Can GIS Bring About (Much-Needed) Equity in Property Tax?
Perhaps the tax with the most obvious benefits to the average citizen is property tax. Property tax helps counties deliver the services that improve lives, including schools, parks, emergency services, public works, libraries, roads and many others. But how do we know properties are valued and taxed fairly and equitably? The Center for Municipal Finance at the University of Chicago recently published several studies researching equity in property tax. The studies found that property tax disproportionately burdens owners of lesser valuable homes and renters in low rent areas. Unfortunately, these inequities are the result of the limitations from the data and analysis that most counties use in property assessment.
When A CAMA System Isn’t Enough
CAMA (Computer Assisted Mass Appraisal) systems were originally developed in the 1970s to leverage emerging computing power to do computationally heavy analysis on large tabular datasets. Essentially, a CAMA takes the characteristics of properties that have sold and applies the results to properties that have not sold to calculate an ‘assessment’, or an approximate value used to calculate property tax. Most counties use some form of a CAMA system today. Some are spreadsheet-based, but many are sophisticated systems with integrated tax administration systems to work with individual state property tax laws with capabilities for taxpayer notification, billing and collection. However, in many situations, CAMA systems and spreadsheets are not enough to understand equity, fairness and uniformity in valuation and assessment.
An often-reported statistic is that 85 percent of all data has a location component. Lord Harold Samual, a British real estate magnate taught us the three things that matter most in property, “location, location, location.” So, it makes sense that it is important to use location when analyzing and estimating property value. GIS delivers the tools to use location to improve property value estimates and help counties deliver more equitable assessments.
Leading with a Geographic Approach
The GIS toolbox is full of analytical gadgets to understand how location impacts property value. This includes deep dive capabilities like geographic weighted regression, clustering, forest-based classification and regression, response surface modeling and a lot more. These capabilities can get extremely specialized and technical, but the tools in GIS help counties understand the ‘what’ and the ‘why.’ Your GIS also gives you the ability to visualize your data and look at it on a map to see the ‘where,’ which gives your county a complete understanding of how location impacts value.
In addition to limited analytical capabilities, the University of Chicago reported that inequitable assessments were caused by limitations in the data used, such as completeness and quality. GIS helps you detect data quality issues such as blunders, outliers and understand data currency and consistency. But what do we do when we do not have enough data?
2021 is a big year, not just because of our emergence from pandemic lockdown, but because the 2020 decennial census data will be published. This data includes geographic, economic, business and employment information that can advance our understanding. Esri combines this information with other commercial data and curates it to be ready and easy to use in your GIS. This dataset, located in the Living Atlas, enables you to add data to help with our assessment analysis, but also to understand who is where. Understanding who is where is critical to understanding equity.
Equity is Achievable with GIS
There is a lot to it, and it is not all easy, but tools and data exist to form a better understanding. Changing market conditions don’t necessarily treat everyone equally. Combining fresh Census data available this year with spatial analysis in your GIS, we have an opportunity to better understand what is happening and who it is impacting the most. It is critical that we use all the tools and data available to us for equitable valuation and fair taxation.
Equity and fairness in real estate are achievable. GIS can help.