PVSC Certification Document · International Property Tax Institute Institute international de la...

International Property Tax Institute ● Institute international de la fiscalité immobilière

Suite 2308, 4950 Yonge Street ● Toronto, Ontario, Canada M2N 6K1 Tel: 416-228-8874 Fax: 416-644-5152 email: [email protected] www.ipti.org

Report for

PROPERTY VALUATION SERVICES CORPORATION

IPTI CERTIFICATION REPORT

December 7, 2015

International Property Tax Institute ● Institute international de la fiscalité immobilière

Suite 2308, 4950 Yonge Street ● Toronto, Ontario, Canada M2N 6K1 Tel: 416-228-8874 Fax: 416-644-5152 email: [email protected] www.ipti.org

December 7, 2015

Kathy Gillis Chief Executive Officer Park Place II, Building A, Suite 200 238 Brownlow Avenue Dartmouth, NS B3B 2B4 Dear Ms. Gillis, Re: PVSC Audit Review – IPTI Certification

The International Property Tax Institute (IPTI) has completed its certification review of the Property Valuation Services Corporation (PVSC), Nova Scotia, in terms of its appraisal outcomes and business processes and procedures.

IPTI examined the following areas of PVSC’s core valuation business:

1. Statistical Review of Assessment Outcomes 2. Policy and Procedure Review 3. Statutory and Communication Review 4. Special/Unique Properties Review 5. Quality Framework/Business Improvement Review

As the worlds’ leading organization on property tax policy and practice, IPTI is well qualified to evaluate and make meaningful conclusions regarding assessment jurisdictions worldwide.

IPTI used the International Association of Assessing Officers (IAAO) standards in making these judgements along with its considerable experience in the field of mass appraisal.

It is IPTI’s professional opinion, based on its expertise and objective evaluation in terms of best practices for assessment jurisdictions that PVSC has achieved what IPTI considers to be a very good level of certification, achieving a total score of 89.5% out of a possible 100%.

It is IPTI’s professional opinion that PVSC has been compliant in terms of property valuation as mandated by s. 42(1) of the Nova Scotia Assessment Act, RS, c23. s1 (as amended) and with IAAO standards for mass appraisal.

Based on its review, IPTI has confidence in PVSC’s ability to produce and provide a quality assessment roll for municipal units throughout Nova Scotia and for individual property owners in the Province.

Ruel J. Williamson

Ruel Williamson Chief Operating Officer International Property Tax Institute

P V S C C e r t i f i c a t i o n P a g e | 2

International Property Tax Institute

Table of Contents

Introduction ............................................................................................................................... 4

Executive Summary.................................................................................................................... 5

SWOT Analysis ......................................................................................................................... 11

Section 1 – Statistical Review and Assessment Outcomes ....................................................... 12 Statistical Review & Assessment Outcome SWOT Analysis .......................................................................................13 Ratio Analysis Design ..................................................................................................................................................14 Sales Sample Representativeness...............................................................................................................................16 Sales Dataset Creation and Refinement .....................................................................................................................17 Determine Appropriate Stratification ........................................................................................................................19 Determine Time Trends to Bring Sales to Assessment Date ......................................................................................21 Outlier Identification and Remediation ......................................................................................................................22 Summary Measures for Assessed Value, Sale Price, and Ratio .................................................................................24 Appraisal Level ............................................................................................................................................................25 Appraisal Uniformity ...................................................................................................................................................28 Detecting Selective Reappraisal .................................................................................................................................31 Nature of Changes from Formal Appeals ...................................................................................................................34

Section 2 – Policy & Procedures Review .................................................................................. 36 Policy and Procedures SWOT Analysis........................................................................................................................37 Parcel Updates ............................................................................................................................................................38 Valuation Process Timeline .........................................................................................................................................39 Cost Method ................................................................................................................................................................40 Income Method ...........................................................................................................................................................41 Sales Comparison Method ..........................................................................................................................................43 Market Modeling ........................................................................................................................................................44 Valuation Methodology Choices .................................................................................................................................47 Land Valuation ............................................................................................................................................................49 Model Stratification ....................................................................................................................................................50 Accounting for Location ..............................................................................................................................................51 Application of Models to All Properties .....................................................................................................................53 Valuation Reports .......................................................................................................................................................54 Selective Reappraisal ..................................................................................................................................................56 Value Defense .............................................................................................................................................................58 Sales Validation ...........................................................................................................................................................59 Data Collection Practices ............................................................................................................................................61 Data Query Checks ......................................................................................................................................................63 Data Entry Quality Control ..........................................................................................................................................65 Plan for Data Quality Review ......................................................................................................................................66 Legal Framework .........................................................................................................................................................67 Human Resources .......................................................................................................................................................69 Appeals Process ..........................................................................................................................................................71 Property Tax and CAMA System .................................................................................................................................72

Section 3 – Statutory and Communication Review .................................................................. 74 Statutory and Communications SWOT Analysis .........................................................................................................75 Annual Report .............................................................................................................................................................76 Public Relations ...........................................................................................................................................................76



Public Speaking Engagements ....................................................................................................................................79 Transparency to Data ..................................................................................................................................................79 Spatial Representation of Data ...................................................................................................................................81 Special Purpose Data ..................................................................................................................................................82

Section 4 – Special & Unique Property ..................................................................................... 84 Special & Unique Properties SWOT Analysis ..............................................................................................................85 Tracking Special and Unique Properties .....................................................................................................................86 Guides for Properties ..................................................................................................................................................87 Valuation Professionals/Contracting ..........................................................................................................................88 Roll Handling Procedures ............................................................................................................................................89 Quality Control ............................................................................................................................................................90

Section 5 – Quality Framework/Business Improvement ........................................................... 91 Quality Framework/Business Improvement SWOT Analysis .....................................................................................92 Quality Improvement Plan ..........................................................................................................................................93 Plan Assessment..........................................................................................................................................................94 Plan Approach .............................................................................................................................................................95 Quality Membership ...................................................................................................................................................96 Input and Feedback .....................................................................................................................................................97 IPTI Certification Documentation ...............................................................................................................................98

Addendum A - PVSC Management Responses ...................................................................... 104

Addendum B – Curriculum Vitae - Ruel Williamson, MBA ...................................................... 106



Introduction

BACKGROUND

In an effort to produce and maintain a world class, quality assessment product, PVSC entered into a formal agreement with the International Property Tax institute (IPTI) to attain an objective certification of PVSC’s core business.

IPTI is an independent, not-for-profit organization that has achieved international recognition for its expertise in areas of property taxation and assessment practice. IPTI assists governments, organizations, corporations, taxpayers and professionals alike to better understand the complex issue of financing local governments, and in particular, the essential role property taxation has in this process. IPTI’s mission is to provide impartial, objective expert advice in the area of property tax systems and promote the concept that these systems should be fair and equitable and meet the needs of all stakeholders, i.e. governments, taxpayers, practitioners and academics.

The merits of attaining IPTI Certification are:

Increased public trust in the assessment process

Compliance with designated standards and statutes

Improved business practices

International recognition in terms of quality and continued oversight

A road map for continual improvement of processes, practices and procedures

Greater professional development for staff

IPTI certification will ensure a path of continuous improvement for PVSC in terms of its core business. It helps to evaluate and measure PVSC’s continued compliance with legislated requirements by reviewing and updating internal and external audit practices currently in place. The certification project will also aid PVSC in several operational areas. It provides PVSC with a set of best practices by which to measure the quality of its assessment administration. It also provides a framework to fairly and consistently use as a measurement tool for the Corporation. A certification score of 80 or more points out of a possible 100 is regarded as “good”. Jurisdictions which score between 90 and 95 points are regarded as very good. Jurisdictions which score above 95 points are considered excellent

THE PROCESS

To achieve certification status, IPTI examined PVSC across five main areas. These were:

1. Statistical Review and Assessment Outcomes

2. Policy and Procedure review

3. Statutory and Communication review

4. Special/Unique Property Review

5. Quality Framework/Business Improvement

A major step in the process of certification was a “gap analysis” performed by IPTI with regard to PVSC’s principles, processes, and procedures in all of the above five areas.

The initial review of existing documentation provided insight and direction as to the areas of the Corporation which required a greater level of detailed policies, procedures, standards and guides. In all, over one hundred thirty separate documents were provided to IPTI for review. These documents covered all of the current processes, procedures, standards and other internal correspondence deemed relevant to value production, review and appeal.



Executive Summary

1. The International Property Tax Institute (IPTI) was commissioned by the Property Valuation Services Corporation (PVSC) of Nova Scotia to undertake a certification audit of the PVSC’s operations.

2. The Nova Scotia Assessment Act and associated regulations govern the implementation of the property tax system throughout the Province. Section 42(1) of the Assessment Act, RS, c.23, s.1, as amended, states the following: “All property shall be assessed at its market value, such value being the amount which in the opinion of the assessor would be paid if it were sold on the a date prescribed by the Director in the open market by a willing seller to a willing buyer, but in forming his opinion the assessor shall have regard to the assessment of other properties in the municipal ity so as to ensure that, subject to s.45A, taxation falls in a uniform manner upon all residential and resource property and in a uniform manner upon all commercial property in the municipality.”

3. PVSC provided access to over one hundred thirty documents which were used in conducting the certification process. These documents were helpful in providing an overall understanding of the organization, along with the depth and breadth of operational details.

4. The methodology for the certification process was based on reviewing PVSC processes and outcomes

against a set of best practices. This was done by reviewing fifty (50) individual processes throughout the organization across five (5) major operational areas:

a. Statistical Review & Assessment Outcomes b. Policy and Procedures c. Statutory and Communication d. Special & Unique Properties e. Quality Framework/Business Improvement

5. In evaluating PVSC IPTI attributed the following weighting system:

a. Statistical Review & Assessment Outcomes –This is deemed the most important measure of performance within the mass appraisal profession as it independently measures the overall performance of the key organization deliverable, i.e. property values. 50% of the total score is thereby attributed to this section.

b. Policy and Procedures – This is deemed critical as an organizations policies and procedures guide how it conducts its daily business and ensures uniformity across the Province. 30% of the total score is thereby attributed to this section.

c. Statutory and Communication – This is deemed important as it outlines if the organization is communicating appropriately to both internal and external stakeholders. 9% of the total score is thereby attributed to this section.

d. Special & Unique Properties – This is deemed important as special and unique properties are often high-profile and can have a significant tax impact on an individual municipality. Ensuring that these properties are handled correctly is an important component to the overall assessment process. 6% of the total score is thereby attributed to this section.

e. Quality Framework/Business Improvement – This section is deemed important as it measures if the organization is continually looking at not only the quality of its work but also its review of business processes and improvement. An organization that does not constantly seek to improve will typically regress over time. 5% of the total score is thereby attributed to this section.



6. PVSC scored 89.5 out of 100 total points in the certification process. This score implies that the organization is operating at a high level (good) when compared against industry best practices.

The chart below shows how scoring from the five major operational areas are broken down:

The percentage of total score that is covered by each operational area is indicated below:

Category Potential Score Actual Score

Statistical Review & Assessment Outcomes

50% 45

Policies & Procedures 30% 26

Statutory & Communications 9% 8

Special & Unique Properties 6% 5.5

Quality Framework / Business Improvement

5% 5

Total Score: 100% 89.5

7. In IPTI’s opinion, we determined that PVSC is in compliance, in all material aspects, with the Statistical Review and Assessment Outcomes section of the certification process. 11 review criteria (see below) were evaluated with a statistical review of values broken down into two main statistical categories. These two categories are Appraisal Level and Appraisal Uniformity. The following are key findings:

a. PVSC materially complies with the IAAO standard on ratio studies. b. PVSC publishes annually a roll quality report outlining the key statistical review(s) undertaken

by the Corporation. c. PVSC can enhance its roll quality report by adding time-trending to its sales analysis. d. PVSC can enhance its roll quality report by testing applicable statistics with a confidence

interval.



Review Criteria and Scores

Item Score

Ratio Analysis Design 5 out of 5

Sales Sample Representativeness 2 out of 2

Sales dataset creation and refinement

2 out of 2

Appropriate Stratification 2 out of 2

Time Trends 0 out of 2

Outlier Identification and Remediation 2 out of 2

Summary Measure for Assessed Value/Sales 5 out of 5

Appraisal Level 10 out of 11

Appraisal Uniformity 10 out of 11

Detecting Selective Reappraisal 4 out of 5

Nature of Changes from Formal Appeals 3 out of 3

TOTAL SCORE 45 of 50

IPTI has rated PVSC with a score of 45 out of 50 total points. This corresponds to a passing score in this category and shows a high degree of competence with respect to value production.

8. In IPTI’s opinion, we determined that PVSC is in compliance, in all material aspects, with the Policy and Procedure Review section of the certification process. 23 review criteria (see below) were evaluated in determining the overall compliance score. The policy and procedure statements currently in effect within PVSC were compared against industry standards and international best practices. The following are our key findings:

a. PVSC provided extensive documentation regarding internal policy and procedure. b. PVSC follows recommended mass appraisal practices when valuing property. c. PVSC conducts is valuation business in accordance with the rules outlined in the Nova Scotia

Assessment Act. d. PVSC has shown it continually reviews and improves upon its policy and procedural

documentation.




Item Score

Parcel Updates

1 out of 1

Valuation Process Timeline 1 out of 1

Cost Method 2 out of 2

Income Method 2 out of 2

Sales Comparison 0 out of 2

Market Modeling 1.5 out of 2

Valuation Methodology Choices 1 out of 2

Land Valuation 2 out of 2

Model Stratification .5 out of .5

Accounting for Location 1 out of 1

Application of Models to all Property 1 out of 1

Valuation Reports 1 out of 1

Selective Reappraisal .5 out of 1

Value Defense 2 out of 2

Sales Validation 1 out of 1

Data Collection Practices 2 out of 2

Data Query Checks 1 out of 1

Data Entry Quality Control 1 out of 1

Plan for Data Quality Review .5 out of .5

Legal Framework 1 out of 1

Human Resources 1 out of 1

Appeals Process 1 out of 1

Property Tax/CAMA System 1 out of 1

TOTAL SCORE 26 out of 30

IPTI has rated PVSC with a score of 26 out of 30 total points. This corresponds to a passing score in this category and shows a high degree of competence with respect to its policies and procedures.

9. In IPTI’s opinion, we determined that PVSC is in compliance, in all material aspects, with the Statutory and Communication Review section of the certification process. 6 review criteria (see below) were evaluated in determining the overall compliance score. The Statutory and Communication Review considered the Corporation’s public relations plan and analyzed it against international best practices. The following are key findings:

a. PVSC publishes an annual report which is transparent to the stakeholders regarding its operations, plans and policy issues.

b. PVSC creates, maintains and follows an annual public relations program. c. PVSC provides transparency of its data through many channels including the My Property

Report web page.




Item Score

Annual Report 3 out of 3

Public Relations Program 1 out of 1

Public Speaking Engagements 1 out of 1

Transparency to Data 2 out of 2

Spatial Representation of Data .5 out of 1

Special Purpose Data .5 out of 1


IPTI has rated PVSC with a score of 8 out of 9 total points. This corresponds to a passing score in this category and shows a high degree of competence with respect to its Statutory and Communication Review section.

10. In IPTI’s opinion, we determined that PVSC is in compliance, in all material aspects, with the Special/Unique Property Review section of the certification process. 5 review criteria (see below) were evaluated in determining the overall compliance score of this section. The following are key findings:

a. The CAMA system in use is sufficiently robust to manage Special/Unique property data. b. PVSC appraisal staff are trained, certified and can accept all assignments within the Province

related to Special/Unique Property valuation.


Item Score

Tracking Special & Unique Property 1 out of 1

Guides for Properties .5 out of 1

Valuation Professionals/Contracting 2 out of 2

Roll Handling Procedures 1 out of 1

Quality Control 1 out of 1

TOTAL SCORE 5.5 out of 6

IPTI has rated PVSC with a score of 5.5 out of 6 total points. This corresponds to a passing score in this category and shows a high degree of competence with respect to its Special/Unique Property Review section.

11. In IPTI’s opinion, we determined that PVSC is in compliance, in all material aspects, with the Quality Framework/Business Improvement section of the certification process. 5 review criteria (see below) were evaluated in determining the overall compliance score of this section. The following are key findings:

a. PVSC is an active member in several organizations who have quality as a primary goal. b. PVSC regularly solicits and incorporates feedback from all of its key stakeholders.




Item Score

Reassessment Plan 2 out of 2

Plan Assessment .5 out of .5

Plan Approach .5 out of .5

Quality Membership 1 out of 1

Input & Feedback 1 out of 1


IPTI has rated PVSC with a score of 5 out of 5 total points. This corresponds to a passing score in this category and shows a high degree of competence with respect to its Quality Framework/Business Improvement

12. IPTI’s certification review further found: a. PVSC obtained all of the points on forty (40) of the fifty (50) certification processes considered. b. All five major operational areas obtained qualifying to excellent scores.

13. IPTI makes a number of important recommendations for improvement. These include:

a. PVSC should implement time-trending as part of the organization’s annual statistical analysis. b. PVSC should implement testing statistical values using a confidence interval. c. PVSC should look at implementing the sales comparison method of valuation for residential

property in localities where there are adequate sales samples. d. PVSC should incorporate more graphical representations of data from its operations to depict

year over year operational changes. e. PVSC should improve valuation guidelines related to special and unique properties. f. PVSC should adopt and incorporate a formalized quality feedback mechanism into its

organization.

14. IPTI will be pleased to discuss the outcome of our analysis, or any other aspect of this report, upon request.



SWOT Analysis SWOT stands for strengths, weaknesses, opportunities and threats. A SWOT analysis identifies strengths and weaknesses within an organization, and outside opportunities and threats. The most important parts of a SWOT analysis specify the actions that correspond to the elements identified. By using the results of the analysis to improve the situation of the organization, the likelihood of developments that negatively affect the business can be reduced while improving performance. Strengths are internal characteristics of an organization such as skills, resources, capabilities and brands. Weaknesses are internal characteristics such as sources of customer or employee dissatisfaction. Opportunities are external market possibilities, technological improvements or competitor weaknesses. Threats come from external factors such as new competitors, dissatisfied customers or changing market needs. The first step was to list all possible elements as a team, a brain-storming process. As part of the learning process of certification, IPTI outlined five key areas within PVSC which were determined to be of importance within PVSC to examine. The purpose of the SWOT analysis is to suggest actions that are appropriate for the organization to improve its situation. It should be noted that only a limited number of actions are possible at any one time, given typical limitations on resources and personnel. Normally, it is not necessary to keep more than the top two or three elements of each type to specify several of the most important courses of action the organization might take. The most important part of a SWOT analysis is to improve the viability of the organization. Important threats coupled with weaknesses typically put at risk the organization's future, and the SWOT analysis identifies these risks. The analysis pairs external threats with internal weaknesses to highlight the most serious issues faced by the organization. The organization must now decide whether it is most appropriate to eliminate the internal weakness, or reduce any external threats. It is possible to eliminate internal weaknesses by assigning organization resources to fix the problems. External threats can be reduced by abandoning the threatened area of business or meeting the threat after strengthening the business. The SWOT analysis for each of the five major areas that were analyzed for this project occurs at the beginning of each area section throughout this report.



Section 1 – Statistical Review and Assessment Outcomes The statistical review and assessment outcomes process is, in reality, the most important of the five sections of this certification review. Assessment outcomes are simply the statistical review of the end product of PVSC (property valuations used for property tax purposes). These results are subject to comparison against international best practices and benchmarks.

Item Score

Ratio Analysis Design 5 out of 5

Sales Sample Representativeness 2 out of 2

Sales dataset creation and refinement

2 out of 2

Appropriate Stratification 2 out of 2

Time Trends 0 out of 2

Outlier Identification and Remediation 2 out of 2

Summary Measure for Assessed Value/Sales 5 out of 5

Appraisal Level 10 out of 11

Appraisal Uniformity 10 out of 11

Detecting Selective Reappraisal 4 out of 5

Nature of Changes from Formal Appeals 3 out of 3

TOTAL SCORE 45 of 50



Statistical Review & Assessment Outcome SWOT Analysis

The statistical review and assessment outcomes area tells us how well the appraisal results compare statistically to the International Association of Assessing Officers (IAAO) ratio study standards. PVSC annually produces a comprehensive Roll Quality Report that calculates the key statistics needed to determine the organization’s relative equity and uniformity against the stated valuation standard. IPTI’s review has pointed out two weaknesses that are part of PVSC’s 2016 organizational goals to rectify. Overall, the extensive nature of the annual roll quality report allows the organization to stay informed of progress in the area of assessment results. By addressing the weaknesses, the corporation will enhance an already strong area of the business.

STRENGTHS

•Dataset Creation

•Stratification

•Outlier Identification

•Value Change Analysis

WEAKNESSES

•Time Trending

•Testing for Representativeness

OPPORTUNITIES

•Stratification

•Nature of Changes From Appeals

THREATS



Ratio Analysis Design

Justification The goal of the ratio study analysis within certification is to completely analyze the results of a valuation and use that analysis to draw conclusions. The ratio analysis is worthless, however, if it isn’t well designed and if important goals in the ratio analysis are not clearly defined. It is important therefore to define a set of necessary criteria for the design and general execution of a ratio analysis plan. Dependencies

IAAO Standard on Ratio Studies Timetable This objective should be met as a part of the completion of the ratio analysis.

Review Criteria Points

1. The purpose of the ratio analysis must be clearly defined from the outset. Is the goal of the ratio analysis merely to provide oversight, or is there the possibility that equalization or a reassessment could be ordered? The purpose must be determined from the beginning.

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2. As a part of the revaluation process, a ratio analysis could be conducted for four possible reasons:

a. as a starting baseline for appraisal performance; b. to analyze the preliminary values to correct problems; c. to judge the quality of the values used in the assessment notices to

ratepayers; and d. to judge the quality of the final values after either informal or formal

appeals have concluded.

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3. Ratio analyses may also be completed as needed throughout the year to solve a specific problem or answer a specific question. PVSC reviews ratio study statistics as a regular part of the annual roll quality report along with other quality items.

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4. There should be a division to independently conduct ratio analyses every appraisal cycle with PVSC Executives given an in-depth explanation of the results.

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5. Is the ratio analysis sample comprised of sales only or does it also include independent appraisals to make up for lack of sales? This must be known at the outset as it affects the design of the ratio analysis. PVSC uses sales only when it conducts is ratio study.

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Scoring Summary 5 of 5



Review of Ratio Analysis Design Document(s)

PVSC annually publishes its Roll Quality Report. This report outlines key statistical measurements for appraisal level, uniformity and equity. The current Roll Quality Report contains all of the minimum level statistical analysis. Upgrades to the number and type of statistics have been initiated for the 2016 roll quality report. These additions go well beyond the minimum number and type of statistical calculations and review of the roll. In addition, PVSC provides a statistical breakdown by municipality where applicable sample sizes exist. The upgrades to the 2016 Roll Quality Report will provide additional insight into individual municipality statistics.

Queries and Reports

Ratio Analysis Report/Roll Quality Report

Metric

Confirm that the ratio study conducted by PVSC has a clear indication of what is being measured by the study and what the guidelines are.

PVSC Management Response



Sales Sample Representativeness

Justification Sales samples are an observational means of collecting survey results. The nature and quantity of the group of properties that sell in a given time period is therefore outside of the control of the individual performing the analysis. This means that, because of various societal, geographical, or economic factors, the sales sample may end up being unrepresentative of the population of properties. This is potentially dangerous because the conclusions from the ratio analysis will be applied to all the properties as a whole. It is therefore important to test for sales sample representativeness so that this danger can be avoided. Dependencies

IAAO Standard on Ratio Studies

IAAO Standard on Automated Valuation Models (AVMs) Timetable This objective should be met as a part of the completion of the ratio analysis.


1. In each major stratum, sales samples should be representative of the population. The jurisdiction should run a statistical test for sample representativeness to test for this.

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2. If a sample fails the test for representativeness then, as a remedial measure, simple random samples should be used by valuation range strata to insure groups are represented equally. Alternatively, the time period used for the sales in the ratio study could be lengthened in the hope that this may make the sample more representative; but this step, even if it is possible, may not work.

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3. The test for sample representativeness must be detailed in the Ratio Analysis Report.

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Review of Sales Sample Representativeness Document(s)

PVSC annually publishes the Roll Quality Report. This report outlines key statistical measurements for appraisal level, uniformity and equity. The ability to measure for sample representativeness is being added to the PVSC Roll Quality report for 2016 and beyond.

Queries and Reports

Ratio Analysis Report/Roll Quality Report Metric

Each ratio study should run a statistical test for sample representativeness as outlined in the IAAO Standard on Ratio Studies.




Sales Dataset Creation and Refinement

Justification The basis of every ratio analysis is a proper sales sample dataset. Without a properly constructed sales sample dataset, the sales ratio analysis could be incorrect. Since the results of the ratio analysis are built upon the foundation of a quality sales data, it is imperative to refine the sales dataset to eliminate observations that should be excluded. Dependencies



1. The sales sample dataset must contain, at minimum, the following fields: Property ID, Property Type, Sale Price, Sale Date, Sale Validity Code, Assessed Value. The Sales Query can then extract these fields.

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2. The sales sample dataset must include only valid or qualified sales.

3. The sale(s) sample dataset must be reduced row-wise by a set of common-sense data edits such as: if any field in a row in missing, if the sale price is below 10,000, and if the assessed value is below 10,000. An effort must be made to rectify these data issues before a row is deleted.

4. Sales should be excluded from the sales sample dataset that have been altered significantly between the sale date and the assessment date. This applies also to sales that occur after the assessment date that may be used in a selective reappraisal detection analysis.

5. Sales in a stratum with a much higher sale price than every other sale in the stratum should be excluded from the sales sample dataset because they could skew the ratio analysis.

6. It is not valid to eliminate a sale from the ratio analysis simply because it does not meet expectations or match the assessed value.

7. The Ratio Analysis Report/Roll Quality Report should include a summary of all properties eliminated from the sales sample dataset and the reason they were eliminated. This data is available from the CAMA database as needed.




Review of Sales Dataset Creation and Refinement Document(s)

In order for PVSC to produce its annual Roll and Roll Quality Report it must select all valid/qualified sales from the appropriate time period. This list must then be stratified by property class and further stratified by municipality.

PVSC accomplishes this process through the use of a number of Cognos reports. Cognos generates the initial data downloads which are then quality checked to ensure that all parameters used to generate the reports are accurate. In addition, PVSC includes all the required sales data fields and analysis either in the Roll Quality Report or other applicable reports/downloads.

Queries and Reports

Sales Query


Metric

Confirm that the sales dataset includes all qualified/valid sales.

Confirm that all sales removed from the study have been marked with a reason code.




Determine Appropriate Stratification

Justification A properly conducted ratio analysis analyzes all sales together and significant sales strata broken out separately. These strata could be determined by property type, geographical region, or property data field range. This allows significant strata, which are often valued based on different methods and by different individual appraisers, to be reviewed individually. A problem could exist with the ratios in one stratum but not in another. The failure to appropriately employ stratification in a ratio analysis could lead to such a problem remaining undiscovered.

Dependencies



1. Strata should be defined by major property type category, geographic region, property data field range, or a combination of some or all of those factors.

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2. Strata should be determined by taking into account the goal of the ratio analysis.

3. Strata should be determined by taking into account the nature of the factor or factors used to define the strata. Strata with too few sales should be either grouped together into a single stratum or, if that isn’t appropriate, not included in the analysis at all. Dissimilar factor levels should not be grouped into the same strata, even if the goal is to arrive at more sales in a combined stratum.

4. Strata should be determined by taking into account the guideline of keeping at least twenty sales in a stratum, preferably much more. Strata must not be over-stratified.

5. The goal should be to pre-define strata appropriately and then not to change them. This will work if strata are determined intelligently, both broadly enough to always have enough sales and narrowly enough to yield important information.

6. The results of strata identification should be added to the Ratio Analysis Report, including the strata definitions and the number of sales in each stratum.




Review of Appropriate Stratification Document(s)

PVSC delineates its ratio study by Property Class and then further by Region and/or Municipality. For property classes across the Province there is typically a valid sample size. When stratifying by Municipality, the number of valid areas falls dramatically. PVSC meets the requirements of stratification, though IPTI advise the corporation to continually look for new ways to review data and seek improvement. Recommendations in this section include time-trending of sales in order to enlarge the sample size of municipalities and property class sales that do not include valid sample sizes. Currently PVSC includes ratio statistics for each stratum of five samples or more. IPTI recommends that PVSC not publish ratio statistics in a stratum that do not contain at a minimum 11 sales and to understand the relationship of sample size and confidence intervals.

Queries and Reports

Ratio Analysis Report/Roll Quality Report Metric

Ratio study must be delineated by the following criteria: o Property Class o Region

For each criterion where data is not within the published ratio study guidelines then further stratification by age, size or sub-class is recommended.




Determine Time Trends to Bring Sales to Assessment Date

Justification An analysis of ratios can be negatively affected by not accounting for time trends. Assessed values are calculated as of a certain date, but sale prices are collected for the sales dataset from a period of time. Over this period of time, the market undergoes changes that affect the sale prices. Time trends quantify these changes in the market, and they allow sale prices to be adjusted to the assessment date. Ignoring time trends means that assessment to sale price ratios would have distorted measures of assessment uniformity and a measure of assessment level that does not match the market at the assessment date. Dependencies

IAAO Standard on Ratio Studies.

Timetable This objective should be met as a part of the completion of the ratio analysis.


1. Time trends should be determined by stratum, when appropriate. The analyst must use judgment in determining at what level to calculate time trends for the adjustment of the sale prices to the assessment date.

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2. Time adjustments should be made after other sale price adjustments but before statistical analysis.

3. Atypical sales can be removed prior to the time trend analysis, but then should be put back in after the time adjustments are determined for the formal outlier testing. Atypical sales can be determined in the same way as outliers (see the “Outlier Identification and Remediation” Section for more information).

4. Using a statistical model that regresses the sales ratio on time is one of the preferred methods used to arrive at the adjustment to bring sale prices even with the market on the assessment date. Care must be taken in this method to avoid model over-fitting. Other methods for accomplishing the same goal are an analysis of re-sales, an analysis of paired sales, or by comparing per-unit values over time in homogeneous strata.

5. If a model is implemented to determine the time trend, then it should use the sale price to assessment ratio as the dependent variable in order to gain stability and to make the adjustment of the ratios easier. The model should use various time variables such as month-of-sale, date-of-sale, quarter-of-sale, and their transformations as possible independent variables. The model used must adequately capture the time trend, as measured by goodness-of-fit statistics and diagnostic residual plots.

6. However, the time trend is determined, it must be used to determine a set of adjustments for the sale prices to bring them in line with the market on the assessment date. To accomplish this, PVSC should set the assessment date as the baseline and then determine a multiplier for the other points in time to bring them in line with the baseline.




Review of Time Trends to Bring Sales to Assessment Date Document(s)

PVSC has recently re-designed the Roll Quality Report to incorporate a time-trend to all valid sales used within the report starting in 2016. While trending sales has not been used in the past, the market movement has been minimal over the past several years. This change in the statistics used within the Roll Quality Report will allow for better analysis while following industry best practices. This section of the analysis will resolve itself after the 2016 Roll Quality Report implements the time trending analysis.

Queries and Reports


Metric

For each property class or stratification, the ratio study should have a time-trend applied to the valid sales used in the report.


Outlier Identification and Remediation

Justification Outliers are observations far off from what is typical. In a ratio distribution, outliers are the ratios that are at the extreme tails of the distribution. Outliers can be due to chance but, more often, they are due to a data erro r or an unknown issue. Outliers must be dealt with in an appropriate fashion lest they conceal the true results of a ratio analysis. If outliers are not accounted for, then they could skew the overall results. Dependencies



1. The outlier analysis can be conducted at the stratum-level, if appropriate. 2 of 2

2. The “3*IQR” trimming method should be used to detect extreme outliers. The “3*IQR” method excludes all ratios that fall outside of the window [Q1 - 3*IQR, Q3 + 3*IQR], where Q1 is the first quartile of the ratios, Q3 is the third quartile of the ratios, and IQR is the Interquartile Range calculated by Q3 - Q1. This outlier trimming method is described in “Appendix B: Outlier Trimming Guidelines” of the IAAO Standard on Ratio Studies. Additionally, due to the fact that ratio distributions tend to be approximately lognormal, the natural logarithm of the ratios should be used rather than the ratios themselves



Review of Outlier Identification and Remediation Document(s)

PVSC uses 3 times the inter-quartile range (3*IQR) as the standard way to identify outliers in the Roll Quality Report. This is the accepted IAAO standard and is employed correctly.

Queries and Reports

Roll Quality Report

Metric

Outliers should be identified and removed using a standard statistical technique like “3 IQR”. o These outliers should be included as part of the ratio study/roll quality report.


3. The sales that are identified as outliers should be removed row-wise from the sales dataset unless their outlier status can be corrected by fixing a data mistake

4. The “3*IQR” trimming process should only be conducted once, not multiple

times.

5. The outlier analysis should be added to the Ratio Analysis Report, including the outlier trimming bounds and an identification of which sales were deleted




Summary Measures for Assessed Value, Sale Price, and Ratio

Justification Summary measures are a good way to view the distribution of a set of data. Summary measures can be viewed in tabular format as summary statistics and in graphical format as summary plots.

Considering the assessment to sale price ratio in particular, summary statistics allow the analyst to see the minimum ratio and the maximum ratio, which give the range of the ratio distribution, and the first and third quartiles, which can be used to extract the Interquartile Range. Both the Range and the Interquartile Range are common measures of distributional spread. The median and the mean can be quickly compared to get an idea of not just the measure of center of the ratio distribution, but an idea of the amount of scenes present of that distribution. Summary plots are useful to view the overall shape of the distribution.

Summary measures also provide a window into data problems that may exist. If a mistake was made in either the sales sample refinements phase or the outlier elimination phase, then it can often be discovered by a quick analysis of the summary statistics and the summary plots.

Dependencies



1. The summary measures must be viewed in both a tabular and graphical format. 5 of 5

2. The summary measures must be viewed for the assessed value, the sale price, and the assessment to sale price ratio.

3. The summary measures must be produced for each stratum being considered in

the ratio analysis, as well as overall for the entire sales sample dataset.

4. In the tabular format, the summary measures should include the minimum, the median, the mean, the maximum, and some percentiles of the given distribution, such as the first quartile and the third quartile.

5. In the graphical format, the summary plots should be ones that show the shape and center of the distribution, such as a histogram or a box-plot.

6. Conclusions should be drawn from the summary measures about the center, spread, and scenes of each distribution.

7. Conclusions should be drawn from the summary measures about the general success of the sales sample refinements and the outlier eliminations.




Review of Measures for Assessed Value, Sales Price & Ratio Document(s)

PVSC incorporates all of the base summary measures into its Roll Quality Report. Included in these are Minimum and Maximum Ratio along with quartile ranges. Summary plots of statistics are being added to the report for 2016.

Queries and Reports

Roll Quality Report

Metric

Summary measures should be produced for both overall numbers and the stratification of data within the study.

Summary measures should include: o Minimum ratio o Maximum ratio o First and third quartiles used to extract the Interquartile range

Summary plots are useful to view the overall shape of the distribution.


Appraisal Level

Justification A measure of appraisal level is a measure of the center of the distribution of the assessment to sale price ratio. The appraisal level indicates the percent of market value that the properties are being assessed at on the average. An appraisal level under 100% indicates that properties are being under assessed, and an appraisal level over 100% indicates that properties are being over-assessed. It is important that appraisal level be measured so that the analyst can determine whether the properties in the overall sales sample dataset and in each stratum are being assessed appropriately.

A measure of appraisal level, like any statistic, encompasses both a point estimate and a confidence interval, and both should be included when that measure of appraisal level is calculated. The point estimate gives the best indication of the measure of appraisal level and the confidence interval gives a measure of the reliability of the point estimate. Both should be included to get a full picture of the appraisal level.

The analysis of appraisal level is important because an equalization or reappraisal may need to be ordered if the appraisal level is unacceptable.

Dependencies





1. The point estimate of the median assessment to sale price ratio must be calculated for the overall jurisdiction and each stratum.

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2. A two-sided confidence interval for the median assessment to sale price ratio must be calculated using a 95% confidence level. The confidence interval for the median can be calculated by the method of bootstrapping or one of many acceptable formulas. For small samples, the IAAO recommends using the formula in Appendix C of the IAAO Standard on Ratio Studies. For larger samples, there is multiple acceptable formulae available, including the one on Pages 365-366 of the IAAO book “Fundamentals of Mass Appraisal.”

3. The median assessment to sale price ratio should be as near to 100% as possible.

4. The median for each stratum, as well as the overall jurisdiction, should be tested to see if it is within the range of 90% to 110%. If the median can be shown to be outside the range of 90% and 110% by a statistically significant margin, then that group of properties is said to be missing the standard and a direct equalization or reappraisal should be ordered for that group of properties.

5. If the point estimate for the median is inside the 90% to 110% range, then it is immediately said to be acceptable and it is not necessary to run the statistical test.

6. If the point estimate for the median is outside the 90% to 110% range however, then a statistical test must be conducted to see if it is outside of the range by a statistically significant amount. The statistical test can take the form of a 95% one-sided confidence interval for the median.

7. If the median point estimate is less than 90%, then a 95% one-sided upper confidence interval is used. If the median point estimate is greater than 110%, then a 95% one-sided lower confidence interval is used. In both cases, if the confidence interval overlaps the range of 90% to 110%, then the median is said to be acceptable. In both cases, however, if the confidence interval does not overlap the range of 90% to 110%, then the median is said to not be acceptable and either a direct equalization or a reappraisal is ordered for that group of properties. For ease of understanding and calculation, the needed bounds of an upper and lower 95% one-sided confidence interval are equivalent to the upper and lower bound of a 90% two-sided confidence interval.

8. If it is the case that there are a small number of sales or there is high variability in a given stratum, then it is likely the case that the confidence interval is so wide that meaningful conclusions to the statistical tests are difficult to make if the point estimate falls outside of the acceptable range. In this case, it is important to first re-examine the formulation of the stratum. If the stratum was defined too narrowly, then redefining the strata may be able to increase the number of sales enough to narrow the confidence interval considerably. If the stratum was defined justifiably, then there are two remedial measures that can be taken.

9. The first remedial measure is that the level of confidence can be reduced by 5% each year for five years from 95% to 70%, if each year the point estimate continues to fall outside of the acceptable range but the confidence interval overlaps the acceptable range. This effectively acts to progressively tighten the interval and make it easier for the statistical test to detect a statistically significant difference.



Review of Appraisal Level Document(s)

PVSC incorporates all of the appraisal level statistics into its Roll Quality Report. Included in these statistics are the Mean, Median and Weighted Mean ratios for each property class. Stratification of these statistics is further refined by Municipality.

Queries and Reports

Roll Quality Report

Metric

Mean, Median and Weighted Median ratio for each property class and stratification should fall within the published ratio study guidelines (IAAO Standards are published in the Appendix).


10. The second remedial measure is that past ratio analysis cycles can be reviewed to see if the point estimate for the median was outside of the acceptable range in the same direction for five years in a row. If the point estimate was outside the acceptable range in the same direction for the five previous years in a row, then it can be concluded that the median misses the standard

11. The analysis of appraisal level should be added to the Ratio Analysis Report.




Appraisal Uniformity

Justification Appraisal uniformity is the degree to which the assessment to sale price ratios is variable and therefore the extent to which the assessments are an accurate measure of the market time‐adjusted sale price. Horizontal inequity and vertical inequity are the two primary components of appraisal uniformity. Appraisal uniformity is an important quantity to measure because it can reveal the suitability and success of the mass appraisal modeling process. It can also reveal performance disparities between strata. An assessment of appraisal uniformity is an essential part of any ratio analysis.

The coefficient of dispersion (COD) is a measure of overall inequity and is calculated on a set of assessment to sale price ratios. Calculating the COD point estimate, along with its associated confidence interval, is necessary to assess the overall appraisal uniformity. Depending on the nature of the group of properties being analyzed, there are standards for an acceptable level for the COD. If the COD standard for a given group of properties is statistically shown to be violated, then it is necessary to order a reappraisal for that group of properties. Without calculating a measure of overall inequity like the COD, it is impossible to know if the assessments miss a standard accuracy level and therefore need corrective action.

The coefficient of price‐related bias (PRB) is a measure of vertical inequity and is calculated on a set of assessment to sale price ratios. Vertical inequity occurs when different value‐classes of property are appraised inequitably. Calculating the PRB point estimate, along with its associated confidence interval, is necessary to assess the specific vertical inequity component of appraisal uniformity. There are standards for an acceptable range for the PRB. If the PRB standard for a given group of properties is violated, then it is necessary to orde r a reappraisal. The Price‐Related Differential (PRD) is another measure of vertical inequity and it is also calculated on a set of assessment to sale price ratios. The PRD also has a standard for an acceptable range. Without calculating a measure of vertical equity like the PRB or PRD, it is impossible to know if the assessments were unfair toward a single value‐class of property and therefore need corrective action.

Dependencies



1. The median for each stratum should be tested to see if it is within 5% of the median for the overall sales sample dataset.

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2. If the median for a given stratum can be statistically significantly shown to not be within 5% of the median for the overall sales sample dataset, then a direct equalization or reappraisal should be considered for that stratum.

3. If the point estimate for the median for a given stratum is between the overall

median minus 5% and the overall median plus 5%, then it is immediately said to be acceptable and it is not necessary to run the statistical test.

4. If the point estimate for the median for a given stratum is outside that range, however, then a statistical test must be conducted to see if it is outside of the range by a statistically significant amount. The statistical test can take the form of a 95% one-sided confidence interval for the median. If the median point estimate for a given stratum is less than the overall median minus 5%, then a 95% one- sided upper confidence interval is used.



5. If the median point estimate for a given stratum is greater than the overall median plus 5%, then a 95% one-sided lower confidence interval is used. In both cases, if the confidence interval for a given stratum overlaps the range of the overall median minus 5% and the overall median plus 5%, then the median for that stratum is said to be acceptable.

6. In both cases, however, if the confidence interval for a given stratum does not overlap that range, then the median for that stratum is said to not be acceptable and either a direct equalization or a reappraisal is ordered for that strata. For ease of understanding and calculation, the needed bounds of an upper and lower 95% one-sided confidence interval are equivalent to the upper and lower bound of a 90% two-sided confidence interval.

7. The point estimate of the coefficient of dispersion (COD) for the assessment to sale price ratios must be calculated for the overall jurisdiction and each stratum.

8. A 95% two-sided confidence interval for the coefficient of dispersion (COD) for the assessment to sale price ratios must be calculated for the overall jurisdiction and for each stratum. The confidence interval for the COD can be calculated either by using the method of bootstrapping or the using the Bonett-Seier formula.

9. A statistical test must be calculated to see if a COD falls in the acceptable range, as defined by the IAAO Standard on Ratio Studies, for the given group of properties. The statistical test can take the form of a 95% one-sided confidence interval for the COD.

10. If the point estimate for the COD is inside the given acceptable range, then it is immediately said to be acceptable and it is not necessary to run the statistical test. If the COD point estimate falls below the lower bound in the acceptable range, usually 5%, then a 95% one-sided upper confidence interval is used. If the COD point estimate falls above the upper bound in the acceptable range, then a 95% one-sided lower confidence interval is used.

11. In both cases, if the confidence interval overlaps the given acceptable range, then the COD is said to be acceptable. In the case of a COD point estimate below 5%, if the confidence interval does not overlap the acceptable range, then the result should be seen as possibly indicative of selective reappraisal or a non-representative sample. In the case of a COD point estimate above the upper bound in the given acceptable range, if the confidence interval does not overlap the acceptable range, then a reappraisal should be ordered for that group of properties because of poorer than standard performance. For ease of understanding and calculation, the needed bounds of an upper and lower 95% one-sided confidence interval is equivalent to the upper and lower bound of a 90% two-sided confidence interval.

12. The point estimate of the coefficient of price-related bias (PRB) for the assessment to sale price ratios must be calculated for the overall jurisdiction and each stratum.

13. A 95% two-sided confidence interval for the coefficient of price-related bias (PRB) for the assessment to sale price ratios must be calculated. The confidence interval for the PRB should be calculated using a t-distribution and the standard error of the regression coefficient.

14. A statistical test must be calculated to see if a PRB falls in the acceptable range of -0.10 to 0.10, as defined by the IAAO Standard on Ratio Studies, for the given group of properties. The statistical test can take the form of a 95% one-sided confidence interval for the PRB. If the point estimate for the PRB is inside the



given acceptable range of -0.10 to 0.10, then it is immediately said to be acceptable and it is not necessary to run the statistical test.

15. If the PRB point estimate falls below -0.10, then a 95% one-sided upper confidence interval is used. If the PRB point estimate falls above 0.10, then a 95% one-sided lower confidence interval is used.

16. In both cases, if the confidence interval overlaps the given acceptable range, then the PRB is said to be acceptable. In the case of a PRB point estimate below -0.10, if the confidence interval does not overlap the acceptable range, then the result should be seen as unacceptably regressive and a reappraisal should be ordered. In the case of a PRB point estimate above 0.10, if the confidence interval does not overlap the acceptable range, then the result should be seen as unacceptably progressive and a reappraisal should be ordered. For ease of understanding and calculation, the needed bounds of an upper and lower 95% one-sided confidence interval are equivalent to the upper and lower bound of a 90% two-sided confidence interval.

17. Instead of, or in addition to, the PRB, the point estimate of the price-related differential (PRD) for the assessment to sale price ratios must be calculated for the overall jurisdiction and each stratum.

18. A 95% two-sided confidence interval for the price-related differential (PRD) for the assessment to sale price ratios must be calculated. The confidence interval for the PRD should be calculated using bootstrapping.

19. A statistical test must be calculated to see if a PRD falls in the acceptable range of 0.98 to 1.03, as defined by the IAAO Standard on Ratio Studies, for the given group of properties.

20. The statistical test can take the form of a 95% one-sided confidence interval for the PRD. If the point estimate for the PRD is inside the given acceptable range of 0.98 to 1.03, then it is immediately said to be acceptable and it is not necessary to run the statistical test. If the PRD point estimate falls below 0.98, then a 95% one-sided upper confidence interval is used. If the PRD point estimate falls above 1.03, then a 95% one-sided lower confidence interval is used.

21. In both cases, if the confidence interval overlaps the given acceptable range, then the PRD is said to be acceptable. In the case of a PRD point estimate below 0.98, if the confidence interval does not overlap the acceptable range, then the result should be seen as unacceptably progressive and a reappraisal should be ordered. In the case of a PRD point estimate above 1.03, if the confidence interval does not overlap the acceptable range, then the result should be seen as unacceptably regressive and a reappraisal should be ordered. For ease of understanding and calculation, the needed bounds of an upper and lower 95% one-sided confidence interval are equivalent to the upper and lower bound of a 90% two- sided confidence interval.




Review of Appraisal Uniformity Document(s)

PVSC incorporates the Coefficient of Dispersion (COD) as a measure of uniformity along the Price Related Differential (PRD) as a review of vertical equity. PVSC has updated the statistics for 2016 to incorporate testing the statistics at a 95% confidence interval. This data will further help PVSC determine if the actual results are significantly different from the standard.

Queries and Reports

Ratio Analysis Report

Metric

Run all appraisal uniformity statistics as outlined in Appendix C of the IAAO Standard on Ratio Studies and report on the results.

These results should be measured against the published ratio study guidelines.

Any results that are outside the published guidelines would indicate that a plan of corrective action should be created.


Detecting Selective Reappraisal

Justification Selective reappraisal, commonly called sales chasing, is when individual sale properties are intentionally singled out in the reassessment process and appraised differently than the properties as a whole in order to achieve better perceived appraisal performance. Model over-fitting is a form of selective reappraisal when models are fit in such a way that they model the sale properties very well, but the non‐sale properties not so well. Selective reappraisal also occurs when many formal appeals of sale properties are simply adjusted, as a group, to the sale price. Selective reappraisal is not a good thing because it gives a false sense of confidence in the value estimates. Please see the “Selective Reappraisal” Section for more details.

It is necessary to appraise sale and non‐sale properties in the same manner so that conclusions made from the sales ratio analysis can be said to apply to all of the properties. Selective reappraisal undermines this effort by treating sale properties differently than non‐sale properties. Therefore, when sales are selectively reappraised, the conclusions made from an examination of appraisal level and appraisal uniformity do not apply to all the properties and are therefore, meaningless. It is necessary, therefore, to employ a method that checks to see if selective reappraisal is occurring.

Dependencies

IAAO Standard on Ratio Studies

IAAO Standard on Mass Appraisal of Real Property

Timetable This objective should be met as a part of the completion of the ratio analysis.




1. Selective reappraisal must be investigated by at least one of the methods in this section for each stratum and the overall group of properties. Each method measures how much a certain statistic differs between the sale properties and the non-sale properties, but no hard standard exists for how much of a difference in each method is too much. Defendable and reasonable criteria must be developed for determining how much of a difference a given method can yield in its statistic.

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2. One method is the Comparison of Average Absolute Value Changes. In this method, the absolute percent change is calculated from the previous assessed value to the new assessed value for the sale properties and the non-sale properties separately, and then the average is taken of the absolute percent changes in each of the two groups. The average absolute value changes for the sale properties and the non-sale properties can then be compared. If the sale properties have changed substantially more than the non-sale properties, then it could be the case that selective reappraisal is occurring. The Mann-Whitney Test should be used to determine if the average absolute value for the sale properties is statistically significantly greater than the average absolute value for the non-sale properties. Alternatively, a T-Test can be used if the absolute value changes are normally distributed.

3. Another method is the Comparison of Average Unit Values. In this method, a set of unit values, using a method like the value per square foot, is calculated for the sale properties and the non-sale properties. Then, the average of the unit values is taken for each group. Then, the average unit value for the sale properties can be compared to the average unit value for the non-sale properties. A substantial difference in these two quantities could be a sign of selective reappraisal. The Mann-Whitney Test should be used to determine if the average unit value for the sale properties is statistically significantly less than the average unit value for the non-sale properties. Alternatively, a T-Test can be used if the absolute unit values are normally distributed.

4. Another method is the Split Sample Technique. In this method, a second ratio analysis is done using sales from after the appraisal date. This later sales sample must have time adjustments done in the same manner as in the original ratio analysis. Sales should not be included in this later sales sample if they have undergone significant changes since the assessment date, and the same sales sample refinements as were applied to the original sales sample must be applied to the later sales sample as well. Also, an outlier analysis must be done on these new later sales as well. Selective reappraisal could be the case for a given group of properties if the results of the first ratio analysis are statistically significantly better by a given amount than the results of the second ratio analysis.

5. A COD Permutation Test can be used to determine if the COD using the original sales sample is statistically significantly lower than the COD using the later sales sample.

6. Another method is the Comparison of Observed vs. Expected Distribution of Ratios. In this method, the percent of ratios inside of a given range around the measure of central tendency is compared to the percent one would expect for a distribution that would arouse the suspicion of selective reappraisal. The percent of properties that fall in this given range for a given group of properties can be compared to what percent would be expected to fall in that same range under an expected distribution derived from a selective reappraisal. If more or a similar percentage of properties fall in that same range, then this could be a sign of



Review of Detecting Selective Reappraisal Document(s)

PVSC has looked at the Comparison of Average Absolute Value Changes and will continue to do so going forward. The Roll Quality Report, it is recommended could also include one of the other Selective Reappraisal techniques into the annual report.

Queries and Reports


Metric

The ratio study report should include at least one test to measure for selective reappraisal activity.

If selective reappraisal is determined to have occurred for a stratum or an overall group of properties, the plan of corrective action should be developed to manage the results. This may include complete reassessment of the affected properties.


selective reappraisal.

7. Another method is to employ Mass Appraisal Techniques. In this method, a mass appraisal model is used, along with the sale properties, to build an independent estimate for the non-sale properties. This independent estimate is then used, along with the assessed value, in an appraisal ratio analysis. The results of this appraisal ratio analysis are then compared with the results from the sale ratio analysis on the sale properties. Selective reappraisal can be concluded if the results of the sales ratio analysis are statistically significantly better by a given amount than the results of the appraisal ratio analysis. A COD Permutation Test can be used to determine if the COD using the sales sample is statistically significantly lower than the COD using the mass appraisal model values.

8. If selective reappraisal is determined to be the case, then the ratio analysis needs to be redone using sales that can produce an accurate measure of appraisal level and appraisal uniformity. If they are available, these sales should be from a future time after the effective assessment date so that they could not possibly have been known about during the appraisal process. These sales would need to be adjusted for time, outliers would need to be removed as usual, and the same sales sample refinements would need to be applied. Future sales should be excluded if significant changes occurred with the property between the assessment date and the sale date.




Nature of Changes from Formal Appeals Justification The formal appeals process is one of the most important ways that a jurisdiction interacts with its ratepayers. It is important to assess the percent of properties appealed in a given stratum and then calculates summary statistics for the percent change in values generated by those appeals. This gives the jurisdiction important information about which properties are appealing their assessed values and how much the Board of Review is altering those values. This could yield powerful insights into whether different classes of property are being treated fairly in the formal appeals process.

Dependencies

IAAO Standard on Assessment Appeal Timetable This analysis should be completed soon after the formal appeals period is completed.


1. Properties should be assigned to a given stratum by property type and possibly also by other factors, making sure that there are at least twenty appeal properties in each stratum. It is likely that some property types will have to be combined to ensure enough appeal properties are in each stratum. Knowledge of the property types should be used to group similar property types together so that there are at least twenty appeals in each stratum.

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2. Dividing the number of appeals in each stratum by the number of properties in each stratum and multiplying by 100 should calculate the percent of properties appealed in each stratum.

3. Conclusions should be drawn about the frequency of formal appeals filed across

the various strata. Subtracting the value before appeals from the value after appeals, dividing by the value before appeals, and then multiplying the entire quantity by 100 calculate the percent change in values resulting from appeals. The summary measures for the percent change in values resulting from appeals by strata must be viewed in a tabular and graphical format.

4. In the tabular format, the summary measures should at least include the minimum, the median, the mean, the maximum, and some percentiles of the given distribution, such as the first quartile and the third quartile.

5. In graphical format, the summary plots should be ones that show the shape and center of the distribution, such as a histogram or a box-plot.

6. Conclusions should be drawn from the summary measures about the center, spread, and skewness of each distribution.

7. Conclusions should be drawn from the summary measures about the general nature of the appeal value changes.

8. The percent of properties appealed by strata and the summary statistics for the percent change in value after formal appeal by strata must both be included in an Appeals Report that describes the nature of the changes made after formal appeals




Review of Changes from Formal Appeals Document(s)

PVSC has developed many reports that are used to review the properties that are under appeal. These reports are detailed and include change analysis. Developing graphical plots of (missing word?) would provide additional insight into the statistics and distribution of changes. The level of analysis completed around appeal properties is very good to excellent.

Queries and Reports

Appeals Report Documents

Metric

A calculation of the percentage of properties that are appealed in each stratum should be made o If this number is over 3% then additional analysis should be conducted.

A calculation of the percentage of value change by stratum should be made.

If the overall change in value is in excess of 15% on average, then additional analysis should be conducted.




Section 2 – Policy & Procedures Review The policy and procedures review process reviews not only assessment processes and procedures but also outlines the type of documentation reviewed and the basic procedures utilized for the assessment process review. This is not intended to be an instructional course for the provincial reassessment, nor is it intended to replace or modify the current revaluation specifications.

A review of assessment policies and procedures is a very important part of the certification process. By applying recognized appraisal and mass appraisal methods and procedures to all of the provincial parcels, qualified appraisal personnel are expected to achieve a high degree of uniformity and equity in the valuation of properties. This is especially important when reviewing geographical areas or property types where there are few market transactions.

For this section of the certification program there were twenty-three review criteria worth a total of thirty points. The table below outlines the overview of Section 2 scoring:

Item Score

Parcel Updates

1 out of 1

Valuation Process Timeline 1 out of 1

Cost Method 2 out of 2

Income Method 2 out of 2

Sales Comparison 0 out of 2

Market Modeling 1.5 out of 2

Valuation Methodology Choices 1 out of 2

Land Valuation 2 out of 2

Model Stratification .5 out of .5

Accounting for Location 1 out of 1

Application of Models to all Property 1 out of 1

Valuation Reports 1 out of 1

Selective Reappraisal .5 out of 1

Value Defense 2 out of 2

Sales Validation 1 out of 1

Data Collection Practices 2 out of 2

Data Query Checks 1 out of 1

Data Entry Quality Control 1 out of 1

Plan for Data Quality Review .5 out of .5

Legal Framework 1 out of 1

Human Resources 1 out of 1

Appeals Process 1 out of 1

Property Tax/CAMA System 1 out of 1




Policy and Procedures SWOT Analysis

The assessment policies and procedures area is vitally important to the organization. Overall, this area is robust and has had considerable work completed to help guide the corporation.

IPTI has have reviewed well over 100 documents and used these to compare and contrast current documented operations vs best practices. The corporation has shown that there are several strengths, including comprehensive policies, procedures and reports.

There are two areas of weakness that the corporation is working to remediate by 2016. This includes an upgrade of the ratio study document, the inclusion of time-trending to sales analysis and adding a test for representativeness analysis. In addition, the corporation is working to address the need for a data quality manual. Addressing these weaknesses will further strengthen an already healthy area of the organization.

PVSC also sees that there are several opportunities to improve policy and procedures by further refining procedural documents that do not currently exist. In particular, this includes Special/Unique property manuals. Overall, the health of this area of the organization is operating at a very high level.

STRENGTHS

•Comprehensive report(s)

•Valuation Policy Statement

WEAKNESSES

•Time Adjustments

•Data Quality Manual Review

OPPORTUNITIES

•Sales Comparison Method of Valuation

•Roll Quality Report Stats (additions)

THREATS



Parcel Updates

Justification Maintaining an accurate set of GIS parcel line updates is important. It is also important to keep parcel line changes in sync between the Assessment Division’s records and the GIS system, which ultimately feed data to multiple other departments. If these processes are not done, then there would likely be inaccurate or confusing information in the GIS system. An accurate GIS system should be leveraged so that its full potential is realized for the Assessment Division. GIS can be used for various forms of spatial analysis. GIS can also help detect potentially outlying data values through a visual comparison of a property with its neighbors. Dependencies

IAAO Standard on Digital Cadastral Maps and Parcel Identifiers

IAAO Standard on Mass Appraisal of Real Property Timetable Maintaining or ensuring that GIS parcel line data is accurate and up to date should be done on a continuous basis. Never letting the GIS parcel line data get more than a month behind is critical to production of a complete property tax roll. Analysis using GIS should be done as needed during the reassessment and data quality control processes.


1. There must be a carefully maintained process, complete with a set of policies and procedures, for both who is responsible for updating the GIS parcel lines and how long it should take them to get updated. A CAMA-GIS balancing report (queries) are used to detect issues between the PVSC CAMA database and the GIS database.

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2. GIS should be used for spatial analysis. GIS should be used in the quality control process to detect potentially outlying data values. This type of analysis can focus on uniformity and equity visual display checks

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Review of Parcel Updates Document(s)

PVSC receives its parcel updates directly from the Nova Scotia Property Records Database (NSPRD) system. Timing issues are not within the span of PVSC control. It should be noted that PVSC does run quality control checks on the parcel data and provides feedback or updates to the system when warranted. Below is a link to the procedures used to receive the parcel updates from the NSPRD. PVSC currently uses GIS to do limited spatial analysis. This is an area within the Corporation that is consistently being upgraded. The My Property Report is an external tool that uses GIS technology while internally a number of chloropleth maps are produced for both analysis and review.

The following link is the CAMA-GIS Balancing Report:



Queries and Reports

CAMA-GIS Balancing Report. Metric

Parcel updates are updated in PVSC data systems within 30 days of transactions being registered with Province.


Valuation Process Timeline

Justification It is important to define an appraisal timeline and frequency that provides adequate time for all of the necessary steps to be completed. It is important for the appraisal timeline to keep up with the market for purposes of equity. The valuation process timeline may well be controlled by an overall reassessment project plan, which is subsequently broken down into individual division projects.

Dependencies


IAAO Standard on Assessment Appeal Timetable The valuation process must be completed in time to mail the assessment notices to taxpayers according to the statutory timeframes.


1. A set timeline must govern the production of the value estimates for each class of real property.

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2. If Automated Valuation Models (AVMs) are used, time must be allotted for review of both model results and their application to non-sale properties

3. An annual or cyclical reassessment process should be followed to keep assessments as close to market value as possible.




Review of Valuation Process Timeline Document(s)

PVSC develops a regular operating plan which includes reappraisal as a section of the overall plan. The organization follows and updates the plan on a regular basis.

Queries and Reports

Valuation Project Plan Report Metric

Valuation project plan should be created, tracked and reported against throughout the entire assessment process.

Valuation project plan should include time and resource estimates for all key milestones.

Valuation project plan should include risk management and quality control/quality assurance plans.


Cost Method

Justification Valuation is arguably the most important step in the appraisal process. If the cost method is used, then it is of the utmost importance that cost modeling and valuation be conducted in accordance with sound appraisal practice and strong analytical reasoning in order to achieve the best results. This section outlines many steps that should be taken to ensure that the cost model achieves the best results possible. The cost method must have certain quantities defined in order to be executed successfully. Dependencies


IAAO Standard on Automated Valuation Models (AVMs) Timetable The valuation process must be completed in time to mail the assessment notices to taxpayers according to the statutory timeframes.


1. There must be a credible source for the cost tables used in arriving at the cost estimate. If the cost tables were determined in-house, then a skilled analyst using provincial building cost data must have conducted the analysis. PVSC uses Marshall & Swift for their cost table data.

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2. The Local Cost Multiplier for each local provincial area (Region or Zone) must be determined from the market.

3. The depreciation tables should be determined from the market.

4. Cost tables should be updated before each reassessment cycle.



5. Local market adjustments should to be used, in addition to the Local Cost Multiplier at the homogeneous neighborhood level or other sub-market level in order to account for spatial effects.

6. Cost models need to be very accurate when compared to sales of new, improved structures in a ratio analysis.

7. The results of the cost method should be included in the Valuation Guide. See the “Valuation Reports” Section for more information.


Review of Cost Method Document(s)

PVSC has published a valuation methodology guide that outlines how each valuation method is used. PVSC incorporates a cost approach that utilizes Marshall & Swift costs and is maintained and applied through the PVSC CAMA system.

Queries and Reports


Valuation Guide(s) Metric

Jurisdiction should have updated cost tables in place for assessment date

Jurisdiction should have documented location multipliers

Jurisdiction should have documented market-based depreciation tables


Income Method

Justification Valuation is arguably the most important step in the appraisal process. If the income method is used, then it is of the utmost importance that income modeling and the collection of income data be conducted in accordance with sound appraisal practice and strong analytical reasoning in order to achieve the best results. This section outlines many steps that should be taken to ensure that the income model achieves the best possible results. The income method must have certain quantities defined in order to be executed successfully.

Dependencies






1. For use in income modeling, Income and Expense Questionnaires must be sent out at least once a year. Ample time should be given for property owners to respond to the inquiry before income data is needed for analysis in the reassessment. This is completed by PVSC on an annual basis.

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2. Potential Gross Income, Vacancy, Other Income, and Expense figures should be calculated using data from the Questionnaires as well as sound, defendable data analysis.

3. There must be a good and justifiable reason for using either the Capitalization Rate or the Gross Income Multiplier in the calibration of the income model. Capitalization Rates or Gross Income Multipliers, whichever one is used, ought to be calibrated using statistical analysis.

4. The results of the income method should be included in the Valuation Guide. See the “Valuation Reports” Section for more information.


Review of Income Method Document(s)

PVSC has published a valuation methodology guide that outlines how each valuation method is used. PVSC incorporates the income approach that is maintained and applied through the PVSC CAMA system. PVSC seeks the income and expense data, performs necessary analysis and has implemented direct capitalized valuations where appropriate

Queries and Reports

Income and Expense Questionnaire


Jurisdiction should publish guidelines for which properties should be valued by the income approach.

Jurisdiction should document capitalization rates for property types based upon market evidence.

Jurisdiction should document analysis for how each model is created on the income and expense side.

Jurisdiction should document allowable adjustments for property types.




Sales Comparison Method

Justification Valuation is arguably the most important step in the appraisal process. If the sales comparison method is used, then it is of the utmost importance that sales comparison modeling be conducted in accordance with sound appraisal practice and strong analytical reasoning in order to achieve the best results. This section outlines many steps that should be taken to ensure that the sales comparison model achieves the best results possible. The sales comparison method must have certain quantities defined in order to be executed successfully.

Dependencies




1. There must be a solid statistical or practical reason why the particular sales comparison model was chosen. This reason should be articulated by those tasked with explaining the modeling approach taken.

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2. Sales comparison models must be calibrated by an accepted statistical procedure, like regression, feedback, or another statistical algorithm.

3. The sales comparison model must take a given functional form, like additive, multiplicative, or hybrid (non-linear), and there must be a good reason why the given functional form was chosen over the others.

4. Sales comparison models should be re-specified, re-calibrated, and re-tested every assessment cycle.

5. The results of the sales comparison method should be included in the Valuation Guide. See the “Valuation Reports” Section for more information.


Review of Sales Comparison Method Document(s)

PVSC has published a valuation methodology guide that outlines how each valuation method is used. PVSC does not incorporate a sales comparison method. The valuation methodology is highly dependent upon the availability of sufficient sales samples to develop automated valuation models (AVMs) to arrive at reasonable estimates. We strongly advise PVSC to review the use of the sales comparison approach to value. In particular, we suggest this review should focus on residential properties within the major municipalities who have sufficient sales.



Queries and Reports

Valuation Guide Metric

Jurisdiction should document sales selection criteria for sales used in the modeling process.

Jurisdiction should document selection methodology.

Jurisdiction should have published standard on what properties are to be valued using the sales comparison methodology.

Ratio study that meets jurisdiction standards should be run against property types valued by sales comparison methodology.


Market Modeling

Justification Market models can assist at various stages in the valuation process, including certain steps in the cost, income, and sales comparison method. This is particularly true in the sales comparison method. Incorrectly executing or implementing a market model can have a direct and negative impact upon the quality of the reassessment results.

Dependencies


IAAO Standard on Automated Valuation Models (AVMs)

Timetable The valuation process must be completed in time to mail the assessment notices to taxpayers according to the statutory timeframes.


1. Before performing market modeling, a sales sample must be extracted via the Sales Query. This sales sample must be clearly defined by property type, geographic area, sale date range, etc., based on the intended application of the market model. Only “valid” or “qualified” sales should be included in this sales sample. In the case of income modeling, this could be an observational sample of income and expense data rather than a sales sample.

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2. Time-of-Sale Information must be used in market modeling no matter how the model is applied. If Time-of-Sale Information is not used, then properties that have changed significantly since the date of sale should not be included in a sales sample.

3. The sample must be searched for missing, suspect, and incorrect values of key variables and an attempt should be made to fix any errors in this data before market modeling starts. A relevant subset of the queries in the Data Query Checks File can be used for this purpose. If the data errors are unable to be fixed, then those problem observations should be eliminated from the sales sample.



4. Market models usually rely on a sample of sales, but these sales are an observational sample, not a random sample. It must be determined whether the sales sample is representative of the population. Since market models are typically done inside of one property type group, sample representativeness must be achieved with respect to the general assessed-value ranges inside of that property type. A formal test of sales representativeness must be conducted to see if the sales are indeed representing different assess-value range groups equally.

5. If a sample fails the test for representativeness then, as a remedial measure, simple random samples should be used by valuation range strata to ensure groups are represented equally. Alternatively, the time period used for the model sales could be extended backward, in the hope that this may make the sample more representative but this step, even if it is possible, may not work and should be considered carefully.

6. Market models must be calibrated by Multiple Regression Analysis, Non-Linear Regression Analysis, Feedback, or some other acceptable statistical algorithm.

7. Before modeling takes place, a phase of data exploration should be conducted. Data exploration analyzes the distribution of key potential independent variables and the strength of their correlation with both the dependent variable and the natural log transformation of the dependent variable.

8. Certain key independent variable transformations are often important to investigate as well, like the natural log, square, cube, and binary variable transformations.

9. Independent and dependent variable transformations that were found to be worthwhile in the data exploration phase should be added to the sample so that they are available for the model-building process.

10. For calibrating a market model by Multiple Regression Analysis or similar method, there must be at least ten times as many observations present in the sample as there are independent variables in the regression model.

11. Time must be accounted for in the market modeling either by an a priori, time-only model adjustment or by including time variables directly in the model. The data must be investigated for the suitability of non-straight-line time effects, including seasonal effects.

12. The process of model building, including the model specification and calibration, should be done properly. Inconsistently collected variables should not be included in the model specification. A goodness-of-fit measure should be used in the model calibration process to determine if adding another variable to the model specification has an overall effect on the quality of the model. This ‘goodness-of-fit measures’ must reward models for parsimony like the Adjusted R2 or the AIC.

13. The coefficients from a market model must have both clear interpretation and a realistic value. If automated search routines were used to arrive at the final model specification, then this is all the more important.

14. As a part of the model calibration process, and in addition to goodness-of-fit statistics, the model output examined should include a summary of the coefficients, including individual t-tests conducted for Multiple Regression Analysis, and a ratio analysis.



15. An outlier analysis must be conducted on the results of the modeling to see if some observations are extreme enough to overly influence the model results. For calibration methods like feedback and non-linear regression, solid outlier detection methods do not exist and so a simple scheme using either three or five times the Interquartile Range of the ratios is sufficient. See the “Outlier Identification and Remediation” Section for more information on how this would be done. For Multiple Regression Analysis, Cook’s Distance must be examined for each observation and, if it is greater than the 50% percentile of the F (p, n‐p) distribution (p is number of coefficients and n is the number of sales), then that observation is considered an influential outlier. Whatever the case may be, the first goal of outlier detection is to investigate the outlier in an effort to correct the problem that is making it an outlier. If a problem cannot be identified, then the outlier can be omitted from the modeling analysis. After outliers have been dealt with, the model should be built again, but this process should not repeat itself again and again; outliers should be eliminated only once.

16. After models which have been built using Multiple Regression Analysis, there are several important additional diagnostics to run to make sure the results of the model are sound. The Variance Inflation Factor (VIF) must be run for each of the coefficients, and any VIF > 10 should indicate a serious problem with multi-co-linearity in the model. A plot of model predicted values versus model residuals must be made, as well as a normal probability plot of model residuals. The plot of model predicted values versus model residuals must show no trend (a flat cloud of points), and the normal probability plot must show a straight linear trend along the diagonal across the great majority of the range of the normal probability. Models that fail these model diagnostics should be re-evaluated. Beside the residual plot of model predicted values versus model results, the other diagnostics are not available for other forms of calibration beside Multiple Regression Analysis. The residual plot of model predicted values versus model results should be calculated for all forms of model calibration.

17. The results of the market model should be compared to the model’s application to a holdout sample that was not included in the original model that was built. This same idea can also be accomplished through cross-validation. This holdout sample should be taken from a period after the period from which the original sample was drawn or it should have been randomly selected out from the same period before the modeling was done. Analysts must make an assessment of whether model over-fitting is a problem and whether the model is suitable to apply to new properties.

18. The market model must finally be applied to all the properties in order to get the best measure of its suitability over a wide range of different properties. If appropriate, an analysis must be done on the percent changes from the previous assessed value from using the new market model; these changes are summarized in the Value Change Report. The set of all properties is derived from the All Properties Query, which is referenced in the “Application of Models to All Properties” Section.

19. If appropriate, a ratio analysis must also be done to see if the model has equal applicability across value ranges and property characteristic ranges. The ratio analysis must be summarized in a Ratio Analysis Report.

20. The various results derived from market models should be detailed in the Valuation Guide. See the “Valuation Reports” Section for more information.

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Review of Market Modeling Document(s)

PVSC does utilize market modeling when preparing various components of its cost and income valuation approaches. Land valuations and market adjustment factors are concrete examples that are included in this category. Models are tested statistically, though further refinement with respect to time-trending of models is encouraged.

IPTI suggest that PVSC also further review and run trials using market modeling with respect to the residential sales comparison approach. While not required by legislation, this approach would follow industry best practices.

Queries and Reports

Sales Query

All Properties Query

Data Query Checks File


Value Change Report

Valuation Guide

Metric

Time adjustment for each model must be completed and documented

Sales sample must be extracted for independent testing for each model

Ratio study analysis must be completed for each model and produce results that meet internal requirements


Valuation Methodology Choices

Justification Cost, income, and sales comparison are the three main valuation methodologies. However, all valuation methodologies are not created equal for every property type. In certain property types, it is better to use one valuation methodology over another. It is important that the best valuation methodology is applied, given the current situation, to achieve the best results in a given property type.

Dependencies



The valuation methodology must be chosen prior to the start of the valuation process.




1. Residential property types should be valued using the sales comparison method. Out‐of‐the‐ordinary residential properties may be valued by the cost method. Multi‐family residential property types could also be valued by the income method.

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2. Commercial property types should be valued by the income method. The cost method should be used in the case of out‐of‐the-‐ordinary properties or properties where income information is not readily available or available in sufficient quantity or quality

3. Industrial property types should be valued by either the income method or the cost method, depending on the availability and quality of information.

4. If enough vacant non‐agricultural land sales are available; then vacant land should have valued by the sales comparison method. If enough vacant land sales are not available, then vacant land could be valued by the income method.

5. Special purpose property types should be valued by the cost method or applicable method defined by law.

6. Agricultural property types should be valued by the income method or applicable method defined by law.


Review of Valuation Methodology Choices Document(s)

PVSC has published a valuation methodology guide that outlines how each valuation method is used and how each class of property are valued. Industry best practice is that PVSC should utilize the sales comparison method for residential property. Currently PVSC uses a market adjusted cost approach to value residential property.

Commercial and industrial property use both the income and cost approaches to value in accordance with best practices. Valuation model produced values are used in a preponderance of parcels.

We have confirmed that PVSC uses modeled values in almost all cases. Only 3,600 out of over 600,000 records uses a value that was not produced by the valuation model. This accounts for non-modeled values being used less than 1% of the time.

IPTI recommends that PVSC uses the sales comparison methodology for residential properties in areas where there are adequate sales.

Queries and Reports NA

Metric

Residential properties should be valued using the sales comparison or alternative market methodology.

98% of all properties should be valued using the model-produced valuations.

Commercial properties should be valued using the income method or cost method depending on the property sub-type. Model values should be used on 95% of all properties within the class.



Industrial property should be valued using the cost method or income method depending on the availability of data. Model values should be used on 95% of all properties within the class.


Land Valuation

Justification Land can be difficult to value due to the absence of vacant land sales and the paucity of land parcel attributes. However, land holds substantial value and the assessment of lands needs to be accurate, equitable, and based on sound appraisal theory.

Dependencies



Land valuation must be done as a part of the overall valuation process. The valuation process must be completed in time to mail the assessment notices to ratepayers a short time after the assessment date.

Timetable This process should be reviewed annually.


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2. If enough vacant land sales are available, then land should be valued using the sales comparison method. Land may be modeled using a market model, either separately or in the same model with improved parcels, or a market pseudo‐model where appraisers set land rates by hand.

3. If land adjustment factors are used to adjust the value of land, there must be strict policies governing their use so that land is not over-fitted and adjustment factor values make sense.

4. PVSC must have a set of policies and procedures for identifying agricultural land use properties appropriately.

5. The results of the land valuation should be included in the Valuation Guide.


Review of Land Valuation Document(s)

PVSC has published a valuation methodology guide that outlines how each valuation method is used and how each class of property are valued. Land is valued consistently through a model application applied via the corporation’s CAMA system. Agricultural land use properties are clearly identified throughout the CAMA system.



Queries and Reports


• Land value models are documented and use market evidence as the basis for values • Adjustments are documented through the use of market analysis • Ratio studies are conducted on models and should achieve internal ratio guidelines.


Model Stratification

Justification Stratification is the process of breaking down a set of the data into distinct sets that can be analyzed separately or given separate recognition in a global modeling scheme. Stratification is essential in valuation modeling because it allows the analyst to target differences due to location or property type. Failure to actively stratify the data would have a very negative affect on valuation results.

Dependencies



Model stratification must be performed as a part of the valuation process. Timetable This process should be reviewed annually.


1. Each valuation methodology being employed by the Assessment Division must account for location and other important factors of that nature by means of a defendable stratification scheme based on sound data analysis.

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2. When too few sales exist in a given stratum, modeling should not be conducted within that stratum, but rather the strata should be redefined in order to achieve an adequate amount of sales in each stratum with which to perform valuation modeling. If strata cannot be redefined, adding additional years of sale data, if appropriate, could boost the number of sales available in some strata. As a general rule, over stratification should be avoided and appropriate remedial measures must be taken if it does occur.

3. The results of the model stratification should be included in the Valuation Guide.

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Review of Model Stratification Document(s)

PVSC recognizes that there are vast differences in the highly varied geographic locations of Nova Scotia. Segmentation is accounted for by accurate classification of properties. Properties are further stratified through the application of neighborhoods and their analysis.

IPTI recommends that PVSC continues to enhance its geospatial representation of data. This would include working with and providing spatially represented maps of stratified model data and applicable results.

Queries and Reports


• Strata should be broken into standard homogeneous groups of neighborhoods and further grouped into market areas to provide additional market data where needed.

• Market areas should be documented in the applicable valuation guides.


Accounting for Location

Justification Location is one of the most important factors in valuation of real property. The same property can be worth drastically different amounts depending on where it is located. Accounting for location in valuation modeling then becomes a very important task.

Dependencies

IAAO Standard on Mass Appraisal of Real Property.


Location must be accounted for as a part of the valuation process. Timetable This process should be reviewed annually.


1. Each valuation methodology employed by the Assessment Division must include property location as a factor.

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2. Modelers and appraisers must be able to explain how property location is taken into account in each valuation methodology

3. GIS-based locational “heat maps” of assessment-to-sale-price ratios must be utilized to look for pockets of over-assessed or under-assessed properties. These maps can help identify areas where the model did not adequately account for location.



4. Moran’s I is a measure of spatial autocorrelation calculated on the assessment to sale price ratios, and it is a way to compare models based on the extent to which they take into account location. The higher than Moran’s I value, the less a given model accounts for location. The values of Moran’s I should not be interpreted in an absolute sense, but rather in relative sense between models.


Review of Accounting for Location Document(s)

PVSC understands that the real estate market in Nova Scotia is quite varied throughout its geography. The various market and economic differences are accounted for in the PVSC valuations through the analysis and application of location modifiers and market adjustments. This is particularly true in the cost approach. As PVSC continues to enhance its statistical analysis, the calculation of Moran’s I will provide an extra level of review regarding location.

Queries and Reports NA

Metric

• Moran’s I should be calculated on the assessment to sale price ratios to measure autocorrelation. Values for the Moran’s I calculation should be between (x and y) to be considered within a valid range.




Application of Models to All Properties

Justification Models use a formula to arrive at a value for many properties. Models are built to value properties in a certain stratum, usually based on property type. Good model results don’t mean very much in the end if the model is unable to be applied appropriately. Therefore, it is of utmost importance that models are able to be equitable and adequately applied to the properties for which they were intended.

Dependencies

IAAO Standard on Automated Valuation Models (AVMs) Timetable Models must be applied as a part of the end of the valuation process.


1. An All Properties Query must be run according to the same specifications as the Sales Query that was used to build the model that is about to be applied. It is the All Properties Query that the model must be applied to, but the terms of the two sets must match so the model is applied correctly. For example, a model built using sales of just multi-family properties cannot be applied to a set of all properties that also includes single-family.

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2. Before property values are finalized, a series of valuation and classification data checks must be run to make sure the properties pass a series of necessary tests. These tests check for data anomalies and mistakes relating to valuation.

3. Property assessments, for reasons of consistency and “defensibility”, should be rounded to at least the nearest $100.

4. There should be a plan in place for applying models to properties that have multiple buildings on them. Unless there is a large set of sales with multiple buildings on the parcel, it is best to run models on sales with one building per parcel only, and then apply models to properties with multiple buildings in the following way: treat each property with multiple buildings like it is really multiple parcels with one building each, apply the model to the new hypothetical parcels, extract the land value from the hypothetical parcels, and finally combine the one land value and the improvement values of the hypothetical parcels together into one actual record and value.

5. The application of each valuation model to all properties must be reviewed for such matters as general applicability and the degree of change in value from the previous reassessment cycle. The preliminary values generated by the models must be reviewed via the Value Change Report for this purpose.

6. There must be a person assigned to review every parcel, and there must be a process defined for how value review should take place. Outliers must be detected as a part of this process and there must be a criteria set for their identification on the Value Change Report.

7. If value reconciliation was used to select between multiple modeling methodologies (for example, between cost and income), then there must be a set of policies and procedures for how this process must be conducted and the system must show the data supporting the relative merit of each of the candidate valuation methodologies.



8. A set of policies and procedures must govern the use of value overrides, where an appraiser decides to not accept a model estimate and to assign another value to a property.

9. Important procedures for model application must be added to the Valuation Guide. See the “Valuation Report” Section for more details.


Review of Application of Models to All Properties Document(s)

PVSC produces over 600,000 property values for property tax purposes. In almost every cast the organization uses a modeled value. During the last revaluation only 3,600 values were overrides (not the result of a modeled value). This indicates that the organization uses the modeled values a preponderance of the time which should produce a high equitable value base.

Queries and Reports

All Properties Query

Value Change Report

Valuation and Classification Data Checks

Valuation Guide Metric

A count of properties that do not use the recommended valuation methodology for each property type and geography should be completed.

Re-review all valuations in strata that show a deviation of model values greater than 5% of the total by property class.


Valuation Reports

Justification It is advantageous to the Assessment Division as a whole, and to the public, for there to be a strong set of valuation reports to document and describe the valuation process. It is beneficial for a Valuation Guide to exist that fully documents and explains the valuation methodologies and associated models being used in the Province. It should include a list of important valuation procedures and steps that are followed. The Valuation Guide acts as a reference for the Assessment Division staff, and parts can be shared with the public to ensure transparency in the valuation process. This can give the Assessment Division appraisers a greater understanding and confidence in the results of the valuation process for value review and value defense. The absence of the Valuation Guide would leave the Assessment Division without a standard guide for the staff to know how the valuation results were derived. There should also be a report where the property’s main characteristics, valuation history, sales history, and current estimate of value are summarized in one place. This gives the Assessment Division something to easily hand a property owner to help explain their property’s assessment. A Value Change Report should exist where the model results are summarized in terms of how property values changed from one assessment to the next.



This report would help in the internal review of the model application process. It is helpful to have a Ratio Analysis Report done at the end of the valuation process to be able to internally assess the overall quality of the process. Finally, a high-level Annual Report is helpful to ensure the public is able to get an overall view of PVSC operations.

Dependencies


IAAO Standard on Automated Valuation Models (AVMs)IAAO Standard on Ratio Studies

IAAO Standard on Public Relations

Timetable The Value Change Report and the Ratio Analysis Report are to be produced at the end of the valuation process as a part of the review of the valuation results. The Property Summary Report should be available at all times. The Valuation Guide should be published a short time after the valuation process is finalized. The Annual Report should be produced shortly after the end of the provincial tax year.


1. A Valuation Guide must exist that includes sections for each class of property. The Guide should include a full description of all rate tables, model specifications, valuation summary results, and important valuation processes that were used to arrive at the final value.

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2. A Property Summary Report must exist that summarizes the property’s main characteristics, valuation history, sales history, and current estimate of value in one place. This report should be easy to produce for a property owner.

3. A Value Change Report must exist that lists the percent changes in the property values when compared to the last reassessment. This report must allow percent changes to be listed property-by-property, as an overall summary, and a summary by stratum. The Value Change Report must also be “filterable” to allow only extreme percent changes to be displayed.

4. A Ratio Analysis Report must be done at the end of the valuation process and include a full analysis of assessment level and assessment uniformity for various strata using both in and out of sample sales. The Ratio Analysis Report must perform an analysis to see if either selective appraisal or model over-fitting are present, and it should also include a set of summary statistics for the time-adjusted sale price, the proposed assessed value, and the ratio. The Ratio Analysis Report must also describe any data refinements used to eliminate sales from the ratio analysis as well as the results of the time analysis, the outlier analysis, the stratification process, and the test for sales sample representativeness.

5. An Annual Report must be produced that combines the important and relevant areas of other reports, including the mission of PVSC, a summary of major office accomplishments, a summary of statutory changes, and a summary of assessment results. The Annual Report would be made available to the public. The Annual Report is key in value defense (see the “Value Defense” Section of this report) and public relations (see the “Public Relations” Section of this report).




Review of Valuation Reports Document(s)

PVSC has produced and maintains a detailed valuation methodology manual. This is a four-part manual and is reviewed and signed-off by the PVSC Executive. The organization also provides detailed information on property summary, value changes and ratio analysis through its Roll Quality Report. The Corporation also provides an Annual Report that details open and transparent data to the general public.

Queries and Reports

Valuation Guide

Property Summary Report

Value Change Report


Annual Report

Metric • A valid sample of each review criteria above should be produced/documented.


Selective Reappraisal

Justification Selective reappraisal, sometimes called sales chasing, is when individual sale properties are intentionally singled out in the reassessment process and appraised differently than the properties as a whole in order to achieve better, perceived appraisal performance. Model over-fitting is a form of selective reappraisal when models are fit in such a way that they model the sale properties very well, but the non-sale properties not as well. Selective reappraisal is not to be considered good operational practice as it gives a false sense of confidence in the model performance.

Dependencies • IAAO Standard on Mass Appraisal of Real Property • IAAO Standard on Ratio Studies

Timetable This process should be looked at on a regular revaluation cycle basis.




1. Properties are not to be selectively reappraised. Every factor applied to the sale properties and every modeling decision made for the sale properties must be applied equally to the properties that did not sell.

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2. Comparable sales algorithms are not to calculate model results for comparison purposes when a sale is used as a comparable for itself. This biases results due to over-fitting.

NA

3. Cost models must not use local neighborhood market adjustments when neighborhoods have only a small number of sales. This biases results due to over-fitting.

4. Regression market models must not use a large number of binary variables with little variation in those binary variables. This biases results due to over-fitting.

NA

5. There are many ways, within the ratio study analysis, to detect when selective reappraisal is likely taking place (see the “Detecting Selective Reappraisal” Section). An analysis of the likelihood of selective reappraisal should be included as a part of the Ratio Analysis Report that is produced as a part of the review of the entire valuation process (see the “Valuation Reports” Section for more details).

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Review of Selective Reappraisal Document(s)

PVSC produces an annual roll quality report. Modifications to the report are being made to ensure that items like selective reappraisal can be detected. The PVSC roll quality report is comprehensive and contains numerous statistical measures. The addition of a selective reappraisal analysis in the 2016 roll quality report will provide further proof that the corporation is doing everything it can to produce high-quality values.

Queries and Reports

• Ratio Analysis Report

Metric • A review of one or more of the methods for detecting selective reappraisal (in the appendix) should

provide valid results showing that selective reappraisal has taken place on a mass basis.




Value Defense

Justification After assessment notices are mailed out to property owners, it is of paramount importance that appropriate numbers of resources be put toward value defense. Value defense is the process of explaining to a property owner how their new property value was derived during an informal or formal appeal. It is also the time when errors in the assessment process are corrected. In order for this process to take place, members of the appraisal staff must be knowledgeable of how the property values were determined. The failure to do a satisfactory job at value defense leaves PVSC open to more appeals and potentially far greater issues with public confidence.

Dependencies

• IAAO Standard on Mass Appraisal of Real Property • IAAO Standard on Automated Valuation Models (AVMs) • IAAO Standard on Ratio Studies • IAAO Standard on Assessment Appeals • IAAO Standard on Public Relations • Value defense takes place between the time when the assessment notices are mailed and the end of

the formal appeals process.

Timetable

Valuation appeal data and reports should be made available in a timely manner so that both the assessment official and ratepayer are able to make use of their data.


1. The valuation reports must be available for staff to review before value defense begins, including the Valuation Guide, the Property Summary Report, the Value Change Report, and the Roll Quality Report.

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2. Individual value defense should allow the assessment official to defend a value by making one or more of the following items available in an appeal hearing:

a. producing the Comparable Sales Report to show sales of similar properties,

b. producing the Comparable Assessments Report to show assessments of similar properties,

c. showing the Property Summary Report for the purpose of verifying basic property data,

d. explaining the basic approach of how the value was determined, and e. showing ratio statistics via the Roll Quality Report for the out-of-sample

sales to demonstrate overall appraisal performance

3. The Assessment roll is completed and sent to the clerk by the statutory timeframe each year.

4. There should be a formal appeal board independent of the Assessor.

5. It must be clearly understood who is responsible to defend or provide the preponderance of evidence -the ratepayer or PVSC.




Review of Value Defense Document(s)

PVSC produces a number of appeal level documents. The assessment department has a clear line of communication on managing the appeal of real property. This is managed through a set of documents and reports which include the following:

NSAAT results

Section 68 results

Appeal intake report sample

Appeal Performance Report by Assigned Sample

Appeal Performance Report Sample

Appeal Target and Measures

Internal Appeal Report Summary Sample

MU Appeal Summary Report

Income Modeling Appeal Report Template

NSAAT Valuation Summary Residential

Income Modelling Appeal Document

These documents are used both internally and by the general public.

Queries and Reports

Valuation Guide

Property Summary Report

Value Change Report


Comparable Sales Report

Comparable Assessment Report Metric

• Assessment staff and ratepayers should have detailed valuation reports available for all properties that are appealed.

• This should apply to all classes of property.


Sales Validation

Justification The quality of the property valuations is based, in large part, upon the quality of the property sales data. Therefore, it is of the utmost importance to have quality property sales data. Quality property sales data is achieved through a properly conducted sales validation process. The failure to maintain and implement a strong set of policies and procedures for sales validation will decrease the accuracy and defensibility of property valuations.

Dependencies

• IAAO Standard on Ratio Studies • IAAO Standard on Verification and Adjustment of Sales



Timetable Sales validation should be done on a rolling basis as sale transfer documents are received by PVSC. Sales should be fully validated and inspected within 60 days of the transfer date. This is particularly necessary for all non-residential sales.


1. It must be known who performs the sales validation for every property that is inspected.

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2. The sales validation process must include the acquisition of property information at time-of-sale via an on-site inspection. The CAMA System must be able to store “time-of-sale” property snapshots

3. There must be a clear definition of what constitutes a valid sale, a sale qualified for analysis purposes.

4. Sales should be considered valid until proven otherwise.

5. There must a clear set of policies and procedures in place for how sales validation should be done so that the process of investigating sales is consistent across the Province

6. Sales Verification Questionnaires, if used, should be mailed to the new property owners soon after sale information has been received by PVSC.

7. Staff should be supplied with a list of questions to ask in personal interviews as a part of the sales validation and verification process training.

8. Many sources should be used in the validation process: buyers and sellers, sales verification questionnaires, transfer documents, and third parties

9. The sales ratio should not be used as the basis for an invalidation of a sale.

10. A standard internal Sales Validation and Verification Form may be used to record information gained through every step of the process of sales validation and verification. The relevant conclusions of this process should be stored in the CAMA System.

11. Adjustments should be made to sale prices to account for things like assumed long-term leases and personal property that are discovered in the sales validation and verification process.




Review of Sales Validation Document(s)

PVSC publishes and has maintained both a residential and non-residential property sales validation questionnaire as well as residential and non-residential sales validation guides. These documents are key in allowing the corporation to use only those sales which are valid for analysis purposes. PVSC meets the criteria for validation of sales and storage of applicable information related to sales validation.

Queries and Reports

Sales Validation and Verification Form

Sales Verification Questionnaire

Metric • Sales for residential properties should be validated as close to the sales date as possible. The process

may include desktop validation or in-field validation as deemed necessary by the lead appraiser. • Sales for all non-residential properties should include a physical property inspection within 90 days of

notification from the registration system.


Data Collection Practices

Justification More accurate data yields more accurate assessments. Therefore, the goal should be to have the most accurate data possible. This goal can be met through the adoption of sound data collection practices. Data collection practices cover when data should be collected, how data should be collected, which data should be collected, and how often data should be collected. An important principle followed in this section on data collection is how to achieve necessary data quality and at the same time maintain time efficiency. Dependencies

• IAAO Standard on Mass Appraisal of Real Property • IAAO Standard on Automated Valuation Models • IAAO Standard on Ratio Studies

Timetable Data collection occurs on a rolling basis throughout the year.


1. The on-site inspection of building permits should also prompt an on-site inspection of the entire property, if at all possible.

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2. Aerial, street-level and oblique photography should be used as tools within the property inspection process.

3. The Multiple Listing Service should be used as a data source to verify and update property information.



4. Data collectors should conduct an on-site inspection of a property at the request of the ratepayer.

5. Transfers should be given an on-site inspection during the sales validation and verification process.

6. An entire area should be given an on-site inspection after a period of catastrophic damage, i.e. flood, earthquake, etc.

7. An on-site inspection must be performed on every parcel at least once every six years via an organized plan that calls for at least a partial re-measurement and a property walk-around. An acceptable substitute is the use of current and accurate street-level, oblique, and orthogonal area imagery, but an on-site inspection is still necessary when significant construction changes are detected using aerial imagery.

8. Key fields for valuation and property description should be collected completely, and significant gaps in important data fields should not exist. If gaps do exist in an important data field, then a suitable plan needs to be in place to collect that data. Gaps in existing data fields can be discovered through some of the queries in the Data Query Checks File (see the “Data Query Checks” Section for more information).

9. Data should not be collected unnecessarily, as this decreases operational efficiency. Data that is not necessary for valuation or descriptive purposes should not be collected.

10. Data should be collected consistently across the Province. For example, one area or region should not collect different data fields than another.

11. Data should be collected so it can be efficiently transferred to the CAMA System. An example would be by means of software that directly enters information from the field into the CAMA System via the cloud.

12. Data can also be collected through the use of specific field collection forms that can easily be inputted via a standard format into the CAMA System.

13. There must be a regular plan followed for how to allocate resources in data collection.

14. Data collection forms and software entry screens must have a consistent and logical format used to ensure operational efficiency.

15. There should be a set of minimum training requirements for people employed to collect property data and to assign subjective factors.




Review of Data Collection Practices Document(s)

PVSC has published both a residential and non-residential field guide. These guides outline the necessary data elements while providing practical guidance on how to collect the data. In addition, there is also a Property Data Assistant Field Guide. PVSC has also published a data collection policy statement. It indicates that while the Province does not follow the IAAO standard of re-collection of property data once every six years it does outline when data is to be re-collected. This is a response based upon the relative expense of data collection and allocation of PVSC staff.

Queries and Reports • Data Collection Field Guides • Data Collection Policy Statement

Metric

• A data collection manual and training program should be documented and implemented. • Periodic inspections of physical data should be undertaken with a complete set of data available (100%)

and accuracy of the data being at a minimum 95% accurate.


Data Query Checks

Justification Good quality data is necessary to achieve good quality property valuations. Data that is inaccurate can slowly infiltrate a CAMA System, over time, due to things like simple data entry mistakes. In order to maintain data quality, a set of database query data checks can be used to identify missing, suspect, and incorrect data. These routine data validation query checks are invaluable in maintaining a clean CAMA System database. Dependencies


Timetable Data query checks are to be used on a periodic basis throughout the year as needed.


1. A large set of saved database queries should be in place to help detect missing or inaccurate data. Any sparsely populated data fields should be identified by these queries and investigated to see why the data is not being collected consistently. These queries are stored in the Data Query Checks File.

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2. A large set of saved database queries should be in place to detect suspect data. Suspect data is data that is both not missing and not obviously wrong, but appears suspect or not logical (i.e. a house with 2 bedrooms and 6 bathrooms).



Suspect data should be inspected because it could very well be incorrect data. These queries are stored in the Data Query Checks File.

3. A large set of saved database queries should be in place to detect incorrect data. For example, an improved parcel with more first floor living area than lot area. These queries are stored in the Data Query Checks File.

4. An Assessment Roll Balancing Report must exist and be run prior to finalization of the assessment roll. The Assessment Roll Balancing Report shows discrepancies between the CAMA System and Tax System. The Assessment Roll Balancing Report is able to help answer the question of whether the assessment roll is complete.


Review of Data Query Checks Document(s)

PVSC has created a complete set of e-audit checks that aid the overall quality of the assessment file. The results of the e-audit checks are reported on the regular assessment cycle. This step in the quality control process is proactive and positive. PVSC runs and actions the e-audit results as part of the overall roll quality program.

Queries and Reports

Data Query Checks File

Assessment Roll Balancing Report

Metric

Data query checks should be run on at least a reassessment basis.

Data completeness should be 100% for all fields affecting value.

Statistically significant results or suspect data should have a plan of corrective action completed.




Data Entry Quality Control

Justification Many types of data are collected routinely by PVSC. This includes information pulled from deeds, information gathered during field reviews, and information gained by using aerial imagery. Information gathered during field reviews could include data gained from inspecting new construction, permit related work activities, data collected during the process of sales validation and other data gathered during periodic on-site reviews. After information is collected, it must be input into the CAMA System. This may be done directly fro m a field collection form or through an in-field mobile solution. Either way, there is always the danger that meticulously-collected data can be keyed into the system incorrectly. Policies and procedures need to be adopted in order to mitigate this danger and ensure good data quality. Dependencies


Timetable These steps in data entry quality control should be taken routinely.


1. CAMA System data entry services should be available at the time of data entry such as warning messages for strange data or missing data alerts.

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2. Missing, Suspect, and Incorrect Data Queries should be immediately available to help pinpoint data entry mistakes after the fact, as discussed in the “Data Query Checks” Section.

3. If data entry forms are used, someone should be doing random data entry checks, comparing the data on the data entry form to data entered into the CAMA System.


Review of Data Entry Quality Control Document(s)

Data entry quality control is checked by the use of the e-audit and roll quality report processes. In addition, there are various built-in system edits within the CAMA system that check for quality of data entry. PVSC has worked and met all of the requirements of data entry quality control. IPTI recommends that PVSC do a project of manual review on a select number of data entry work to ensure that all e-audit checks are performing as expected. This manual check could also be used as a feedback exercise for the data entry operators.

Queries and Reports

• Data Query Checks File Metric

• Spot data query analysis of office staff data entry should be run on a regular basis. Particular attention



should be given to completeness of data being entered. • Data completeness should be 100% for all fields affecting value. • Data accuracy should be between 98%-100% for all data elements being manually entered by PVSC

staff. • Statistically significant results or suspect data should have a plan of corrective action completed.


Plan for Data Quality Review

Justification Data is collected and entered into the CAMA System according to the policies and procedures of the Data Quality Standard Manual and other operational documents. Data accuracy standards are explained in the manual for both subjective and objective data. There must be, therefore, a way to assess the quality of existing data. An assessment of data quality allows PVSC staff to target areas of unacceptable data quality and allocate resources to more efficiently correct them. In addition, data quality must be assessed statistically so that there is a basis for rejecting data that does not meet the quality standard. A failure to execute a plan for data quality review means that areas of less than standard data quality will be more slowly discovered and resources will be more inefficiently deployed to fix them. Dependencies


Timetable The Data Quality Control Plan should be implemented as needed by PVSC.


1. Random data inspection samples should be done in pre‐defined strata according to the Data Quality Control Plan.

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2. An independent team of people should do data inspections. These teams should be staffed from the current data collection employees.

3. The statistical framework in the Data Quality Control Plan should be used to detect strata that fail to comply with the data quality standards for a given data field that are laid out in the Data Quality Standard Manual.

4. If a data field in a stratum were statistically proven to fail to comply with the data quality standards, then a plan for corrective action of that data field would need to be created for that stratum




Review of Plan for Data Quality Review Document(s)

PVSC has published a data collection review policy. This policy guides PVSC on when data within a stratification has reached a quality level that is no longer acceptable. The policy also outlines what types of corrective action should take place if data is deemed to be of unacceptable quality.

Queries and Reports

• Data Quality Standard Manual Metric

• Data quality standard manual is created and updated every reassessment • Data quality control plan is implemented


Legal Framework

Justification It is critical that the Province maintain a process to ensure that it is aware of, and prepared for, changing legislation. The impact of legislation on the organization is all-encompassing and it is important to ensure that the letter - and spirit - of the law is followed. Dependencies

• Nova Scotia legislation Timetable Annual review, as necessary.


1. At what point in the process does PVSC become involved in tracking new legislation – PVSC executives continuously review and track legislation during the year.

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2. How are things measured with respect to ensuring that legislation is being followed and executed?

a. How does PVSC keep up with legislative changes – Executives and legal council follow legislative cycle.

b. Is there a particular team or office that tracks legislation – All executive team members and legal council in addition to other related government agencies.

c. Is there a team who performs cost impact calculations – There is no one team that undertakes this duty. This depends on what area of the organization is impacted and in what manner.

d. How does PVSC ensure that it has complied with legislative changes – PVSC routinely looks at the legislation internally for compliance. PVC also relies on outside auditors to regularly look at their performance against stated legislation.




Review of Legal Framework Document(s)

PVSC has been the recipient of stable legislation concerning property taxation. The executive team is aware of, and annually reviews, rules and regulation changes. If and when changes are proposed or made to the Nova Scotia property tax system, these changes are reported within the annual report, press releases and other appropriate communications.

Queries and Reports NA Metric

PVSC Executive Team signs off annually that they have reviewed and are compliant with all currently enacted legislation.

PVSC Executive Team publishes a document outlining any new legislation that has changed in the previous or current year and what the ramifications are to the organization and its stakeholders.




Human Resources

Justification Human resources and staff management is one of the key operational factors of any assessment organization. It is important to make sure staffing and budgetary levels are adequate to achieve key goals and to meet key standards. It is important that staff is adequately trained and educated, and that there is a way to track their development. In the process of establishing assessment standards, people must be an important part of the equation. Dependencies

IAAO Standard of Professional Development

Timetable Human resource concerns should be constantly evaluated.


1. How many people work in each area of PVSC? The ratio of workers to work must make sense.

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2. PVSC must engage in formal planning.

3. PVSC’s budget needs to be at least comparable to other jurisdictions operating at a similar level of responsibility, and PVSC’s budget needs to be adequate to fulfill its responsibilities and meet its goals.

4. The differences between management and staff workers must be identified, and an employee performance review process must be in place.

5. There should be an available staff‐training program where the completion of education and training courses by PVSC staff is tracked. This can be aligned with groups like the Institute of Municipal Assessors, International Association of Assessing Officers or equivalent group for valuation purposes


Review of Human Resources Document(s)

PVSC creates an annual operating plan that is tracked and monitored. Within the plan, human resources are assigned to tasks. The review of the plan and tasks has determined that the allocation of resources is reasonable and appropriate.

The corporation takes great pride in its staff and has invested in their education and professional development. The corporation provides designation opportunities, continuing education classes and appropriate levels of specific education to its employees.

Over 80% of the PVSC appraisal professionals are certified or in process of attaining certification.

Queries and Reports



NA

Metric

Formal reassessment project plan is in place prior to each reassessment. o Ratio of units to employees for each task assigned in plan must meet internal or external

productivity guidelines.

Staff training plans should be in place. o All staff with designations should meet annual continuing education guidelines. o Training should be tracked by human resources staff.




Appeals Process

Justification The appeals process is an important part of the mass appraisal timeline. The appeals period begins with the sending out of assessment notices, and it allows ratepayers to go through remedial steps to contest an assessed value they believe to be flawed. The appeals process is key for public relations. The failure to have an adequately timed and planned appeals process would reduce the public’s confidence in the assessment process. Dependencies

IAAO Standard on Mass Appraisal of Real Property Timetable The appeals process is conducted each reassessment cycle between the time when assessment notices are mailed and the formal appeals period has ended.


1. Information on the appeals process must be adequately disseminated to ratepayers, including instructions for how to begin an informal appeal and, if the problem is not resolved, how to escalate to a formal appeal.

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2. An informal appeals step must exist where property owners can communicate directly with PVSC. Documentation must be kept on any communications.

3. At least one formal appeals step must exist where property owners can appeal their assessment to a local or provincial board, and documentation must be kept on the board results. The board must be comprised of independent but knowledgeable individuals.

4. A final step must exist where the property owner can appeal their assessment through the court system.

5. The appeal timeline must have enough time allocated for ratepayers to inquire informally about the property value delivered to them on the assessment notice and for them to file a formal appeal if the matter is not resolved.


Review of Appeals Process Document(s)

PVSC has spent a tremendous amount of time during the past 12+ months reviewing the appeal process within Nova Scotia. PVSC prepares a number of reports and continuously seeks to review and improve the appeal process. PVSC has met each of the review criteria above. In addition, all appeals are logged within the CAMA system.

The number of appeals filed annually is considered low on a relative percentage basis scale.


All formal and informal appeals must be logged with ability to report on property type, appraiser and



value changes.

PVSC should produce property assessment data for each property under appeal for both the appraiser and ratepayer.

PVSC should produce an annual report outlining that all appeals have been filed and brought to resolution according to legislated timeframes.


Property Tax and CAMA System

Justification In Real Estate Mass Appraisal and Property Tax, the Property Tax and CAMA System are pieces of computer software used to manage every step of the assessment and tax collection process in a cost‐effective manner through the use of technology. CAMA means Computer Assisted Mass Appraisal, and CAMA Systems are able to generate assessed values quickly for large sets of properties via valuation models. Property Tax Systems help manage the often‐complex rules for levying and collecting taxes against those assessed values. Together, the Property Tax and CAMA System manages every step of the assessment and tax collection process from valuation to billing to collections. It is vital, therefore, for a set of standards to be followed relating to the Property Tax and CAMA System. Dependencies


IAAO Standard on Facilities, Computers, Equipment, and Supplies Timetable The Property Tax and CAMA System should be functionally available at all times.


1. The computer hardware must have enough power and memory to perform the necessary tasks of running the Property Tax and CAMA Software as well as any other important pieces of software.

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2. The Property Tax and CAMA Software must meet accepted industry standards, be compliant with governing law, and perform relevant tasks accurately.

3. The Property Tax and CAMA Software must be able to work cohesively with other related jurisdictional software.

4. The Property Tax and CAMA Software Database must be backed up to a secure server. This back-up server should be located in a different location than the primary server.

5. Important reports and forms should be available to members of the jurisdictional staff from the Property Tax and CAMA System.

6. There must be a trained and competent staff member who is responsible for custom report writing, database queries, and overall database management.




Review of Property Tax CAMA System Document(s)

PVSC has purchased and maintains a CAMA system to provide a systematic way to store property data including ownership, address, building and parcel based structural components. The IT department has published a number of operational manuals related to the maintenance of the CAMA system and the other IT systems used throughout the organization. The system produces the annual roll, integrates with several additional systems (GIS, Cognos, etc.) and provides the ability to query data in an ad hoc fashion. The IT Department provides regular backups of the CAMA database including off-site storage.


Confirm that all property systems complete regular and complete database backups.

Confirm that all property systems provide all necessary functionality to meet legislative requirements.

Confirm that all property systems can annually provide a complete and accurate tax roll. o This should include a manual that PVSC follows to generate the property tax roll.

Confirm a training manual exists for all major functions that are executed within the property systems.




Section 3 – Statutory and Communication Review A public relations program in the assessment profession provides current and useful information on assessment policies and practices, as well as a means of responding to public opinion. A proactive public relations program is essential to public awareness of the assessment process and of the importance of the property tax in funding local government services. A public relations program should be an integral part of every assessment office’s work. A public relations program describes what the office does as well as how, why, and for whom its services are provided. An effective public relations program results in more accurate and thorough coverage from the media and a better-informed constituency. The assessment office needs to be aware of a wide variety of core constituencies, including individuals or groups with special needs that require attention and focused communication. These groups include property owners, civic and professional organizations, lending institutions, developers, attorneys, real estate appraisers and brokers, governmental agencies and policymakers, tax representatives, and the media. For this section of the certification program there were six review criteria worth a total of nine points. The table below outlines the overview of Section 3 scoring:

Item Score

Annual Report 3 out of 3

Public Relations Program 1 out of 1

Public Speaking Engagements 1 out of 1

Transparency to Data 2 out of 2

Spatial Representation of Data .5 out of 1

Special Purpose Data .5 out of 1




Statutory and Communications SWOT Analysis

The statutory and communications area is well-aligned with the organizations other operating sections. The strength of the annual report, public relations program and continuous work to make data open and transparent are key foundations within this area of the business.

The organization should address crisis management planning and continue to work toward providing a better education experience around special and unique property values and assessment practices.

IPTI recommends that PVSC continue to work towards enhancement of the spatial data presentation of data for both internal and external users. This will ensure wide adoption and greater understanding of PVSC operational results.

STRENGTHS

•Annual Report

•Public Relations Program

•Transparency to Data

WEAKNESSES

•Crisis Management Plan

•Special Unique Data Education

OPPORTUNITIES

•Spatial Representation of Data

THREATS



Annual Report

Justification The goal of an annual report it to provide government officials, staff and ratepayers with a tool that clearly outlines the previous year operations, current status and future budget and operating goals and projections. This is a highly important transparency document that should provide an objective review of the organization. Dependencies

Budgets and completed financial results

Roll quality report


Timetable This objective should be met on an annual basis.


1. Ensure that an annual report is published and readily available to ratepayers, government officials and academics.

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Review of Annual Report Document(s)

PVSC creates and publishes an Annual Report that is available to the general public, employees and government officials. The document is transparent as it outlines key operational issues, financial performance and future operating strategy.

The Annual report is available both in hard-copy and via electronic download.

Queries and Reports

Annual Report Publication Metric

Confirm that the annual report is published and openly available for review by government officials, staff and ratepayers.


Public Relations

Justification Public relations play a key part of tax administration. It is important for the public to be given information about revaluations and new legislative updates. It is also important for the public to develop a sense of trust and respect in the assessment process. Failing to have an adequate public relations strategy can cause issues from information request overload to complete distrust of the process.



Dependencies



Timetable

Public relations concerns should be constantly evaluated.


1. PVSC must maintain a Public Relations plan. 1 of 1

2. Research must be routinely done on the public perception of PVSC. An example would be a statistically valid public opinion poll. – Public opinion is sought out on a regular basis through surveys.

3. Communications with the public should be positive. Education or communications should be provided to the public on key assessment issues and new legislation.

4. There must be a set of public relations policies and procedures outlining criteria

for electronic, written, news release, and face-to-face communications with the public.

5. Information should be distributed to the public in a current and cost‐effective means.

6. Past public relations programs should be tested and evaluated to look for

potential improvements.

7. The public relations plan should take into account the current climate and the specific needs of the core audience.

8. There should be a designated PVSC public relations officer.

9. Planning for public relations must be done in advance.

10. There must be a process by which reasonable public information requests can be

quickly accommodated.

11. A web portal must exist for the public to access key property information including assessed values, sales history, land data, and building data. There must be someone appointed to review the accuracy of the data that is published to the web portal.

12. As a priority, PVSC should keep educating the public about property assessment and property tax. This can be done through various initiatives and plans.

13. Property owners should be able to easily get answers to questions. PVSC should

be able to efficiently handle questions from property owners.




Review of Public Relations Document(s)

PVSC creates and reviews an annual public relations plan. This plan outlines key dates, speaking engagements and education items. This is done in conjunction with the Annual Report. PVSC provides public information via the website, through published documents and through personal interaction with ratepayers, government officials and other concerned groups.

An area where PVSC can add value to this area would be to create and implement a crisis public relations plan. This will address how PVSC might best serve the public during times of crisis.

Queries and Reports

Annual Public Relations Plan

Brochures

Videos

Reports and documents

Website information

Metric

Development of a plan that annually or cyclically addresses identified public relations needs. This is typically through the use of published brochures, videos, reports, speeches or delivery of data via the organizations website.

Confirm that the plan is published and updated on an annual basis. Ensure that all groups are being represented by the plan.

The goal of an active public speaking program is to educate ratepayers and government officials about the valuation process, especially when there are pending changes to the process.




Public Speaking Engagements

Justification The goal of an active public speaking program is to educate ratepayers and government officials about the valuation process, especially when there are pending changes to the process. Dependencies

Public Relations Plan

IAAO Standard on Public Relations Timetable This objective should be met on an annual basis.

Review of Public Speaking Engagements Document(s)

PVSC’s public relations plan includes known public speaking engagements. PVSC, its executives and employees are often asked to deliver information to the general public or special interest groups.

Queries and Reports

Annual Public Relations Plan Publication

Provide sample speeches, videos or other public education documentation Metric

Confirm that the annual report is published and openly available for review by government officials, staff and ratepayers.

Confirm that PVSC is conducting public relations speeches, videos, or other forms of public education. PVSC Management Response

Transparency to Data

Justification Open access to data is one of the keys to running a transparent government organization. The benefits are efficiency for staff, ratepayers and other interested parties. The rapid growth of the internet has provided a means to allow access to data that previously was not possible. Not only should data be open and available, the approach to provide this data should be easy to use for the average person.


1. Identification of outreach groups to address on an annual or regular basis. This may include government partners, ratepayer groups, real estate or appraisal groups.

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2. Once groups have been identified, confirm that there is active dialog between the organization and corresponding group.




Dependencies


IAAO Standard on Public Relations Timetable This objective should be updated on an ongoing basis.

This objective should be reviewed at least annually.

Review of Transparency to Data Document(s)

PVSC has created and maintains a public internet site. This site provides access to a number of frequently asked questions and property data. PVSC also responds to open information requests as appropriate.

IPTI recommends that PVSC work towards enhancing its public access to spatial data representation.

Queries and Reports


Internet and intranet facing applications which allow access to data.

Metric

Confirm that PVSC is providing access to public data via the internet

Confirm that PVSC is fulfilling records requests

Confirm that PVSC is conducting public relations speeches, videos, or other forms of public education.



1. Functioning website or kiosk that allows ratepayers, government officials and other interested parties access to relevant property data.

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2. Functioning website or kiosk that allows ratepayers, government officials and other interested parties access to relevant forms (appeals, exemptions, change of property data, etc.).

3. Functioning website or kiosk that allows ratepayers, government officials and other interested parties access to relevant data about assessment/valuation processes and procedures used to determine taxable values.

4. Special consideration will be given to sites that allow enhanced query capabilities with digital output of data.




Spatial Representation of Data

Justification When providing data to the general public, government officials and interested parties it is often much easier to see a representation of the data on a map. This is facilitated by open access to geographical information systems (GIS) tools. Similar to other transparent data access sources, GIS tools help the flow of information to those who are seeking to make sense of the process. Dependencies



GIS and CAMA system access Timetable This objective should be updated on an ongoing basis. This objective should be reviewed at least annually.

Review of Spatial Representation of Data Document(s)

PVSC has created and maintains a spatial layer that is used within its property valuation group. Spatial analysis and publication of spatial data is an area that PVSC can increase its presence. Spatial data analysis may find value patterns that are not immediately noticed in tabular data analysis. This analysis should be added to the public facing website when available. While there are spatial data presented to both employees and the public IPTI believes that PVSC can and should increase its use of spatial data.

Queries and Reports


Internet and intranet facing applications, integrated with GIS applications, that allow access to data Metric

Confirm that PVSC is providing access to spatial data via the internet

Confirm that PVSC is utilizing GIS data when producing reports and analysis for public consumption



1. Functioning website or kiosk that allows ratepayers, government officials and other interested parties to access spatial/map based data for requested properties.

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2. Special consideration will be given to sites that allow enhanced query capabilities with digital output of data.




Special Purpose Data

Justification

There are many complex processes involved in the property tax valuation and assessment business that are not easily understood. It is incumbent upon PVSC to provide non-technical insight into how each of these special purpose issues work. These are excellent tools that can be used to further public education, save time and money and increase public perception of the assessment organization.

Dependencies



Internet and/or Intranet site Timetable This objective should be updated on an ongoing basis.

This objective should be reviewed at least annually.

Review of Special Purpose Data Document(s)

Special purpose properties are of significant importance in the Province. The valuation of these properties is covered within the valuation guides. The PVSC team often manages questions and other communication issues around these property types.

IPTI recommends that PVSC work towards updating or creating a set of special purpose brochures, website data or other relevant data would help to communicate issues related to these properties to the general public. The current data is overly technical and can be adjusted to allow for an easier understanding of the issues.


1. Access to non-technical explanation(s) of what qualifies as a special purpose property. This can be in the form of:

a. A website link outlining the types of property which qualify. b. A brochure that explains what the various property types are and the

importance of correctly identifying property types/class. c. Identification of speaking engagements, radio shows or other public

information sessions where special purpose property is discussed. d. Other relevant format.

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2. Access to non-technical explanation(s) of how special purpose property is assessed. This can be in the form of:

a. A website link outlining the valuation techniques and processes for special purpose property

b. A brochure that explains what the various valuation techniques for special purpose property.

c. Identification of speaking engagements, radio shows or other public information sessions where special purpose property valuation is discussed.

d. Other relevant format.




Queries and Reports


Internet and intranet facing applications that allow access to data

Pamphlets or videos

Metric

Confirm that PVSC is making arrangements to provide non-technical explanations for items like valuation processes, how to file an appeal, how to file for exemptions/deductions, etc.




Section 4 – Special & Unique Property Special and Unique property is a small but important part of the real property inventory within a jurisdiction. These properties are often highly visible and may be extremely valuable on an individual basis. It is important that these properties are managed in an appropriate manner. The focus of the certification exercise on these specific properties is to ensure that the organization is tracking, and managing their inclusion on the tax roll in an accurate and responsible way. It is also imperative that the jurisdiction is open and transparent with the valuation processes, property values and roll handling processes of these properties.

For this section of the certification program there were five review criteria worth a total of six points. The table below outlines the overview of Section 4 scoring:

Item Score

Tracking Special & Unique Property 1 out of 1

Guides for Properties .5 out of 1

Valuation Professionals/Contracting 2 out of 2

Roll Handling Procedures 1 out of 1

Quality Control 1 out of 1

TOTAL SCORE 5.5 out of 6



Special & Unique Properties SWOT Analysis

Special and unique properties are highly visible and require special valuation skills. PVSC hires, trains and maintains professional evaluators who are capable of valuing and managing the special and unique properties across Nova Scotia.

The opportunity to enhance tracking and stratification of special and unique properties is well within the capabilities of the CAMA system. PVSC should look at ways to further utilize this tool to help manage these properties. The corporation is weakest when it comes to publishing the details of how it values and handles special and unique properties within the assessment roll. This includes provision of web access to these details.

STRENGTHS

•Professional evaluators

WEAKNESSES

•Valuation guide(s)

•Web access to special/unique processes

OPPORTUNITIES

•Property tracking within the CAMA system

THREATS



Tracking Special and Unique Properties

Justification Tracking special and unique properties is important to an assessment jurisdiction as these properties are often high profile, valuable and difficult to value. The goal of tracking these property types is important to the goal of an annual report it to provide government officials, staff and ratepayers with a tool that clearly outlines the previous year operations, current status and future budget and operating goals and projections. This is a highly important transparency document that should provide an objective review of the organization. Dependencies

CAMA System

Roll Quality Report

IAAO Standard on Mass Appraisal


Timetable This objective should be updated on an annual basis.

Review of Special & Unique Properties Document(s)

PVSC tracks special and unique properties within the CAMA system. Structure codes within the system identify the specific property types. This code also allows query and analysis of special and unique properties.

IPTI recommends that PVSC work towards updating or creating a set of special purpose brochures, website data or other relevant data would help to communicate issues related to these properties to the general public. The current data is overly technical and can be adjusted to allow for an easier understanding of the issues.

Queries and Reports

Custom CAMA query

Roll Quality Report

Metric • Confirm that the Special & Unique properties are being tracked within the CAMA database.



1. The jurisdiction should be able to track special and unique properties within the CAMA database. .

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2. Please provide an explanation of how this process is managed (ex. by “structure code” or some other query capable field, etc.).




Guides for Properties

Justification Production of guides for special and unique properties is important to an assessment jurisdiction. This is both to insure that staff manages these unique properties consistently and that ratepayers are aware of how their properties are being valued. These are highly important transparency documents that should provide a basis of discussion for these high priority properties. Dependencies

IAAO Standard on Mass Appraisal Timetable This objective should be updated on an annual basis.

Review of Guides for Properties Document(s)

PVSC addresses property valuations through the publication of valuation guides. There are both residential and non-residential property valuation guides. Valuation guides for special purpose properties have not been specifically created, though the valuation techniques are outlined in the non-residential valuation guides. PVSC is working towards publishing non-technical valuation process manuals for special use properties.

Queries and Reports

Custom query outlining special and unique properties located within the jurisdiction.

Metric

Confirm that the Special and Unique properties are being valued per valuation manual or memorandum.



1. Production of a memorandum or valuation guide for each special or unique property or property group. This could include a list of guides and recommend valuation methods for properties such as:

a. Railroads b. Airports c. Ports d. Military Bases e. Public Schools f. University’s g. Churches h. Shipyards i. Etc.

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Valuation Professionals/Contracting

Justification Ensuring that a jurisdiction is following professional conduct standards for its appraisers instills confidence that the job being performed is of a high quality. One of the fundamental items within appraisal ethics is to not take on a project for which you are not trained to complete. Special and Unique properties are difficult to appraise and often require jurisdictions to hire outside help to appraise special and unique properties. Dependencies


Standards of Professional Appraisal Practice

Timetable This objective should be updated on an annual basis.

Review of Valuation Professionals/Contracting Document(s)

PVSC has qualified appraisers who have the experience to value a wide range of properties. Special use properties and their valuation techniques are all managed internally by PVSC staff. The staff have the requisite experience and are suitably credentialed to enable them to perform these valuations. At present at least 80% of the PVSC appraisal staff are certified or in process to be certified.

Queries and Reports N/A Metric • Confirm that the Special and Unique properties appraisers are qualified to undertake their assignments.



1. Certify that appraisal personnel are qualified to value special and unique properties

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2. Certify that appraisal personnel are up to date on accreditation and certification hours.

3. If special and unique property appraisals are outsourced, provide a copy of the

appraisal statement of work or contract.




Roll Handling Procedures

Justification Moving special and unique properties from the exempt roll to the non-‐‐exempt valuation roll is often a very difficult process. Exempt special and unique properties should have a published guideline for how to make the property class change and the resulting valuation roll changes. Dependencies


IAAO Standard on Assessment Administration Timetable This objective should be updated on an annual basis.

Review of Roll Handling Procedures Document(s)

PVSC has developed an entire set of roll handling procedures. These procedures cover all property types including special and unique property.

Queries and Reports N/A Metric

Confirm that the Special and Unique properties are managed on the roll following published procedures.



1. Confirm publication of roll handling procedures for managing Special and Unique properties.

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2. Specific attention to those properties that move from exempt to non‐exempt during a calendar year.




Quality Control

Justification Special and unique properties should be required to undergo quality control procedures like all property. By running quality control reports on appraisal uniformity and appraisal level this will ensure that all properties in the jurisdiction are being held to the same standards. In addition, there should be parcel level quality control processes run against special and unique property.

Dependencies


IAAO Standard on Assessment Administration

Roll Quality Report Timetable This objective should be updated on an annual basis.

Review of Quality Control Document(s)

PVSC runs quality control checks on all property types including special and unique property. This is done through e-audit queries, roll quality report results and other analysis performed by the corporation.

Queries and Reports

Roll Quality Report

Quality Control Queries Metric

Confirm that the Special and Unique properties are being appraised in the same manner as other property classes.



1. Ensure that the roll quality report breaks out special and unique properties as a separate section. These should be compared to other property classes/types for uniformity.

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2. Ensure that special and unique properties have a set of parcel level queries run against them to ensure uniformity of data characteristics.




Section 5 – Quality Framework/Business Improvement Quality framework/business improvement provides an opportunity to learn from peers and other interested parties on the types of actions that can be taken to achieve quality objectives. The goal is to establish priorities that align organizational and system priorities. In addition, PVSC should familiarize itself with performance data and understand how it can use it to drive measurable improvement and build capacity.

IPTI has reviewed many items related to quality and business improvement throughout the certification process. These include the reassessment plan, quality membership and survey results from the stakeholder community.

For this section of the certification program there were five review criteria worth a total of five points. The table below outlines the overview of Section 5 scoring:

Item Score

Reassessment Plan 2 out of 2

Plan Assessment .5 out of .5

Plan Approach .5 out of .5

Quality Membership 1 out of 1

Input & Feedback 1 out of 1




Quality Framework/Business Improvement SWOT Analysis

Continuous quality and business improvement is top of mind within the PVSC organization. The corporation subscribes to several organizations which promote quality including the licensure of its key valuation professionals.

The organization seeks input and feedback from all stakeholders on a regular basis. PVSC has recently upgraded its quality improvement plan, including its statement of quality. The quality plan needs to be continually assessed and PVSC should strive to implement a formal continuous quality improvement process.

STRENGTHS

• Quality membership

• Quality input & feedback from all stakeholders

•Quality improvement plan & PVSC statement

WEAKNESSES

OPPORTUNITIES

•Formal continuous improvement process

THREATS



Quality Improvement Plan

Justification A jurisdiction should embrace continuous quality improvement. This serves many purposes throughout the organization. Management can use continuous quality improvement to streamline operations, lower costs and increase service delivery results. Employees feel empowered and pride working for an organization that seeks their feedback and acts upon it. The organization will also find that it is easier to recruit and maintain top talent in an environment that continually works towards quality improvement. Dependencies



Third Party Quality Improvement Standard(s) Timetable

This objective should be reviewed and updated on a semi-‐‐annual basis

Review of Quality Improvement Plan Document(s)

PVSC has shown that it is dedicated to continuous quality improvement. It has adopted IAAO standards on both mass appraisal and assessment administration. In addition, the executive team has been diligent in recently creating a quality statement for the organization. The quality improvement plan has been developing the past several years and includes amongst other items the roll quality report.

Queries and Reports

Roll quality report as needed Metric

Confirm that the Jurisdiction has published a quality improvement plan which includes developed indicators of quality.



1. Jurisdiction Quality Improvement Plan based upon measurable objectives and priorities.

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2. Quality Improvement Plan should have developed indicators of quality.

3. Formal quality statement by the organization.

4. Formal quality statement by the organization should be developed.




Plan Assessment

Justification A jurisdiction should embrace continuous quality improvement. Having a formal quality improvement plan and quality statement is important. However, there needs to be regular assessments of the plan and how the organization is meeting the agreed upon quality statements. This is critical to ensuring that the organization is continuously monitoring and making improvements to those areas that the organization has deemed priority. Dependencies




This objective should be reviewed and updated on a semi-‐‐annual basis.

Review of Plan Assessment Document(s)

The organization annually provides several quality improvement points. The major areas are the roll quality report, annual employee surveys, annual ratepayer surveys and appeal management reports. The annual report also outlines major initiatives around quality and improvements accomplished and planned.

Queries and Reports

Roll quality report Metric

Confirm that the Jurisdiction periodically assesses and adjusts the quality improvement program initiative.



1. Documentation of PVSC periodically assessing the information derived from the formal quality improvement indicators contained in the formal quality statement

a. This should include a statement of problems solved and an outline of opportunities to improve quality.

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2. Publication of improvements made: a. Internally – via employee email or in person formal announcements. b. Externally – via the annual report or press releases.




Plan Approach

Justification A jurisdiction should embrace continuous quality improvement. Having a formal quality improvement plan and quality statement is important. An important piece of this process is to formalize a process for continuous quality improvement. This tends to lend both repeatability and shows a management seriousness to quality. Following a proven process helps to consistently put improvement projects in front of the stakeholders in a way that allows each member of the team to see measurable results. Dependencies




This objective should be reviewed and updated on an annual basis.

Review of Plan Approach Document(s)

PVSC has been continuously working on a formal approach to continuous quality improvement. The organization has been working towards quality improvement on an informal basis for many years. The more recent move towards formal quality improvement has finally formalized a long-standing process.

Queries and Reports N/A

Metric

Provide an example of how the organization has used the formal approach



1. Outline of PVSC adoption of a formal approach to continuous quality improvement. This could be a formal document or the adoption of a quality improvement process.

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Quality Membership

Justification A jurisdiction should embrace continuous quality improvement. Having a formal quality improvement plan and quality statement is important. An important piece of this process is to identify and participate with an organization whose primary goal is to promote quality. This tends to show a management seriousness to quality. Engaging in a group whose primary goal is quality allows the organization to seek feedback and learn from the best practices of other organizations. Dependencies




This objective should be reviewed and updated on an annual basis.

Review of Quality Membership Document(s)

PVSC belongs, or has individual members who belong, to institutions whose aim is to promote quality through standards and best practices. This includes organizations like the International Association of Assessing Officers, Appraisal Institute of Canada and the Project Management Institute. The standards and education provided by these organizations are woven into the daily operations of PVSC and provide good resources for staff to utilize in their pursuit of quality.


Metric

Provide a written response of how membership has helped the organization.

This could be a group like ISO or the American Society for Quality, Six Sigma or even the IAAO.



1. Does PVSC belong and participate in organization whose primary goal is quality improvement.

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Input and Feedback

Justification A jurisdiction should embrace continuous quality improvement. Having a formal quality improvement plan and quality statement is important. Ensuring that quality improvement inputs are seriously collected and acted upon from all sectors of the process is important in developing trust. Dependencies



Third Party Quality Improvement Standard(s)

Timetable This objective should be reviewed and updated on a continual basis.

Review of Input and Feedback Document(s)

PVSC seeks input and feedback from all stakeholders in the property tax process. The corporation regularly conducts survey input from employees, ratepayers and other interested personnel. These survey’s are then used to drive change or to address pressing issues from all stakeholders.


Metric Provide a written response of how input from employees, management, public, government officials and other interested parties is obtained and reviewed.



1. PVSC seeks quality improvement ideas and concepts from all key stakeholders including staff, ratepayers, government officials and academia.

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2. Does PVSC establish and support specific quality improvement initiatives on an ongoing basis.




IPTI Certification Documentation

The following is a list of documents that PVSC has made available to IPTI during this project. IPTI CERTIFICATION - PVSC DOCUMENTATION REQUIREMENTS

# Category Document

1 Communication Employee Feedback Survey

2 Communication 2015 Inquiry Period Survey

3 Communication 2015 Appeal Period Survey

4 Communication Employee Engagement Survey

5 Communication Income and Expense On-Line Data Submission Survey

6 Communication 2014 PVSC Corporate Communications Strategy

7 Communication 2015 Assessment Communication Plan

8 Communication Municipal Advisory Committee Terms of Reference

9 Communication Commercial Agent Liaison Committee Terms of Reference 2015

10 Communication PVSC 2014-2015 Annual Report

11 Policy Atlantic Canada Site Contamination Policy 1999

84 Policy Atlantic Canada Site Contamination Policy 2015

85 Policy Base Date Policy 2012

15 Policy PVSC Property Data Collection and Maintenance Policy 2015

16 Policy PVSC Valuation Methodology Policy 2015

17 Policy PVSC Service Standards 2015

18 Policy PVSC Training and Development Policy 2012

19 Policy PVSC Data Disclosure Policy 2012

20 IT Cognos Interface Design Document

21 IT Cognos Licenses and Security

22 IT Cognos Environments

23 IT Permit Data Upload Procedures

24 IT IT iasWorld Security / Access Processes

25 IT iasWorld Access by User Role



26 IT iasWorld User Distribution List

27 IT iasWorld Access List

28 IT PVSC IasWorld Application Access Policy and Process

29 IT iasWorld Access Checklist

30 IT iasWorld Access Summer Students List

31 IT PVSC IT Change Management - Emergency Release Process

32 IT PVSC IT Change Management - Minor Release Process

33 IT PVSC IT Change Management - Standard Release Process

34 IT PVSC Release Management

35 IT PVSC Service Request Process

36 IT PVSC Incident Management Process

37 IT PVSC Release Management - Workflow Diagram

38 IT IT Year End Roll Validation Process

39 IT IT Year End Process

40 IT IT Year End Key Dates - Schedule

41 IT IT Year End Roll Production Detail Process

42 IT PVSC-Land Registry EDX Design Document 2006

43 IT IE Modelling Data Mapping for Bulk Upload - Mini Home Parks

44 IT IE Modelling Data Mapping for Bulk Upload - Multi-Residential Properties

45 IT IE Modelling Data Mapping for Bulk Upload - Nursing Home and Retirement Residences

46 IT IE Modelling Data Mapping for Bulk Upload - Office, Retail, Industrial

47 IT IE Modelling Data Mapping for Bulk Upload - Parkades

48 IT Data Mapping for Bulk Upload - Hotel, Motel, Accommodation Properties

49 Operation 2015-16 Operations Plan (Power Point Summary)

50 Operation 2015-16 Operations Plan Work Unit 2 Sample

51 Operation 2014 Roll Quality Report

52 Operation 2015 Residential Peer Review Summary (Work Unit 1)

53 Operation 2015 Residential Peer Review Summary (Work Unit 2)



54 Operation 2015 Peer Review - Commercial (Work Unit 3)

55 Operation 2015 Residential Peer Review (Work Unit 3)

56 Operation 2015 Residential Peer Review (Work Unit 4)

57 Operation Commercial Variance Graphs - Commercial Work Unit 2

58 Operation Commercial Peer Review (WU2) Summary of HRM Land Valuation 2015

59 Operation Commercial Peer Review (WU2) Summary of Dartmouth Land Valuation 2015

60 Operation Commercial Peer Review (WU2) Summary of Halifax City Land Valuation 2015

61 Operation Residential Sales Investigation/Analysis Guide 2004

62 Operation Sample Commercial Property Record Card

63 Operation Sample Residential Property Record Card

63 Operation Commercial Inventory Codes List

64 Operation Map of Assessment Geographic Work Areas

65 Operation Sample Deed Transfer Tax Affidavit (Province of NS)

66 Operation Value Change Through Filed Roll Changes Edit Report

67 Operation 2015 NSAAT - Provincial Results Report Sample

68 Operation 2015 S.68 - Provincial Results Report Sample

69 Operation Appeal Intake Report

70 Operation Appeal Performance Report by Assigned Assessor Sample

71 Operation Appeal Performance Report Sample

72 Operation Appeal Target and Measures Report

73 Operation Internal Appeal Report Summary Sample

74 Operation Municipal Appeal Inventory Report Sample

75 Operation Municipal Appeal summary report

76 Operation Income Modelling Appeal Report Template

77 Operation NSAAT - Residential Valuation Summary Form

78 Operation Call Management Report

79 Operation Call Management Scorecard Report (Sample)

80 Operation PVSC All Staff Call Management Training Document (Jan 2014)



81 Operation Sample Call Flow to respond to "Why did my Assessment Increase"

82 Operation KPI's - Mail and Correspondence

83 Operation Cap Program Interpretation Guide 2014

84 Procedure PVSC File Improvement Process

85 Procedure General Level Calculation Procedures/Policy

86 Procedure PVSC Parcel Map Update Procedures

87 Procedure Income Expense - On Line Data Collection Procedures

88 Procedure IE Modelling Business Requirements

89 Procedure IE Mail out and Logging Procedures

90 Procedure IE Modelling Bulk Upload Procedures

91 Procedure IE - Web Application Reference Guide for Service Desk

92 Procedure IE - Web Application Reference Guide for Assessors

93 Procedure Process for Verifying CLT-MS Cost Tables

94 Procedure Residential Reassessment Process

95 Procedure Sales Validation Guide - Commercial

96 Procedure Commercial Sales Validation Questionnaire

97 Procedure Sales Validation Guide - Residential

98 Procedure Commercial Structures and Machinery/Equipment Guide 2015

99 Procedure PVSC Residential Field Guide 2015

100 Procedure PVSC Agricultural Field Guide 2008

101 Procedure PVSC Change In Use Guide 2014

102 Procedure PVSC Commercial Cost Field Guide

103 Procedure PVSC Depreciation Analysis Guide 2015

104 Procedure Property Data Assistant Field Guide 2014

105 Procedure Student Program Manual

106 Procedure Forest and Farm Exemption Guide 2014

107 Procedure Income Property Valuation Guide for Office Buildings 2015

108 Procedure Marshall Swift Commercial Brown Book



109 Procedure Marshall Swift Commercial Agricultural Occupancy Reference Guide

110 Procedure PVSC Land Valuation Guide 2015

111 Procedure The Assessment of Commercial Properties in NS (2015)

112 Procedure PVSC New Employee Orientation

113 Procedure PVSC Internal Audit User Guide 2014

114 Procedure PVSC E-Audit Issues/Solutions Guide 2014

115 Procedure PVSC E-Audit Report Descriptions

116 Procedure The Assessment of Special Purpose Properties - Table of Contents

117 Procedure Mass Appraisal Procedures Guide

118 Procedure Appeal Procedures 2014

119 Procedure How to Process NSAAT Residential Valuation Summary Form 2013

120 Procedure NSAAT Recorder Manual 2014

121 Procedure i-Respond User Training Guide 2012

122 Procedure i-Respond User Guide

123 Procedure Phone Queue Login In/Out Process 2014

124 Procedure PVSC Quality Contact Call Flows 2013

125 Procedure Service Center Orientation 2015

126 Procedure Certification of Assessment Roll Procedures

127 Procedure PVSC Advanced Notification Process

128 Procedure/Communication PVSC Correspondence Process

129 Procedure/Communication PVSC Mail Distribution List

130 Procedure/Communication Data Disclosure Policy Guidelines

131 Statutory Links to NS Assessment Act and Municipal Government Act

132 Statutory Memorandum of Understanding - PVSC and Province of Nova Scotia 2007

133 Statutory Cap Program Regulations

134 Statutory Service Level Agreement - PVSC and SNSMR Land Services

135 PVSC Data Data File listing all assessed properties in the Province of NS - April 2015

136 PVSC Data Data File Listing all Provincial and Federal Properties with Appeal Information April 2015



137 PVSC Data Data File Listing all Special/Unique Properties with Appeal Information April 2015

138 PVSC Data Data File Listing all Sales in the Province of NS for 2012, 2013 and 2014



Addendum A - PVSC Management Responses





Addendum B – Curriculum Vitae - Ruel Williamson, MBA

Professional Summary

An efficient expert in all aspects of property tax systems including policy, administration, processes, valuation, assessment, appeals and the use of technology to drive innovation. He has consulted on projects around the world including work in the United States, Guam, the U.S. Virgin Islands, United Kingdom, Northern Ireland, Canada, Australia, New Zealand, Tasmania, Trinidad and Tobago, Sri Lanka, Jamaica, Colombia, Kenya, United Arab Emirates, Russia and South Africa. He was an appointed member of the International Association of Assessing Officers (IAAO) International Committee for 2012 & 2013 and a member of the IAAO Technical Research Committee in 2013 & 2014.

Experience

International Property Tax Institute – Chief Operating Officer Present

Provide operational leadership to ensure world-class delivery of all International Property Tax Institute (IPTI) projects. This is accomplished by working closely with clients and professional organizations to ensure we continually evolve independent and unbiased practices in the field of ad valorem taxation.

Mind Pearl LLC – President 02/13 – Present

Project and program consulting for domestic and international clients. Mind Pearl clients include government organizations globally, private sector software development companies and non-profit organizations. This includes serving as a Chief Operating Officer for the International Property Tax Institute (IPTI).

Sub-contracted to deliver project services to the Dubai Land Agency. Project delivered an operational review of overall business processes and research into the calculation of a sales and rental index calculation for the jurisdiction.

Worked as a strategic advisor to Modria, the leading on-line dispute resolution company in the world. Work involved showed how to increase taxpayer satisfaction and lower per case costs.

Provided operational review for all land administration systems in Medellin, Colombia for Mercy Corps. Review was focused on valuation and taxation procedures to ensure that government is maximizing its ability to accurately and equitably collect revenue.

Sub-contracted by the International Property Tax Institute to write and present appraisal operations manuals for Property Valuation Services Corporation, Halifax Nova Scotia.

Sub-contracted by the International Property Tax Institute to research and prepare a property tax market study for the ANZ market area.

Sub-contracted to lead real estate supply and demand study for a progressive MENA government. Sub-contracted to provide analysis and technical support for the territory of Guam property tax system

updates.

Thomson Reuters – Sr. Director, International Strategy 05/06 – 02/13 Developed international business unit for Thomson Reuters government sector creating backlog from

$0 to over $20 million in under 18 months. Executive project manager for Cape Town, South Africa land records and valuation project. Delivered

$3.2 million project on time and on budget. Executive project manager for Government ordered Commercial and Industrial revaluation of Marion

County, Indiana. Lead effort to re-value all parcels in 100 days. Delivered $1.8 million project on time and on budget.

Guest lecturer at Renmin University, Beijing, China for the series “Workshop on Property Tax Assessment and Administration” co-sponsored by the China State Assessment and Taxation



CREW Providers, Inc. – Co-founder and Sr. Advisor 07/05 – 01/11

Provided consulting services to a corporate client who had filed for insolvency in Canada. Coordinated with the court appointed trustee to handle communications and locate a new buyer in lieu of filing a restructuring plan. Company reached agreement to sell a majority of assets including agreement of all preferred debt holders.

Team member for a major property tax procurement project in Maricopa County, AZ. Defined as-is and to-be processes and authored detailed specifications.

Tyler Technologies, Inc. – President, Tax & Appraisal 05/04 – 07/05 Responsible for restructuring 400 services, support, and software development personnel from three

separate operating divisions leading to cost reductions of 15%. Successfully implemented accounting and operational procedures to meet SOX compliance.

NovaLIS Technologies, Inc. – Vice President, Operations 01/03 – 05/04

Executive project manager for tax update project with the Valuation Land Agency in Northern Ireland. Negotiated contract, managed scope, resources and planning of the multi-million dollar project. Project completed successfully.

Executive sponsor to a provincial property tax technology project in British Columbia, Canada. Completed project assessment, re-calibrated project schedule, negotiated necessary change orders and re-aligned project resources. Project completed successfully.

Cole Layer Trumble Company – Chief Operating Officer 11/95 – 01/03

Responsible for company operations and contract compliance leading revenue growth from $33 million to over $55 million.

Implemented a five metric management philosophy into a workforce that grew from 300 to over 500 employees.

Project Manager for a statewide-integrated property tax software implementation in West Virginia. Worked daily with State Tax Department officials to manage all aspects of the $5 million project implementation. Project completed successfully.

Indiana Tax Commission – Director of Real Estate 08/94 – 11/95

Provided statutory oversight and guidance for the assessment of all real property in coordination with 1,008 elected township officials and 92 elected county officials.

Authored legislation which was passed into law outlining the capital valuation and taxation of casino gaming in Indiana.

Kansas Department of Revenue – Appraiser II 10/92 – 08/94

Participated as a member of the DOR compliance/audit team evaluating taxation procedures used in each of the 105 country jurisdictions.

Prepared descriptive written reports of audit findings outlining problems, their cause and effect and recommendations for the correction of deficiencies uncovered.

Lyon County, KS – Commercial Appraiser 08/91 – 10/92

Coordinated the tax appraisals of all commercial, industrial, and exempt parcels within the jurisdiction. Represented the jurisdiction at administrative and appellate hearings related to ad valorem protests.

Professional Qualifications & Memberships

MBA Emporia State University, Emporia, KS May 1991 B.Sc. Emporia State University, Emporia, KS May 1989 Member International Association of Assessing Officers Member of Project Management Institute



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