Indiana Administrative Code › Title 50 - DEPARTMENT OF LOCAL GOVERNMENT FINANCE › Article 27 - ANNUAL ADJUSTMENTS AND EQUALIZATION STANDARDS › Rule 5 - Annual Adjustment Process › Section 5-10 - Stratification

Current through July 10, 2024
Authority: IC
				  6-1.1-4-4.5;
				  IC
				  6-1.1-31-1;
				  IC
				  6-1.1-31-12
Affected: IC
				  6-1.1-4-39
Sec. 10.
(a)
				Stratification is the sorting of parcels into relatively homogeneous groups
				based on use, physical characteristics, and location. Stratification permits
				analysis of mass appraisal performance within and between property groups. Care
				must be taken not to over-stratify, that is, to create strata that are too
				small to achieve statistical reliability. Ultimately, the degree of
				stratification will be determined largely by available sales data, unless it is
				cost-effective and practical to add sufficient independent appraisals. A
				stratum must be combined with similar strata if sufficient sales or appraisals
				are not available for that stratum. Also, systematic sales chasing can occur if
				when creating adjustments for the market, characteristics are over-stratified.
				Over-stratification is most likely to occur with the creation of
				neighborhoods.
(b) If, upon review
				of preliminary value calibration analyses, ratio studies, neighborhood
				delineations, and land values, the assessing official determines that further
				categorization of property types is necessary to promote uniform and equal
				assessments, the local assessing official shall attempt stratification before
				commencing a reassessment to adjust real property market valuations.
(c) The assessing official will need to
				identify similar groups of property, by property class and property type within
				neighborhoods, based on criteria such as location, structure type, and age.
				This dividing of property into groups of similar or homogeneous types for
				analysis and value adjustment is stratification. Value calibration analyses are
				generated for various strata and adjustment factors are refined until the
				assessor determines that the coefficient of dispersion (COD) and the
				price-related differential (PRD) are within the requirements of this rule. The
				calibrated adjustment factors are then applied to the valuation of all
				similarly situated properties so that the assessment statistics fall within the
				requirements of the IAAO Standard on Ratio Studies. For example, if an
				examination of the sales indicates that properties on large acreage tracks are
				undervalued causing the COD to be out of line, and grouping by land size shows
				an acceptable COD within the group but the median ratio for the larger tracks
				is lower than the smaller tracks, the assessor might then adjust the excess
				acreage rate so that the median of the large acreage comes to the same median
				level as the remaining parcels. After this is accomplished in accordance with
				section 6 of this rule, the application of overall adjustment factors shall be
				applied based on the revised value calibration analyses.
(d) In accordance with IC
				6-1.1-4-39,
				stratification, if appropriate, and annual adjustment of real property
				regularly used to rent or otherwise furnish residential accommodations for
				periods of thirty (30) days or more and that has more than four (4) rental
				units shall take into account that the valuation of such property is to be
				determined by applying the least of the following appraisal approaches:
(1) The cost approach.
(2) The sales comparison approach.
(3) The income capitalization
				approach.