and the incentive effects will reduce urban sprawl, lessen inner city decline, and provide incentive to develop land to its highest and best use. Circumstances where site value taxation could be appropriate include areas in which rapid development is desired, for example in new and growing cities or in the declining neighbourhoods of inner cities.
Given the situation in Assignment No. 3, Question 4, what could the assessor have done to avoid this situation?
The assessor could have explained in general terms how the property assessment and taxation system operates. He or she could have then reviewed the past relationship between value and property taxes. Mary could have been directed to the municipality for more information or the assessor could have contacted the municipality on her behalf. At no time should the assessor have given Mary an estimate of property taxes on her specific property without first contacting the municipality.
There are five subsystems in a mass appraisal system: data management, valuation, performance analysis, administrative/support, and appeals. Which do you feel is the most important subsystem and why?
The data management system is the most important because the other four subsystems — valuation, performance analysis, administration/support, and appeals — depend on the quality of data. If the data management system is inadequate, the other four subsystems cannot work well. The data management system is also the most expensive to implement; it is very important to design it carefully.
Is the incidence of property taxation progressive, regressive, or neutral? Provide reasons for your answer.
The incidence of taxation depends on your point of view. If the property tax is viewed as tax on the consumption of real property, it appears to be regressive. This is because individuals with lower incomes spend a greater proportion of their income on housing. However, if income is measured as permanent income (a measure of current and future income) the property tax as a tax on consumption appears to be proportional at minimum. If the tax is measured against equity rather than value, it appears to be even more progressive. This occurs because the elderly taxpayers, although on fixed incomes, typically have a great deal of equity in their homes. Furthermore, regressivity in the property tax is frequently caused by poor assessment administration, such as assessments that are not at market value, and not the tax system itself. If the property tax is viewed as a tax on capital, it appears progressive. This is because higher income taxpayers spend proportionately more of their income on capital than lower income taxpayers.
1. Three perspectives on management are presented in the chapter: the classical school, the neoclassical school (behavioural and management science), and the systems approach. (a) How does the systems approach incorporate aspects of both the classical and neoclassical schools? (b) In what way is the systems approach different from either of these earlier schools? (c) Which perspective on management do you feel would be most appropriate in an assessment office and why?
The systems school emphasizes four major subsystems in an organization: • the psychosocial subsystem • the technical subsystem • the structural subsystem • the planning subsystem The classical school focussed on structural and planning subsystems. The neoclassical behavioural oriented researchers focussed on the psychosocial subsystem. The neoclassical management science researchers focussed on the technical subsystem. (b) The systems approach considers each of these subsystems as well as their interactions. Classical and neoclassical schools measured success in terms of efficiency. With the systems school, factors for success are broader: there should be harmony, growth, stability and adaptability in addition to efficiency. Flexibility is also important in the systems approach. (c) The systems approach will be most effective for an assessment operation in today's environment. Assessment is a complicated task and requires the open and flexible approach of the systems school.
Assume an assessment office is experiencing difficulty in improving production of property information input by the clerical staff. How would a Theory X and a Theory Y manager approach the challenge of improving clerical productivity? Provide examples of how each type of manager might resolve the problem. Which do you think would be more effective?
Theory X A theory X manager would not be surprised by the situation because he or she assumes people dislike work and will avoid it if possible. Therefore, a theory X manager may resort to punishment to try to correct the behaviour. The clerical staff would receive more direction and tighter controls; e.g., their work would be monitored more closely and they would be required to achieve a certain level of output set by the manager. Theory Y A theory Y manager would probably seek the root of the problem by discussing it with clerical staff. A team approach would be encouraged with an attempt to get clerical staff committed to certain objectives. Responsibility would be shifted to the clerical staff. For example, the theory Y manager may require the staff to set their own goals and methods of achieving them. Unless there is a severe lack of supervision and very unmotivated employees, the theory Y manager's approach will be more successful.
Identify CAMA hardward and software and their adv/dis.
There are three types of software options available: 1. Hard-coded package; 2. Customized software; and 3. General-purpose CAMA software. In this case, the most suitable option is a general-purpose CAMA software, possibly with the addition of a mainframe. This software is run on personal computers and can be easily adapted to a jurisdiction. The advantages of a general-purpose CAMA software include: Runs on microcomputers; Inexpensive and easily implemented; Simple and flexible; Staff with some computer expertise can quickly learn the program; Little dependence on outside agencies; System can be available within 18 months; Capable of maintaining a database or can be linked with a database stored on a mainframe; and Can be tailored made to include file maintenance, data editing, market research, valuation, ratio studies and other appraisal functions. The disadvantages of a general-purpose CAMA software include: Capable of becoming infected with virus or other malicious programs; Standardized programs; May not include all functions needed by the assessment agency; Problems with software may arise; and Software generally needs to be updated. Hardware Requirements There are four main types of hardware options available: 1. Mainframes 2. Distributed systems 3. Stand-alone systems 4. Net worked systems In this case, the most suitable option is a net worked system. A networked system includes multiple micro-computer workstations for appraisers that may be networked with each other, a mini-computer or a mainframe.xiv The advantages of a net-worked system include: 6 Convenient file and data sharing; Large quantities of data can be stored on mainframe; Support staff and administers can maintain the system; Other agencies can access this system; Minimal dependence on outside agencies; System can be available within 18 months; Hardware sharing; Flexible; Increased connectivity; Centralized data; and Utilization of micro-computers. The disadvantages of a net worked system include: Large initial cost of mainframe; Eventual obsolesce; Possible difficulties in maintenance and modification; Possible server failure; and May require high coordination I would ask the following questions from the assessment agency: What functions would you like the program to perform? E.g., market research, valuation, etc. Approximately how much data will need to be stored? What is your budget? How large is you staff? How experienced are the support staff and administrators? Expansion needs? Memory, storage and processing speed needs? How compatible should the system be with other agencies? How important is user-friendliness? Willingness to maintain security and backup schedules?
How do the differences between the registry system and the land titles system of land registration impact assessment offices?
Under the land titles system, the assessor can completely rely on the records of the land title office with respect to the status of title and charges against it. Under a registry system, the assessor is alerted to instruments potentially affecting land but may have to conduct a more detailed investigation.
Describe some of the different types of boundaries that can form a neighbourhood. Provide examples
• Natural boundaries: river, ridge, greenbelt, waterfront • Man-made boundaries: highway, major intersection, points of access to freeway, major public institution such as a university, golf course • Political boundaries: street boundary between two municipalities, boundary between developed property and agricultural land reserve • Land use: agricultural area, central business district, strip commercial development, apartment area
