Cost Basis Overview

Assessment Evaluation

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Cost Basis Assigned Value Template

This template begins with land standards because the preliminary survey, Charts 1 to 5, are land based. Therefore, to establish a standard cost basis assessment all components of the assessment need to have fixed values pre-determined and published prior the assessing.

LAND BREAKDOWN http://www.orps.state.ny.us/assessor/manuals/vol6/comm/sect07.htm

These definitions by their nature are ambiguous in that the citations often do not contain citations and at the edges there are no clear separation criteria between classifications. Ponds have less value than lakes, however, how much less? Perhaps a percentage rating based on size, etc. Even this rating contains elements not easily identified or factored
.
pond In North America, even larger bodies of water have been called ponds; for example, Walden Pond in Concord, Massachusetts measures 62 acres (~25 ha).
RiverA large natural stream, which may be a waterway.
Lake "There is considerable uncertainty about defining the difference between lakes and ponds" Charles Elton, one of the founders of ecology, regarded lakes as waterbodies of 40 hectares (99 acres) or more. The technical distinction between a pond and a lake has not been universally standardized.
Creek In the United States a stream is classified as a watercourse less than 60 feet (18 metres) wide. http://en.wikipedia.org/wiki/Stream
Canals are artificial channels for water.
Tributary A contributory stream, or a stream which does not reach the sea but joins another river (a parent river). Sometimes also called a branch or fork.
Brook A stream smaller than a creek, especially one that is fed by a spring or seep. It is usually small and easily forded. A brook is characterized by its shallowness and its bed being composed primarily of rocks.
Creek In North America and Australia, a small to medium sized natural stream. Sometimes navigable by motor craft and may be intermittent.
Ocean An ocean (from Greek Ωκεανός, Okeanos (Oceanus)) is a major body of Seawater (salt water).
bay A bay is an area of water mostly surrounded or otherwise demarcated by land. Bays generally have calmer waters than the surrounding sea, due to the surrounding land blocking some waves and often reducing winds.
Under the riparian principle, all landowners whose property is adjacent to a body of water have the right to make reasonable use of it. Riparian rights include such things as the right to access for swimming, boating and fishing; the right to wharf out to a point of navigability; the right to erect structures such as docks, piers, and boat lifts; the right to use the water for domestic purposes; the right to accretions caused by water level fluctuations. Riparian rights also depend upon "reasonable use" as it relates to other riparian owners to ensure that the rights of one riparian owner are weighed fairly and equitably with the rights of adjacent riparian owners.^[1].
The higest value attributable to the view component of a property, would be “an unobstructable panoramic view”.
view The lowest, would be a potentially obstructable “peek”, or a “winter view” meaning the view is totally blocked by deciduous trees, and the view only appears when the trees shed their leaves in winter.

01 PRIMARY	P POOR (05) 01-10	1 POND
02 SECONDARY	N NORMAL (06) 01-10	2 RIVER
02 SECONDARY	G GOOD	3 LAKE
03 UNDEVELOPED		4 CANAL
04 RESIDUAL	1 TOPOGRAPHY	5 OCEAN
05 TILLABLE	2 LOCATION	6 BAY
06 PASTURE	3 SHAPE
07 WOODLAND	4 RESTRICTED USE
08 WASTELAND	5 VIEW
09 MUCK	6 WETNESS
10 WATERFRONT feet x depth	7 OTHER I.D.
11 ORCHARD
12 REAR land-locked
13 VINEYARD
14 WETLAND
15 LEASED LAND

Question “Why do agents get more for their homes than other people”? This question begs the point on subjectivity on estimating value.

Notes: Data referenced from individual deeds.
       1. FRONT FEET and DEPTH used to record the actual amount to the nearest foot.
    2. ACRES to the nearest hundredth
    3. SQUARE FEET to the nearest foot
    4. SHAPE indicate a value loss irregular shape reducing the utility
    5. RESTRICTED USE law or a private agreement restricting the use
    6. TYPICAL RESTRICTIONS (not coded) Easements, Zoning, Open space or scenic, View, Wetness, Environmental Impact, Other - Locally Defined. (Must apply to all property and published in advance.)
Above from ASSESSOR’S MANUAL Data Collection and Maintenance of Property Inventories SECTION 7.00 pages 1 - 12

FORESTRY - WATERFRONT http://www.orps.state.ny.us/assessor/manuals/vol6/forestry/forest_03.htm#

CRITERIA FOR DETERMINING IF WATER BODIES ARE TO RECEIVE A VALUE
A good rule of thumb is that twenty-four points usually qualifies a water body to have a front foot value. However, waterfront valuation experience and common sense judgments should be relied upon. (“Common sense” must be eliminated by pre-determined values).

Notes:
    1. Where market value is applied waterfront ought to be included in the evaluation.
    2. Since water bodies are generally fixed each must have a pre-determined published utility value. Without this data comparisons cannot be accurately evaluated for consistency.

FORESTRY INVENTORY http://www.orps.state.ny.us/assessor/manuals/vol6/forestry/forest_05.htm#

This page contains preliminary forest evaluation procedures. The primary objection is that while the measurement criteria is provided no prevision is allowed for marketability. Inventory should range from a newly harvested plot to one that is ready to harvest or is past prime and is in decline.

Other influences are the soil type, topography, and plot characteristics. For example: a fifty-acre plot could have twenty-five acres tillable, fifteen acres woodlot, and ten acres swamp, all of this needs to be factored in cost basis assessments

A cost basis process ought to contain an inventory of species, an average maturity schedule, and a published value for each year from fresh cut to the next crop.

ASSESSOR’S MANUAL Valuation Reference Manual Introduction and Cost Calculation http://orps1.orps.state.ny.us/assessor/manuals/vol7/pdf_files/section1.pdf

Excerpts are from this web site.

There are five steps to completing the cost Approach to valuation. These steps are as follows.

- Estimate the replacement cost new (RCN) of all improvements to the land.

The above discussion on Land Breakdown is applied in this step. The premise is that all land ought to have a predetermined value which is fairly constant over time. Added attributes contribute to increased values. These include items such well or city water, septic or city sewer, electric power, telephone, cable, and excess quality.

- Estimate the accrues depreciation for each improvement. The depreciation refers to physical deterioration, functional and economic obsolescence which effects the replacement cost new. Rating tables are contained in this section for these factors.

- Calculate replacement cost new less depreciation (RCNLD) by deducting all accrued depreciation from replacement cost new for each improvement. (Subtract step 2 from step 1).

- Estimate the value of the land, again using highest and best use. Already discussed that estimates must be replaced with a published value similar to an automotive “blue book”.

- Add all replacement cost new less accrued depreciation to the calculated land value. Replace calculated with published value.

Once the cost basis is determined, the assessment process ought to center on property condition from the former year should there have been improvement or deterioration. Regular maintenance may be beyond the means of the elderly, while younger people are able to continue improvements.

The above criteria based process is a very precise system that leaves nothing to chance estimate or misuse. It is both valid and reliable in that everyone using this standard will arrive at exactly the same assessment.

The final effect will be to lower assessment to a uniformity that will guarantee equal and fair taxation. This process will not reduce the market value as people will always pay premiums even if the gap is significant and uninsurable. The major effect will be on tax rates. The reduced assessment from artificial highs will force artificial low tax rates per thousand to be more accurately published.