2014-01-08 Board of Ethics Minutes

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MS. NAHOOPII: Okay, good morning. My name is Lisa Nahoopii, and I am the assistant administrator with the Finance Department, Real Property Tax Division. Most of us are familiar with fee appraisals as opposed to the process of mass appraisal. I started working in a fee appraisal office in Kona in 1989 and received my state license in 1993. There is a very big difference between fee appraisal and mass appraisal. In an extreme example, if a fee appraiser could do one appraisal a day, seven days a week with no time off, he or she would have completed 365 appraisals a year. Each appraiser here at the County is on average responsible for approximately 10,000 properties. When it comes to both the fee appraisal and mass appraisal procedure, there are 40-hour courses that cover the fundamental aspects of each. Due to time constraints, we have condensed this complex process, as requested by the Board in the last meeting, into a short presentation. The International Association of Assessing Officers, which we commonly refer to as the IAAO, defines mass appraisal as a systematic appraisal of groups of properties as of a given date using standardized procedures and statistical testing. The purpose is the equitable and uniform appraisal of all property in a jurisdiction for tax purposes. When we do mass appraisals, we use the neighborhoods, which came up in last month’s meeting. A neighborhood, for the purpose of mass appraisal, is not the same a neighborhood in the traditional sense of the term. Typically, when we think of a neighborhood, we’re thinking of the cul-de-sac our property is on and a few surrounding streets. For the purposes of mass appraisal, we are looking at groups of properties based on similarities—and in our case, more often than not it is based on location and size. Mary Ann’s property is located in a neighborhood with 97 parcels, while Marilyn’s neighborhood has 1,955 parcels. To determine a land value change, the appraiser reviews the sale price and the previous assessment to determine whether we need the value to change or remain the same for that neighborhood. The sale price to assessment is called a sales ratio, and it is a key element to the justification process for mass appraisal. Every sale and transaction is reviewed for taxation purposes. All valid sales are utilized in the sales ratio for determining and justifying values. Real Property administration does look at the sales that are also marked as invalid to be sure good sales are not accidentally coded wrong or purposely overlooked. Mass appraisal, IAAO, and the Hawai‘i County [sic] is based on the premise of uniformity and equality. An example of this is if there are no sales in one neighborhood, but a comparable neighborhood which has historically been similar over the years does have sales, we cannot simply state because this neighborhood had no sales, this neighborhood—I’m sorry. Because we cannot simply state that if this neighborhood didn’t have any sales, there is no change in value. Being uniform and equitable means that if the neighborhood reflects an increase in sales, because historically they are similar to another neighborhood, they both need to increase similarly. Where a fee appraiser would compare one parcel to another, in mass appraisal we look at entire 7