011-9 Wyo. Code R. § 9-5

Current through April 27, 2019
Section 9-5 - Appraisal Methods

(a) The appraisal techniques which may be used by the County Assessor include the approaches described in this section. Each approach used shall be an appropriate method for the type of property being valued; that is, the property shall fit the assumptions inherent in the appraisal method in order to calculate or estimate the fair market value of the property. Each approach used shall also consider the nature of the property and the regulatory and economic environment within which the property operates.

(b) General Appraisal Methods and Reconciliation

  • (i) The Sales Comparison Approach. The comparable sales approach is an appropriate method of valuation when there are an adequate number of reliable arms-length sales and the properties subject to such sales are similar to the property being valued. For land valuation, the sales comparison is the preferred method of valuation. In the absence of adequate vacant land sales, other techniques may be used including allocation, abstraction, anticipated use, and capitalization of ground rents. In the mass appraisal of properties for property tax purposes it is acceptable to value the properties using generally accepted market modeling techniques. Comparable sales shall be adjusted to reflect differences in time, location, size, physical attributes, financing terms or other differences which affect value. The use of this approach to value depends upon:
    • (A) The availability of comparable sales data;
    • (B) The verification of the sales data;
    • (C) The degree of comparability or extent of adjustment necessary for time differences; and
    • (D) The absence of non-typical conditions affecting the sales price.
  • (ii) The Cost Approach. The cost approach is a method of estimating value by summing the land value, where applicable, with the depreciated value of improvements. In the CAMA system, RCNLD is calculated using Marshall and Swift cost tables. The cost approach is an accepted approach and could serve as the primary approach when sales data is unavailable or inadequate (such as special purpose properties). Market adjusted RCNLD plus land value is an accepted method of the cost approach. Sale prices shall be adjusted for time. Other factors influencing sale price should be considered. The cost approach relies on the principle of substitution in which an informed buyer will not pay more for a property than its comparable replacement. The approach requires:
    • (A) Accurate, current land values in the case of real property;
    • (B) Accurate, pertinent physical data regarding the property to which cost data may be applied;
    • (C) Current cost data which considers appreciation in the case of real and personal property;
      • (I) Costs may be estimated on the basis of typical replacement or reproduction costs.
      • (II) Typical replacement or reproduction costs may be estimated by the quantity survey method, the unit-in-place method, the comparative unit method, or the trended original cost method.
  • (iii) The Income or Capitalized Earnings Approach. The income or capitalized earnings approach is a method of estimating the value of property by converting anticipated benefits to be derived from the ownership of the property into a value estimate as is reflected or accomplished by yield capitalization methodology. These benefits can be reflected through the net operating income or cash flow of a company. The anticipated future income and/or reversions are discounted to a present worth. Direct capitalization may also be used to convert a single year's income expectancy into an indication of value. This conversion is accomplished by either dividing the income estimate by an appropriate income rate or by multiplying the income estimate by an appropriate income factor in accordance with generally accepted appraisal techniques. Both direct and yield capitalization methodologies are considered to be the income or capitalized earnings approach as discussed in this subsection
    • (A) For the purposes of this subsection, cash flow is the difference between dollars paid and dollars received. Dollars received include all revenues generated from operating assets. Dollars paid include all current expenses and capital expenditures, or annual allowances therefore, required to develop and maintain the income stream. Cash flow must also take into account all legally enforceable restrictions on the property.
    • (B) Net operating income or cash flow is discounted to fair value using a capitalization rate developed by the methods described in Section 4(a)(vii).
  • (iv) Reconciliation. The appraiser shall weigh the relative significance, applicability and appropriateness of the indication of value derived from the approaches to value or methods outlined above, and will place the most weight and reliance on the value indicator which, in his professional judgment, best approximates the value of the subject property. The appraiser shall evaluate all alternative conclusions and reconcile the value indicators to arrive at a final estimate of value. For market value, the final estimate is that value which most nearly represents what the typical, informed, rational purchaser would pay for the subject property and a rational seller would accept if it were available for sale on the open market as of the date of the appraisal, given all the data utilized by the appraiser in their analysis.

(c) Appraisal Methods for Special Purpose Property

  • (i) Personal Property
    • (A) The cost, sales comparison, and income approaches should be considered as long as the market within the trade level is in equilibrium.
    • (B) The valuation methodology selected shall reflect the trade level at which personal property is found, and consider factors influencing the value in use including utility, usefulness to the owner or the actual income produced.
    • (C) References: Property appraisers may use any credible source to establish costs or sales or personal property, including, but not limited to "blue book" on boats, airplanes, farm and construction equipment, Marshall and Swift Valuation Service and information developed by the Division.
      • (I) The Division shall annually conduct a study of information on personal property, using such source material as may be available, including but not limited to trade journals and publication, auction information, sales from dealers and manufacturers, industry associations, as well as comment from interested parties.
      • (II) The Division shall interpret the data collected in the study and make recommendation. The completed work product shall be published annually on the Department of Revenue website and be entitled the Wyoming Personal Property Valuation Manual.
      • (III) The Wyoming Personal Property Valuation Manual shall also include updated cost trend factor tables, economic life tables, and depreciation tables. Said tables shall also be incorporated into the CAMA system.
    • (D) Depreciation in the valuation of Personal Property
      • (I) Depreciation shall be applied beginning at the first assessment date after the property is acquired.
      • (II) Depreciation shall continue to be applied until the residual value is reached. The residual value shall be considered to be no less than twenty percent (20%) for all personal property, unless the property tax appraiser has collected sufficient market information to indicate a different residual value.
      • (III) The Division shall provide tables of depreciation factors for use by property tax appraisers. Other rates of depreciation may be developed by the appraiser.
    • (E) Apportionment of Valuation of Machinery and Equipment Among Counties
      • (I) Machinery and equipment located in two (2) or more counties during the year, except mobile machinery otherwise required to be registered under W.S. 31-18-203, shall be reported to the assessor of the home county. When the valuation of machinery or equipment is subject to apportionment between or among two or more counties, the owner or operator may select either the time method or monetary method of reporting the subject equipment. Once the method is selected, it must be used for all the machinery and equipment listed. If there is no monetary value of work performed, the time method must be used.
        • (1.) Time method of reporting and valuation allocation.
          • a. The report shall include a listing of machinery and equipment as requested by the assessor for the home county, as well as the amount of time to the nearest whole week each piece of machinery or equipment was used or located in each county during the immediately preceding calendar year.
          • b. The valuation shall be allocated as follows: the home county shall be entitled to assess one-twelfth (1/12) of the assessed valuation of the machinery by applying to the remainder a ratio of the total number of weeks in a county to the total number of weeks in the year or 52. If the machinery and equipment was located in the home county for any part of the year, the home county is entitled to its proportional share in addition to the base share of one-twelfth (1/12).
        • (2.) The monetary method of reporting and valuation allocation.
          • a. The report shall include a listing of machinery and equipment as requested by the assessor of the home county as well as the monetary value of the work done by the owner or operator in each county.
          • b. The valuation shall be allocated as follows: the home county shall be entitle to assess one-twelfth (1/12) of the assessed valuation of the machinery and equipment as the base share. The remainder of the total assessed valuation shall be allocated by applying to the remainder a ratio of the monetary value of the contract performed in each county to the total monetary value of the contracts performed in the state. If the machinery and equipment was located in the home county for any part of the year, the home county is entitled to its proportionate share in addition to the base share of one-twelfth (1/12).
      • (II) The assessor of the home county shall be responsible for allocating portions of assessed value to the counties according to this subparagraph.
      • (III) The time and monetary methods of reporting also apply to machinery and equipment brought into the state after the January 1st assessment date. The time method ratio, if used, shall be modified to reflect the number of weeks remaining in the year after the machinery and equipment is brought into the state.
      • (IV) Mobile machinery as defined by W.S.W.S. W.S. 31-18-103(a)(i) may be reported to the assessor and place on the assessment roll. Property taxes and the administrative fee noted in W.S. W.S. 31-18-203(c) would then apply.
      • (V) Home County means the county in which an owner or operator of equipment and machinery has a principal place of business, and to which reports listing equipment used in two or more counties are made. If the owner's principal place of business is located out of Wyoming or if there is no principal place of business, the home county would be the Wyoming County where the machinery or equipment is first located in the taxable year.
  • (ii) Present Worth Appraisal of Vacant Land within a Platted Subdivision
    • (A) Vacant land within a platted subdivision may be considered for present worth valuation; not all vacant land within a platted subdivision will qualify. All of the following qualifications must be examined prior to utilizing present worth methodology:
      • (I) Land Qualifications
        • (1.) The property must be located within a platted subdivision. Land divided through records of survey and other forms of dividing land does not qualify as a platted subdivision.
        • (2.) The property must be vacant. Any form of construction taking place on the individual lot will disqualify the parcel from present worth consideration. This includes, but is not limited to excavation for improvement. Smaller, non-permanent structures such as, tool sheds, moveable trailer, etc. shall not disqualify the property from present worth consideration.
        • (3.) The subdivision construction phase must be completed and the lot must be ready to build upon. All intended infrastructure must be in place.
        • (4.) The intended property use may be residential, commercial or industrial. Property must be actively marketed for sale (taxpayer must be able to present evidence that the property is publicly available for purchase as anticipated in the definition of fair market value).
        • (5.) The property must be marketed as fee simple property. Property intended to be leased or being leased should not be considered for present worth valuation.
        • (6.) The value of any given lot appraised using present worth shall not be less than the value of raw land. Raw land is the lowest value; and in those cases where a long absorption period or high rate allow the indicated present worth value to drop below raw land, present worth shall not apply.
        • (7.) Subdivision infrastructures will vary within each development and where it is located. The appraiser needs to understand what is to be provided based on the location of the property and that infrastructure provided to similarly situated property. If the lots within a subdivision lack something that has been provided to other lots within the subdivision, then those lots are not ready for construction and should not be appraised using present worth.
        • (8.) Present worth may be applied regardless of the size of the subdivision.
        • (9.) Lots that have complete infrastructure but cannot be built upon for other reasons (steep grade, trees, etc) should not be appraised using present worth.
        • (10.) Agricultural land as defined in W.S. W.S. W.S. 39-13-101(a)(iii) shall not be appraised using present worth.
        • (11.) Lots gifted to friends or family shall not be appraised using present worth. In addition, those lots may not be considered in formula for calculating an absorption period.
      • (II) Applicant Qualification
        • (1.) Applicant must be the owner of the vacant lots and be actively marketing the property. Those lots that are gifted to friends and family members, or those to be used for his/her own personal use will not qualify as that individual is considered an end user.
        • (2.) The property owner must annually request present worth valuation no later than March 1 of the assessment year. Said request must be in writing. The format of the application shall be determined by the division and shall be available in each county assessor office.
        • (3.) Builders or investors who purchase groups of lots within a subdivision may apply. Builders and investors owning lots with the intent to resell may apply.
        • (4.) The applicant cannot be the end user of the property. By purchasing a lot to build a structure, regardless of the amount of time required to construct, the owner has become and end user of the property.
        • (5.) The applicant must be relying on the sale of lots for profit or reimbursement of funds invested.
      • (III) Absorption Period or Rate
        • (1.) The absorption period must be greater than one year to qualify for present worth valuation. An absorption period of less than one indicates that all remaining lots will be sold within a one year period. When the absorption period becomes less than one year the present worth appraisal method is not appropriate.
        • (2.) Often times within a subdivision a developer will sell several lots prior to completing the infrastructure. These presales should be counted as sales of the first month of the absorption period.
        • (3.) To correctly apply present worth values an absorption period must be obtained which, specifically defines the time period as starting at the initial offering of the lots and ending when all lots are sold. More importantly, it is an estimate of the time frame needed to market the inventory to the eventual end users. The appraiser may consider granting a separate absorption period for each owner of land within a development. Much like developers, builders and investors will face the task of selling an inventory of lots over time and at least in part recouping their initial investment and making a profit through the sale of those lots.
        • (4.) The lots being appraised using present worth must be of the same use. If multiple uses exist within a subdivision, the lots should be separated for analysis as those different used will account for different absorption periods.
      • (IV) Discount Rate
        • (1.) The Division will annually provide a discount rate that shall be incorporated in the CAMA system. The division may develop the rate or acquire the rate through a nationally recognized rate service or appraisal company. The division will provide the rate to be used by counties no later than January 31st.
  • (iii) Land and Personal Property Subject to Gross Production Tax
    • (A) All land and real property that are taxed based upon the gross product of a producing well, mine or mining claim shall be listed on the tax rolls by the County Assessor. All tangible personal property used underground in mining or used with the well in oil or gas exploration or production as further described below, that is taxed based upon the gross product of the producing well, mine or mining claim shall not be separately assessed. In accordance with the Wyoming Constitution and Statutes, the gross products tax shall be in lieu of property taxation of those lands and equipment, and shall be levied on all mineral interest owners in a proportion to their ownership shares unless exempted by law.
    • (B) In order for land to be subject to gross production tax in lieu of property tax, the land in question must be actively producing a mineral on which production tax is paid. Lands with plugged, injection or abandoned wells; or abandoned mines shall be listed for assessment by the County Assessor.
      • (I) The amount of land allocated to such treatment shall be:
        • (1.) Up to forty (40) acres of the parcel for each point of valuation where a producing well or mine is located.
        • (2.) Where multiple producing wells, API numbers, etc., are located in the same legal forty acre (quarter-quarter) within a parcel, a maximum of forty (40) acres is eligible.
        • (3.) The number of surface acres occupied by the producing well or mine has no bearing on the number of acres removed from assessment by the county assessor.
    • (C) Personal Property Subject to Gross Production Tax
      • (I) In determining whether equipment satisfied the requirements for W.W. 39-11-102(c)(viii), the taxpayer may submit, and the assessor may consider, information indicating that the equipment is specifically adapted for use underground or it is not put to any use other than the production of minerals in the underground operation. Personal property used to transport product after the point of valuation and all other surface equipment is subject to separate assessment by the county assessor.
  • (iv) Low Income Housing Tax Credit (LIHTC) Appraisal
    • (A) The appraisal methods identified in Section 5(b) should be considered.
    • (B) Tax credits received for a LIHTC project shall be included as annual income in the capitalization process at a rate equal to the total amount of the tax credits received divided by the number of years that the project is required to maintain rent restrictions.
    • (C) Tax credit fees shall be allowed in the total annual expenses.
    • (D) The Division will annually provide a discount rate that shall be used in the capitalization process. The division may develop the rate or acquire the rate through a nationally recognized rate service or appraisal company.

(d) Classification and Taxable Value of Industrial Property

  • (i) For purposes of this subsection, Industrial Property means those properties meeting the statutory definitions set forth in W.W. 39-11-101(a)(xiv) whose taxable value is stated in W.S. W.S. 39-11-101(a)(xvii)(B).
  • (ii) For purposes of this subsection, NAICS means the "North American Industry Classification System" published by the Executive Office of the President, Office of Management and Budget. The NAICS edition 2012 is incorporated by reference into these rules and does not include any later amendments or editions. The Department has determined that incorporation of the full text in the NAICS would be cumbersome or inefficient given the length or nature of the code. A copy of the NAICS is maintained at the Department's office at 122 West 25th Street, Cheyenne, WY 82002 and is available for public inspection and copying at cost at the same location. The NAICS may also be found at http://www.census.gov/eos/www/naics/.
  • (iii) Pursuant to W.S. W.S. 39-11-101(a)(xiv)(A) and (C), properties classified under the following NAICS codes shall be assessed as industrial property:
    • (A) Establishments whose primary activity is food manufacturing as identified in NAICS Industry Groups 3111-3119, excluding commercial bakeries which are located with retail premises and sell primarily at retail from the premises (e.g., a bakery located within a supermarket);
    • (B) Establishments whose primary activity is beverage manufacturing as identified in NAICS Industry Groups 3121;
    • (C) Establishments whose primary activity is tobacco manufacturing as identified by NAICS Industry Groups 3122;
    • (D) Establishments whose primary activity is the manufacture of textile mill products as identified in NAICS Industry Groups 3131- 3149;
    • (E) Establishments whose primary activity is apparel manufacturing and the manufacture of other finished products made from fabrics and similar materials as identified in NAICS Industry Groups 3151-3159;
    • (F) Establishments whose primary activity is leather and allied product manufacturing as identified in NAICS Industry Groups 3161-3169;
    • (G) Establishments whose primary activity is wood product manufacturing as identified in NAICS Industry Groups 3211-3219;
    • (H) Establishments whose primary activity is paper and allied product manufacturing as identified in NAICS Industry Groups 3221-3222;
    • (I) Establishments whose primary activity is printing, and related support activities, including newspapers, books, and periodicals as identified in NAICS Industry Group 3231, providing the establishment operates a printing process;
    • (J) Establishments whose primary activity is chemical manufacturing as identified in NAICS Industry Groups 3252-3259;
    • (K) Establishments whose primary activity is plastic and rubber products manufacturing as identified in NAICS Industry Group 3261-3262;
    • (L) Establishments whose primary activity is the non-metallic mineral product manufacturing as identified in NAICS Industry Groups 3271-3279;
    • (M) Establishments whose primary activity is primary metal manufacturing as identified in NAICS Industry Groups 3311-3315;
    • (N) Establishments whose primary activity is fabricated metal product manufacturing as identified in NAICS Industry Groups 3321-3329;
    • (O) Establishments whose primary activity is machinery manufacturing as identified in NAICS Industry Groups 3331-3339;
    • (P) Establishments whose primary activity is computer and electronic product manufacturing as identified in NAICS Industry Groups 3341-3346;
    • (Q) Establishments whose primary activity is electrical equipment, appliance and component manufacturing as identified in NAICS Industry Groups 3351-3359;
    • (R) Establishments whose primary activity is the transportation equipment manufacturing as identified in NAICS Industry Groups 3361-3369;
    • (S) Establishments whose primary activity is furniture and related product manufacturing as identified in NAICS Industry Groups 3371-3379;
    • (T) Establishments whose primary activity is medical equipment and supplies manufacturing as identified in NAICS Industry Group 3391;
    • (U) Establishments whose primary activity is the manufacture of jewelry, silverware, and plated ware, musical instruments; dolls, toys, games, sporting and athletic goods; pens, pencils and artists' materials; buttons, costume novelties, miscellaneous notions; brooms and brushes; caskets; and other miscellaneous manufacturing industries as identified in NAICS Industry Group 3399.
  • (iv) Pursuant to W.S. W.S. 39-11-101(a)(xiv)(B), properties classified under the following NAICS codes shall be assessed as industrial property:
    • (A) Establishments whose primary activity is oil and gas extraction as identified in NAICS Industry Group 2111;
    • (B) Establishments whose primary activity is coal mining as identified in NAICS Industry Group 2121;
    • (C) Establishments whose primary activity is metal ore mining as identified in NAICS Industry Group 2122;
    • (D) Establishments whose primary activity is non-metal mining and quarrying as identified in NAICS Industry Group 2123;
    • (E) Establishments whose primary activity is petroleum and coal product manufacturing as identified in NAICS Industry Group 3241;
    • (F) Establishments whose primary activity is basic chemical manufacturing as identified in NAICS Industry Group 3251;
    • (G) Establishments whose primary activity is pipeline transportation as identified in NAICS Industry Groups 4861-4869;
    • (H) Pipelines which transport minerals are considered in support of or auxiliary to the industrial property.
  • (v) Auxiliary real and personal property, and leased real and personal property, if the predominant use of such property is in support of, or auxiliary to, property used or held for use for industrial purposes, shall be so classified.
  • (vi) Undeveloped and vacant property shall be classified as industrial or commercial consistent with the concept of highest and best use.
  • (vii) Office buildings in which the majority of use is in conjunction with or supports industrial purposes, shall be classified as industrial property. To determine majority of use, the County Assessor will, in his or her discretion, refer to, but not be limited to, such factors as square footage, occupancy or rental charges.
  • (viii) Notwithstanding the strict classification of property as industrial using the NAICS manual, the County Assessor may consider property as commercial if such property includes only minimal application of skill, capital, machinery or labor in transforming materials into other suitable forms, qualities or properties.

011-9 Wyo. Code R. § 9-5

Amended, Eff. 7/25/2016.