REVALUATION WORKSHOPTown of Manchester, 2011 Revaluation

I. The revaluation process explained

A. This revaluation is the process of updating assessment values in order to reflect changes in real estate values since Manchester’s last revaluation date of October 1, 2006.

B. Revaluation does not change the total amount of taxes raised by the Town. Theamount of taxes the Town must raise is a function of the budget process. Revaluation changes the amount that each individual taxpayer pays, but the total amount of taxes does not change.

C. There are five phases to revaluation: 1) Data Collection, 2) Market Analysis, 3) Valuation, 4) Field Review, 5) Informal Hearings.

The data collection phase is different in the 2011 revaluation than it was in the 2006 revaluation. By Statute, 2011 is a “full, measure and list” revaluation, meaning that the properties in Manchester are being visited and re-measured. The 2006 revaluation was not a full, measure and list revaluation; only properties used for sales analysis, had questions regarding their data, or were modified were visited by either Town or Vision Appraisal Technology staff for the 2006 revaluation. The last full, measure and list revaluation in Manchester prior to 2011 was the October 1, 2000 revaluation.

Since the 2011 revaluation involves measuring and listing each property in Manchester, and there are almost 19,000 properties in Manchester, the measuring and listing component is the most time consuming and costly portion of the revaluation. Measuring and listing began in April 2010

The rest of the process is the same in the 2011 revaluation as it was in the 2006 revaluation. The cost, sales comparison, and income valuation tables in our software will be re-built in order to value properties as of October 1, 2011 instead of October 1, 2006.

After the Market Analysis and Valuation phases of the revaluation are completed, Manchester real estate owners will receive a notice of their new assessment. These notices should be sent in November 2011. Each notice will contain the prior (2006) assessment and the new (2011) assessment.

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Property owners are encouraged to examine their property data online before they receive their notice of their new assessment. The best time to consider what your assessment should be is before you know the new assessment.

Property owners who disagree with their new assessment or believe their data is incorrect will be invited to an informal hearing with Vision. There will be a toll-free number (888-844-4300) in the assessment notice that taxpayers may call to schedule their informal hearing. At the informal hearing, taxpayers may review what they feel is incorrect about their assessment with a representative of Vision.

If Vision reviews a property during informal hearings, a second assessment notice will be sent to the property owner. This second notice will inform the owner as to whether or not a change in the new assessment has been made.

D. Board of Assessment Appeals (MUST apply by February 21, 2012).

In late January 2012 or early February 2012, the Town of Manchester will send a final assessment notice to all property owners. This will occur regardless of whether or not the owner attended an informal hearing.

Property owners who disagree with their new assessment after the Town sends the assessment notice may appeal their assessment to the Board of Assessment Appeals. Board of Assessment Appeals applications must be filed by February 21, 2012, and this deadline cannot be extended.

The Board of Assessment Appeals (BAA) hearings will take place in March and April 2012. Property owners do not have to have attended an informal hearing in order to attend a BAA hearing.

The BAA will hear the owner’s appeal and render a decision. Notice of the BAA decision must be sent by Certified Mail to the property owner or their appointed representative. If an owner disagrees with the BAA decision, they may bring a further appeal by filing with the Superior Court within two months of the date that the BAA decision notice was mailed.

II. Requirements for a Revaluation

A. The mandated assessment ratio is 70% of the market value, meaning that your assessment will be equal to 70% of the estimated full market value.

B. Connecticut General Statutes currently require that Connecticut municipalities conduct a revaluation every FIVE years.

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C. The first tax bills that will be calculated using the 2011 revaluation will be due in July of 2012. Preliminary revaluation notices should be sent in November 2011. It is important that people do not estimate their taxes after revaluation by usingtheir after-revaluation assessment and the before-revaluation mill rate. The mill rate will change.

D. The next revaluation after the 2011 revaluation is currently scheduled for 2016.

E. The primary purpose of a revaluation is to re-adjust assessments to current market values because property values differ over time, and different types of properties in different areas do not change equally in value over time, this means that inequalities in assessments build up. These inequalities are addressed through revaluation.

III. Vision Appraisal Technology

A. In order to assist the Town of Manchester with the revaluation process, Vision Appraisal Technology was hired through an RFP process.

B. Vision has worked in many other cities throughout the area, including Boston, Danbury, Glastonbury, Wethersfield, and Windsor Locks.

C. Visionappraisal.com is the company’s website.

D. Vision was also hired for Manchester’s 2000 and 2006 revaluations.

E. Vision Appraisal Technology is currently in the process of changing their name to Vision Government Solutions, Inc.

IV. Preliminary Real Estate and Sales Analysis (sales data is not finalized at this point)

A. Residential properties make up nearly 90% of the real estate accounts in Manchester:

Category # of Properties

Percentage

Residential Real Estate 16,739 89.89%Non-Residential Real Estate 1,883 10.11%Total Real Estate 18,622 100.00%

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B. Most of the residential properties are single-family dwellings:

Category # ofProperties

Percentage

Single-Family Dwellings 12,220 73.00%Multi-Family Dwellings (2-4 Units) 1,680 10.04%Residential Condominium Units 2,380 14.22%Vacant Residential Land 459 2.74%Total Residential Real Estate 16,739 100.00%

C. Appreciation rates are calculated using sales from January 1, 2010 through March 31, 2011 and comparing them to their 2006 appraised values. In both the 2000 and 2006 revaluations, almost half of the real estate properties in Manchester were valued at between $100,000 and $149,900. In the 2006 revaluation, over 86% of the properties in Manchester valued at $199,900 or less as the following chart shows. All value ranges within the residential assessment database have shown negative appreciation (i.e. depreciation) since the 2006 revaluation. Depreciation has been the highest at the highest value level. Depreciation has been the lowest at the lowest value levels.

10/1/2006 Full Market Value# of

Properties Percentage# of

SalesAverage Appreciation Rate

Less than or equal to $99,900 1,971 11.77% 26 -4.75%Between $100,000 and $149,900

8,168 48.80% 41 -4.60%

Between $150,000 and $199,900

4,313 25.77% 188 -6.80%

Between $200,000 and $249,900

1,428 8.53% 116 -6.24%

Over $250,000 859 5.13% 124 -7.86%Total 16,739 100.00% 495

D. There have been far fewer commercial or industrial sales in 2010 and early 2011. Of the 1,883 non-residential properties in Manchester only 23 have sold. Thus, only 1.22% of the non-residential properties sold in the 15 months between January 1, 2010 and March 31, 2011, compared with nearly 3% of the residential properties. Commercial sales have shown a much greater disparity in their depreciation rates, with 10 of the 23 sales (nearly 44%) selling for over 10% less than their 2006 appraised value, and eight of the 23 sales (nearly 35%) selling for over 10% more than their 2006 appraised value. Analysis of commercial property rental data shows an increase in vacancy rates, and a decrease in rental

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rates on a per square foot basis. We are anticipating a very wide range in the commercial and industrial value changes, while some may show appreciation, most will not, and some may show depreciation of 10% to 20% or more.

Although most of the recently sold properties indicate that the real estate market has shown depreciation since the 2006 revaluation, in general depreciation levels have been less than what has been seen in the national real estate market, and generally less than most people would suspect. With what appears to be modest depreciation in the residential market, and a very spotty commercial and industrial sales and rental market, it seems likely residential properties will bear a proportionately greater share of the Grand List, and thus provide a greater share of the real estate taxes than was the case in 2006. This is commonly referred to as a “burden shift.”

E. By comparison to other markets across the country, the market in Connecticut and in Manchester in particular, has actually performed quite well. As the national news has shown, there are regions in this country, such as parts of California, Nevada, Arizona, and Florida, where residential properties have depreciated by as much as 30%, 40% or even 50%.

F. Connecticut municipalities are heavily dependent on property taxes as the primary means for financing municipal operations.

V. Sale Data

A. Sales Charts

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B. Sale Property Examples (property examples will be distributed and discussed)

1. A good means of comparison to determine potential revaluation impact is to examine properties that have recently sold, particularly if they sold around the time of our previous revaluation as well.

2. The real estate market now is much more difficult to analyze than prior to our 2006 revaluation, there are far fewer sales occurring and trends are not nearly as clearly established.

3. For the purposes of the sale property examples, this year’s budget is used, with a projected general fund mill rate, so no change in budget is projected, this may or may not prove accurate.

VI. Questions and Answers

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