International Property Tax Institute
Institut international de la fiscalité immobilière
11th Mass Appraisal Valuation Symposium
Innovation, Transformation, Knowledge
Enhancement and Improved Efficiencies in
Mass Appraisal Niagara Falls, Canada – May 17-18, 2016
Mass Appraisal Guidance and
Performance Standards Randy J. Ripperger, CAE
IAAO President-Elect
International Property Tax Institute
International Property Tax Institute
Institut international de la fiscalité immobilière
Introduction
Mass appraisal has permeated
valuation systems in the US and
Canada
Mass appraisal helps maintain
equitable treatment of large groups
of properties by enabling current
market value to be maintained
International Property Tax Institute
Institut international de la fiscalité immobilière
Introduction
When results need to meet objective
thresholds and level and uniformity
criteria, mass appraisal techniques
are more prevalent
International Property Tax Institute
Institut international de la fiscalité immobilière
Introduction
Countries that are in the early stages
of understanding, developing, or
implementing mass appraisal
systems for property tax purposes
often find themselves without
authoritative support
International Property Tax Institute
Institut international de la fiscalité immobilière
Introduction
Nations with newly developing mass
appraisal systems know the mass
appraisal methods work well
Problem - they can’t easily cite a
written source that reflects the
perspective of the larger community
outside North America
International Property Tax Institute
Institut international de la fiscalité immobilière
Introduction
Nations need authoritative outside
resources to provide guidance on
the technical side
There is a need for guidance, a need
to be able to point to accepted
standards and best practices
promulgated by outside,
independent organizations
International Property Tax Institute
Institut international de la fiscalité immobilière
What is a Standard?
A model accepted as correct by
custom, consent, or authority*
A criterion for measuring
acceptability, quality, or accuracy*
*Black’s Law Dictionary (2004)
International Property Tax Institute
Institut international de la fiscalité immobilière
What is a Standard?
In essence, a standard is an agreed
way of doing something
Standards represent the distilled
wisdom of an organization’s subject
matter experts – those who know
and understand the needs of the
members they represent
International Property Tax Institute
Institut international de la fiscalité immobilière
Standard-setting Organization
A body that sets, describes, or
documents uniform operating,
technological, or other norms for
participants in a particular field or
industry
*Black’s Law Dictionary (2004)
International Property Tax Institute
Institut international de la fiscalité immobilière
Principles-based vs Rules-based
Principles-based Standards
Norms are expressed as guidelines
The exact implementation is left to the
subject of the norm
Rules-based Standards
Prescribes implementation in detail
May prescribe specific quality criteria
or thresholds
International Property Tax Institute
Institut international de la fiscalité immobilière
Principles-based vs Rules-based
Principles-based Standards
General, universal, abstract – point in a
certain direction
Rules-based Standards
Specific, particular, concrete - prescribe
International Property Tax Institute
Institut international de la fiscalité immobilière
Principles-based vs Rules-based
Principles-based Standards
Qualitative
What is required
Rules-based Standards
Quantitative
How to achieve an objective
International Property Tax Institute
Institut international de la fiscalité immobilière
Principles-based vs Rules-based
Principles-based Standards
Allow for exceptions
Rules-based Standards
All or nothing – no exceptions
International Property Tax Institute
Institut international de la fiscalité immobilière
Principles-based vs Rules-based
By adding qualifications and
exceptions, rules can become more
principle-like – more qualitative
By adding best-practices and
requirements, or specifics such as
measureable outcome metrics,
principles can become more rule-like
– more quantitative
International Property Tax Institute
Institut international de la fiscalité immobilière
Principles-based vs Rules-based
Principles and rules are extremes on
a range or continuum
Differences between principles and
rules are simply a matter of degree
In practice the distinction between
the two is not so apparent
International Property Tax Institute
Institut international de la fiscalité immobilière
Principles-based vs Rules-based
Relatively younger standard setting
organizations are typically principles-
based because they haven’t had as
much time to accumulate rules
In the more mature standard-setting
bodies, their standards will contain a
mixture of principles and rules
International Property Tax Institute
Institut international de la fiscalité immobilière
Principles-based vs Rules-based
In the more mature standard-setting
bodies, standards will exist
somewhere along the continuum
between rules-based and principles-
based
Idea is to find the ‘sweet spot’ or
consensus on that scale
International Property Tax Institute
Institut international de la fiscalité immobilière
Principles-based Example
5.4 Standards of Appraisal Level
and Uniformity 5.4.1 In the interests of assessment equity,
standards of appraisal level (the proximity
between assessments and actual prices) and
uniformity (the statistical measure of valuation
consistency) must be observed in the
application of mass appraisal systems*
*IVSC Guidance Note No. 13
International Property Tax Institute
Institut international de la fiscalité immobilière
Rules-based Example
9.1 Level of Appraisal While the theoretically desired level of
appraisal is 1.00, an acceptable level between
0.90 and 1.10 is considered acceptable for
any class of property
*IAAO Standard on Ratio Studies
International Property Tax Institute
Institut international de la fiscalité immobilière
Principles-based or Rules-based?
3.1 Overview Assessing offices must establish effective
procedures for collecting and maintaining
property data (i.e., property ownership,
location, size, use, physical characteristics,
sales price, rents, costs, and operating
expenses) ….*
*IAAO Standard on Mass Appraisal of Real
Property
International Property Tax Institute
Institut international de la fiscalité immobilière
3.3.2.4 Data Accuracy Standards Continuous or area measurement data, such
as living area or exterior wall height, should be
accurate within 1 foot (rounded to the nearest
foot) of the true dimensions or within 5 percent
of the area*
*IAAO Standard on Mass Appraisal of Real
Property
Principles-based or Rules-based?
International Property Tax Institute
Institut international de la fiscalité immobilière
Why Use Standards?
Provides authoritative support
Facilitate compliance with the law
Promote excellence in assessment
administration
Promote public trust in assessment
administration
International Property Tax Institute
Institut international de la fiscalité immobilière
Available Mass Appraisal
Guidance
IVSC Guidance Note 13
Published by the International
Valuation Standards Council (IVSC)
from January 1, 2005 until July 19,
2011
Principles-based
International Property Tax Institute
Institut international de la fiscalité immobilière
Available Mass Appraisal
Guidance
IVSC Guidance Note 13
IVSC discontinued its mass appraisal
standard in 2011
Created a gap with respect to the
international mass appraisal
community
International Property Tax Institute
Institut international de la fiscalité immobilière
Available Mass Appraisal
Guidance
IAAO Technical Standards of
Professional Practice
Address property valuation, property
tax administration, and property tax
policy
Describe desirable models for the
profession
Provide criterion for acceptability,
quality and accuracy
International Property Tax Institute
Institut international de la fiscalité immobilière
Available Mass Appraisal
Guidance
IAAO History of Standards
Began standard-setting in 1937 with
the publication of principles
Started calling them “standards” in the
1956 published report – approved by
the Executive Board
International Property Tax Institute
Institut international de la fiscalité immobilière
Available Mass Appraisal
Guidance
IAAO History of Standards
Minimum Assessment Standards
document published in 1963
Principles-based
Qualitative
International Property Tax Institute
Institut international de la fiscalité immobilière
Available Mass Appraisal
Guidance
Preeminent Standards - First Adopted
Standard on Assessment-Ratio Studies
– 1980
Standard on Mass Appraisal of Real
Property – 1984
Standard on Property Tax Policy – 1997
Standard on Automated Valuation
Models - 2003
International Property Tax Institute
Institut international de la fiscalité immobilière
Nature of IAAO Standards
Professional consensus
Best practices in the industry
Use is voluntary
Do not have the force of law
Cross both technical and policy lines
Hybrid – on spectrum between
principles-based and rules-based
International Property Tax Institute
Institut international de la fiscalité immobilière
Nature of IAAO Standards
We try to cover everything assessing
officers would need guidance on
Establish and maintain valuation
information related to property tax
Evaluating the nature and features of
model assessment administration
Developing tax policy or responding to
criticisms of tax policy
International Property Tax Institute
Institut international de la fiscalité immobilière
Nature of IAAO Standards
Our standards are the foundation of
modern mass appraisal practice in
much of the developed world
Mass appraisal can be successfully
implemented even if some
recommendations are not
implemented – not all or nothing
International Property Tax Institute
Institut international de la fiscalité immobilière
Nature of IAAO Standards
There is room within our standards
for a lot of local discretion
For example, Standard on Property
Tax Policy emphasized advantages
and disadvantages to market value
as the basis of taxation – it then
supports current market value as
best practice
International Property Tax Institute
Institut international de la fiscalité immobilière
Nature of IAAO Standards
The Standard on Ratio Studies
discusses the meaning and use of
confidence intervals but does not
specify the precise degree of
confidence and suggests lower
confidence as appropriate in some
cases
International Property Tax Institute
Institut international de la fiscalité immobilière
Nature of IAAO Standards
Reminder – the US is multifaceted as
every state is different and has
considerable discretion in determining
its tax and assessment structure
International Property Tax Institute
Institut international de la fiscalité immobilière
Nature of IAAO Standards
With our history, we’ve experienced
about everything you are experiencing
If a country is experiencing a certain
issue, chances are we have already
experienced and dealt with it
International Property Tax Institute
Institut international de la fiscalité immobilière
Nature of IAAO Standards
Our standards often are developed
when none previously existed in order
to deal with emerging issues Standard on the Valuation of Property
Affected By Environmental Contamination –
hot topic around 1990 with some definitive
appraisal work and court cases in the late
1980s
AVM Standard – around 2000 as these
became widespread
International Property Tax Institute
Institut international de la fiscalité immobilière
Nature of IAAO Standards
IAAO tries to be both proactive and
reactive as assessment or property
tax related issues arise or are
considered
Our standards are a key way of
communicating industry best practices
International Property Tax Institute
Institut international de la fiscalité immobilière
Current List of IAAO Standards
Standard on Digital Cadastral Maps and Parcel Identifiers (July 2003, updated January, 2012, 2015)
Standard on Oversight Agency Responsibilities (2010)
Standard on Mass Appraisal Real Property (April, 2013)
Standard on Contracting for Assessment Services (December 2008)
Standard on Assessment Appeal (Jan. 2014)
Standard on Public Relations (July 2011)
International Property Tax Institute
Institut international de la fiscalité immobilière
Current List of IAAO Standards
Standard on Professional Development (Jan. 2013)
Standard on the Valuation of Property Affected by Environmental Contamination (July 2001)
Standard on Ratio Studies (April, 2013)
Standard on Verification and Adjustment of Sales (2010)
Standard on Property Tax Policy (August 1997, re. 2010)
Standard on Personal Property Valuation ( Dec.2005)
Standard on Automated Valuation Models (Sept. 2003 – currently being rewritten)
International Property Tax Institute
Institut international de la fiscalité immobilière
Nature of IAAO Standards
If adhered to, IAAO standards can
enable governmental property tax
administrators to produce excellent
quality appraisals and assessments,
particularly when mass appraisal
practices are employed
International Property Tax Institute
Institut international de la fiscalité immobilière
Online Resource
Our technical standards are publicly
accessible on the IAAO website:
www.iaao.org
Reproduction is allowed for personal
use, educational purposes, property
tax hearings, legislative development,
and as a supplement to local
guidelines
International Property Tax Institute
Institut international de la fiscalité immobilière
Online Resource
Users should request permission to
reproduce all or a portion of a
standard for the stated purposes
The entire standard should be cited
in a bibliography or reference list
International Property Tax Institute
Institut international de la fiscalité immobilière
Other Resources
Guidance on International Mass
Appraisal and Related Tax Policy
Represents a consensus in the
property valuation profession
Considerable international influence
Prepared as an international overview
of recommended practices regarding
mass appraisal and property tax policy
International Property Tax Institute
Institut international de la fiscalité immobilière
Other Resources
Guidance on International Mass
Appraisal and Related Tax Policy
Guidance but not a standard
Nations with mature, functioning mass
appraisal systems
Nations with emerging systems
May provide developing countries with
a more complete package
International Property Tax Institute
Institut international de la fiscalité immobilière
Other Resources
Guidance on International Mass
Appraisal and Related Tax Policy
Provides a systematic means by which
valuers and other property tax
professionals can improve and
standardize the operation of their offices
Advisory in nature – its use is purely
voluntary
International Property Tax Institute
Institut international de la fiscalité immobilière
Other Resources
Guide to Assessment Standards
Reference tool for all our standards
Allows easy searches
Can find specific information that can
be located in one or more standards
International Property Tax Institute
Institut international de la fiscalité immobilière
Other Resources
Guide to Assessment Standards
Serves as a subject index to help
identify which standard would be the
most appropriate reference for any
topic
Most underutilized document out there
International Property Tax Institute
Institut international de la fiscalité immobilière
Other Resources
Body of Knowledge
Compendium that captures a
description of the expertise required to
effectively work within the assessment
profession
Anticipated April 2017
International Property Tax Institute
Institut international de la fiscalité immobilière
Other Resources
Published Surveys – Practices in
U.S. & Canadian Providences
Property Tax Assessment Policies &
Practices Survey – since 1990
Although main audience is property tax
administrators and policy makers in the
two countries, other countries may find it
useful as well
International Property Tax Institute
Institut international de la fiscalité immobilière
Other Resources
Published Surveys – Practices in
U.S. & Canadian Providences
Ratio Studies Survey – over the past
30 years
Although main audience is property tax
administrators and policy makers in the
two countries, other countries may find it
useful as well
International Property Tax Institute
Institut international de la fiscalité immobilière
Interest in IAAO Standards and
International Guidance Document
Nations around the world have
expressed interest
Korea, China, South Africa, Russia
have either asked to use our
Guidance document or Standards or
have asked permission to translate
standards into their language
International Property Tax Institute
Institut international de la fiscalité immobilière
Interest in IAAO Standards and
International Guidance Document
China uses the standards to
evaluate mass appraisal for the
purpose of a transfer tax
The most common use is the
specific guidance in the Ratio Study
Standard
International Property Tax Institute
Institut international de la fiscalité immobilière
IAAO 10th International Research
Symposium
International Property Tax Institute
Institut international de la fiscalité immobilière
IAAO 10th International Research
Symposium
Amsterdam September 19-20, 2016
Focus will be on the exchange of
knowledge for continuous
improvement of property tax systems
Optional one day forum – IAAO’s
Standard on Mass Appraisal of Real
Property Sunday September 18th
International Property Tax Institute
Institut international de la fiscalité immobilière
Summary
IPTI’s President Paul Sanderson’s
April 2016 message:
“No matter how developed a property tax
system may be, all have room for
improvement”
International Property Tax Institute
Institut international de la fiscalité immobilière
Summary
As the international community
develops or enhances mass
appraisal systems, standards are
crucial for modernization
IAAO standards are the preeminent
source for best practices in mass
appraisal
International Property Tax Institute
Institut international de la fiscalité immobilière
Thank you!
www.iaao.org
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