Board of Equalization Meeting   8/1/2023

I will now call this meeting to order.

It's the Board of Repalization meeting for August 1st, 2023.

It is 8 22 a.m. And we'll approve the minutes later.

So we'll go ahead and start with our first case.

First case is application number 76 PID 53128 at 5th Street Station Ventures LLC.

Let me go ahead and do my introduction, and then we'll get started.

So I'll say good morning and welcome.

We're the Board of Equalization.

The board is comprised of five citizens of Albemarle County.

We're appointed by the Board of Supervisors.

We're an independent board.

Here's how the hearing will work.

You will have 10 minutes to present your case.

The assessor will have seven minutes to present theirs.

And you will have another three minutes for rebuttal.

During the hearing, we may ask, we may stop to ask you any assessor questions.

as we've read your materials and you're well aware of the presumption of correctness and the standards that apply here.

And just wanna let you know, in terms of, we have our panel, which we're gonna have a fourth member coming soon, has quite a bit of experience in this area, and specifically being on this board, just in terms of your presentation, just be aware of that.

But I'll go ahead and have,

The witnesses swear in at this time, so please raise your right hand.

Do you saw me swear or affirm that the testimony book or on documentary which you're about to give will be the truth, the whole truth, nothing but the truth?

I do.

Thank you.

Any questions before we go?

We've got a slide set printed out for each one of you to discuss.

Please just take notes, make it easy to follow along.

We do appreciate your time very much here today.

This is a, if you have, as a thankless job, citizen of the county.

So, if I could just direct your attention to the second slide.

You mentioned a bunch of things.

I think the one point I wanted to make here

The assessments have to be arrived at in accordance with Generally Accepted Appraisal Practices and Procedures Rules, the same.

I would go to the bottom of this gap just to be quicker with it.

When we're talking about the Generally Accepted Appraisal approaches, there's a difference between the Generally Accepted Appraisal approach and the sales comparison income or cost approaches versus how you do those approaches using Generally Accepted Appraisal Practices and Procedures Rules.

That's the government standard review.

Can you reference the presumption of correctness?

One of the things that is not talked about a lot, and it's relatively new in Virginia jurisprudence, is the Virginia Supreme Court's opinion in a case called, of course, on the 21st of July on the earth, and there's a really cool sign on here that talks about rebutting the presumption of correctness in cases where massive increases have happened.

Essentially, the red highlighted portion says that you can

So it's not just that zero sense in present practices is

All right, so really we're talking with this particular property, the 5th Street Station of Insurance, it's at 100 Redwoods Way, about the cap rate choice.

When we asked for this information provided on this page, or I guess of your slide set,

provided a one-page data sheet that included a table of cap rates that the county allegedly uses to set shopping stores, but there was no explanation of how they adjusted the terms.

So we asked in response to that for an explanation of how the county arrived at that table.

What we got in response was a single page that shows a table of cap rates for the National Power Center market.

I understand that that was taken from Price Warehouse Coopersville State Investor's Survey.

We've attached that as a given deed to our application itself.

but if you look at the PWC table, there are, it's limited to averages and then high and low ranges for all outcomes, five age condition improvements, difference in the market for the pick and feed or any other differentiated characteristics.

And so when you look at that, the most recent data points that could be applicable to the 20.3 assessment off of that data sheet is an average cap rate of 6.43% and the number of the high range is 9.8 or 7.5 for the third quarter of 2022.

and no indication of a trend in that table.

The issue that we have within the introduction of any additional information is that other than what the county has provided to us, and we didn't get the county's presentation until Friday, and that's important here because by statute, the county cannot introduce any additional information to support its cap rate or use any other information in support of it interfering in any manner.

Due to a failure or refusal to explain how it arrived, it's 5.75% overall cap rate.

The cap state survey, again, the national surveys are based on sales of properties in the nation's largest metropolitan area, including the highest real estate markets in the country, such as Nashville, Dallas, Atlanta, and San Francisco communities.

There's no critical basis to conclude that if you're looking at a cap rate like that, the shopping centers in Albemarle County are more attractive between electricity and motor cap rates.

potential buyers and shopping centers in these larger and hotter markets.

That's not all.

Flight 6.

They're important, and I know we're running short on time, but I'll just run through a couple of them.

The business one has been generated.

So in the development of a cap rate, surveys are generally used as support rather than primary evidence.

Here, that's the only evidence we've received.

It's not used in a supporting role.

It's just primary evidence.

That's a violation of this appraisal standard.

I bring it to you to publish a national survey to understand that participants in surveys may not represent typical real estate investors.

Often these surveys reflect the opinions of institutional investors, such as insurance companies, pension funds, and other high wealth equity investors.

So what you're talking about is potentially not typical market-based.

An overall capitalization rate provides compelling evidence that projects between a series of conditions are met including a pertinent part and this is a big one for us with the county's later data that it pulled in from an after the assessment survey.

Data should be drawn from properties that are physically similar to the subject property and they're from similar preferably competing markets as the subject property is meant to be.

sale properties use the sources for calculating overall cap rates should have current date of sale and future market expectations including income expense patterns etc.

Slide seven.

We think that they're better considered market conditions here, and I'll just be quick with this, but the county's cap rate survey is historical in its focus.

They're looking at third quarter 2022, and they're looking at the points in time that are prior to that date.

What the market does is look at what's going on in the future and you would too because if you were going to buy a shopping center or any of them produce some shopping, you don't care about how profitable it was for the prior owner in the past.

What you're interested in is what's my likelihood of receiving those financial benefits in the future.

So you look at things like what's going on with interest rates, what's going on with inflation, what's going on with other indicators of economic uncertainty that is

It's the future that matters.

And that's what we're saying, nothing to not do here, but the use of this survey, looking backward in time, considering what's going on right now.

And these are all, again, appraisal standards.

This first one I listed here, I've abbreviated the title of which next year, T.A.R.E.

That's the Appraisal of Real Estate.

That's from the Appraisal Institute.

That is the preeminent national professional appraisal organization.

Most of the creditors that I've talked with in cases like this refer to the appraisal of real estate as sort of the bible.

So these are beyond generally accepted standards.

On slide 8, we're talking more about issues with interest rates and inflation.

Again, it's just a list of all the standards that are both in the selection of the traffic and the gates.

And we don't think we're applied by county here.

Slide 9 goes on and talks about inflation.

So why are we filing through these exceptions to make clear that it's not a closed call here.

And respectfully, it looks to us like the table is made up.

We have asked repeatedly for how do you get to this chaff rate to supply to our property from that even if the city takes and does not receive information about it.

If you look at the way that the table is laid out for the county, even over the year, all the votes you've taken are issued on a 45-basis form.

Difficult investors whose behavior of traders should reflect do not price the properties as high as they were in the last season with 5 basis point increments.

And that's important because if you look at the example at the bottom, if the market negotiated properties like this one in nice, even 0.5 basis point increments, that would mean that they're negotiating in $5 million increments for the purpose of the problem.

And the market does not do that.

So to us, it's interesting the way that the table is laid out.

They have a shadow that does not reflect market relief.

I'll talk about this a little bit more specifically that's skyrocketing the historic levels over the past few years and the market indicators are the obviously prudent buyers taking that into account.

The trend right now, at least as of January 1, 2023, was an expectation of another 6% increase in inflation for 2023.

The county did not take mortgage rates into account.

This is another issue because, as you all know, mortgage rates have been dropping.

We have 20 terms in the Fed, we're going to do that now.

It's over the next course of time.

If that affects the access to capital, that's a lasting issue for buyers of these types of properties.

If you can get somebody to loan you money for the purchase of this type of property, is it a lot higher rate than it was before?

That's one of the things that, you know, historical looking cap rates does not tell you is what's the market doing to adjust for increases in interest rates.

And there's still a lot of increase now.

I'll just boil this down a little too, bottom line.

Any prudent investor is going to take all of those things into account in those investments that they're willing to make through parking money and something like that.

And so in that current economic and service direct platform environment, what is a prudent investor going to be willing to buy a shopping center with all of its headaches, ownership, and management?

for a board master of 75 basis point premium over what you could get if you just put your money into a CD.

The difficult for deposit, you get money back with no real risk of loss of your investment.

You're getting a 5% plus return, and the county wants to suggest that the prudent investor, but instead of doing that and sitting on a beach and collecting your 5%, it's for a 75 basis point premium that they call the loss of that investment and all the headaches that are associated with that management of that property.

This analysis of cap rates, by the way, from the county appears to have occurred as a result of our office review, not as a pre-assessment analysis.

But the county analyzed overall cap rates for mutual sales located in the Virginia, Carolina, and South Carolina.

Notice it says from recent sales, it doesn't say

our property is 151,950 square feet of waste.

The county's list of alleged comparables, there are 12 of them that are less than 190,000 square feet in size.

10 of those are less than 100,000 square feet in size.

That's less than

One of those properties is only 28,000 square feet inside.

Remember the county's original cap rate that it talked about in its original analysis, there was a small local shopping center.

I don't remember what the square footage of it was.

On the county's list, only two properties are potentially physically similar.

There's no analysis that you think that they actually are.

The ones at 420,000 square feet of property in Atlanta, which is not a very competitive market.

The others at 350,000 square feet of property in Carolina.

It's smaller, but at least it's being bought.

So if you look at the list again, at least 12 of the properties on that list should not be in the survival category.

On slide 17, sale properties use as sources for calculating overall coverage.

You have more expectations including income and expense patterns and likely value trends that are complicated in terms of property.

A lot of the properties in the county that are sold are

or in 2021 or prior, three were sold in 2020.

So 11 of the properties were sold more than a year before the county's January 1, 2023 valuation date and they're not fully considered comparable sales.

The pool of sales on the list that occurred in 2020 see all liquid pool of the bed max.

So really they're not even rates that have to be used for cap rates.

So what we're seeing is not even this list of sales of determinable that are actually comparable for cap rates and derivation purposes.

Slide 18, I know there's some differences on that here, but you can't usually read them like this.

The app rates on this table were in a particular range from 4.7577 to 544.

They said excluding the upper and lower extremes, which just means those two.

If we excluded that 7.54% cap rate, the next class cap rate is 7.25%, not 6.92.

If we correct those two errors we can expect that the average is 5.93 and the calculated median should be 5.5 So if we assume for discussion only 10 countable sales and the source of its 5.75% cap rate in that period would not be countable because the 10 basis point decrease in cap rate would reduce the assessment by nearly 2 million dollars.

So small moves in cap rate make a big hit.

If we give the kind of benefit of the doubt, we should go ahead and shock these.

Those are sufficiently confident.

That's 209,000 square feet of property in New Jersey.

We talked about it in Maryland and in North Carolina.

All we're doing is changing cap rate to an appropriate cap rate.

We're using 6.9 as opposed to 5.75.

No other changes.

They use the actuals.

I mean, the column to the far left, you can see, we did our own analysis and we came up with a higher net operating income than the city did.

And we're fine with that one too.

I'm sorry, in the county net.

We're fine with that first column too, but just looking at the second and third columns, the second column is our correction and the third column is the county income approach.

So all we're asking for this board to do is to use an appropriate cap rate to survive the Cismont property.

I think 6.9% is probably a little bit low, but we're trying to be conservative and get the county income.

Thank you.

Your first column, you know, you don't have the label, so I'm just really trying to understand, what is your first column with the value of any income approach ending up at $102 million?

What is your, is that just a,

Yeah, and I didn't label them.

I just took a snippet of them in our presentation.

It's in exhibit A in our application package.

You can see that portion of it.

But all we did is this is comparing our analysis of the property's actuals to, I think,

Actuals for 2021.

I'm sorry, so I misspoke.

The first column is our 2022 Actual Operating Results.

right outside of that black outline box.

That's the county's analysis of the 2021 activities.

So at 2022, that first column, that's our most recent data for the property on its performance.

And the second column is 2021, which is, I think, what we're going to use for assessment and assessment volume.

Thank you.

What can you tell us about the owner of Fifth Street Station?

Who is it?

Is it a REIT?

It's not a REIT.

It's a company that I believe just owns several shopping centers around the country and manages them.

We used the income approach to value this property.

It's a retail power center.

The 2021 actual income and expenses were used for the analysis.

2022 income and expenses were not available for any income producing properties when the 2023 assessment was determined.

So therefore, 2021 income and expenses are applicable to this assessment.

Based on our internal review, which was done previously,

The assessment was reduced from 119.9 million to 114.9 million, reflecting a reduction of approximately 4.2%.

The subject is a grade one property, which is typically newer centers.

Power centers are large regional centers.

The market itself, just generally speaking, has historically been strong.

The retail rents have risen.

over the years, and vacancy has remained fairly low.

We put some charts in on page two and page three that explain that in further detail.

For the income approach, again, we used 2021.

After the adjustments, the effective gross income was concluded at 9,001,488, which is also what was

calculated by the representative as well.

We applied a 4% replacement reserve and a 4% management and administrative fee to the property.

So the NOI after reserves was 6.608 million.

And on page five, where it shows our worksheet, you can see that number at net operating income.

National surveys were used for the cap rate.

Obviously, PWC provides national data throughout the United States.

This market is not specifically any more risky or any less risky than any other national market.

In fact, there has been a lot of interest in Charlottesville pre and post pandemic because it is a solid, stable, tertiary market area.

The comparable sales that we used were outside of the immediate market area because we have no power center sales in this market.

So therefore we went to regional data to support the cap rates.

Those were presented on page nine of our report and they show the range from 4.57 to 7.54 with an average of 5.95 and a median of 5.77.

The math error was not a math error.

Perhaps we didn't make it clear, but we were referring to the upper end range sale of the High Point Harris Teeter Center and the Lenox Marketplace Center as the upper range of the cap rates.

Those sales were brought to market during the height of concerns for the property type during the pandemic.

And the High Point Harris Teeter Center also had a greater risk of anchor turnover because it had short-term lease expirations,

the cap rate would reasonably be higher.

At the lower end of the range is actually what we considered we would fall above was the Wegmans ground lease because we have land and improvements versus ground only.

So a cap rate above the ground lease of 4.88 would also be appropriate.

But in any case, we provided these sales for additional cap rate support for the shopping center property model and not to provide a specific rate for the subject property

We also looked at the rise in interest rates, but we are looking through the end of 2022, not into 2023.

The market fundamentals reflect a normal market risk profile for this property.

And so we believe that the cap rates should fall in the middle range exhibited by the sales.

The overall capitalization rate of 5.75, we believe is reasonable.

I'm just trying to add regarding the cap rate schedule and yes we do use basically quarter point increments or half point increments.

We are not

I can just hear if we used a 5.41% how accurate could we possibly be instead of an argument about why are we using quarter percent.

But what we do on our cap rate schedules, because we're doing mass appraisal, mass assessment, is to set up a schedule that

doesn't represent an average of anything.

It represents a schedule of properties based on their different grades.

And those grades have to do with their qualities, whether their size, their location, whether they're anchored or non-anchored or power.

So all of those are appropriate in setting a cap rate schedule.

I don't see how there would be anything wrong with that approach in the mass appraisal.

The Appraisal Institute is a very well-known organization and mainly for single property appraisals.

IWEO standards handle more mass appraisals issues and we believe that we're not in conflict with any of those but there are different things you have to do in mass appraisal as opposed to single property appraisals.

but we believe that our covering schedule is appropriate.

And over time we developed those schedules and the differences between the grades.

And we did not have a power center sale now but we've had a power center sale in the past.

And we've had sales of all the whole range of properties in the general area that helped us flesh out the differences between those.

So, you're not going to have sales every year that are perfectly appropriate compared to every property, especially when you only really have two big power centers in the county.

You're not going to, it's going to be very rare that you actually get a power center to sell in the county.

When we did, it sold for a lot of money.

On page 20 of his presentation, the fourth column, just to make sure that the value that is being appealed here is the $114 million

We have already changed on the initial review from $119 million to $114 million.

And I believe that was based on actual income being provided.

Is that correct?

I just want to make sure I understand correctly.

You did not disqualify the lowest

The Wegmans was because of the ground lease and the other two, they were both pretty much at the top of the market.

OK. Any other questions for the sponsor at this time?

And is it above?

That's probably.

I don't remember.

I don't know if we can answer that.

Collier.

One of the comments Ms. Collier made was that this is a tertiary market, and I think that's an important concession here because these national cap rate surveys only survey non-tertiary markets.

I'm not even aware of a cap rate survey that gets into the analysis of what's happened to tertiary markets.

these primary markets, these class A investment properties, these primary markets is what these tables are.

So there's not any analysis even repeated to see about what cap rates are in tertiary markets and properties like this.

And I will concede at the head of the line, this is a difficult job.

We run into this a lot in the rural areas in Virginia with a lot of different property tax because where you go to find capital is some source for it.

And even though that makes the job difficult, it's still a job that has to be done correctly.

So I can appreciate that there has been a sale every once in a while in Albemarle County, perhaps even regionally, if the county has built a table that it's basing on most historical sales, but you have to base your cap rates in actual market data.

Again, just do it because it looks reasonable.

I could sit in the assessor's office and come up with a thing that I think is reasonable and have no market support for it at all.

And that's basically what we're dealing with here is we've got national data from these primary markets, the two markets.

talking about tertiary, that's tier three or below.

So we're not even talking about a table of tier one or tier two markets, we're talking about using those cap rates as a basis for what's going on in a tertiary market.

That's no market support for a share market.

If you were going to look at that, you'd say you'd have to make an adjustment.

What's that adjustment process?

That's out of my pay grade, but it's indicative of being a riskier environment than a tier one market.

And so your adjustment would be up from that.

But on the table on page nine where the county was qualified or left out of its analysis, the three options at the bottom

One of those, the one in Atlanta, is the only one that's actually physically similar to the subject property.

And another one is nearly 200,000 square feet.

So two of the more comparable properties on all this have been just dropped out.

Why were the ones that were below 100,000 square feet, which are not similar to the subject property, also excluded?

Because they're flat out not comparable to this property, though.

But again, when we look at the average date, we have another case and we've been asking for cap rate information, at least the client has been asking for cap rate information.

Lynch's response was we don't use averages, and he said that again here today.

But that's exactly what the county has done out of their own list.

They come up with an average and a median, and they're facing extra support.

And this, again, is a post-assessment analysis.

This is not how they write a good table in the first place.

But it's support for their analysis, and they're using averages and medians.

All we're asking is for the capric to use the value of property that we have as a basis in the actual market table.

Is that all?

Any questions?

Any other questions from the board?

You realize that inflation is going down.

You have to look at it as if the tax date, as if the tax date, and then we provide the citation to you.

The expectation is that you're doing pretty well.

2% increase in inflation.

There is, to my knowledge, nothing in the IAEA of standards that talks about cap rate selection.

When you look at the standard on mass appraisal, it talks about the three channel adjusted appraisal approaches, which of the approaches are appropriate for different property types, so you've got the sales comparison, income and cost approaches, and some standards on how mass appraisal should, techniques should be used to

and three general assembly approaches.

With my knowledge, there's nothing in here that talks about how you derive cap rates.

When you go to a book like this from the IAEA on fundamentals of mass appraisal, it reflects the same types of principles we've been talking about from the appraisal.

But the bottom line is I don't care whether you're talking about the IAEA Institute or the IAEA or any other nationally professional appraisal organization.

everybody has to reflect what does the market do so your cap rates have to you're looking at what is investor behavior what does the market do and that's what we're replicating and what the market does is they look for appropriate cap rates for similar competing markets at similar points in time I mean that whole idea of the word comparable and comparable sales

What does comparable mean?

Well, it's as similar as you can get.

That's the idea.

Because if it's not similar, it's not comparable.

So.

That's what is supposed to happen is, regardless of the approach you use, whether it's a single property appraisal, because you're an appraiser out there who's doing this for the next sale of the property around the house or whatever it is, or you're an assessor employing mass appraising techniques, you have to do what the market does.

So there's no guard to all of the principles on cadre selection, to my knowledge, at all.

I had a quick question.

So the 6.9% that you're driving is also an average from the JL.

Do you have any other, and you referred us to the sales the county is providing, are there any other sales or anything else

that you have there.

Obviously, there isn't a similar sale in this market.

We know that.

It's a very difficult property to, and we're sticking with this question of this cap rate.

So,

Do you have anything additional for us?

Your argument is that the assessor is inappropriately using averages.

I'm not suggesting that it's inappropriate to use averages.

I'm saying they told us they did not use average.

and I'm conceding again this is not an easy thing to do we're in a tertiary market go find somebody who's done an analysis for example in Virginia alone and maybe that's out there what we're looking at is let's just look at what look at the information that we're able to find it's actually looking at forward-looking data

So if you try to get that down to what are the sales that actually

they're not at 5.75% they're way above that and when you factor in what's going on with inflation and interest rates etc and what you could get an alternative investment for I mean that's how investors behave and so that's what the basis for ours is.

We've not seen an explanation yet for why you're looking at a table, for example, from PWC.

Why aren't we 68 basis points below the average of the average of tier one markets?

And still don't have an explanation for that.

Still don't have an explanation for how the data is provided.

OK. Let's go on.

Does anybody need a break before we go on?

I assume this next part's going to be longer, at least to the initial presentation.

Anybody need a break?

All right.

So the next.

Okay, we're gonna have a number of hearings coming up before all the hearings.

Assessor's office, we need to swear in.

So if you're planning on testifying, please raise your hand.

Are any of the property owners planning on testifying?

You don't need to raise your hand.

Yeah, thank you, though.

You solemnly swear or affirm the testimony with oral indoctrination, which you're about to give will be the truth, the whole truth, and nothing but the truth.

Thank you.

Okay, so let me go ahead and call these cases really quickly.

And then we'll proceed.

So these are going to be hearings numbers two through 14.

And I'll read off what they are real quick application number ADP ID 13526.

Owners Broomfield and corporate

Pid 13538, owner 5600 Turkey Sag Road LLC, application number 82, PID 13539, property owner 5600 Turkey Sag Road LLC, application number 84, PID 27525, owner Cismont Manor LLC,

the owner, the Andrew and Elizabeth Carter trucks, application number 86, PID 27597, property owner, Castellia, Cismont, New Brunswick, D.C., application number 87, PID 27784, owners, Albert, Cindy, Schoenberg, application number 88,

Vivian Ray Porter, Sergeant Trustee, application number 89, EIE 28316, Vivian Ray Porter, Sergeant Trustee, application number 90, PID 34435, property owner, Mooring Farm LLC, application number 91, PID 34444, property owner, Richard B. Hilliam, Provocable Trust,

and application number 92, PID 34471, and finally application number 93, PID 34636, property owner Oakdale LLC.

Appreciate your validation as far as

All right again

I don't need to tell you what your standards are that you, that you're using, about what the standards are, appraisal practices, procedures, and what the standards are.

In this case, there are generally presumptions of correctness that are, because there is, as we talked a little bit earlier,

Paul Zefi, Alan Hirsch, talks about defensively inflated assessments are not live at the conference.

Another one that comes from the case of the Key Foods Corporation versus County of Augusta, this is the June 3rd, 2018, chapter, June 3rd, 2019.

that says that if an assessment's not arrived at in accordance to accepted appraisal practices, in other words, not using one of the three accepted appraisal approaches, then the assessment is also not in tie with the prevention practice period.

So in those circumstances, what the board said is there's not a presumption to the but, which is no prevention at all.

Slide 3.

There should be no protective records in any of these cases because the county does not arrive at a consensus of residential buildings or land on farmsteads in importance to generally accepted appraisal practices.

The county does not use any of the three generally accepted or appraisal approaches that are generally accepted under certain law instead of what the county says in its

residential valuation model documentation study uses a quote hybrid end quote mass appraisal model that involves the assignment of what we think are speculative and arbitrary values to both residential buildings and alleged homicides on farmsteads.

and by speculative and arbitrary loaded terms, we mean that the values are not actually based on comparable sales or on provable estimated construction costs.

The presumption of pregnancy being defeated by indefensible inflated assessments, but I think it's important to look at those words just a little bit more carefully.

What the court is saying with respect to mass appraisals is that it's obviously a process of valuing the universe's properties, and as you do, they're using standard methodology, including common data, and allowing for a speech to be tested.

I guess the statistical models can be pretty speculative, but what the court says is that it's implicit in Vassar Parzil that even when properly specified, and that properly is being termed here,

Even when properly specified and calibrated, the mass appraisal models are used.

Some individual value conclusions will not meet standards of reasonableness, consistency, and accuracy.

In other words, the mass appraisal value principle is that it may be unreasonable, inconsistent, or inaccurate when applied to the specific property, which is a particularly important qualification for the fabric of the tax engine.

The reason for that is because the subject property that's being appraised is an individual property, not a universal property.

So what you'll hear today from the assessor is the use of these mass appraisal techniques.

They're looking for something that looks statistically reasonable, but there is a presumption by the way that it's set up that there is certain properties.

The assessments that result from these processes are not going to be reasonable and that's why we're here today.

There are three and all three generally accepted mittens to determine property's fair market value, the cost approach, the sales approach, and the income and personal opinion, and the citation to certain court cases out of the number.

But in citing a Virginia Supreme Court case, the guess was it was purchased as a company.

2007.

That's important.

The three approaches are there's a cost approach, an income approach, and a sales approach.

The language that I've given you here is from that.

It's exciting because the club case described what they are.

One of the key takeaways from that case is that ideally, localities should use all three of those valuation methodologies in order to maximize the likelihood of their valuation accurately reflects the property's market value.

The quote goes on to say that if a locality basis is assessment of fair market value solely on one of those generally accepted appraisal approaches the local assessments are entitled to presumption of correctness only if the locality properly considered and rejected the use of the other two approaches.

Now one of the things that I want you to keep in mind here as you're hearing the presentations today is that the county is going to tell you that its approach, this hybrid model is generally accepted.

It's not the

The issue is not whether a particular model is generally accepted, it's whether and what the court cases say and what the IEO standards say is.

Whatever the model is that you're using, whether it's a sales, cost, or income approach, you have to arrive at your assessment using generally accepted appraisal practices, procedures, and standards.

and then in Virginia, the court says, the valuation property.

So you should be able to see that.

I think we give you citations to the pages.

So the county says, rather than use the cost approach, the income approach, or the sales comparison approach, value residential building, created what it calls a quote, hybrid of the sales comparison and cost approaches, end quote.

the county says its hybrid methodology both looks and feels like the cost approach but uses market derived rates rather than estimated construction costs and that's on page four

The only problem with that is that in Virginia, the use of the hybrid methodology without showing any recognition for it as a generally accepted appraisal practice contains too much speculation and conjecture which is not permitted in terms of the fair market value for real estate, for real estate tax assessment purposes.

That was a court case out of Loudoun County.

It's been around for a long time.

The interesting thing I would add to that is if you go look at the IAAO's standards on mass appraisal or any other standard, they still refer to the three generally accepted approaches.

I can't find an IAAO document that counts the use of what's called a hybrid model, sort of melding two of them, however you do it.

They still all refer to three generally accepted appraisal approaches.

So this hybrid methodology is not a general accepted appraisal approach.

regardless of the number of localities that have been decided by particular camp and development companies.

And I'd add, too, I think the county had said that it's generally accepted because 500 different localities used across the country.

Well, there are over 11,000 taxing jurisdictions in the United States, so five out of 100.

Even if you said that you wanted to make an argument based on the number of localities that that indicates

So our position with respect to the hybrid methodology, and we could probably stop the conversation right there about the model, is that it's not one of the three general acceptable approaches because it's not one of the three general acceptable approaches.

Slide seven, the other issue has been the county claims its fiber methodology was created and calibrated with sales of residential properties in Albemarle.

That's what the model documentation says.

but the assessor has admitted to us that the rates used in the hybrid methodology are not all that precise.

So it's back on July 10th, the conversation with the assessor, it's all going positive, the assessor finds the fields.

And we were looking at unit prices or extra features that are at age 41 of the model documentation.

And I think we've used the Abode as an example.

But the assertion in the model of the bed of the day, for example, adds like $1300 in value to the price of the house.

And I do not buy and sold a number of houses.

You all probably bought and sold a number of houses.

Do you have any idea or have you ever seen any data from a sale that would indicate to you that you could tell that you had

So that was our question.

That's just one example that there's a long list of these things.

Those are not union prices, they are in fact what you call the cost to install the phone.

So we asked for the alleged cost data.

And this is in the title of the call.

It could be the assessor of page 8.4.

Mr. Lynch said that the county did not do a specific cost study for the 2023 reassessment, as far as the cost to do the IFC.

He said that they did adjust the rates this year or the previous year's rates based on the overall change indicated and supported by the sales ratio studies.

That to us is an indication of sale change.

We'll talk about that more in a minute.

But in any event,

you know we've talked about how assessments have to be arrived based on you have to actually have actual market support for this stuff so an admission that there's no sales support because it doesn't exist and nobody tracks that kind of data and an admission that they didn't do a cost study for the 2023 reassessment so there's no basis in either cost to install or in sales and if you could take tab two and just i want to show you

This is the 2020-2023 model of augmentation for X-rays.

I've highlighted some of the things that the classes are.

I figured that I would put it out here and break it to the right and I would push it to the right for the previous year for 2020.

Basically all of these, the county is saying that the transit rates, in other words the values that it adds to the assessment of the residential building went up by these figures, but based on what?

because you can't go out there and find a sale where they track sales data in any county, let alone Albemarle County that says if you have a worldview of a separate shower, last year it added $3,000 to the value of your house, this year it adds $3,600.

That data does not exist.

There wasn't a cost assessment pre-assessment done or a cost study that was done.

So what's the basis for the increase from $3,000 last year to $3,600 this year?

What we'll get to, I've been told myself as we come along this track, the county told us that how it arrives at different rates is in what it calls an iterative process, meaning you make some adjustments and you run your sales ratio studies to see if that sales ratio, and this again, these are only on the residential buildings itself.

to see if when I apply all of the rates that I've set in my model, does my assessment of those sold properties come in line with the sale prices?

And if I'm off, I go back and I make adjustments to other rates in here and rerun those sales studies.

And so there's a back and forth with changing rates, adjusting rates to get to the point where

The assessed values on properties that sold in 2022 are very very close in line with their sale prices.

Well our understanding the process is is then once the county is satisfied that all of these adjustments it's made I mean the rates go on here you can come back and forth and you can see all of the adjustments that took place from last year's this year on a wide variety of features

When the county is satisfied with its sales ratio studies, it's got the assessments of those sold properties in line with those sale prices.

And it just applies en masse by mass appraisal technique, those adjustments to every other property in the county.

It's not, there's no market support doesn't exist that's admitted.

There's no cost done.

So where do these numbers come from?

And that's, in a nutshell, that's our problem with this is that's not an appraisal.

I mean, it may look reasonable on paper.

It may make your assessments of the properties that sold match their sale prices.

But what does that tell you about?

That only tells you something about those particular properties.

but I still, and I'm sorry to get stuck on it, but I'm just stunned that there is an assertion, for example, that a bidet adds $1,300 in value.

If you've got one, you're just gonna add that to the value of your house.

That doesn't even tell you how old is the bidet.

Is it 20 years old or is it brand new?

So a lot of these things are done that way, but again, there's no basis for them at all.

But those are extra features, at least particularly on this page.

If you look at the next page on page 42, it's a factor.

It's a location multiplier.

Some of them went up, some of them went down.

But based on what

And again, what I'm telling you is the County has already told us the computer is a process.

So what it's done is adjustments back and forth until it got the sale price of the property sold in line with the accesses of those properties.

And we'll show you a spreadsheet here in a little bit of the overall effect of it is.

and this back and forth process adjusting these rates with no basis other than just to make a sale price matching assessment came up to a point where the median sale price of these, or the median sale price of these homes, the median assessment are within nine, ten thousandths of a point of each other.

We asked for the cost data.

We asked for the most recent cost data since one wasn't done for 2023.

We've not gotten that either.

I told you I got ahead of myself.

It looks like I won five.

Slide 10, in addition to what we talked about, the county needs to have no actual sales or cost support for its original prices covered by implementation.

Again, this is where I talk about this iterative process, and this is what we're looking at.

What the county said in its child food business is tab four back and forth.

The county says we run an initial set of sales studies in order to determine if and how much grades needed to be changed.

Adjustments are made to all portions of the model, all portions of the model.

And the sales studies are rerun.

If further changes are needed, then more adjustments are made and sales studies are created again.

This is an iterative process and they do several steps to achieve results.

So if you want to look at that in lay terms, it's speculative arbitrary adjustments to the various rates and prices and all portions of its model to make this model produce assessments of the properties that sold during the prior calendar year that are add on to your 100% of this property with respect to sale prices.

If that first set of adjustments made, the county makes additional adjustments to various rates and prices and rechecks to see if it's gotten there.

When we get down to the bottom line on it, the county ultimately got the assessments of those properties to be within

So let me just show you an example of what I'm talking about so you can see on a sales ratio study.

This is the county's sales ratio study by grade, construction grade.

Look down at the bottom line of the particular page, you see 2,255 sales in residential buildings, 2,255 sales on 22.

If you look at that median A slash S ratio, that's the assessment to sale ratio, down at the bottom line, 0.9991.

Nine ten-thousandths of a point on 2,255 sales.

Now what we're alleging here is that this is a process of sales chasing.

I know we've got disagreements about what the definition of it is.

but this is from the book that I showed you a minute ago, The Fundamentals of Mass Appraisals about Bob and Bob.

Sail chasing is what they say are lonesome and inequitable practices of adjusting appraisals so that they have profitable devices.

If that doesn't define the purpose of the process, I don't know what it is.

This is the ZAP-5 with the high AOs standard on ratio studies.

This is the first, you know, chart one, as I said, we've been going for about 16 pages, so this is part one.

The I.O.

says that the most generally useful measure of variability or uniformity produced by a mass appraisal model is photovision dispersion.

I'm not even tracking through the list.

The statistical definitions are photovision dispersion.

I'll see you again for sure.

COD measures the average percentage deviation of the assessment to sale price ratios of the sales included in the study from the median assessment to sale price ratio.

In the standard, this is the bottom line, the standard indicates whether a sales ratio study on a rural river's property agrees to accept model of adults that raise sales in the range of 5.0 points.

So that's your appraisal standard.

That's your generally accepted appraisal standard is that your model is produced

a COD in net range 5 to 20.

This IAEO says this, I'm not saying it.

The Excel ratio study by grade shows CODs below 5.0 for 11 for presidential building grades.

CODs for six additional grades are just nearly there between 5.0 and 6.0, so ones like 5.0 and 5.2

but together that's 71% of the coefficients of dispersion produced by the county's hybrid methodology show blatant evidence of saddle chasing.

If you look at the next one.

The self-ratio study by Stiles.

There are three OD's below 5, we're at 25, and we can't reach 46 residential building styles, and I'm including those which have CO2 E rows, because you can't have a valid coefficient of dispersion, and you need a multiple one sale.

But if I exclude those, only 5 or 46 have CO2 E rows below 5.

Slide 13 and look at tab nine.

Billings, 12.5, Bates, and five actual years old languages, and we exclude those.

Nine additional year-old ranges are in the range of five to six, so that's, together, 68% of CODs, if you take this slice by actual year-old, show blatant evidence of sale changes.

Correa de Timm, COD 205, two additional ones have CODs in the range of 5 to 6, 0.06, call your attention to it, but that's 50% of the CODs produced by the county's land valuation methodologies.

So looking in, I want to show you the market areas.

That one shows the COD of 0.6, 0.76.

That's above the high-end range.

That shows you another value distribution methodology.

Look at some of these.

We've got a COD of 1.35, 3.96, 1.13.

They're not even close.

Downey's model of what it should be doing in terms of the value of plant properties and we should be consistently seeing COGs in the rest of 2020.

That's, think about that, that's a really broad thing.

It's not like this is a small target yet, like you can get between five and six or something.

Five to 20 is a pretty big goal.

But we're seeing the majority of things below five.

That's an indication that the model is not performing the way that it's intended to perform.

Of the 2,255 residential property sales included in the sales ratio studies by grade style and actual yearbook, we have 19,000 sales being assessed exactly in the yearbook.

If you look at some of these, tab seven, I'm sorry.

Up at the top of the first page, there's one story in vacant and then I guess the style is 1.25 and 1.75.

The vacant in

That one points to 2.5 and 1.75 story column on the panel.

There's 300 properties there plus more than 300 million AS ratio.

Wanted exactly 100%.

Look at a lot of these numbers.

The I A O instructs, and this is kind of out of the fundamentals of mass appraisal text that Paul Deloria put in earlier.

While the desired level of appraisal is 100% market value, the I A O is limited to the number of appraisals allowed in temperature and variation based on the assumption that the law mandates the trading of market value for that particular assessment ratio.

This implies that the overall appraisal level should be 0.9 into 1.1.

The window of 10% about the market value standard provides a reasonable range in which measures of central tendency should fall in the head before mass appraisal.

Strict enforcement of a 100% standard is neither cost effective nor practical.

Such a policy could force assessors to make trivial annual adjustments and corrections.

That's why we're here today.

things that the assessor responds is a situation about that central line.

And you see just, I mean, there's a clustering, a huge number of dots on that graph that are above that line and the equal number that are below.

The people who are assessed below that line, I guarantee you're probably happy with their assessments.

Everybody who's assessed above that line should not be, because that's an indication that they're assessing while using it.

and we hear a lot about uniformity in these things, too.

It's like, well, you have to treat everybody the same.

Well, that's true, except for the Constitution requires, which is, even though those are the people, uniform principles, uniformity and fair market value, should be informed, we have to stop it, and then it should be fair market value.

So you cannot assess anybody's property, and then you would set a fair market value.

It also doesn't make any difference whether everybody else didn't appeal.

because you know that's on them if they didn't appeal their assessment.

I'll tell you that you know one of the things you see all the time especially in residential crisis assessments is that there's you know the homeowners left to themselves.

The difference that you're going to save is maybe a thousand dollars you'd spend a lot more money than you'd save and so nobody says anything.

This is the first time in my 17-year experience that I had a group of residential property owners who said that's had enough.

Their properties are a set of significance, but I'm sure Mark and I in your mind think that our values can show that.

But this is the first time that we've really had an opportunity to tell them how models like this are built and what they do.

and Bill Price, to a quicker crossing system.

Because it's pretty easy to remember it's effective.

I have instructed the court to excel or selectively re-appraise based on their sale prices, except for the part of the ratio study, the rest of your farming references will not be accurate in the words of graces appear more uniform than they are.

So when we talk about selective re-appraisal, we're not talking about sometime during the tax year that only those properties are re-appraised, but when the county does its reassessment,

It's a sales ratio study.

There's not any holdout sample, but we can tell all 2,255 properties installed in 2022 were included in that net ratio study.

So there's not a statistically appropriate analysis done to determine whether these iterative adjustments that are made actually work.

They're just all included in the sales ratio study and the integer process continues until they're all flustered right around that itself.

and the rest of the rest of the group.

From another perspective, we've, and I can find others, I'm sure.

The first one is one of our clients.

It's a 522.76 acre farmstead, 5600 yards.

It's under conservation.

It's sold for $6.2 million on April 29, 2020.

So this is the assessment I'm highlighting here is right after that.

So this is the assessment of this three partial farmstead as of January 1, 2020, 6.341 million dollars for the improvements alone.

So if you think about that, you know, we've got the improvements alone assessed for more than the whole farm.

How in the world is that possible?

The only thing possible is that the model is not working.

The residential property is being valued significantly by their fair market value, and this is a good example of that.

Here's another one that's a 60, roughly 62-acre farmstead at the 437 Ersley Farm Road under conservation easement solved for $3 million August 7th of 2020.

The county's total assessment of the improvements alone was $3.5 million.

So $500,000 value assigned to the improvements.

Mr. Smith, can I ask you a question real quick?

So how do we know that those two sales are attributable to the

Yeah.

Well, I mean, it's by a process that we think of, you've got a, there's not been any indication that we can find, and I believe the county treats these as what they call verified sales, meaning that there's no, it's their arm's length, it's not a family type of situation, that sort of thing.

So it's a verified sale, farm's length transaction, and that's an indication of fair market value property.

And the question is, why is the assessment so far off from that?

One of two things has happened.

Either the farmland's not worth much, but I mean, even then, is the farmland worth less than zero?

How can you say that the improvements on the property are worth more than the whole farm?

There's only one reasonable conclusion to that.

It's rational in my mind and that is there's an over-assessment of the improvements and obviously the sale price of that property contemplated the whole thing.

So I supply it so many ways.

Certain COVID sales, though.

On January

in 2020 who made those.

And after this point, they shot up in price.

I mean, these farm sets were not selling for a while.

And then in 21, 22, now 23, these properties were a lot more.

So to give these two examples are not helpful for us.

The 2020 sales are not helpful to show this.

Let me back up a second.

You said the sale prices shot up, right?

So both of these happened after COVID came out.

It was later in 2020 when it actually went up.

so that's that's the well I disagree with you on that because what I'm aware of is for example this is on the Washington DC market is that there was not a depressed market I mean mortgage rates were good there was not a depressed market for single-family homes we saw in that market where everybody who lived in DC seemed like in an apartment getting out of an apartment and moving to single-family homes to get distance from people

So what we saw in COVID was not that the property like a farm like this where you're away from other people.

These were premium properties before and they were premium properties after.

But the question is, let's say that it was in the process, the price is in the process of shooting up.

That indicates that the situation as of January 1 of that year was even worse.

I'm just saying you're meeting a lot of arguments here so I don't want you to get stuck on this because I'm just mentioning these two sales because Mr. Mayo did bring up this point I just want to reflect I'm very familiar with these sales this is my area I mean Keswick and I'm familiar with these properties I'm familiar with what happened in that area I'm just saying there was a downturn in mid 2020 early to mid 2020 after

a few months and then it went up as you're saying a little bit later in 2020.

Now I don't know the precise dates but I'm just

mid 2020 sales versus what the assessment was in January 1, 2020.

Not the most helpful for your argument as to this particular point.

I understand you're making a lot of other arguments, so I'm not discounting your other arguments.

I'm just saying as this specific slide and these two specific sales, it's a little bit more difficult to make that argument given the particular circumstances with these sales.

but you know I can appreciate the market made it fresh for real estate but I don't think I can't accept that it would crash the extent that you could get a 522 acre farm

Questions?

Your discussion about sales chasing.

How is that

On the one hand, you're arguing that the appraiser is not using a sales comparison approach.

But then he's using, he's taking these comparable sales and he's analyzing them.

So how is your, how is this, how is analyzing these comparable sales for the contributory value of the components

Is that different from sales, Jason?

I mean, that is an analysis of the sale and applying it to the other properties.

Sure.

It's not an analysis.

What I'm telling you that they've done is they had almost a unique sale price for these 2,255 boxes.

and they went to their book and they record their model and put in a sales ratio study to see where are we in terms of our median assessment to the median sale price.

And then they go in into their model and they start just making adjustments, random adjustments.

Then they rerun that sales ratio study to see did that get us closer and then they repeat that, did that get us closer and they keep going through that iterative process that was described until they're satisfied that they've got the assessments in mind with those sale prices.

Now the question is, okay, I can see that you did an adjustment, for example, a neighborhood adjustment for Glenmore that went from 0.9 to 0.85.

There was 0.85 last year and it's 0.9 now.

Where's the market data to support that?

There is no market data to support that.

There's just an iterative process adjustment that was made.

So it's not an analysis of the sales.

It's just

What you're doing is you're just making adjustments here and then re-running your report, making adjustments and re-running your report until you've got those two numbers in line with each other.

So there's not an analysis of things.

It's just an iterative process of making adjustments to numbers.

But that's the problem is, you know, you've got this hybrid model for starters, which is not doing such a show.

If you're gonna have a hybrid model, then what you need to do is actually analyze the sales and make adjustments to your model that show what your analysis of the sales did.

It's not just a, I'm gonna adjust this one up by 10 basis points and this one down by 15 and whatnot until I get those numbers in line.

You need to actually have, show me in the market data, show me the sales that that number is right.

This is what we've been asking for and with our long list of questions back and forth is showing the market data, showing the market data, showing the market data.

And we've not been able to get it and it's because it does not exist.

Nobody, and I like the point of this, nobody slides his cells this way.

I've never seen it, and I would challenge any of you to go try to look, because I can't find it either, where you can say that a steam shower adds $2,500 in the value to your house.

Who does that?

Nobody does that.

And then we find out it's a cost to install, but we can't even get the county's alleged cost to install data.

I mean, we've asked for it multiple times and it's still not been produced.

Because, I mean, this is supposed to be a transparent process.

I've done this type of work mostly in commercial and industrial context for the assessors just like any other

Just like you all, having decisions of trust.

That implies that, more than just implies, that this needs to be a transparent process.

The whole idea of that, for example, having a property record cards, and by having a standard that requires record keeping of assessors and appraisers, is so a taxpayer can understand how you arrive at hers.

But what we now have is we have a black box, nobody,

When we start digging into the black box and we find that there's no data that's made available to us to show how did you arrive at these numbers?

Not one number in here if we had anybody provide us with either cell data or cost data to support that.

And that's our problem here is, you know, this is a position of trust.

There's transparency required.

There is no transparency.

My other comment or question is on page 16 when you're discussing these sales,

If an analysis was actually done of the sales, yes.

But what we're seeing in the modelers, that's not part of the process.

We're making investments to give for the owner of the property itself.

The dental ratio reports that things are going on in the property itself.

If the property is even sold, we need to sell it to the employees.

If all these properties are sold, we need to go into the process.

Back and forth with adjustments in the median sale price in line with the assessment and expert stocks.

Where's the analysis?

You can't accept that

there's no market support basis for this but this is how our properties

Our purpose here is not to get into an argument about how farmland generally is used as

We're not concerned about the valuation of the farm acres, so to speak.

What we're concerned about is we'll see this process for valuing alleged homicides on farms.

And we see something happening here.

Sales chases arrive at land values.

And this is, again, from tab four.

This is Art Caulk with Mr. Lynch at age two.

Tori says the first step in determining the land value in each neighborhood is to farm the areas.

This second step is done by, and this is important, adjusting both the land and improvement limits to create sales ratios that meet the IAE sales ratio.

So what you're doing again with the same thing with your rates on those properties is you're adjusting rates to create an assessment to sell ratio of 1.0 or 100%.

That's what that means.

Now, with respect to, we have two different types of properties here.

We got properties that are in the land use program and then we have properties that are under conservation.

So I'm gonna talk about the land use program first.

We don't have any disagreement with the county about this.

It talks about real estate on which the farmhouse, the home, or such other structures were staged.

It should be assessed and taxed by the same standards, methods, and procedures as other taxable structures in other real estate and localities.

That's what that says.

So properly and perfectly, that simply means that assessments of homicides on farmsteads and the land use program must be arrived at or if you cannot accept the appraisal of the practices, procedures, rules, and secrets.

But importantly, this is on slide 19, nowhere does Virginia Code section 58.1-3231 give localities the authority to value home sites on farmsteads enrolled in land use programs as if the home sites are not part of the farmsteads.

Home sites can't be assessed as if they're sold separate, apart from the rest of the farmsteads.

When you think about it, it makes perfect sense.

When you sell a farm, do you sell the rest of the farm but not the farmstead or just the land on which the house sits?

Generally, I mean, maybe that happens sometimes, but that's a pretty rare circumstance.

Someone, if you own a farm and you're gonna sell the farm, you sell the farm.

And I'm an old farm boy myself.

When you sell a farm, you have, this is the way it goes.

It's 600 acres, and there are these improvements, and we value the improvements.

You don't value 598 acres as farmland, and then turn around, and the two acres on which the house is safe, well, that's a home side, quote, unquote, and so we're gonna value that like it's a two-acre site and any other residential substitute.

That's what we're seeing in the county.

So for example, let's say that you say the farmland is valued at five thousand dollars an acre and my math kids say okay I've got a hundred acre farm times five thousand acre that's five hundred thousand dollars.

and I've got to improve the value that I add to that.

That's fair market value.

That's not what the county does.

The county says, oh no, you've got 98 acres that are farmlands.

We're going to value that $5,000 acres for that two acre home site.

We're going to value that.

Sometimes these figures are upwards of $150,000.

They're valuing home sites on farmsteads as if they're in residential subdivisions, as if these home sites could be sold separately apart from the rest, would be sold separately apart from the rest of the farm.

That's not what Virginia law accountants is with these things.

That's not what generally accepted grace principles would require.

And it gets down to the ability to control the specific analysis and the science community that's on it.

So we're talking about that a little bit on slide 20.

Under Virginia Law, I know that the present practice of farm has debated what it is it's a farm.

So this is from City of Richmond v. Jacksonville, a partner of the 2012 Virginia Supreme Court.

It says real property should not be assessed as something other than what it actually is.

That's what's happening here.

Home sites are being valued as something they are not.

They're not separate home sites.

They are the land that's part of the farm.

Brookgrover, Georgia City of Alexandria, another Virginia Supreme Court case, the property spares by the value is the present actual value of the land with all its adaptations to general and special uses.

So, again, just to summarize the point, family cannot walk with assessed homicides on bonds with on the fiction of the prototype of the sold separate shark number.

Sell the card and sell the bond.

Same kind of analysis applies under child probation easements.

Stumpf, Virginia Code section, implementation of that assessment shall reflect the reduction of the Fairmont County land with results from the inability of the owner of the paid and due to such property for use as far as that is permitted by the E.T.

To ensure that the owner of the E.T.

is not taxed on the value of the E.T.

proposal, there is a reason that the Fairmont County value of such lands shall not include any value of the E.T.

approval from the use of the potential use of the land that has been permitted by the E.T.

We'll simply put, it's our analysis that it is homicides on farmsteads are not so separate apart from the rest of the land.

There's issues in conservation easements about whether they have division rights, stuff like that.

Even if it's a conservation easement, you've got certain division rights, you still have the issue of what it is.

The homicide on that particular portion

and that's part of the topic.

It has to be solved as part of it, you know, it's divided, it's part of that part.

and that is what's the highest of issues on these types of properties and do you think that it's farmstead?

I didn't cite the U.S. export case that did the same thing with Proffit up in northern Virginia but came to the conclusion that it was a country estate.

So the point is you're not saying it's a farmstead plus a two acre home site.

It's not a country estate plus a two acre home site.

It's just the farmstead.

That's not what the animals do.

They are valued in a separate two-acre home, in some cases a secondary one-acre home.

Again, property that has to be assessed as highest and best use does not mean property should be assessed as something that a different owner actually is.

The analysis, the sales selected for analysis must accurately relate to the motivations of the market for these types of properties.

And what we then put it from that is that also means that the selection of properties is going to be both the land and the dwelling structure of the property.

So I think the best and simplest way to put it is just value the farm, the farm is the farm, and then we have improvements on the farm, and those improvements are house.

but valid assessment of the improvements from farm to farm is not a farm plus an oversight.

We've thrown in here some principles of the general set of appraisal principles that talk about selection of appropriate comps, depends upon the proper market analysis and marketability analysis, and have shown here that the same principles apply to the use of mass appraisal techniques.

The section at the bottom of this page is from the standard on mass appraisal of real property, and it underscores the importance of analysis upon the data.

And I think the last sentence is

and it says it doesn't just say just do a market analysis.

It does not by the way say just do an iterative process to get back and forth with numbers.

What it says is careful and extensive market analysis is required for a model to produce values accurately.

Slide 24, the entire purpose of the appropriate market market is to announce the market's comprehensive profit as similar as possible to systemic profit and ensure they reflect the actions of similar buyers.

Using a comparable that has a different highest and best use is an inappropriate appraiser type of evening.

When an appraiser fails to use sales that are truly comparable, a forester can fail to find an essence of value reached by an assessor.

The sales comparison approach may clearly overwhelm this.

Before a comparable sales comparison analysis, the appraiser must first ensure the sale price of the property, the property rights that are similar to those being appraised.

And then that last step, not being able to accomplish that is at the same time as the property rights of the study of the property so that adjustments are not needed.

And from our analysis of the information provided to the county, none of that was needed.

Again, those are all generally accepted appraisal principles and that's the standard that covers the process which should be determined.

So in our view, the county should have looked to sales of comparable farmsteads that were in coverage of the conservation easements originally and would be programmed to cover the sale because those were the properties that would be as similar as possible to other farmsteads.

Instead of that, what we have seen from the committee is the use of previously incomparable properties provided by that concept into the farm, sorry,

Grossly incomeable properties to ride with assessments won't be alleged to coincide with other parts of the market.

I think the difference is farms typically don't have, do not

I saw on Bates Street with county storm water systems encountering and you got on municipal water supplies and street lights that are put in and maintained by the county and other closed sites and things.

That's what you see in residential subdivisions and the sale prices for farm, the land, residential subdivisions reflect those different costs.

So when you think about a farmstead, you might have a gravel drive, you might occasionally see one with a paved drive.

It's not a county maintained by street, street lines and all the other improvements and cost improvements going into the process of doing that.

So it's a two subject system.

So your home site that's out there on the farm is not the home site in the country.

The bottom line with this argument is there's not a Prince of Massachusetts forest.

There is no real locality to treat a home site as a separate use of the farmstead or

I don't have one.

It's an actual fine example.

I told you I went through and just looking property by property, sale by sale on the Albemarle GIS and there are

There are parcels out there that you can look at it from the satellite view.

It's completely in the trees.

There's not been any development on it.

And you can look at the assessment and there's an alleged homicide value on your home.

It doesn't exist.

So there are any number of problems with this particular process.

The per acre values assigned to alleged home sites may vary on a wildly consistent range.

The use values that they assign to some home sites are actually in excess of alleged fair market values and I don't know how that happens.

But the county then, in some instances, adds land use area under single-family use over and above the area of the land travel sites on farmsteads.

We see a number of different problems.

The bottom line on that is the gross off valuation of farm sites on farmsteads.

And it seems to us that

So here's the table that I want to show you of these different farm values.

HS1 would be a primary home site.

HS2 is what the county calls a second home site.

The values that are assigned to two acre primary home sites range from $52,500 to $32,700.

That's the daily sentiment.

I can tell you that they've adjusted those for things like view and location and things like that.

I asked about things like, for example, the location adjustment, and I don't have the specific figures, but Mr. Lynch said the further that you get away from a particular intersection, all the ways are relatively going to the north, and they incrementally increase the location adjustment because it's more valuable.

begs the question, based on what?

This history that just seems to be right or is right or whatever.

Ask for sales to show the adjustments made for those types of things that we have not been shown.

So we're required to accept on faith that nobody's got it right, but without any actual market support to show.

That's why.

So we've got these, the result is that we end up with these, all the ethanol site values that have been piece of wild to me.

Secondary home sites is a little bit worse, actually from $52,500 to $30,000 per acre.

Now, again, these are the values that are added to the value of the farm.

So it's not like you're selling your 100 acre farm for $5,000 an acre.

What the county says, for example, is you're selling a 98 acre farm for $5,000 an acre and then

The market, because that's what, I mean, it's what this is supposed to be reflective of, the market prices and expenses on home sites worth, you know, $266,000, $267,000.

That's not how farms are bought and sold.

It is that two acre home sites are bought and sold.

Tori, Cismont Manor Farm, N4789, Louisa Road.

They have an alleged market value of $6,250 per acre.

One, I think, is the primary main house current use value of $129,400 per acre.

How you have a market value, it's

29 plus 14, over $40,000 an acre less than the use value.

So, I mean, you'd think that the use value should never exceed the share market value.

It's natural standard.

That's, well, the figures or the amounts that are tacked onto the home site's value on these two particular partial sets over there

single-family use land area offered by the action side of the Microsoft.

There is a, this is off the GIS, there's a two-acre primary home site and a one-acre secondary home site.

It describes the same three total acres to be both maintenance and current use.

But then there's an addition of 3.76 acres of a legislative family land degree and a use value of $3,500, $22,203 per acre.

And then there is,

As a second example, a three-acre primary home site and a one-acre secondary home site is a 5460 Stony Point Pass that, on the GIS, the county describes the same four total acres to a main house current use, but then adds 15 acres to a single family land area at a use value of over $409,000.

So if these parcels have a total of three and four acres respectively of homicides for market value purposes, what's the legitimate basis for the kind of inflating of the homicide area on this farm?

Argue that some indefensible inflation does not explain assessments of these issues in other ways.

Another issue, county values home sites on farmsteads and even coal acre for actual sizes and uses of rules such as two acres for primary home sites and one acre for secondary home sites and you can go and look at any farmstead on cash GIS and see that.

What the statute says is real estate excluded from the total area eligible for land use taxation must only be the land under and otherwise actually used, and that's a statutory language, actually used in connection with the farmhouse or lawnmower industry in order for it to be in special use.

The Virginia Attorney General, back in 1979, looked at this issue on the app as well.

The chairman advised, at least in the claim meeting, that it would potentially quote the demands on water-plastic remediation of the lane, and it stood in the leadership of the Department of Public Safety.

In that case, the Attorney General realized that it's impractical to require a survey of the excluded land for land use purposes, but requires, she said, the assessing officer make a reasonable personal judgment as to the amount of land really put in the non-existent use.

So in other words, we can't just use rules of law.

That's convenient.

It may be more efficient.

But what the Virginia Attorney General said about the statute is that's an

So it follows from these principles and the practice of rounding up homicide's actual papers to the next level of proper professional use.

And beyond that, the statute that governs internal state assessment says that mistakes of factored already created really good different side use cause assessors to be brought into presumption of practice because, quote,

We can't use a rule of thumb.

We can do that around value something that's taxing land that is not actually home site use.

That's a mistake of fact, it does affect the assessment.

Slide 33 kind of gives you a summary.

Farms are not farms plus homesite.

Other homesites on farms, of course.

You sell the farm, you sell the farm, and it happens to have a home on some certain portion of the universe.

What you don't sell is you don't sell farms and you don't sell separately homesites

That's our main issue here.

I do have questions.

Yes, but would the value difference be I can build an additional home and therefore two acres of my apartment would be the site for the home I was offering XYZ country.

That's the problem here.

It's not that, you know, could you build a home there and that makes potentially more value in the future?

Fine.

But it still is an acre of farmland.

Well, what I'm saying is that the land value is just like the land value of the rest of the acres on the farm.

That's half the equation.

The other thing is you have to look at the value of the improvements.

So if I if I put a well, if I put a set consistent, if I put a date, I get the driver, whatever, those are improvements to that.

The way that taxation works, you value land separately from improvements.

So what our argument is, is sure, let's say I've got a two acre farm cut, our home style on the farm, the land is working for the same price as all the land on the farm.

It's what I do to that land to improve and make the difference on that particular spot.

So what we're saying is, let's say, I actually am using about an acre of jasmine.

That would be excluded from land use.

That's excluded from land use taxation.

So that one and a half acres would be valued using the same methodology as everybody else.

That doesn't mean that I value a one and a half acre pump.

It's still part of the pump.

It's valued at what it is.

It's a home slide on a farm.

the community talked about these arbitrary sizes of these home sites that are not, they're being used as home sites, they're not being used as home sites in that particular, so you have to think about highest and best use of that particular site.

Well, let me finish my question.

So in land use taxation, when the,

property owners goes to apply for their land use.

They are.

There is a portion of land use taxation in the example.

We don't.

We've got all of these leachates for crop placement to the lands under the house.

That's specifically exempted from that.

But that doesn't mean that makes that home site a separate site.

It's still part of the site.

So the issue, our issue is you can't value it on a fiction that it's not part of the farm.

It is part of the farm.

It doesn't magically,

or any other two-acre parcel in a country club, both to buy a two-acre parcel in a country club or in a residential subdivision.

That's all you bought.

You didn't buy a two-acre parcel plus the farm.

And all we're saying over here is you bought a farm.

It happens to have a home site on it, but that doesn't mean that that home site has the same value as a two acres home site in the country club.

It's part of the problem.

And so it has to be valued as part of the problem.

I mentioned earlier is if farmland is valued at $500 an acre, I've got a 100 acre farm.

There's two acres that are excluded from use value taxation for those two acres on the home side.

The difference is if I want to value the home side, I've got my land value.

What's the value of the improvements to that home side?

And if you go through analysis to determine, you know, if you think of what all adds next, if you think of subject system as why, if you think of it that way, as to the, whatever you've done in that particular side stack,

I just want to ask you one last question going back to my first question.

So if we have two properties, one is stripped of any ability to build a home and it sells for $5,000 an acre and the adjacent property, same size, you know, sells for $6,000 an acre because you can put two houses on it.

then you're saying that farmland that has the ability to have two houses built on it should sell for $1,000 an acre more and that should be applied to all that acreage.

But that doesn't mean that $6,000 is applied to 98 of those 100 acres in the last two are valued at half a million dollars.

Right.

But going back to that argument, wouldn't it also be appropriate to say, okay, well, we recognize that, you know, the 98 acres should only be valued at $5,000 an acre because they're not built just like this property that sold for $5,000 an acre.

And therefore, you know, through their study of the market,

That's, it's the land, that's the value of improvement.

Let's go look for our farm.

My comps should not be two acre lots, one, two, three, four, and five over here at any point.

If you want the proper analysis, go find me a comparable cell in a farm, a similar farm in terms of its physical characteristics, location, time in the cell, humidity assessment, all those things.

Find me a comparable cell.

comparable meaning comparable.

Find a cell on the farm.

Don't go value this farm using comps two acre land sale comps value on this farm.

I just wanted, before we move on to the test or if anyone else has questions, I just want to make a remark again, Ty.

So you have 130 minutes from the 13 applications.

We started at 910.

That takes us to, I calculate 1120.

You'll have 39 minutes of rebuttal.

So I just want to just

I just want to make you aware that there is some time, it's right here, because we prefer to get these done by lunch if we can.

It might be longer, but we're going to give you all the time that our rules provide.

We just want to make sure we're doing the timing.

Any questions for the applicant at this time?

That would be great.

Thank you.

But can we take a break?

And then they'll obviously be an exchange.

Thank you.

First of all, and I have to say this now because he had an opportunity to say country club lots out 35 times during this presentation.

And even though I won't get to that toward the end where we're talking about land.

None of the lots, none of the properties that are under appeal were compared or had their home sites determined or their land values determined based on a country club lot.

There are no country club lots in the neighborhoods in which these properties are located.

No matter which direction from the city you get, unless they're specific.

Hot spots in the area in the county like Crozet.

to court cases, cases are very difficult and their attorney's bread and butter.

But you have to really understand the underlying arguments as to what they're saying in taking a snippet out of one little statement out of the probably page after page after page of decision can be a little bit misleading as to what the actual meaning was.

But even what Mr. Smith provided is contradictory.

On his page six, he says, in Virginia, the use of hybrid methodology

The use of a hybrid methodology without showing any recognition for it as a generally accepted appraisal practice, yet, you know, and I'll get down to this hybrid question in a second, but the fact that every assessor does the same process, it makes it, that is proof that is a generally accepted assessment practice for appraisal.

and but the word hybrid and I probably started this problem because when I was writing our explanation four or five years ago which I wanted to make it a clear explanation for the property owners so they could look at something and figure out how is the assessor doing what they're doing and

The very first thing I said, well, you know, we're doing this sales comparison approach, but it looks like a cost approach.

What do I call it?

So I called it a hybrid.

Is that legally a bad thing?

I don't know.

But what it is is a sales comparison approach because it uses all of the sales that we have of single family properties in this case in the county

The ability to do sales pairing and figure out exactly what each item in that model is worth.

So he's actually absolutely right, where we do not have a study for every single item that shows up in our model.

Over time, we are able to determine those through a

An estimate of, in some cases, the cost and just sometimes overall how that model is working and going up over time and so I'm going to try to slow down a little bit because there's so many things that I'm going through that I want to make sure I don't miss something.

So when you are doing a sales comparison approach, you make adjustments to properties.

Those adjustments can be based on different things.

And if a cost of cure is the reason why you're adjusting the condition or the cost of an item is and the difference between two properties, you're making an adjustment based on the cost of that item doesn't mean that you're not doing the sales comparison approach.

It means you're using some kind of market data to make that adjustment within the sales comparison.

Now, it's difficult because, as I described in kind of my response to this general, the general information that was provided, that in a single property appraisal, you typically have three sales, three, four, five sometimes.

and the single property appraiser will adjust those sales based on their differences from the subject property.

Mass Appraisal works differently because we have to determine the value of all 39,000 or so single family properties in the county.

So we use this model

as a standard, like a model property.

If you not just think about it as a model, like a mathematical model, but as a model property that is the average property in the county with all the average items on it, all the average attributes, let's say.

And we use the model to adjust

is to adjust this every single subject property to that average model property.

And so the mathematical model is how we determine, it's not how we determine, but how we modify or adjust that average property to the subject.

So

The subject, if it is an A grade and it's not the average grade, which is C, we have an adjustment to increase the value based on its grade.

If it has a number of bathrooms, we use the number of bathrooms.

If it has any other item that he showed you on these lists, we make an adjustment to get there.

Do we have sales?

with match pairs to show every one of those and why they should be exactly what they are, no we don't.

We're doing mass appraisal and we're using a general model to get there.

In the end,

Will I be able to support the value of every single one of those or every one of those rates?

No, I can't.

I won't be able to give you the cost necessarily of it.

I won't be able to give you two sales that are absolutely identical except the difference of the number of bathrooms or the difference of one of them has a bidet and one of them doesn't have a bidet.

because that just doesn't exist in reality because there are so many differences in every sale that you'll find sort of bigger the more general differences are well supported and those minute ones are not.

However, there are differences in value when you have those items when you start adding certain things to a property and

You have certain things included in a property that doesn't add any value.

And we don't add any value for those.

There's things that are no longer valued by the market.

So it's a complex model, but we break it down as well as we can to make sure that all the components of a property are included to determine appropriate value.

So once we

We already have the model.

The model has existed for decades itself.

Every year we look at that and say, is this model appropriate?

Do we need to change anything, take anything out of it, add anything to it?

So that's the model specification step that IAAO talks about.

And so we do that part.

And we only make very minor changes.

And we may make no change to the specification of the model.

What normally happens and happens every year is that we change the calibration of the model.

and in some jurisdictions when they have somebody who can do this, either a staff who's able to do a multiple regression or if they have someone else that they hired to do it, will do a multiple regression and multiple regression

If you know what multi-aggression is, it's really an iterative process.

It's an iterative calculation done by a computer that says if all of these things were considered with these different variables, how do we get down to what each one would contribute?

And that's a standard way to determine these different contributory items.

We have not done a multiple regression, but what we have done

by adjusting the rates based on where we are.

So I agree with some of the things that Mr. Smith said.

Yes, we use this iterative process.

And yes, we're trying to get 100% of market value.

And what is 100% of market value?

In Mass Appraisal, it is a median ratio of 100%.

So yes, we're trying to get as close to 100% as we can.

And if we're nine thousandths of a percent off, we're thinking that's a good thing, not a bad thing.

But in the other part of that sales analysis, or the sales studies that we use, is the COD, as he said.

and the CODs, yes, the IAAO says that you should have CODs between five and 10, five and 15, five and 20, depending on how homogeneous your property types are.

So if you're in a townhouse neighborhood, you should have five to 10%.

You really shouldn't have really high CODs.

You don't have much variability in your townhouses.

As you get into the rural areas, that should be higher.

You have more,

More variance in what you would be expecting, more variance in the types of properties.

The question of being too low.

So there are two different times that sales studies are done.

Sales studies, as we're trying to analyze for the reassessment, are done after the property sells.

So we are looking at properties that my appraisers are

able to actually look at the properties after they sell and say, is our description appropriate?

Is our grade appropriate?

Do we have the right square footage?

And quite often we find that the property that we haven't looked at in years is a little bit different than the description that we have.

So we make adjustments to that.

So when we do those adjustments, it tends to bring those sales more in line

after we make the adjustment to the model with that 100%, with a smaller COD.

However, if you do a sales study like the state does, which is taking the assessed value

as of January 1st, and then the sale price that happens later in that year, our CODs are high, obviously, because there's more variance.

So it really matters what sales study timing you're looking at as to how your CODs are going to fall.

And kind of the big question, because I think there were maybe 10 slides about sales chasing.

So the big question is, are we sales chasing?

So sales chasing is, and I describe this in my write-up, where I go out and I look at your property, it's sold for $200,000 more than we have on it.

And I'm going to make up that $200,000 by changing your description.

and I'll get your value up to 100%.

And I'll do that on this guy over here and that guy over there.

So all of these houses are just getting reassessed individually.

So one of the things Mr. Smith said is

It was on one of these slides that if you're doing a reassessment on a property when it sells, that is wrong.

I agree.

You don't want to reassess a property when it sells.

We reassess every property in the county every year, and we are not reassessing your specific home based on the fact that it sold for a certain amount.

We were looking at that, and we did a study

six years ago where we created our grade guide.

One of the exhibits that Mr. Smith provided was our grade guide.

We had a gentleman from the IAAO, a consulting wing of the IAAO come in, and one of the most important things he said to my staff was, my appraisal staff, was that when you're looking at this property,

You don't know, you ignore the sale price.

You are looking at the property based on this great guy, based on the measurements, based on all of that objective information.

Then you set the description and then we adjust the model to get that value up to 100%.

It's not up to the appraiser to go out and look at a house and say oh yeah that's worth a million dollars I'm going to change it to a million dollars that's not appraisal that's just

Magic.

So what they're supposed to do is they're supposed to go out and objectively determine, based on our criteria and description, the description criteria, not the numbers, what description appropriately describes that house.

And then once they do that for the more than 2,000 sales we have each year,

Then we adjust the model to bring all of the sales up to 100%.

Yes, 50% of those sales are above 100%, 50% are below.

We're not saying that market value is not determined on every specific property by its sale price.

Market value is determined based on the aggregate of the sales.

That's an important differentiation.

So when Mr. Smith says half the properties that sell are being assessed above their market value, yes.

I mean, no, they are not being assessed above the market value.

They're being assessed above 100% of the median in our analysis.

So that, I believe, is a very important differentiation.

There are components in there.

I know we talked about this in our conversation with Mr. Smith.

There are components within this model.

And as I said, we did not do a specific how much it's a bidet worth this year.

We didn't look at the cost this year.

We did not look at two sales to figure out the bidet was worth $1,300.

However, one comment he made about it doesn't matter how old the bidet is, that was incorrect.

The bidet

The costs that are included in here, no matter which it is, today or anything else, will be adjusted by the grade of the property.

It's a part of the building, the house.

So it's part of the model for the house.

So it'll be adjusted either up or down based on the grade of the property, if it's above average or below average.

And it'll also be reduced based on the age of the property.

So if it's a brand new,

Badde, or if it's a 20-year-old Badde, they're not going to be valued the same.

If it's in a mansion versus a luxury home versus an A-home, it's not going to be assessed the same.

So the model takes into account a lot of different components.

And we are saying that those components are done effectively

Whether we have specific support for every single item or not, that is effective because of the fact that our CODs are relatively low.

And the fact that a few of our, and if you look at the percentage-wise of these numbers, every time you break down the sales study into different criteria, we do that to make sure that the way we're looking at it,

When we set our values and we come up to 100% of the values overall, that's great.

But then we look at the CODs.

Are CODs really high?

Well, we don't really want really high CODs because that means not just the 50% are above and 50% are below the medium.

That 50% range is going to get much bigger the bigger the COD is.

So the higher COD just means you're further away from the median.

So we don't want a higher COD.

But what he is saying is that the fact that those numbers in some cases are below 5 COD,

is an indication that we are sales chasing.

So what the IWAO actually says is that, just that, it is an indication that we may be sales chasing, but there are things that you can do, reports that you can run to make sure you are not actually sales chasing.

So I've already explained to you that we're not sales chasing because we are adjusting the model after we look at the sales themselves.

and the importance of doing that because if we had adjusted, if my appraisers had gone out and just said, okay, you're worth a million because you sold for millions, I'll just change your description to get to your sale price, no other property would change.

None of these

uh clients of Mr. Smith's would be here because they wouldn't have gone up at all in any of those years that they hadn't sold that is absolutely not the case they their values have changed with the market so the important part of understanding sales chasing is that all properties whether they've sold or not are moving with the market so i mean that it's a totally different argument are they moving appropriately with the market or not but the sales chasing isn't talking about that part it's talking about

Are we adjusting the model to the market?

Are we just adjusting the sales to their sale prices?

And we are definitely not adjusting the sales to the sale prices.

I provided a report, which is one of the methods that the IAAO suggests or recommends for determining whether your sales chasing or not.

Let's get down to land.

So I want to reiterate, because you said I swear 35 times, we are not comparing any of these properties under appeal to country club properties.

So Keswick Estates is a country club neighborhood.

Only properties in that neighborhood are assessed using Keswick Estates sales for their lots.

Glenmore, Farmington, those are all country club states.

We don't use those sales, those land sales assessments to determine any rural area property assessments.

What we do use is the sales of properties within their neighborhoods, within their market areas.

So rural area market areas are the way we break down those rural areas.

So we do

assigned a home site to every property in the rural area.

and whether it's got a home built on it or not.

That is absolutely the case.

So if you had a property, just to talk about kind of the general idea, if you have a property that's zoned for building a commercial building, you don't wait until that commercial building is built before you value it as a commercial lot.

You don't, if you have something that's zoned for apartments, you don't, you value that land based on apartments and apartment sales.

So apartment land sales.

When it comes to properties in a rural area, we base that model of a two-acre home site and then residual based on the fact that you can build a two-acre home.

I mean, you can build on, you can subdivide to, if I can get this, if I can say this right, you can subdivide a property to a minimum of two acres.

So our model

It creates a value for two acres as the minimum because you can build a house on it.

And as you get larger than that, we add value for what we call residual land.

And that value is a fraction, it's 15%, as the mathematical model goes, 15% of the rate used for the home site.

So,

and as you get larger because of size, size adjustments, that value goes down.

But the value of that land is not just farmland when you can build a house on it.

In some cases, if there's no house on it, where exactly is that?

Is that home site, that two acre home site?

It doesn't matter to us where that home site is.

The fact that you can build a house on it somewhere,

Isn't important.

We also, now he says that you can't break out this two acre home site and sell it separately.

Well, we're not saying you can sell it separately.

We're saying you can build a home on it.

We also make adjustments for property that's in a floodplain, and we'll reduce that area.

Well, you can't break that off and sell it separately either, but we're gonna make an adjustment and value that section of floodplain at a lower amount, or area your property with a critical slope that you can't build on, or you can't use very well, this utility is slower.

All of those parts of the property we're going to make adjustments to.

So as I explained in my write up, when you're doing a fee appraisal, a single property appraisal, you can look at properties based on the overall average price or value per acre.

but then you are comparing other properties and you're adjusting that value per acre appropriately based on differences.

What we're doing, we're doing it in a, basically using different units.

We're separating that home site, that ability to build that house and then the remaining land and how much the market shows that that land adds to the value.

So all of that is a standard way to assess land in a rural area.

They're just not.

So I've said it three or four times now.

Oh, sales of conservation easement properties.

They're just not.

By law, they are not assessed at market value.

We are required to

Well, first of all, there are several different requirements for us when it comes to conservation easements.

We're not allowed to value the loss of value that's held by the easement holder or the value itself that's held by the easement holder.

Basically, when you sell the rights to develop the property, the development rights to a property, and the easement holder buys those from you,

that part of the value is not assessed, it cannot be assessed by us.

And we won't assess it because the further requirement is that we assess any property under conservation easement by the land use rates, if at the time that easement was put on the property, the property would have qualified for land use.

So in all of the cases of the properties under appeal that are in conservation easement,

We assess all of their qualified land at land use rates.

And so you cannot compare an assessment created using non-market

a graph of those and bring that up for a second.

The median ratio was 31.8%.

So we are assessing overall conservation easement sales that took place between 2020 and 2022.

There were 75 of them.

at about a third of normal market value because of those restrictions that are placed on us by the law, but also the restrictions that are placed on the properties by the easement.

Well, actually, let me change that.

I said that incorrectly.

We assess it at 37% or 31% based on the law.

They are actually selling at a third of what they're, we're assessing it at a third of what they actually sold for.

So what is their actual market value?

Now these are sales that were already under conservation easement and they sold at three times our assessment.

So I just want to make that clear.

We're assessing it at a third.

We're not doing it wrong because we're being ordered to by the law, but

And I think, question.

It's 480 Cismont Manor Farm.

In which the two acre home site is assessed at 86,250 per acre and the one acre is at 129,400 per acre.

So if you look at it like that, it really sounds wrong.

What we're actually doing is we're assessing a two acre home site

and 172,500, and we're assessing a one acre home site at 129.4, which is a 25% reduction for a one acre home site compared to a two.

And in the market, we've found that one acre home sites, they don't sell for half the sale price of a two acre home site.

They sell for 75% on average because of the diminishing return of your size adjustment.

under conservation easement.

These are properties, or at least I looked at one of them just to refresh myself.

So the second one is the one I looked at, 5460 Stony Point Pass is a property that is under the land use program.

So the land use program

There are several different things.

Qualification is all that matters to determine land use assessment.

Only the land that is qualified is assessed under land use rates.

So you don't qualify a parcel and the entire parcel suddenly becomes subject to land use rates.

It's only those with an active use.

So in this case, it's forestry.

and there's 15 acres that is not forestry.

It's not qualified.

So we assess

We assessed that 15 acres both at market and the land use side at the exact same, which is 15 acres at a total of 409,500, which is what he lists on his page.

But we're not doing that at land use rates.

We're doing that as market rates.

And the only way to pull that over, our assessment side is what we're assessing and taxes are based on.

Market value side is,

what we're saying the market value is.

Anything that's on the market value side that's not affected by land use just gets pulled over.

So the home itself, the value improvements, the home site gets pulled over, the non-qualified gets pulled over, and then the qualified land gets reduced to those land use rates.

and then talking about you can't use a two-acre rule of thumb for a home site.

That is true.

It's ironic that my predecessor actually came from Loudoun County.

He was well aware of this ruling because of the lawsuit there.

So we don't determine our,

Our two acres qualify on the qualified side.

Now this is different than we use the two acre minimum on the market side because that's the smallest home site you could subdivide.

On the qualified side, we use whatever size we can basically measure on the map that you're using.

And that's not just the footprint of the house, it's the yard, it's the pool, it's the extensive landscaping in some cases, detached garage, the driveway.

So, you know, it really matters.

It can vary greatly on properties.

Now those properties,

When we measure it, we'll round up or down.

We're not gonna assess a property at 1 point, I'm sorry, 2.76 acres.

Because you can measure it on the map several different times and come up with slightly different numbers.

We're gonna round that to the closest quarter or half an acre and not just round up.

Because I believe Mr. Smith said, you can't round up.

So I think that is everything in response to what he's presented.

With the right effect I presented, I don't have anything further to add unless you have questions.

I have two questions.

The qualified land is based on the application by the property owner.

So they're applying for land use based on

They are specifying it.

They're not always completely aware of exactly the acreage because it's hard to measure unless you're actually looking at an aerial photograph and you can, like in the case of this one I was just looking at, it's all forestry, so you can easily go around and measure the acreage of the forestry.

The property owner doesn't always have that information, so

and again these are things that we have that are qualified over a long period of time typically and we revalidate every two years so the property owner will be giving us revalidation forms for in that process right now and they'll say this is how many acres I have and we'll look at you know the information we have and do a check and make sure that's what we still see because again that can also change they can cut down trees they can plant more trees so those things change over time but to answer your question

I guess, and my other question is, when you're analyzing these easement sales, are you looking at the rights retained, you know, for example, if a

Property owner retains rights to build five houses or to buy the property into three lots.

and another restriction is based on the law of how we assess it is we can only assess the home site if the home site is the home's actually there in that case, in the conservation easement case.

So I think the key takeaway for me from this presentation is to describe how these values are derived.

And what we said is they value the home size as if they're two acres because that's the minimum number of acres that could be property could be subdivided.

and his words were then for parcels that are over about the two acres the other land is valued that he called residual acres and that tells us how far farms are valued as two acre home sites with lower values for the residual acre.

This whole analysis tells me now what I didn't understand, didn't make a connection is,

I'm looking at it as this is not how you value a farm, you don't understand that.

They're valuing two acre home sites, sometimes with an extra home site thrown in a secondary home site, but with a residual acre.

These are not potential subdivisions, they're farms.

You don't subdivide your farm to put numbers of houses on it, you just feed one.

A family

That's what the county just said that it's valued these assets a two-acre residential life because that's what you can subdivide to

I never said, even though I said the words, we never said that they're valuing them by comparing them to country clubs.

What I'm saying is, the home sites that are being alleged are getting values as if they are in a country club.

Clark Lawrence asked Mr. Lynch early on for comparable sales, sales support for that particular property.

These are the sales that we would provide as comparable sales.

On the list are addresses on Palmer Drive, Edwith Lane, North Drive,

Okay, those are not being used in dry yard plant properties.

That's not on a tab.

I'm just going back and look at my analysis of the next.

That's what the process is telling you.

They're not saying that they compared them to the value that they're concerned about.

They're valued as if they are.

But to Mr. Lynch's point, we're going to ask for comparable sales.

They're being provided as support for these.

So, there are other ones that are provided.

There's some that were funeral sales.

I think the largest one is 46.24 acres looks like.

There's a list of

Well, I don't understand how you could use a two acre lot in a country club as a comp for a 600 acre farm.

I think he's let me answer that.

Why don't we, this is the assessor.

Well, Mr. Mayo is basically saying what I would say.

It's in our right room field.

And that's what we're doing.

We're trying to provide improvements that are

I don't see the bummer.

The point is, we have an understanding of how farmsteads are valued.

That's how you can have farmsteads.

It's not how you value farms.

and just the overarching thing here is you have to, you have to replicate what the market is.

That's what assessors are supposed to do.

What do buyers and sellers do?

Buyers and sellers don't price farms.

They don't price farms.

I've talked to buyers and sellers of farms and asked them how they value these types of properties, how they arrive at their valuations, and they'll tell you that I have a 600-acre farm with these improvements on it.

That's what any appraiser is required to do, is to replicate, you're replicating buyer and seller behavior, because the targeting is fair market value, and what is that?

It's the price that a seller who's not under any duress or compulsion to sell his own, to accept and buyer, to transact this particular property, and the owner makes a transaction.

and so whatever you do as an assessor or appraiser, you're looking at it the way the market looks at it.

How does the market behave?

That's why if you say on some properties, you know, cost approach is not appropriate because of the type of properties and do not do that.

So it's like affordable housing is a good example of this.

And now state law requires affordable housing to be assessed using any approach.

Why is that important?

The appraisal standards that I'm telling you, though, that

So you look at market behavior and that's how you set what your standards are because somebody needs to write down and say this is how you do it to actually replicate market behavior.

What we're telling you here is you can call it what you call it.

Hold on, that was the issue of the adjustments for the bidet, right?

So, the alleged home sites in particular.

How does the market behave?

If you were to go out and try to buy a farm today and you thought you were going to sell a farm, you don't say, I've got this two-acre residential site with 98 residual acres.

You say, I've got a hundred-acre farm, and your farm's price says a hundred-acre farm, and then you determine what the value of those improvements add to the farm, including improvements to make it a home site under the building.

That's how the market does it.

The market doesn't say, I've got this two acre home site on this farm that's valued, same values basically as you'd see over in the other side of the road.

I've got these lesser values for the other 98 acres.

A farm is sold though.

How the farm is taxed is part of the public information available for that farm, right?

We're here today because this is not how our clients view the market today.

It's not how they behaved in their transactions to buy or sell their properties.

It's based on our analysis that this is inappropriate racial practice.

It's significantly and defensively inflated our assessments.

And that's why we're asking for.

We just want to be taxed at 100% fair market value.

And we want to be taxed in uniformity in terms of uniform methodology and application of methodology.

And otherwise, children pushing their tax burdens are much less.

Just one more question.

So could you respond specifically to Mr. Lynch's claim that there are sort of statutory restrictions on their methodology that they're honoring?

Not that one specifically.

The one where he said we are constricted in the way that we value conservation easements specifically according to Acts of the General Assembly.

Well, I disagree with that because if you're going to value a foundation, if you're going to value a fund that's under a conservation easement, you would most easily modify a system as similar as possible probably.

So you're looking for a comparable sale.

The conservation easement has been altered.

So it is a unique class of property in that way, but you can't use sales of properties that are not encumbered by conservation easements as good comps for a property that isn't a conservation easement.

I understand that's what you're asking us to do, but I guess what is the specific statutory authority that allows them to do that?

Because I think what he's saying is the statute specifically disallows them from doing that.

It's 10.1-1011.

It says this is the appropriate part, the relevant part to ensure that the owner of the feed is not taxed on the value of the interest of the holder of the easy fair market value of such land and skipping over some interferes with the relevant shall not incur the value of the tradeable uses of the centuries.

I think this is an interesting point, too.

While the land with some of the home sites on conservation easements are subject to that conservation easement as well, if you look at the values that the county is assigning to the home sites on conservation easement land, no difference.

I mean, in some cases, higher.

Okay, thank you.

I would suggest that we move to the specific properties at this point.

I think it would be really helpful to, I think we understand the arguments, at least for myself, but maybe understand the arguments for the bigger picture.

Those are the pages where we're giving you our analysis based on the Sales Management

I want to thank you so much for being with us today.

We've got some of them in the back, some down.

So just a quick administrative type of a note.

We noticed in the processors information packets that they replicated or at least included what they said are the comps provided by the owners.

But there's not a distinction in some cases between the comps that are for land sale purposes only versus improvements.

So I've been asked that you argue about what we've got here.

I also noticed that in a couple of cases problems for one property aren't used for sensor analysis so it's just you have to kind of watch for the time.

We may get into some of those details in case we don't, we just want you to be aware of those particular issues.

So if you look at tab 1A, this is the path to middle 6-1 down to the middle 6-7.

So the land period and farm use, the current assessment of the farmsteads farmland and ag use is $495 per acre.

The land period and ag use is 215.99 acres and Walter County says the fair market value of land and ag use is $777,000.

The assessment of the farmstand's forested land is $424 an acre, and the area in the forestry is 370 acres, and so what the county says is the fair market value in land and forestry use is $159,000.

The county then shows the area in the homesite use.

Let's say you go buy a farm.

It's just an open farm.

You can put the table.

You can sign the picture out.

So it's one acre and different than any other acre.

So the issue then in terms of value

What's the depreciative replacement cost of the improvements that you might want to make to the actual homicide that's there?

And what we have come up with is our estimate of the cost of the improvements that have been provided to the homicide in $77,000.

So our analysis and the total sure amount of time

The home site use is the value of the land, or the value of the raw land, plus the replacement cost, new, less depreciation, and development costs.

We estimated that at $82,845.

What we're seeing is the total land for market value for this property is $3.50.

as opposed to assigning something like the value breaker as the county says for those of us.

So we're coming at it from it's a farm, we're not doing the same thing.

We've selected four different properties that provide the parcel entries and the addresses for them there.

I'll have, first of them has the quality of sale minus one, that's like three minus one, or luxury or mansion plus one or luxury quality, properties that are in similar conditions, similar effective ages, similar effective areas.

And then we're looking at sale rates that are incentives that we can find.

Look at the sales dollars per effective area,

The value is in the range of $248 per acre up to about $328 for the meat and the vegans here in the $295 to $302 per square foot range.

and so that's what we're looking at then is what's the analysis here how does our house compare with these particular properties you can see on the all the figures there towards the left that our fair market value part one improvement is based on effective area we're using that garbage figure as a common unit of measure for everything it's 280 dollars square but and so the two that are most like our property are

Banks, and Harrison.

They're $248,281 per square foot respectively.

I think based on just an analysis of quality, condition, et cetera, the effective period, we're at the high end of that range, and that's the basis for our inclusion at $2,439,000 grant.

Part 2 improvements, one of the things I'm going to point out here is when you have a property that's got a guest house on it, you're not going to sell the guest house separately.

We don't have a deduction in here for the discount that the market could sell for the property.

We're just giving you our conservative estimate of what its properties sell for.

This particular case we've got a 724 square foot cottage, that's the effective area.

The addresses are listed for two of them.

The effective areas on those, can't find anything 720 square foot cottage.

It's a little bit higher than that, but it's a rounded value of $6,900.00.

And so what we're given at the bottom then is total farmstead fair market value in our situation, total fair market value in the land, plus the fair market value being housed in the sky.

The kitchen was renovated nine years ago.

The last remodel was in about 1983.

So it's not a recent remodel.

During the accessory review, there were some corrections made that reduced the assessment improvements from 2.7 million to 2.1 million.

But again, we're at a total farmstead value of 2.8 million.

The thing that we noticed about the assessors is it's not really comparable sales.

They just give you, they just give you a compromise for the most part, including properties that haven't sold in recent, general fund.

You should know each of the dates.

This particular property, this is in the assessor's records, they're not number three that last sold in 2008.

so what you're getting from the assessor is not an analysis of property sales it's just an analysis of sales for a reason seems that your assessment of other properties is also accurate

The land use value, which is not a market value.

It's a land use value.

That's set by SLIAC.

It has nothing to do with market value.

So the premise of that whole analysis is incorrect.

and then we do provide additional comparable properties and we use some that aren't sales or aren't recent sales because we're including some here I believe that are conservation easement BS.

That one that he was just talking about comparable number three, we're just trying to show some sales of properties that were conservation easements just to provide some other information.

So this is not, somebody's not gonna buy this because it's just a farm.

There's another farm over here.

There's extensive gardens.

There's a pool over here.

None of this is conservation easement.

All of this is in use as an estate.

So I would disagree with the fact that conservation easement restricts the value of a home site because it only restricts what you can do with it, where you can tear down your 8,700,000 square foot house and you can't build a 10,000 square foot house.

But it doesn't restrict the value of that existing property or the property it sits on.

This is a conservation easement property.

Is there any of it not part of the conservation or the whole property is?

The whole property is under conservation easement.

Exactly.

My argument is that the conservation easement, these things are already there when the conservation easement was put in place.

They weren't restricted by that conservation easement.

The easement is restricting doing anything on the rest of the property.

You can't build any more houses.

I don't know the specifics on this one, if you could build any more houses or not.

I think we're OK.

Okay.

Well, the 375 farming tonight, I saw that multiple times.

Just I think the

Well, I don't know if they said, they have like a 40% off because I think it's a fiscal obsolescence.

That home when it was sold, it was pretty much a shell.

but I know that sale and I know that that property was a shell at the time.

It was pretty much a shell.

Quality is M1 that's mentioned plus

They showed built in 1931, remodeled in 1994, and they said it's in fair condition.

So they have it as a nation plus quality, two-story, 12,000 square foot plus, with a slate-proof responsible frame, et cetera.

Yeah, so they have a fair and they're showing a 40%, they did a 40%

The interesting thing is when you look at the other properties that we've selected in here in terms of using the county's existing quality that poses the condition codes like this first one Meacham Banks at $230 a foot.

It's a luxury minus one quality average condition because

Big Story Contemporary, 6,690 square feet, sell price at $248, $50.

I think this is kind of helpful.

They have signs of luxury quality and

Average condition, one of their comps that they provided is L-1, which is pretty close in quality.

Our client's house built renovations last in like 1993.

This one was renovated in 2018 in excellent condition.

Here's the next one, their comp number two, built in 2018, M-1 quality average condition and it's quite the size of our property.

If you look at the next page, N-1, this is count number four, N-1, quality, excellent condition, renovated in 2021.

Here's the property, it's count number 32 from 2001, 2005, renovated in 2007, 2006, built in 2009.

In terms of the quality and the condition of these properties,

all comparable sales and most of them are not comparable sales.

So in 2008, that's 15 years old.

So that doesn't tell you anything about what that property would sell for now, it just tells you what the assessment is.

But it's a nicer quality home in better condition in

quite a bit larger.

But the point that I'm making is we're looking at actually doing a sales comparison approach.

You're kind of limited by what sales do you have.

Find those that are as similar to your property as you possibly can and then you make adjustments from there.

And that's what we're doing is looking to see what's as similar as possible to this particular improvement that we find.

in terms of quality and size, et cetera, to sort of figure out where we fit in them.

So I'm trying to find discrepancy and just looking both your comps, their comps, and everything else.

I'm just trying and also trying to see because these two are kind of the outliers in a sense or much lower because also Meacham Banks, I'm looking at the assessor's comps.

They have a living area is 3,991 square feet, whereas you have it as 6,690.

So they have it as 3911, 3991.

the GIS on this particular property, primary building details, finished square foot, and this does not include basement area.

6,690 square feet.

There is no basement at all.

I just, again, like I'm trying to, that's what it appears like.

I think it's a state mandated land use valuation, not market value.

But this property sold for $24 million back in 2005.

It was subsequently stripped of division rights.

No, I'm not saying that.

Yeah, I'm not saying that.

Well, I'm not saying that there's not value to the ability to place a house on the site.

We're not looking at here.

I don't know if you can see it.

On the county's GIS, it is learned that market value is different.

So if you do the math, what we're saying is pick the category of agricultural land, do the math, you're ending up in that $495 per acre range.

That's what we're counting, and that's not the use value.

That's what the county says the market value is.

So- And he just, he said that when the property is under conservation management, that that value is not representative of market value.

That is its mark.

By statute, that's what it is.

Because the whole idea, if you've heard the analogy, if you are the peace symbol owner of the property, you own all the rights to possess and do whatever you want to do and every right is yours.

When you grant a conservation easement, you have given away part of that population.

You don't halt it anymore.

So that's, in terms of a conservation easement, that is, you're looking at sales of comparable or other lands that are under conservation easement, but what we're seeing here is

We're not valuing the property as a two acre or in this case an 11 acre home site with 589 residual acres.

What we're saying is it's a 600 acre farm.

Some of the acres, subject system, those sorts of things, that's value that should be recognized because it's there.