CHAPTER 6
ASSESSMENT OF LAND
The assessor is concerned with making correct and uniform valuations of real estate and this involves the consideration of two (2) separate entities: the land, which is permanent (immovable) and imperishable (not subject to depreciation), and the improvements, which are to some extent mobile and are always subject to deterioration. Terminology is important in the appraisal of land, the entity with which we are concerned in this chapter, because it is the medium through which the assessor expresses his estimate of value. Because he will have to use these terms in the performance of his duties, the assessor must understand their meaning. Although some terms may have different meanings to different assessors and court decisions may modify or change their meanings, the following definitions are generally accepted:
Land - A portion of the earth's surface, together with the earth below it, the space above it, and all things annexed thereto by nature or man.
Air Rights- Current concept is that one owns only as much of the air space above the surface as he can reasonably utilize, depending on location, zoning, and other factors governing the highest and best use of the property.
"AIR RIGHTS"
"SURFACE RIGHTS" "RIPARIAN RIGHTS"
"'MINERAL RIGHTS"
EARTH
Surface Rights- Any right to occupy and use the surface of the land on any designated property.
Riparian Rights - The property rights to water attached to land bordering water bodies arising by reason of the ownership of the land.
Mineral Rights - The ownership of the unmined mineral resources as distinguished from other ownership rights; the right to extract mineral resources.
Real Estate - Land and everything permanently attached thereto.
Real Property - The total of all the rights involved in the ownership of real estate. In common usage, the term has come to mean the things, rather than the rights of ownership. In ad valorem tax law, the subject of the tax is the thing, not the ownership.
Urban Land- Any land located in thickly populated areas such as cities, towns and boroughs, the major use of which is residential, commercial and industrial.
Rural Land - Any land located in less thickly populated regions, the major use of which is residential and farming.
Rural – Urban Fringe Land - Land in transition, where demand for land results in a change in the highest and best use and where land values are not stabilized.
Highest and Best Use - That use which at the time of appraisal is most likely to produce the greatest net return to the land or building over a given period of time.
STANDARD UNIT LAND MEASUREMENT
Standardized assessment of land requires determination of a suitable physical unit of measurement. Commonly used units are:
Acre - Definite in area (43,560 square feet) but indefinite in shape.
Generally used in the appraisal of rural areas (farmland, woodland, marshland, meadow land, recreational land, open space land, and rural residential land) and industrial land if the zoning requirements and the location and type of industry so indicate.
Square Foot - Generally used where the assumption is that shape, within limits, has no important bearing upon value. Applicable to industrial and commercial land.
Unit FrontFoot - Generally used where value depends to a considerable extent on shape. The unit front foot is definite in both area and shape, a rectangular strip lying perpendicular to the street, with frontage of one (1) foot with a certain depth, referred to as "standard depth." Standard depth should be selected to correspond to the depth of a majority of parcels in the area. Standard depth may vary among well-defined districts within the same taxing jurisdiction to conform to variations in typical lot depth.
The appraised value of each parcel of land must be translated into a unit front foot value. If the lot is of standard depth and shape, the unit front foot value is found by dividing the number of front feet into the appraised value. If the lot is not of standard depth and shape, further adjustments must be made to arrive at unit front foot value.
Lot Width
When various land values per front foot have been determined, the assessor must concern himself with the dimensions of various parcels. For example, if study of lot sizes discloses that the majority of lots bought and sold had frontage for residential use of 150 feet or less, it would seem reasonable that all lots having frontage in excess of 150 feet would not be of the same value as the first 150 feet. To adjust for such conditions, an excess frontage factor may be used. Some assessors use an excess frontage table, decreasing the value per front foot for each 25 feet or so beyond standard width. (See
Appendix B for Illustrative Excess Frontage Table.) Another method of adjusting for additional frontage is to apply a flat percentage of the original front foot value to all frontage in excess of standard width.
Examples of Adjustment for Excess Frontage
Assume three lots, one standard width (150 feet), one 25 feet beyond standard (175 feet), and one 50 feet wider than standard (200 feet).
LOT A LOT B LOT C
150’ 175’200’
Using a hypothetical front foot value or $10.00 for illustration only, the value of each lot could be calculated as follows:
Method 1. Applying excess frontage factors from the Illustrative Excess
Frontage Table in Appendix B.
Lot A-150' x $10.00 (front foot value) x 100% (excess frontage factor) = $1,500 (lot value)
Lot B-175' x $10.00 (front foot value) x 96% (excess frontage factor)
= $1,680 (lot value)
Lot C-200' x $10.00 (front foot value) x 92.3% (excess frontage factor)
= $1,864 (lot value)
Method 2. Applying a flat percentage or the original front foot value to the
excess frontage.
Lot A-150' at $10,00 per front foot $l,500
Lot B-150' at $10.00 per front foot$1,500
25' at $6.00 per front foot 150
Total 175' $1,650
Lot C-150' at $10.00 per front foot$1,500
50' at $6.00 per front foot 300
Total 200' $1,800
Lot Depth
Having given consideration to the effect of frontage in determining lot values, it is also1necessary to make adjustments for variations in depth. In terms of front foot values, it has been found that, as additional depth is added to a given lot, the value of the lot increases. Mathematical studies, which reasonably approximate the relation of front foot values to added depths, are tabulated in tables called depth tables.
These depth tables are based on the value of a hypothetical strip of land, which has frontage of one (1) foot and a depth at right angles to the street line of 100 feet, 150 feet or whatever is the normal lot depth in that section. Parcels with lesser or greater depths are values at a percentage of the front foot value of this hypothetical strip of land.
Values for varying depths are determined from a study of lot sales in acommunity or from one (1) of the several recognized standard depth tables which have been found to fit conditions in the community. (See Appendix D for Illustrative Depth Table.)
Illustrative Problem Applying Excess Frontage and Depth Factors
The following method might be used to value a parcel of land 200 feet deep with 200 feet frontage:
Normal lot depth-150 feet; Depth factor for 200 feet-1.061
Normal lot frontage--150 feet; Excess frontage factor for 200 feet-0.923
Unit front foot value-$5.00 per front foot
To find adjusted front foot value for this parcel-
$5.00 x 0.923 x 1.061 = $4.90 adjusted unit front foot value
To find value oflot-
200 (front feet) x $4.90 (adjusted front foot value) = $980 total value
SPECIAL URBAN PROBLEMS
Several important problems need special consideration when determining urban land values. These include the proximity of lots to corners and alleys and lots of irregular shape.
Corner Influence
One of the most important problems in determining value of properties needing special treatment is that of corner influence. There have been many rules designed to reflect the fact that corner lots in commercial zones sometimes have greater fair market value than inside lots of like size. The assessor will need to study sales and income of various properties to determine whether any of the commonly adopted rules for corner influence applies in his/her jurisdiction.
Assessors in some towns and cities assume that corner influence affects the first 25 feet of frontage in every direction from a corner. Other assessors determine the value of a corner lot by adding together the values of two (2) interior lots of the same size and shape lying near the center of perpendicular blocks.
Other popular rules for expressing corner influence are those developed by Hoffman-McNeil and W. A. Somers, which are based upon the relocation of unit land values of the main street to the side street (see Appendix C). All rules assume that corner lots in commercial areas have greater value because of (1) increased access to light and air, (2) greater ease of entrance and exit, (3) accessibility to greater flow of pedestrian and vehicular traffic, (4) increased show window and advertising space, or (5) greater building area under zoning laws because of exemptions from side-yard and set-back restrictions. A complete discussion and examples of corner influence may be found in Urban Land Appraisal., pages 99-135.
Few assessors attempt to account for corner influence in residential areas. Furthermore, popular rules should not be used in business areas unless studies of sales, income and traffic flow bear out assumption on which these rules are based. Some assessors maintain that corner influence in residential areas is actually a negative factor due to the possibility of greater special assessments, lack of privacy, increased noise and dirt, added care of curb and sidewalk and reduction in lot area by building line limitations on both frontages.
Alley Influence
Lots, which adjoin service alleys, may have additional value and, therefore, require special attention. The assessor will have to decide, after actual studies of sales and income from various parcels, the extent to which alleys affect land values in a given town or city.
In computing an assessment, some assessors arbitrarily add a portion of the width of an alley to each of the lots abutting it. Other assessors add a flat percentage, perhaps three (3) percent, to the value of all lots abutting an alley. These rules have the effect of giving an added increment of value to such lots without necessitating involved mathematical calculations. However, such systems should not be adopted without careful study of individual conditions.
Irregular Lots
Irregularly shaped lots require special attention. Some assessors have developed special tables based upon calculations arrived at by the use of calculus for valuing these lots. A more widely used method of determining their value is by dividing an irregularly shaped lot into several small, regularly shaped areas. These regular lots can then be valued with the aid of normal rules and formulas. Triangular lots are usually considered to have approximately two-thirds the value of a rectangular lot with the same width and depth when the base of the triangle is on the street and about one-third the value when the apex of the triangle is on the street.
Examples of Assessment of Irregular Lots
The following examples illustrate how the value of various irregular lots
may be determined. In these examples standard depth is 150 feet; depth factors are taken from the Illustrative Depth Table in Appendix D. A hypothetical front foot value of $20.00 is used for illustrative purposes only. For additional examples of valuation of irregular lots see Appendix R.
Lot with Parallel Sides of Unequal Length
LOT A
170 '
100'
STREET
Lot A-Sides parallel lot of unequal length. l"'c the deplh factor fcor the
nerage depth.
170' + 150' = 320 _,_ 2 = 160' averngc depth.
Depth factor for 160' is 103%.
100' x $20 (front foot value) = $2,000 x 103% (dcplh factor) = $2,060.
§} Ibid., pp. 73;90 .
r ""
•
Triangular Lots
LOT B LOTC
STREET
Hight angle triangles. Triangle factors u111.'<l are 65% for triangle with base
on street and 35% for triangle with apex on Hlrcet. Multiply the width by
the front foot price and apply the triangle factor to the result.
Lot l.J.-Right triangle with BASE on street. use 65% triangle factor.
100' x $20 (front foot value) = $2,000 x 100% (depth factor) = $2,000
x 65% (triangle factor) = $1,300.
1.ot C-Uigbt triangle with APEX on street, u!.e 35% trianirle factor.
100' x $20 (front foot value) = $2,000 x 100% (depth factor) = $2,000
x 35% (triangle factor) = $700.
6.7
L-Shaped Lots
LOTD LOT E
50' 100'
40' 40 (c)
100' (d) 100'
(a) (b) 60' 60'
100' so
STREET STREET
L·shaped lotA. Divide into rectangles, compute the value of the rectanrles
8eparlitely, then add.
Lot D--Both rectangles have frontage on street.
Section (a) 50' x $20 (front foot value) - $1,000 x .87 (depth factor
JQO') = $870.
Sectic»t (b) 50' x $20 (front foot value) = $1.000 x .69 (depth factor
for 60') = $690.
Total value of Lot D = $870 + $690 = $Hi60.
Lot &-Rear rectangle has no frontage on street.
To find depth factor for rear rectangles, subtract the depth factor for the
front lot from the depth factor for the total depth of the front and rear lots.
Depth faC'tor for 100' (whole lot) = .87
Ot-plh factor for 60' (front lot) = .69
Depth factor for rear lot (40') = .18
Stction (c) 50 ' x $20 (front foot. value) = $1.000 x .87 (depth factor
for 100') = $870
St'ction (d) 50' x $20 (front fool value) = $1,000 x .18 (depth factor
for rear 40') = $180
Total value of Lot E = $870 + 180 = $1 ,050.
6.8
•
•
Trapezoidal Lot
LOT F
100'
lb)
100'
STREET
Lol F-Trapezoidal figure with front and rear lines parallel. Divide into
rectangle and two triangles. Figure &ections separately, then add.
Section (a) Triangle with apex on street.
40' x $20 (front foot valoe) = $800 x 100% (depth factor) = $800 x
35% (triangle factor) = $280
Section (b) Reel.angle.
100' x $20 ( front foot value) = $2.000 x 100% (depth factor) = $2,000.
Section (c) Triangle with bue on slrffL
50' x S20 (front foot value) = $1 ,000 x 100% (depth factor) = $1,000
x 65% (triangle factor) = $650.
Add Sections (a)
(b)
(c)
Total value of Lot F
$ 280
2000
650
$2930
ta)
Lot with Curved Frontage
LOTG
.... •• .•
•h 10' •• •
100'
(b )
100'
STREET
l.ot G-Lot with curn-d front.age. Ural\ langenl>1 dividing area into rectangle
and two triangles. Figure secl•On'! 11eparately, then add.
~etion (a) Right angle triangle with bake on street.
110' x $20 (front Coot value) = $2,200 x 100% (depth factor (or 150')
= $2,200 x 65% (triangle factor) = $1,430.
Section (b) Rectangle
100' x $20 (front root value) = $2,000 x 1.03 (depth factor for 170')
= $2,060.
Section (c) Triangle with bll!e on street. ~ot a right anrle tria.ngle.
One method is to use the average depth or the sides.
60' x $20 (front root nlue) = $1,200 x J.023 (depth factor for 165') = $1,228 x 65 % (triangle factor) = $798.
Add sections (a)
(b)
(c)
Total value of Lot G
6.10
$1430
2060
798
$4288
GENERAL FACTORS AFFECTING LAND VALUES
Nonfarmland values are dependent on location, accessibility to major highways, urban centers, recreation areas, planning, zoning, utilities, area economic and social environment and a number of other factors. Residential, commercial and industrial lands are all affected by these factors and a careful study and analysis of market data is necessary to properly assess these parcels.
Commercial lands are investment properties, and the value of this type of land generally is based on the buying power of the public and the location of the land in relationship to this buying power. This type of land is generally assessed on a front foot or square foot basis.
Establishing industrial land values is a complex procedure. Such lands are subject to a highly specialized and intensive use and are wholly dependent upon each individual owner's requirements. Such properties rarely sell on the open competitive market as other than unimproved sites and substantial adjustments must be made for site improvements . Each type of industrial property requires special treatment in evaluation because of its individual characteristics. A detailed study of each site is required as to use, topography, shape, utility, industrial capacity, zone and location in relation to transportation, proximity of the labor market and accessibility to the customer market. Industrial land is generally assessed on a square foot or acreage basis.
Residential land values are based on desirability, scarcity, surroundings, restrictions, utilities and location. The more desirable the location, the more valuable the land would be. Desirability is stimulated by the factors of surroundings, deed restrictions, utilities and availability of transportation, shopping facilities, schools and churches. Residential land is generally assessed on a front foot or acreage basis.
Undeveloped acreage and farmland values depend on potential use as residential, commercial or industrial parcels. The assessor must consider all of the factors outlined previously for each classification. Under certain conditions, values for assessment for this type of land are estimated under the provisions of special legislative acts.
SPECIAL FACTORS AFFECTING LAND VALUES
Particular Legislation
The Rhode Island General Assembly has determined that certain types of land must be assessed in certain ways. Section 44-3-8 provides for special treatment for forest land. Sections 44-5-12; 44-5-39 and 44-27-1 through
6 provide preferential tax treatment of farm, forest and open space lands that qualify under certain conditions. Qualifying lands are to be assessed on the basis of use rather than market value. (see chapter 2, page 23)
Legal Factors
Planning and zoning, deed restrictions, easements and taxation are important factors. Is there a well -designed, adequately enforced master plan? If spot zoning is prevalent and over or under zoning of certain classifications is present, land values will be affected. Deed restrictions in relationship to limitations, terms and renewals, must be considered. Easements are reservations retained by grantors in the chain of title, such easements upon, and rights of way across a property circumscribe the rights of subsequent owners. An easement for ingress and egress in favor of parties other than the owner tends to decrease a property's utility and value. However, there may exist an easement attaching to adjacent property which is beneficial to ownership of the subject property. Rights of way, party wall agreements, and other agreements which run with the land can either restrict or enhance the land's utility and value.