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Glossary.md

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Glossary

The property assessment world is filled with lots of technical jargon that can make things confusing, even for veteran employees. This glossary of terms should clarify some of the confusion. Terms are listed by section in alphabetical order. If you have questions about a term or think something is omitted, please open an issue.

General

Arm's Length Sale

  1. A sale between a willing buyer and a willing seller that are unrelated and are not acting under duress, abnormal pressure or undue influences.
  2. A sale between two unrelated parties, both seeking to maximize their positions from the transaction.

Assessed Value (AV)

The value set by the Assessor, based on market conditions, for the purpose of computing property taxes. In some jurisdictions, assessed value is equal to fair cash value. In Cook County, assessed value is:

These percentage multipliers are known as assessment levels.

Assessor

The county or township official who determines assessed values of all properties within a jurisdiction for property tax purposes. In Illinois, assessors work at either the township or county level.

Assessment Level

The percentage of fair cash value at which assessments are set within a jurisdiction.

Automated Valuation Model (AVM)

A mathematical model which produces estimates of property market value based on location, time, characteristics, etc. of properties. The distinguishing feature of an AVM is that it is a market appraisal produced through mathematical modeling. Credibility of an AVM is dependent on the data used and the skills of the modeler producing the AVM.

Class

The designation of a property by type, such as vacant, residential, multi-family, agricultural, commercial or industrial. The classification determines the percentage of fair cash value at which a property is assessed for taxing purposes.

Clerk

The county official who assigns property index numbers and calculates property tax rates applied to the value of each property within the county

Computer-Assisted Mass Appraisal (CAMA)

See AVM.

Effective Tax Rate

The percentage of a property’s fair market value paid in property taxes each year.

Exempt Property

Property removed from the tax base; may be a partial (a homestead) or complete (church building used exclusively for religious use).

Exemption

A reduction in assessed value based on the type of property, income and other factors granted to a property owner.

Extension

The process, conducted by the county clerk, of determining tax rates for each owners of certain types of property.

Fair Cash Value (FCV)

The amount for which a property can be sold in the due course of business and trade, not under duress, between a willing buyer and a willing seller. (35 ILCS 200/1-50)

Fair Market Value (FMV)

Identical to fair cash value. These terms are used interchangeably at the CCAO.

Forfeited

The status of a property when the taxes are delinquent and a tax buyer did not purchase the lien on the delinquent taxes at the annual tax sale. In those cases, the county holds the lien to the property.

IAAO

The International Association of Assessing Officers. The IAAO (pronounced I double-A O) is the professional organization for assessors. It offers training, standards, and resources related to the process of assessment. It hosts an annual conference that many members of the CCAO attend.

Leasehold Tax

When for-profit companies lease space in a tax-exempt building owned by a non-profit or government entity, the for-profit company is liable for property taxes on the portion of property it uses. This is called a leasehold tax.

Levy

The total amount of taxes sought by a local government unit in a given year.

Lien

An unpaid debt legally assigned to a property. The holder of the lien is entitled to recoup their debt upon sale of the property.

Property Index Number (PIN)

A brief legal description of a particular parcel by numerical reference to parcels on assessment maps. It is a fourteen-digit number. The first two digits refer to the geographical township; the second two, to the section in which the parcel is located; the next three, to the block number; the next three digits identify the parcel within the block; the last four digits identify parcel subunits such as condos.

Residential Property

A property valued solely on the market valuation standard that is used, or intended to be used, for a residential purposes. This includes:

  • Residential condominiums
  • Property with up to seven self-contained dwelling units
  • Vacant and marginally improved land used, or intended to be used, in conjunction with a residential property

Sales Ratio Studies

Assessment Ratio

The ratio of the assessor's estimated assessed value to the property's sale price in the same period $t$:

$$\text{Assessment Ratio}_t = \frac{\text{Assessor's Estimated Assessed Value}_t}{\text{Sale Price}_{t}}$$

⚠️ NOTE: The CCAO typically uses lagged/leading sales when calculating sales/assessment ratios. See the Sales Ratio Study SOP for more details.

Coefficient of Dispersion (COD)

COD is a measure of horizontal equity and uniformity. The COD is the average percentage deviation of ratios from the median ratio. It is calculated as the ratio of the Average Absolute Deviation from the Median Sales Ratio to the Median Sales Ratio:

$$COD = \frac{\text{Average Absolute Deviation From Median Ratio}}{\text{Median Ratio}}*100$$

Prediction Ratio

See sales ratio.

Price Related Bias (PRB)

PRB is a statistical measure of vertical equity. The statistic is obtained by running a linear regression:

$$\frac{\text{Sales Ratio}_i-\text{Median Sales Ratio}}{\text{Median Sales Ratio}}=\beta_0 +\beta_1\Bigg[\frac{Ln\bigg(\Big(\frac{\text{EFCV}_i}{\text{Median EFCV}}\Big) + \text{Sale Price}_i\bigg)/2}{Ln(2)} \Bigg]+\mu_i$$

The recovered coefficient $\beta_1$ is the PRB statistic.

Price Related Differential (PRD)

PRD is a statistical measure of vertical equity in assessment. It is the mean prediction ratio divided by the sale-price weighted mean prediction ratio.

$$PRD = \frac{\text{Mean Sales Ratio}}{\Big(\sum{\text{Sales Ratio}_i}*w\Big)/n}*100$$

Sales Chasing

Also known as 'Selective Appraisal,' sales chasing is the practice of changing a property's assessed value in response to a recent sale.

Sales Ratio

The ratio of the assessor's estimated fair cash value to the property's sale price in period $t$:

$$\text{Sales Ratio}_t = \frac{\text{Assessor's Estimated Fair Cash Value}_{t}}{\text{Sale Price}_{t}}$$

⚠️ NOTE: The CCAO typically uses lagged/leading sales when calculating sales/assessment ratios. See the Sales Ratio Study SOP for more details.

Sales Ratio Study

A statistical analysis to evaluate the quality of assessments with respect to accuracy, uniformity, and vertical equity. Compares assessed values to actual property sales transactions to determine whether assessments hit their proper assessment level.


Statistics

Bootstrapped Standard Deviation

The standard deviation of 100 or more calculations of the same statistic, with each calculation based on a random sample of the overall population.

95% Confidence Interval

The range in which it is likely that an unknown parameter lies given an observed sample distribution. The confidence interval is given by the mean of the sample statistic plus and minus the product of the z-score (1.96) and the ratio of the standard deviation or bootstrapped standard deviation to the square root of the sample size:

$$CI = \text{Mean} \pm \sigma / \sqrt n$$

CCAO/Cook County/Illinois Specific

Annual Tax Sale

The annual auction held by county treasurers to sell liens on property tax-delinquent properties.

Appeals Process

The official review of an assessment placed on a property. Also known as assessment review. Review can be up to four stages. Each stage can yield an adjustment in assessed value.

  1. Appeal an assessment at the Assessor’s Office
  2. Appeal at the Board of Review (BOR)
  3. Appeal to the Property Tax Appeal Board (PTAB)
  4. File an objection in Circuit Court (only if filed at BoR)

AS/400

The machine used by the CCAO to communicate with the Cook County mainframe. Analysts interface with the AS/400 via an IBM System i terminal screen. Up until 2021, the AS/400 was the primary way analysts interacted with individual property records. The AS/400 has been effectively replaced by iasWorld.

Assessment Cycle

The Cook County assessment cycle occurs in four primary stages:

  1. Initial Values AKA Model Values: These are the raw output from the AVMs.
    • Desk Review: Initial values go through a review process to look for modeling errors, characteristic errors, and other anomalies. See Desk Review for more information.
      • Model values are exported to Excel for review by class/neighborhood.
      • Model values are uploaded to iasWorld. Individual property prediction errors are corrected in iasWorld.
  2. Mailed Values AKA First Pass: These are the values that are actually mailed to taxpayers.
  3. Assessor Certified AKA Second Pass: These are the first pass values after appeals. Values are considered Assessor Certified once the appeal window for a town has closed.
  4. Board Certified AKA Final Values: These are the final values after both CCAO and BoR appeals. Values are Board Certified after the BoR's appeal window has closed.

Assessment Review

See appeals process.

Board of Review (BoR)

An independent office created by Illinois statute and governed by 3 commissioners who are elected to two or four-year terms. The Board of Review acts as a second round of assessment appeals (after the intial round of appeals processed by the CCAO).

Bureau of Technology (BoT)

The Cook County Bureau of Technology, an independent office that manages IT infrastructure, contracting, and setup. Responsbile for maintaining certain databases as well as the AS/400.

Certificate of Error (CofE)

A way to apply changes to a property tax bill that has already been issued (the assessment is finalized). These are mostly (but not only) used to correct for missing exemptions.

Certified Illinois Assessing Officer (CIAO)

A designation in the Illinois chapter of the IAAO certifying that the recipient has taken specific coursework in assessment/appraisal.

Cook County Land Bank Authority

A quasi-governmental agency that works to restore tax-delinquent and otherwise distressed properties to productive use. Most of its property has historically been obtained at the Scavenger Sale.

Equalization Factor

A factor determined by the Illinois Department of Revenue each year to ensure an equal assessment among all 102 counties in the state. State statute requires that the aggregate value of assessments within each county must be equalized at $33 \frac{1}{3}\%$ of the estimated fair market value of real property in the county. This factor is also known as the "multiplier."

Equalized Assessed Valuation (EAV)

The assessed value multiplied by the equalization factor.

First Installment

The first of two property tax bills sent out each year. This bill is 55% of the previous year’s property tax on the property being billed.

Home Rule Government

A municipal government granted additional authority, including added taxation powers, by the state of Illinois. Municipalities that have more than 25,000 residents are automatically granted home rule powers.

iasWorld

Web portal link - Must be on CCAO network

Property assessment and tax administration software produced by Tyler Technologies. As of 2021, CCAO analysts use this software as their primary method of accessing individual property records. This system replaces the AS/400 and will eventually replace the mainframe.

Illinois Department of Revenue (IDOR)

The state agency with myriad financial duties, including conducting sales/ratio studies and setting the equalization factor.

Mainframe

Cook County's system of record for property taxes and assessments. Shared between the Assessor, Clerk, and Treasurer. Originally installed in the 1980s. Still in use for the calculation of tax bills, but likely to be deprecated in the next few years.

Partial Assessment

An assessed value that is less than a full assessed value, because:

  1. Improvements were added but were not usable for the entire tax year, or
  2. The taxable status of the property changed during the tax year.

New construction, building demolition, or fire occurring during the taxable year are common triggers for a partial assessment.

Property Tax Appeal Board (PTAB)

A quasi-judicial, state-level body that also processes property tax appeals. Appeals are only considered by PTAB after being considered by the Cook County Board of Review. See appeals process for more information.

PTAXSIM

Short for Property Tax Simulator, PTAXSIM is an application developed by the CCAO Data Department designed to replicate the property tax bill calculations performed by the Clerk/Treasurer. The goal of the application is to allow users to model different scenarios in order to more accurately predict how certain changes will affect the tax bill of a property.

Illinois Property Tax Extension Limitation Law (PTELL)

An Illinois statute that limits annual property tax increases by non-home rule governments to 5% or the increase in the consumer price index, whichever is less.

RPIE

The Real Property Income and Expense form. Now deprecated and replaced with a dedicated Smartfile filing.

Second Installment

The second of two property tax bills sent out each year. This bill is based on the current levies and assessed values. It amounts to the total tax bill for the year, minus the 55% of the prior year’s tax owed.

Tax Base

The total assessed value of all properties. Sometimes broken out by area i.e the tax base of Rogers Park, which refers to the sum of all property AVs in that town.

Tax Incentives

Incentives include exemptions, deferrals, abatements or tax credits. Incentives were established to stimulate a specific type of new growth for certain types of properties (i.e. affordable housing) or growth in areas of economic need.

Tax Increment Financing (TIF)

A TIF is a special property tax district for a specific geographic area. TIFs are designed to encourage local development, fund specific projects, and help blighted areas. They work by effectively freezing the tax base of the TIF area, then funneling any additional tax revenues to a dedicated fund. TIFs expire after 23 years.

See City of Chicago resources on TIFs.

Tax Levy

The amount in real estate taxes requested by each taxing body.

Tax Rate

The tax levy divided by the total of all equalized assessed values. This figure is compiled by the Cook County Clerk and applied to the equalized assessed valuation to determine the amount paid in property taxes.

Taxing Body

Units of governments that collect taxes to fund government services (the City of Chicago, Chicago Board of Education, Chicago Park District, County of Cook, and local school districts). Also called a taxing agency.

Taxing District

The area within which a unit of local government levies taxes, a term also applied the to the local government levying those taxes.

Taxpayer Information Services (TPI)

A department within the CCAO responsible for interfacing with the public. TPI helps guide taxpayers through the appeals process, provides information about exemptions, etc. They are located on the 3rd floor of City Hall.

Valuations

A department within the CCAO responsible for:

  • Certain aspects of the valuation process, such as valuing land
  • Reviewing initial model values from the Data Department
  • Mailing, closing, and certifying assessed values
  • Processing appeals submitted to the CCAO
  • Validating data such as property characteristics, sales, and PIN divisions
  • And many additional things

Sources