Looking at Assessments in McHenry County

The Chicago Tribune article on assessments has a comment on what constitute acceptable real estate assessment quality.

It states that a 15% margin of error is “the highest acceptable coefficient of dispersion (margin of error).”

Accuracy in your township

Experts say the highest acceptable coefficient of dispersion, or COD [margin or error], is 15.

See how your township compares with others in the same triennial reassessment area by entering a street address.

Information for Cook County is contained below that statement.

The average margin of error is 23.5%.

Here is the 2015 information for McHenry County:

Only Grafton Township meets the standard of uniformity that say is acceptable with regard to uniformity.  Algonquin is quite close, however.

So what does living in a township like McHenry or Richmond or Burton with margins of error of about 20% mean?

Over the years while wrestling with trying to explain Coefficients of Dispersion (“margins of error” in human terms), I came up with the following.

>Assuming that a sales tax rate is 10%  (I used 5% in past days), a 20% COD would mean that if three shoppers spent $100, one would pay $12 in sales tax, a second $10 and a third $8.

There’s an equal chance for each result.

Think of the fights one would have at the checkout line.

Another way of explaining it is that with a COD of 20%:

  • Half of the properties are assessed within the range of the median = or – 20%.
  • The other half are assessed higher or lower.

That’s how bad real estate assessments are in McHenry, Burton and Richmond Townships.

They are worse in all but Grafton, Dorr and Nunda Townships.


Comments

Looking at Assessments in McHenry County — 7 Comments

  1. This is good explanation from Nunda Township Assessment website:

    Coefficient of Dispersion . . . . . What is it?

    How do we judge the Assessor’s job?

    Well, the Township Assessor must certify the assessed valuation of each and every parcel in the Township.

    This certification is reported to the McHenry County Supervisor of Assessments and used to create your tax bill.

    There are over 18,400 parcels in Nunda Township.

    How do we measure the Assessor’s performance?

    We measure it “statistically”.

    There are basically 2 statistics that we need to measure.

    How close to the statutory 33 1/3% of fair market value are the Assessments; and how uniform are our assessments.

    The most commonly used statistical measure of assessment uniformity in a ratio study is the COEFFICIENT OF DISPERSION (COD).

    The COD provides a measure of the variation of individual assessment ratios around the median level of assessment.

    It can be stated as the “average error” expressed as a percentage.

    The lower the rate of dispersion, the more uniform, and fair the spread of the tax burden.

    To put it another way, there should be some uniformity in the assessment of all the homes in your neighborhood, even if they don’t look exactly like yours.

    The COD actually measures that uniformity; or lack of uniformity in statistical terms.

    Once we calculate the median, or the middle, we can determine how wide are the variations from the median.

    How fair is your assessment as compared to your neighbors?

    We calculate this variation on a Township wide basis, neighborhood by neighborhood.

    What is this “Median Level of Assessment”?

    Well we all know the state statute says the assessed valuation of your home should be 33.3% of fair market value.

    The fair market value can only be determined by a sale.

    So, we list the sales, divide each sales price by the Assessed Valuation and see how close they all came to 33.3%. How wide are the variations from the median, or middle? How “uniform” are our assessments. . . . .

    What is our Coefficient of Dispersion ?

    To put it another way.

    What is the average deviation?

    Assume a township has a median level of assessment of 30% and a Coefficient of Dispersion of 40%.

    The assessment levels of individual properties on the average can be expected to deviate plus or minus 40% from the middle.

    Assume two similar properties had a market value of $90,000.

    One could be assessed at 42% and the other at 18%.

    Given a tax rate of 6%, one property tax bill could be $972 while the other $2,268.

    The tax burden is not shared equally in this example.

    You can see how important assessment uniformity can be.

    Each Township Assessor strives for a low COD.

    The lower the COD, the smaller the Average Deviation.

    Our County Supervisor of Assessments considers any Township under 15% to be good and any Township over 20% to be bad.

    Adjustments to the Township Assessors books or even rejection may be the result of a high COD.

  2. What is not measured is whether the deviation from fair value is skewed high or low (only the amount and magnitude of deviations).

    In the article about Cook County assessments the point was made that higher-valued properties received lower-than-fair-value assessments in greater magnitude and frequency than lower-valued properties received lower-than-fair-value-assessments.

    Also, lower-valued properties received higher-than-fair-value assessments with more frequency and with higher percentage magnitude than higher-valued properties received higher-than-fair-value-assessments.

  3. Action Item:

    Because individual township assessors are unwilling to do so,
    and County Assessor Ross is unwilling to do so:

    1. Every citizens should look at each property directly contiguous to their own on
    http://www.mchenrycountygis.org/Athena/

    2. Ascertain whether relative assessments are unfair. Even if you find your own assessment is too low based upon your neighbors’ similar properties, do not be afraid to call assessor and offer to pay your fair share as the law requires.

    When ALL property owners are paying property taxes based upon the legally required assessment of ‘fair market value’ on that particular property classification
    (residential-zoned property produces more social service provision cost provision than , say, farmland, which produces no children requiring education costs or fire or police or parks or libraries or community colleges)
    then the tax RATE become equitably distributed.

    If the tax RATE goes down, ALL properties benefit, and the local economy may pick up.

    3. LEARN WHAT A TIF IS AND DOES TO ALL TAXPAYERS. TIFS get social service provision ‘for free’, paid for by all of us taxpayers.

    4. If property tax RATES go lower, then ALL property owners benefit because McHenry County property values stop hemorrhaging value.

    5.Demand that your township assessor not only optimize your own property’s lowest possible assessment, but that the assessor address UNDER-ASSESSED properties which you know are not paying their fair share.

    When ANY property is under-assessed, EVERY taxpayer who is fairly assessed pays more so that the under-assessed property gets that discount.

    6.Make Assessor aware of rental properties in your neighborhood.

    MANY properties in McHenry County claim “homestead exemptions”.

    Homestead exemption is supposed to apply to OWNER OCCUPIED properties.

    If a property is a RENTAL property improperly claiming a Homestead Exemption, the owner is receiving a fraudulent tax reduction paid for by all other taxpayers.

    Homestead exemption is an $18,000 reduction in fair market value of assessment of total home value, so it means about a $700 discount to taxpayer per property.

    Every Landlord saving $700+ by burdening other taxpayers with that cost may be subject to interest and penalties, and Whistle-blower compensation may be available for those who make the infraction known to Assessor.

  4. Why does it take so long, in this digitalized age, to come up with these figures from ’15 …. what about ’16?

    They should all be in by now!

  5. “What is not measured is whether the deviation from fair value is skewed high or low (only the amount and magnitude of deviations).”

    The Department of Revenue tracks this via its Price-Related Differential PRD) metric. Below is the Department’s definition and explanation.

    http://tax.illinois.gov/AboutIdor/TaxStats/PropertyTaxStats/AssessmentRatioLevels.htm

    Column 10 – Price-Related Differential (PRD)

    In addition to the COD, the intra-area price-related differential can be used as an indicator of assessment uniformity. While the COD measures the general scattering of individual ratios around the median ratio, the intra-area price-related differential measures a pattern of inequity in assessments that has a correlation with the value of the property.

    If there is a tendency for the higher-valued properties to exhibit lower assessment ratios than lower-valued properties, the price-related differential will be greater than 1.03.

    If, on the other hand, higher-valued properties have higher assessment ratios than lower-valued properties, the price-related differential will be less than .98.

    Differentials greater than 1.03 or less than .98 are both indicative of an inequity in assessment.

    The formula for calculating the price-related differential is
    Mean assessment ratio/Sales-based average ratio

    The mean assessment ratio is the sum of all ratios divided by the number of ratios.

    The sales-based average ratio is computed by adding all assessed values and sale prices and then dividing the first sum by the second.

    The intra-area price-related differential, like the COD, is an indicator of a specific type of inequity.

    It cannot be used to calculate factors that will correct an inequity, nor will it indicate if a particular parcel of property has been assessed fairly.

    However, it will help locate the source of the inequity so a program can be formulated to correct the inequity.

  6. When someone like Cal Skinner starts rambling about property taxes and assessments, I like to check his “facts” with my Township Assessor.

    My Assessor gave me the International Association of Assessing Officers (IAAO) standards for C.O.D.s, and they vary by property type and sample size.

    For residential property with homes on it, a C.O.D. of 20% is only acceptable for “Rural or small jurisdictions / older properties / depressed market areas.”

    So, apparently it IS on the spectrum.

    There are whole different C.O.D. standards for income-producing property, vacant land, and so on.

    There’s also something called the P.R.D (price related differential) that tells if you if cheap homes are overassessed and mansions are being underassessed.

    So I guess that, again, Cal is an “expert” in something he knows little to nothing about.

    Big surprise…

  7. First let me know that Mr. “Williams” does not reveal the township in which he resides.

    So, his source, his local assessor remains anonymous.

    In the late 1960’s I took and passed the International Association of Assessing Officers (IAAO) course that allowed me to be designated a “Certified Illinois Assessing Officer.”

    While I was McHenry County Treasurer I handled appeals for overassessed taxpayers that went all the way to the Illinois Property Tax Appeal Board.

    All won their appeals.

    To my delight, I was able to hand out a check for $500 to a Coventry Subdivision resident in Crystal Lake.

    If you are satisfied with a margin of error of 20% where you live, that’s fine.

    In my opinion, it is way too high.

    At a 33% assessment level, a Coefficient of Dispersion of 20% means that half of the properties are assessed between 26.7% and 39.9%.

    The rest are either assessed higher or lower.

    I passed the bill that requires members of Boards of Review to pass a test for the first time. I then tood the test and passed with a score of about 90%.

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