2027 Lincoln County Schedule of Values Schedule of Values Lincoln County 2027 TABLE OF CONTENTS Components of a Reappraisal …………………………………………………………………. 3 Data Management System ………………………………………………………………... 4 Sales Analysis System ……………………………………………………………………... 4 Valuation System ………………………………………………………………………….. 5 Administrative System ……………………………………………………………………. 6 In-House Reappraisal ……………………………………………………………………... 6 Summary …………………………………………………………………………………… 6 Statutory Requirements ………………………………………………………………………... 7 Property Valuation ……………………………………………………………………………. 13 Appraisal Theory ………………………………………………………………………… 13 Concept of Property …………………………………………………………………….... 13 Appraisal Principles ……………………………………………………………………… 14 Traditional Approaches to Value ……………………………………………………….. 23 Property Valuation Techniques …………………………………………………………. 25 Land Valuation Techniques ……………………………………………………………... 43 Mass Appraising …………………………………………………………………………. 49 Sales Ratio ………………………………………………………………………………... 52 Data Inventory ………………………………………………………………………………… 54 Processing the Data ………………………………………………………………………. 58 Operating Statement (Income & Expense) ……………………………………………... 60 Real Property vs. Personal Property ……………………………………………………. 62 Estimating Replacement Cost New ……………………………………………………… 70 General Pricing Schedules ……………………………………………………………………. 75 Residential ………………………………………………………………………………… 75 Manufactured Housing …………………………………………………………………... 84 Calculating Value Based on Residential Cost Schedules ………………………………. 86 Base Residential Characteristics ………………………………………………………… 88 1|Page Schedule of Values Lincoln County 2027 Calculating Value Based on Agricultural Building, Other Building & Yard Item Cost Schedules …………………………………………………………………………………. 91 Waterfront Improvements (MS-40) …………………………………………………….. 92 Pricing Schedule Information …………………………………………………………… 94 Calculating Value Based on Commercial/Industrial Cost Schedules ………………… 97 Multi-Family Apartments ……………………………………………………………….. 98 Section 42 Low-Income Housing ………………………………………………………. 100 Franchise Food Restaurants …………………………………………………………… 102 Golf Courses …………………………………………………………………………….. 103 Percent Good Schedules and Tables …………………………………………………… 108 Land …………………………………………………………………………………………... 119 Land Site Improvements ……………………………………………………………….. 122 Land Influence Factors ………………………………………………………………… 123 Base Rate Land Valuation Technique …………………………………………………. 134 Tables & Rates ……………………………………………………………………………….. 135 2|Page Schedule of Values Lincoln County 2027 COMPONENTS OF A REAPPRAISAL To accomplish the task of valuing all parcels within a county as of the January 1 revaluation date, the methodology of mass appraisal rather than the methodology of single-property appraisals must be utilized. Mass appraisal is the systematic appraisal of groups of properties as neighborhoods. This is accomplished by using standardized procedures and statistical testing. In a mass appraisal system, the assessor must make valuation judgments about groups of properties rather than single properties. The assessor must be able to develop, support, and explain standardized adjustments in a valuation model among use classes, construction types, neighborhoods, and other property groups. The guide used for this is the uniform schedule of values. The schedule of values is made up of schedules, standards, rules, tables, and other factors used to apply the correct value to parcels. The schedule of values serves as the county’s mass appraisal model and is implemented by means of a computer-assisted mass appraisal system (CAMA). Incorporated in the schedule may be building cost figures derived from national data that have been adjusted to reflect local costs, local cost studies, qualifying arm’s-length sales, and income and expense formulas. The schedule of values sets forth values for appropriate unit of measurement for use in appraising land and buildings. For example, land may be valued by a set amount per square foot, lot, acre, or homesite, depending on the highest and best use. A dwelling is typically valued using an established amount per square foot. The land unit per appropriate unit of measurement will vary depending on the neighborhood in which the land is situated. Factors that warrant adjustments are also set forth in the schedule of values for various types of property. The schedule typically authorizes adjustments to land value based on factors such as homesite size, excess acreage, road frontage, topography, zoning, the presence of easements, and other factors. A county’s schedule also typically prescribes ranges of characteristics and corresponding percentage adjustments for recognized factors. Mass appraisal for ad valorem purposes entails many of the same principles as an independent fee, single-property appraisal. Mass appraisal techniques, however, emphasize valuation modules (expressed as equations, tables, and schedules), standards of practice, and statistical quality control. A reassessment program consists of these subsystems: 1. A data management system 2. A sales analysis system 3. A valuation system 4. An administrative system These subsystems are independent of each other. For example, the valuation system uses information maintained in the sales analysis and data management systems and produces output (valuations) required by the administrative system in the production of tax bills. 3|Page Schedule of Values Lincoln County 2027 DATA MANAGEMENT SYSTEM The data management system has components for collection, entry, editing, organization, conversion, storage, and security of property characteristics and ownership. Quality control of this system is very important because the accuracy of the values determined depends on the reliability of the data from which they are generated. In addition, data collection, conversion, and maintenance are the most expensive aspect of any reappraisal program. Special care must be given to the thought and planning required of managing logic to minimize cost. Data maintenance is the protocol for creating new parcels, capturing and valuing new construction, and making changes to the current property database. The maintenance protocol consists of three components: 1. County Land Records System: The creation and maintenance of new parcels through the recording of parcel splits (divisions of existing parcels), the combination of existing parcels, and the recording of new subdivision plats. All these activities feed into the second component of the system. 2. Permits and Inspections: Upon receiving notification of new permits and inspections, appraisal staff retrieve the corresponding property record cards to collect updated data. Staff monitor construction progress to determine the percentage of completion as of January 1 of each calendar year. 3. Periodic Reinspection of Properties: Routine field visits are supplemented with data from the latest orthophotographic imagery. Staff also integrate information provided by property owners through annual listing abstracts, as well as taxpayer requests for reviews or appeals. SALES ANALYSIS SYSTEM The sales system has components for sales data collection, sales screening and processing, ratio studies, and sales reporting. Assessment/sales ratio studies are the primary tool for measuring mass appraisal performance. They are valuable for monitoring appraisal results, identifying reappraisal priorities, adjusting valuations to the market, and assisting the administrative system in planning and scheduling. Ratio studies and sales reports draw on values produced by the valuation system and on property characteristics maintained in data management. 4|Page Schedule of Values Lincoln County 2027 VALUATION SYSTEM The valuation system (CAMA) consists of mass appraisal applications of the three approaches to value and/or allows for various adjustments that recognize specific aspects of each approach. The three approaches are: 1. Cost Approach: This method requires the maintenance and application of computerized cost schedules, valuation equations, depreciation schedules, and indexing factors. Staff gather this underlying data by researching state and local construction costs, as well as consulting with real estate professionals and contractors. 2. Sales Comparison Approach: Applications include utilizing multiple regression analysis and model building to perform automated comparable sales analysis. Staff regularly collect, verify, and input local market sales data to ensure the accuracy of these automated valuation models. 3. Income Approach: This method requires the development of income multipliers and overall capitalization rates. Staff generate these metrics by analyzing rental, leasing, and sales data provided directly by property owners and tenants. Appraisal staff should evaluate all three approaches and apply the method(s) yielding the most accurate final value for the property type. Any of the three approaches can produce credible results. However, because the sales comparison and income methods require extensive market data, the Cost Approach serves as the primary method for uniform application when data is constrained. The current economy affects the number of arm’s-length sales in the market. A county-wide reappraisal relies on data from a variety of sources to properly apply the three approaches to value. While sufficient data may be available for the sales comparison and income approaches, it can also help refine the Cost Approach. When relevant market data is limited or unavailable prior to the final determination of reappraisal values, the Cost Approach becomes the more reliable method across all property types. Below is a table of the three approaches and when typically, most appropriate.1 RESIDENTIAL COMMERCIAL INDUSTRIAL 1. Sales Comparison 1. Income 1,2. Cost 2. Cost 2. Sales Comparison 1,2. Income 3. Income 3. Cost 3. Sales Comparison 1 Information provided from IAAO One-Day Forum 960 5|Page Schedule of Values Lincoln County 2027 ADMINISTRATIVE SYSTEM The administrative system is comprised of a variety of functions and activities, each of which requires information from sales analysis, valuation, or data management systems and produces products used by the administrative system. IN-HOUSE REAPPRAISAL An in-house reappraisal is a major effort requiring careful preparation, the support of county management and the Board of County Commissioners, adequate time, and sufficient funds. In preparing a schedule and reappraisal, the assessor’s office should include the relationship between the daily operations of the assessor’s office and the reappraisal program. Adequate time to cover probable delays and contingencies to deal with unforeseen problems must be taken into consideration. Even though the reappraisal process should be viewed as separate from daily operations, existing staff, duties, responsibilities, and priorities must be modified, and additional staff or staffing hours may be required. SUMMARY General reappraisals of real property are required by statutory authority to be performed on an eight-year cycle. Many counties adopt a shorter cycle via a resolution by their respective County Board of Commissioners. The current trend in North Carolina is a four-year reappraisal cycle, with counties hiring and training staff to perform an “in-house” reappraisal rather than contracting the work to an outside firm. Some counties also use a hybrid approach, combining in-house staff and contracted services to provide flexibility, access to specialized expertise, and additional capacity. As understood by the assessor’s office, an effective reappraisal requires careful planning, a realistic analysis of the present state of the assessment records and values, and the resources needed to conduct the appraisal. As such, reappraisals are a costly, highly visible, and politically sensitive undertaking. However, since the real property staff in the assessor’s office understands its own resources and the technical requirements of the task, they are committed to conducting the fairest and most equitable reappraisal possible. The success of this endeavor depends on the leadership of the assessor’s office, an informed public awareness, and committed management support. 6|Page Schedule of Values Lincoln County 2027 STATUTORY REQUIREMENTS For an assessor to undertake their responsibilities and duties properly, they must be familiar with the legal framework in which to perform their duties. The legal framework sets the guidance and rules to follow for a reappraisal. Some general statutes, but not all, are included in this section. Others will be included throughout this schedule as applicable. § 105-286. Time for general reappraisal of Real Property. (a) Octennial Cycle. – Each county must reappraise all real property in accordance with the provisions of G.S. 105-283 and G.S. 105-317 as of January 1 of the year set out in the following schedule and every eighth year thereafter, unless the county is required to advance the date under subdivision (2) of this section or chooses to advance the date under subdivision (3) of this section. (1) Schedule of Initial Reappraisals. – Division Five – 1976: ---Lincoln (2) Mandatory Advancement. – A county whose population is 75,000 or greater according to the most recent annual population estimates certified to the Secretary by the State Budget Officer must conduct a reappraisal of real property when the county’s sales assessment ratio determined under G.S. 105- 289(h) is less than .85 or greater than 1.15, as indicated on the notice the county receives under G.S. 105-284. A reappraisal required under this subdivision must become effective no later than January 1 of the earlier of the following years: a. The third year following the year the county received the notice. b. The eighth year following the year of the county’s last reappraisal. (3) Optional Advancement – A county may conduct a reappraisal of real property earlier than required by subdivision (1) or (2) of this subsection if the board of county commissioners adopts a resolution providing for advancement of the reappraisal. The resolution must designate the effective date of the advanced reappraisal and may designate a new reappraisal cycle that is more frequent than the octennial cycle set in subdivision (1) of the subsection. The board of county commissioners must promptly forward a copy of the resolution adopted under this subdivision to the Department of Revenue. A more frequent reappraisal cycle designated in a resolution adopted under this subdivision continues in effect after a mandatory reappraisal required under subdivision (2) of this subsection unless the board of county commissioners adopts another resolution that designates a different date for the county’s next reappraisal. 7|Page Schedule of Values Lincoln County 2027 Note: Under the provisions of GS 105-286 (a)(3), for 2009 the Lincoln County Board of Commissioners adopted a resolution to advance the reappraisal date to January 1, 2011, and continue a four-year reappraisal cycle from this date which has resulted in subsequent reappraisals for 2015, 2019, 2023 and now for 2027. § 105-273(13) Definitions Real property, real estate, or land. – Any of the following: a. The land itself. b. Buildings, structures, improvements, or permanent fixtures on land. c. All rights and privileges belonging or in any way appertaining to the property. d. A manufactured home as defined in G.S. 143-143.9(6), unless it is considered tangible personal property for failure to meet all the following requirements: 1. It is a residential structure. 2. It has the moving hitch, wheels and axles removed. 3. It is placed upon a permanent foundation either on land owned by the owner of the manufactured home or on land in which the owner of the manufactured home has a leasehold interest pursuant to a lease with a primary term of at least 20 years and the lease expressly provides for the disposition of the manufactured home upon termination of the lease. § 105-296(b). Powers and duties of assessor. Within budgeted appropriations, he shall employ listers, appraisers, and clerical assistants necessary to carry out the listing, appraisal, assessing, and billing functions required by law. The assessor may allocate responsibility among such employees by territory, by subject matter, or on any other reasonable basis. Each person employed by the assessor as a real property appraiser or personal property appraiser shall during the first year of employment and at least every other year thereafter attend a course of instruction in his area of work. At the end of the first year of their employment, such persons shall also achieve a passing score on a comprehensive examination in property tax administration conducted by the Department of Revenue. 8|Page Schedule of Values Lincoln County 2027 § 105-299. Employment of experts. The board of county commissioners may employ appraisal firms, mapping firms or other persons or firms having expertise in one or more of the duties of the assessor to assist the assessor in the performance of these duties. The county may also assign to county agencies, or contract with State or federal agencies for, any duties involved with the approval or auditing of use-value accounts. The county may make available to these persons any information it has that will facilitate the performance of a contract entered pursuant to this section. Persons receiving this information are subject to the provisions of G.S. 105-289(e) and G.S. 105-259 regarding the use and disclosure of information provided to them by the county. Any person employed by an appraisal firm whose duties include the appraisal of property for the county must be required to demonstrate that he or she is qualified to carry out these duties by achieving a passing grade on a comprehensive examination in the appraisal of property administered by the Department of Revenue. In the employment of these firms, primary consideration must be given to the firms registered with the Department of Revenue pursuant to the provisions of G.S. 105-289(i). A copy of the specifications to be submitted to potential bidders and a copy of the proposed contract may be sent by the board to the Department of Revenue for review before the invitation or acceptance of any bids. Contracts for the employment of these firms or persons are contracts for personal services and are not subject to the provisions of Article 8, Chapter 143, of the General Statutes. (1939, c. 310, s. 408; 1971, c. 806, s. 1; 1973, c. 476, s. 193; 1975, c. 508, s. 2; 1983, c. 813, s. 4; 1985, ARTICLE 19) § 105-317. Appraisal of real property; adoption of schedules, standards, and rules. (a) Whenever any real property is appraised, it shall be the duty of the persons making appraisals: (1) In determining the true value of land, to consider as to each tract, parcel, or lot separately listed at least its advantages and disadvantages as to location; zoning; quality of soil; waterpower; water privileges; dedication as a nature preserve; conservation or preservation agreements; mineral, quarry, or other valuable deposits; fertility; adaptability for agricultural, timber-producing, commercial, industrial, or other uses; past income; probable future income; and any other factors that may affect its value except growing crops of a seasonal or annual nature. (2) In determining the true value of a building or other improvement, to consider at least its location; type of construction; age; replacement cost; cost; adaptability for residence, commercial, industrial, or other uses; past income; probable future income; and any other factors that may affect its value. (3) To appraise partially completed buildings in accordance with the degree of completion on January 1. 9|Page Schedule of Values Lincoln County 2027 (b) In preparation for each revaluation of real property required by G.S. 105-286, it shall be the duty of the assessor to see that: (1) Uniform schedules of values, standards, and rules to be used in appraising real property at its true value and at its present-use value are prepared and are sufficiently detailed to enable those making appraisals to adhere to them in appraising real property. (2) Repealed by Session Laws 1981, c. 678, s. 1. (3) A separate property record be prepared for each tract, parcel, lot, or group of contiguous lots, which record shall show the information required for compliance with the provisions of G.S. 105-309 insofar as they deal with real property, as well as that required by this section. (The purpose of this subdivision is to require that individual property records be maintained in sufficient detail to enable property owners to ascertain the method, rules, and standards of value by which property is appraised.) (4) The property characteristics considered in appraising each lot, parcel, tract, building, structure and improvement, in accordance with the schedules of values, standards, and rules, be accurately recorded on the appropriate property record. (5) Upon the request of the owner, the board of equalization and review, or the board of county commissioners, any lot, parcel, tract, building, structure or improvement be visited and observed to verify the accuracy of property characteristics on record for that property. (6) Each lot, parcel, tract, building, structure and improvement be separately appraised by a competent appraiser, either one appointed under the provisions of G.S. 105-296 or one employed under the provisions of G.S. 105-299. (7) Notice is given in writing to the owner that he is entitled to have an actual visitation and observation of his property to verify the accuracy of property characteristics on record for that property. (c) The values, standards, and rules required by subdivision (b) (1) shall be reviewed and approved by the board of county commissioners before January 1 of the year they are applied. The board of county commissioners may approve the schedules of values, standards, and rules to be used in appraising real property at its true value and at its present- use value either separately or simultaneously. Notice of the receipt and adoption by the board of county commissioners of either or both the true value and present-use value schedules, standards, and rules, and notice of a property owner's right to comment on and contest the schedules, standards, and rules shall be given as follows: (1) The assessor shall submit the proposed schedules, standards, and rules to the board of county commissioners not less than 21 days before the meeting at which they will be considered by the board. On the same day that they are submitted to 10 | P a g e Schedule of Values Lincoln County 2027 the board for its consideration, the assessor shall file a copy of the proposed schedules, standards, and rules in his office where they shall remain available for public inspection. (2) Upon receipt of the proposed schedules, standards, and rules, the board of commissioners shall publish a statement in a newspaper having general circulation in the county stating: a. That the proposed schedules, standards, and rules to be used in appraising real property in the county have been submitted to the board of county commissioners and are available for public inspection in the assessor's office; and b. The time and place of a public hearing on the proposed schedules, standards, and rules that shall be held by the board of county commissioners at least seven days before adopting the final schedules, standards, and rules. (3) When the board of county commissioners approves the final schedules, standards, and rules, it shall issue an order adopting them. Notice of this order shall be published once a week for four successive weeks in a newspaper having general circulation in the county, with the last publication being not less than seven days before the last day for challenging the validity of the schedules, standards, and rules by appeal to the Property Tax Commission. The notice shall state: a. That the schedules, standards, and rules to be used in the next scheduled reappraisal of real property in the county have been adopted and are open to examination in the office of the assessor; and b. That a property owner who asserts that the schedules, standards, and rules are invalid may except to the order and appeal therefrom to the Property Tax Commission within 30 days of the date when the notice of the order adopting the schedules, standards, and rules was first published. Before the board of county commissioners adopts the schedules of values, standards, and rules, the assessor may collect data needed to apply the schedules, standards, and rules to each parcel in the county § 105-283. Uniform appraisal standards. All property, real and personal, shall as far as practicable be appraised or valued at its true value in money. When used in this Subchapter, the words "true value" shall be interpreted as meaning market value, that is, the price estimated in terms of money at which the property would change hands between a willing and financially able buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of all the uses to which the property is adapted and for which it is capable of 11 | P a g e Schedule of Values Lincoln County 2027 being used. For the purposes of this section, the acquisition of an interest in land by an entity having the power of eminent domain with respect to the interest acquired shall not be considered competent evidence of the true value in money of comparable land Authors Notes: The Machinery Act of North Carolina has been provided as an integral part of these Uniform Schedules of Value, Standards, and Rules. Other applicable information not recited in this text is included by reference. In addition to the specific statutory direction and appellate court rulings, it is necessary to be well- versed with the nature of appraised values of property and with the basic economic principles that serve as the foundation of the valuation process. 12 | P a g e Schedule of Values Lincoln County 2027 PROPERTY VALUATION APPRAISAL THEORY An appraisal is an opinion of value. This does not imply, however, that one opinion is necessarily as good as another; there are valid and accurate appraisals, and there are invalid and inaccurate appraisals. The validity of an appraisal can be measured against the supporting evidence from which it was derived, and its accuracy against that very thing it is supposed to predict - the actual behavior of the market. Each is fully contingent upon the ability of the appraiser to record adequate data and to interpret that data into an indication of value. Appraising real property, like the solving of any problem, is an exercise in reasoning. It is a discipline, and, like any discipline, it is founded on fundamental economic and social principles. From these principles evolve certain premises which, when applied to the valuation of property, explain the reaction of the market. This section concerns itself with those concepts and principles basic to the property valuation process. One cannot overstate the necessity of having a workable understanding of them. CONCEPT OF PROPERTY The definition of property should begin the discussion of assessing value. Property is associated with the right of any person to possess, use, enjoy, and dispose of a thing. Property, then, is a broad term expressing the relationship between owners and their rights in and to possessions. In appraising real property, the parcel to be appraised includes the rights inherent in ownership of the property and should be included in the opinion of value rendered by the reappraisal. All property may be divided into two major categories: real property and personal property. Real property is defined as the sum of the tangible and intangible rights in land and improvements. This refers to the interest, benefits, and rights inherent in the ownership of physical real estate. Real estate is physical land, and everything permanently attached to it. Personal property consists of movable items not permanently affixed to, or part of, the real estate and is commonly known as “personal” or “chattels”. Real estate may be divided into two categories: land and improvements. Land is defined as the surface of the earth together with everything under its boundary and everything over it. Improvements (land improvements, such as paving, fencing, structures, etc.) consist of immovable items affixed to and becoming part of the real estate. “Permanently affixed” refers to the original intent of the owner and economic life of the improvements. 13 | P a g e Schedule of Values Lincoln County 2027 Defining the term “affixed” has been the subject of much litigation, and the courts are subject to change the meaning. In general terms, personal property annexed to land is called a fixture. Chattels that have been annexed to land are called a fixture. These chattels that have been annexed to the land, to lose their character as chattels, become real estate for ad valorem tax purposes. In determining the nature of the annexation of personal property, there are two basic considerations: first, the adaptability of the personal property to the use part of the realty; and second, the person by whom the annexation is made and their interest in the land and the personal property. Courts have held that, if the chattel is affixed to the land so that it loses its original physical character and cannot be restored to its original condition as a practical matter; it loses its nature as personal property and becomes real property. Two tests relied upon to determine if personal property becomes real estate are: first the intention of the person who put the item in its place; and second, whether the item may be removed from the real estate without damaging either the item or the real estate. Also, to be considered are the use of the item and the generally accepted conveyance of the item in real estate transactions. In identifying property, a distinction must be made between that of tangible and intangible property. Tangible property consists of actual physical property. Intangible property is evidence of ownership of property rights. Some examples of intangible property are patent rights, copyrights, notes, mortgages, deeds of trust, and stock certificates. APPRAISAL PRINCIPLES BUNDLE OF RIGHTS Real estate and real property are often used interchangeably. Real estate pertains to the real or fixed improvements to the land such as structures and other appurtenances, whereas real property encompasses all the interests, benefits and rights enjoyed by the ownership of real estate. Real property ownership involves the Bundle of Rights Theory. This asserts that the owner has the right to: enter it, use it, sell it, lease it, or give it away, as they choose. Law guarantees these rights, but they are subject to certain governmental and private restrictions. 14 | P a g e Schedule of Values Lincoln County 2027 Governmental restrictions are found in its power to: • tax property • take property by condemnation for the benefit of the public, providing that just compensation is made to the owner (Eminent Domain) • police property by enforcing any regulations deemed necessary to promote the safety, health, morals and general welfare of the public • provide for the reversion of ownership to the state in cases where a competent heir to the property cannot be ascertained (Escheat) Private restrictions imposed upon property are often in the form of agreements incorporated into the deed. The deed also spells out precisely which rights of the total bundle of rights the buyer is acquiring. Since value is related to each of these rights, the appraiser should know precisely which rights are involved in the appraisal. Appraisals for Ad Valorem tax purposes generally assume the property is owned in the "Fee Simple", meaning that the total bundle of rights is intact. THE NATURE AND MEANING OF VALUE An appraisal is an opinion or estimate of value. The concept of value is basic to the appraisal process and calls for a thorough understanding. The American Institute of Real Estate Appraisers' Appraisal Terminology Handbook, 1981 edition, offers the following definitions of value: "The measure of value is the amount (for example, of money) which the potential purchaser probably will pay for possession of the thing desired.” "The ratio of exchange of one commodity for another, for example, one bushel of wheat in terms of a given number of bushels of corn; thus, the value of one thing may be expressed in terms of another thing. Money is the common denominator by which value is measured." "It is the power of acquiring commodities in exchange, generally with a comparison of utilities - the utility of the commodity parted with (money) and that of the commodity acquired in the exchange (property)." "Value depends upon the relation of an object to unsatisfied needs; that is, supply and demand." "Value is the present worth of future benefits arising out of ownership to typical users and investors." 15 | P a g e Schedule of Values Lincoln County 2027 With these definitions, one can see that value is not an intrinsic characteristic of the commodity itself. On the contrary, value is determined by people, created by desire, modified by varying degrees of desire and reduced by lack of desire. Throughout the definitions a relationship between the purchase and the commodity (property) is implied; this relationship is “value”. A purchaser desires a property because it is a useful commodity in that it has utility. Utility is a prerequisite to value, but utility standing alone does not sufficiently cause value. If a great supply of a useful commodity exists, like for example air, needs would be automatically satisfied, desire would not be aroused, and therefore value would not be created. Therefore, besides having utility, to effectively arouse desire, the commodity must also be scarce. One additional factor is necessary to complete the value equation . . . the ability to become a buyer. A translation must be made of desire into a unit of exchange; a buyer must have purchasing power. The relationship is now complete . . . the commodity has utility and is relatively scarce, it arouses desire, and the buyer can satisfy that desire by trading for it . . . value is created. The question is how much value, and herein lays the job of the appraiser. Numerous definitions of value have been offered, some simple and some complex. It would seem though that any valid definition of value would necessarily embody the elements of utility, desire, scarcity and purchasing power. Furthermore, the concept of value very rarely stands alone. Instead, it is generally prefixed by a descriptive term that serves to relate it to a specific appraisal purpose or activity such as "loan value". Since appraisals are made for a variety of reasons, it is important for the appraiser to clarify the specific purpose for the appraisal and the type of value that they seek to estimate. For Ad Valorem Tax purposes, the value sought is generally market value. Statute § 105- 283 from the North Carolina Machinery Act describes market value as follows: All property, real and personal, shall as far as practicable be appraised or valued at its true value in money. When used in this Subchapter, the words "true value" shall be interpreted as meaning market value, that is, the price estimated in terms of money at which the property would change hands between a willing and financially able buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of all the uses to which the property is adapted and for which it is capable of being used. For the purposes of this section, the acquisition of an interest in land by an entity having the power of eminent domain with respect to the interest acquired shall not be considered competent evidence of the true value in money of comparable land. 16 | P a g e Schedule of Values Lincoln County 2027 VALUE IN USE VS. VALUE IN EXCHANGE We have stated that there are several qualifying distinctions made in reference to the meaning of value. One of the most common and important distinctions for the purposes of this manual is between value in use and value in exchange. We have defined market value as a justifiable price which buyers, in general, will pay in the market. The question arises then as to the value of property which, by nature of its special and highly unique design, is useful to the present owner, but relatively less useful to buyers in the market. One can readily see that such a property's utility value may differ greatly from its potential sales price. It is even possible that no market for such a property exists. Such a property is said to have value in use, which refers to the actual value of a commodity to a specific person, as opposed to value in exchange, which aligns itself with market value, referring to the dollar value of a commodity to buyers in general. In a sense, value in use embodies the objective premise, which maintains that value is within the object. This concept easily accommodates cost. While with value in exchange the subjective element is accentuated. Value in exchange, being the primary concern for the assessor, reflects the actions and reactions of buyers, sellers and investors and is considered market value. THE PRINCIPLE OF SUPPLY AND DEMAND For property to have value, there must be desirability, utility, scarcity, and economic purchasing power. Utility is the capacity of goods to create desire and should not be confused with usefulness. While utility is a subjective concert, usefulness is an objective concept inherent in the property. Scarcity helps to create desire. There are two economic forces which determine scarcity, supply and demand. Among the forces which constantly operate to influence supply and demand are population growth, new techniques in transportation, purchasing power, price levels, wage rates, taxation, governmental controls, and scarcity. A sudden population growth in an area would create an increase in demand for housing. If the demand increased at a higher rate than the supply, this could soon be a scarcity of housing. If the demand was backed up by purchasing power, rentals and sale prices would tend to increase and ultimately reach a level which would tend to stimulate more builders to compete for the potential profits and thus serve to increase the supply toward the level of demand. As the supply increases demand begins to taper off. This would cause rentals and sale prices to level off. When builders, due to increases in labor and material rates, are no longer able to build cheaply enough to meet the new level of prices and rents, competition would tend to taper off and supply would level off. The cycle is then complete. 17 | P a g e Schedule of Values Lincoln County 2027 Balance occurs when reasonable competition serves to coordinate supply with demand. When competition continues unchecked to produce a volume that exceeds the demand, the net returns to investors are no longer adequate to pay all the costs of ownership, resulting in loss rather than profit and, consequently, a decline in values. A community may well support two shopping centers, but the addition of a third shopping center may increase the supply to excess. If this occurs, one of two effects are caused; either the net dollar return to all the shopping centers will be reduced below that level necessary to support the investment, or one of the shopping centers will flourish at the others' expense. Utility and scarcity by themselves do not confer value on an object, unless the desire by the purchaser is present, a desire backed by the economic purchasing power of the buyer(s). In any discussion of value, a comparison of the terms “cost” and “price” is useful. Cost may be defined as the sacrifice made in the acquisition of property and commonly reflects the perspective of the buyer. Either the purchase of an existing property or the construction of a new property may incur cost. Price may be defined as the amount of money given, expected or arrived at arranging for the exchange of property. Cost and price may be the same, but not necessarily. An example would be a purchaser pays $200,000 to buy a property, it may be stated that the property cost $200,000. However, while price is defined in terms of money, cost is expressed as a sacrifice. A sacrifice may be in terms of money, labor, or time. Also, when property is sold, the price may be either above or below the owner’s cost. MARKET VALUE The terms “value” and “market value” though similar are not the same. There are many different definitions for market value provided by statutes and constitutions of all fifty states for property taxation and realtors used to market property. The assessor must adhere to the definition of market value as stated in § 105-283 (see section on statutes) and decisions rendered by the North Carolina Appellate Courts. The following important points regarding market value should be noted: 1. It is the most probable price. 2. It is not the highest, lowest, or average price. 3. It is expressed in terms of money. 4. It implies a reasonable time for exposure to the market. 18 | P a g e Schedule of Values Lincoln County 2027 5. It implies that both buyer and seller are well-informed of the uses to which the property may be put. It requires an arm’s-length transaction in the open market. 6. It requires a willing buyer and willing seller, with no advantage being taken by either buyer or seller. Neither buyer nor seller placed in a position of having to purchase or sell to avoid legal action or dispose of property. This is a constraint against consideration of foreclosures and short sales. 7. It recognizes the present use as well as the potential use of property. Note: In analyzing property sales, careful attention is given to identifying transactions that meet the criteria for disqualified sales. These may include foreclosures, short sales, sales between related parties, sales involving personal property, sales involving governmental entities, and other transactions that do not represent an open-market, arm’s-length transaction. Disqualified sales are not used in developing the schedules presented in this document or in evaluating reappraisal results through the State-mandated assessment-to- sales ratio study. THE PRINCIPLE OF HIGHEST AND BEST USE The way in which property is used, or could be used, plays an essential role in determining its market value. An assessor recognizes this as the highest and best use. The highest and best use for a property is that use which will produce the highest net return to the land for a given period within the limits of those uses which are economically feasible, physically possible, probable, and legally permissible (current zoning). On a community-wide basis, the major determining factor in highest and best use is the maximum quantity of land that can be devoted to a specific use and still yield a satisfactory return. Once a suitable basic use has been chosen for a specific property, each increment of capital investment to the existing or planned improvement will increase the net return to the land only up to a certain point; after this point is reached, the net return to the land begins to diminish. This is the point at which the land is at its highest and best use For example, in planning a high-rise office building, each additional upper floor represents an extra capital expenditure that must yield a certain return to the investor. This return will be dependent upon the levels of economic rent that the market will bear at the time. An optimum number of floors can be calculated above which the income yield requirements of additional expenditures will no longer be satisfactorily met. This, excluding the possibility of other more particular considerations, should determine the number of stories of the building. 19 | P a g e Schedule of Values Lincoln County 2027 Detailed analysis of this type is rarely thrust upon the property tax appraiser. Generally, the tax appraiser will find the most prudent course of action is to consider the present use and follow development rather than anticipate it. Just as everything changes with time, the highest and best use of property will change. The character of a neighborhood may be altered, thereby creating demands for different uses. The assessor periodically reviews conclusions as to highest and best use and revises them according to the data that are collected. As an example, zoning, one of the restraints on use, may be changed, which changes the allowable use. PRINCIPLE OF ANTICIPATION Market value is the present worth of all the anticipated future benefits to be derived from the property. Income stream and amenities may be considered benefits. Anticipated future benefits are those benefits anticipated by the market. Past sales of the property and past income are important only when they are an indication of what may be expected in the future. The principle of change works in conjunction with the principle of anticipation. PRINCIPLE OF BALANCE The principle of balance, when applied to a property, states that maximum market value is reached when the four agents of production – labor, coordination or management, capital, and land attain a state of equilibrium. PRINCIPLE OF CHANGE The principle states that market value is never constant because economic, social, and governmental forces are at work to change property and its environment. Because change is continuous, the estimate of market value is valid only on the effective day for which it is made. This principle works in conjunction with the principle of anticipation. The impact of change on the value of real property manifests itself in the life cycle of a neighborhood. The cycle is characterized by three stages of evolution: the development and growth evidenced by improving values; the leveling off stage evidenced by static values; and finally, the stage of infiltration of decay evidenced by declining values. The highest and best use today is not necessarily the highest and best use tomorrow. The highest and best use of the land often lies in a succession of uses. A declining single-family residential neighborhood may be ripe for multi-family, commercial or industrial development. Whether it is or not depends upon the relationship between present or anticipated future demand with existing supply. 20 | P a g e Schedule of Values Lincoln County 2027 In estimating value, the appraiser is obligated to reasonably anticipate the future benefits, as well as the present benefits, derived from ownership and to evaluate the property considering the quality, quantity, and duration of these benefits based on actual data as opposed to speculative or potential benefits that may or may not occur. PRINCIPLE OF COMPETITION This principle states that when substantial profits are being made, competition is created. This leads to the aphorism that profit tends to breed competition and that excess profit breeds ruinous competition. PRINCIPLE OF CONFORMITY The principle of conformity states that maximum market value is reached when a reasonable degree of economic and social homogeneity is expected in the foreseeable future. As applied to improvements, reasonable homogeneity implies reasonable similarity, not monotonous uniformity. Similarity in age, income, background, etc., is conformity when applied to residents. In understanding the neighborhood concept in mass appraisal, conformity is essential and works with the principles of progression and regression. PRINCIPLE OF CONSISTENT USE This principle states that the property must be valued with a single use for the entire property. Property valued on the basis on one use for land and another for the improvements is improper. The principle is especially applicable to a property in transition from one use to another. While the improvements on a parcel ready for higher use may theoretically have a long physical life, their economic life may have already terminated. PRINCIPLE OF CONTRIBUTION This principle states that the value of an agent of production (or a property component) depends upon its contribution to the whole. This is another way of saying that cost does not necessarily equal value. Some examples are: 1. A garage is built on an existing home at a cost of $30,000. Based on comparable sales analysis, it is determined that such a garage adds $35,000 to the overall market value of the property. In this case, $35,000 is the value contribution of the garage. 2. A brick fireplace costs $10,000 to construct. Sales analysis in this neighborhood reflects a brick fireplace only adds $6,000 of value to a home. A brick fireplace may only add $6,000 of contribution to the value of the home, not the cost of $10,000. 21 | P a g e Schedule of Values Lincoln County 2027 This principle is the basis for the adjustment process of the comparative sales approach to value and the direct sales comparison method of land valuation, for determining whether physical deterioration and functional obsolescence are curable or incurable, and for justifying remodeling and modernization. Many of the adjustments to value that are detailed herein for various property characteristics are based on their contribution to the whole property, not their actual cost. This principle works in conjunction with the principles of balance, increasing and decreasing returns, and surplus productivity. PRINCIPLE OF INCREASING AND DECREASING RETURN This principle states that, when successive increments of one agent of production are added to fixed amounts of other agents, future net benefits (income or amenities) will increase up to a certain point (point of decreasing returns), after which successive increments will decrease future net benefits. PRINCIPLES OF PROGRESSION AND REGRESSION The principles of progression and regression relate to how surroundings affect the value of an object. Progression indicates that the value of a lessor object is enhanced by association with better objects of the same type. The principle of regression states that, when there are dissimilar properties within the same general classification and in the same area, the better property will be adversely affected. PRINCIPLE OF SUBSTITUTION Value is created by the marketplace through the process of translating demand into a commodity of exchange. When the benefits and advantages derived from two properties are equal, the lower-priced property will generally receive the greater demand, and rightfully so. An informed buyer is not justified in paying more for a property than the cost of acquiring an equally desirable property. Therefore, the value of a property is established by the price at which equally desirable, comparable properties are bought and sold in the marketplace. This principle provides the foundation for an approach to value and serves as a fundamental basis of the valuation process. PRINCIPLE OF SUPPLY AND DEMAND The forces of supply and demand determine market value. 22 | P a g e Schedule of Values Lincoln County 2027 PRINCIPLE OF SURPLUS ACTIVITY This principle states that the net income remaining after the cost of the agents of production – labor, coordination, and capital – has been paid is considered surplus productivity. TRADITIONAL APPROACHES TO VALUE In the preceding paragraphs, it has been stated that value is an elusive item that occurs in many different forms, and that the forces and influences which combine to create, sustain, or destroy value are numerous and varied. It is the appraiser's function to define the type of value sought, to compile and to analyze all related data, and, giving due consideration to all the factors which may influence the value, to process and translate that data into a final opinion or estimate of value. This must be done for each property that is to be appraised. The processing of this data into a conclusion of value generally takes the form of three recognized approaches to value: Cost Approach, Sales Comparison Approach and Income Approach. Underlying each of the approaches is the principle that the justifiable price of a property is no more than the cost of acquiring and/or reproducing an equally desirable substitute property. The use of one or all three approaches in the valuation of a property is determined by the quantity, quality, and accuracy of the data available to the appraiser. Cost Approach: This involves making an estimate of the depreciated cost of reproducing or replacing the building and site improvements. Reproduction Cost refers to the cost at a given point in time of reproducing a replica property, whereas Replacement Cost refers to the cost of producing improvements of equal utility. Depreciation is deducted from this cost new for loss in value caused by physical deterioration, and functional or economic obsolescence. To this depreciated cost is then added the estimated value of the land, resulting in an indication of value derived by the Cost Approach. The significance of the Cost Approach lies in its extent of application . . . it is the one approach that can be used on all types of construction. It is a starting point for appraisers, and therefore it is a very effective “yardstick” in any equalization program for Ad Valorem taxes. Its widest application is in the appraisal of properties where the lack of adequate market and income data preclude the reasonable application of the other traditional approaches. Sales Comparison Approach: This involves the compiling of sales and offerings of properties that are comparable to the property being appraised. These sales and offerings are then adjusted for any dissimilarity and a value range obtained by comparison of said properties. The approach is reliable to the extent that the properties are comparable, and the appraiser's judgment of proper adjustments is sound. The procedure for using this approach is essentially the same for all types of property with the only difference being the elements of comparison. 23 | P a g e Schedule of Values Lincoln County 2027 The significance of this approach lies in its ability to produce estimates of value, which directly reflect the attitude of the market. Its application is contingent upon the availability of comparable sales and therefore finds its widest range in the appraisal of vacant land and residential properties. Some examples of applicable North Carolina case law are: Neither this section nor G.S. 105-317(a) requires the commission to value property according to its sale price in a recent arm’s-length transaction when competent evidence of a different value is presented. In re Greensboro Office Partnership, 72 N.C. App635,325 S.E. 2d 24, cert. denied, 313 N.C. 602,330 S.E.2d 610 (1985) Where sale was not between a willing buyer and a willing seller, as contemplated by this section, sales price was not indicative of property’s true value. In re Phoenix Ltd. Partnership, 134 N.C. App. 474, 517 S.E.2d 903 (1999) Essentially, North Carolina law prohibits the presumption that the sale price of any particular property must be the basis for its appraised value for ad valorem tax purposes. Instead, reliance is placed on the greater weight of evidence determined from a larger sampling of comparable properties and, as a result, the appraised value may be less than or greater than the sale price of any particular property. Income Approach: This measures the present worth of the future benefits of a property by the capitalization of the net income stream over the remaining economic life of the property. The approach involves making an estimate of the “effective gross income” of a property, derived by deducting the appropriate vacant and collection losses from its estimated economic rent, as evidenced by the yield of comparable properties. From this figure then is deducted applicable operating expense, the cost of taxes and insurance, and reserve allowances for replacements resulting in an estimate of net income, which may then be capitalized into an indication of value. For the 2027 Revaluation, Lincoln County adopts a capitalization rate range of 5% to 10%. Expense ratios, vacancy rates, and market rents may vary by the location and type of property being appraised. This approach has its basic application in the appraisals of properties universally bought and sold on their ability to generate and maintain a stream of income for their owners. The effectiveness of the approach lies in the appraiser's ability to relate to the changing economic environment and to analyze income yields in terms of their relative quality and durability. 24 | P a g e Schedule of Values Lincoln County 2027 PROPERTY VALUATION TECHNIQUES APPLYING THE COST APPROACH If the highest and best use of a property is its present use, a valid indication of value may be derived by estimating the value of the land and adding the land value to the depreciated value of the structures on the land, the resulting equation being . . . Estimated Land Value + Estimated Replacement Cost New of Structures - Estimated Depreciation ___________________________________________ = Indication of Property Value Since estimating the land value is covered in a separate section, this section will address itself to the two remaining elements, Replacement Cost and Depreciation. REPLACEMENT COST Replacement Cost is the current cost of producing an improvement of equal utility to the subject property; it may or may not be the cost of reproducing a replica property. The distinction being drawn is one between Replacement Cost, which refers to a substitute property of equal utility, as opposed to Reproduction Cost, which refers to a substitute replica property. In a particular situation the two concepts may be interchangeable, but they are not necessarily so. They both, however, have application in the Cost Approach to value, the difference being reconciled in the consideration of depreciation allowances. In actual practice, outside of a few historic type communities in this country, developers and builders, for obvious economic reasons, replace buildings, not reproduce them. It logically follows that, if an appraiser's job is to measure the actions of knowledgeable persons in the marketplace, the use of proper replacement costs should provide an accurate point of beginning in the valuation of most improvements. The replacement cost includes the total cost of construction incurred by the builder whether preliminary to, during, or after completion of the construction of a particular building. Among these are material, labor, all subcontracts, builders' overhead and profit, architectural and engineering fees, consultation fees, survey and permit fees, legal fees, taxes, insurance, and the cost of interim financing. 25 | P a g e Schedule of Values Lincoln County 2027 ESTIMATING REPLACEMENT COST There are various methods that may be employed to estimate Replacement Cost New (RCN). The methods widely used in the appraisal field are the Quantity-Survey Method, the Unit-in-Place (or Component Part-in-Place) Method, and the Model Method. The Quantity-Survey Method involves a detailed itemized estimate of the quantities of various materials used, labor and equipment requirements, architect and engineering fees, contractor's overhead and profit, and other related costs. This method is primarily employed by contractors and cost estimators for bidding and budgetary purposes and is too laborious and costly to be effective in everyday appraisal work, especially in mass appraisal. The method, however, does have its place in that it is used to develop certain unit-in-place costs which can be more readily applied to estimating for appraisal purposes. The Unit-in-Place Method is employed by establishing in-place cost estimates (including material, labor, overhead and profit) for various structural components. The prices established for the specified components are related to their most common units of measurement such as cost per yard of excavation, cost per lineal foot of footings, and cost per square foot of floor covering. The unit prices can then be multiplied by the respective quantities of each as they are found in the composition of the subject building to derive the whole dollar component cost, the sum of which is equal to the estimated cost of the entire building, providing, of course, that due consideration is given to all other indirect costs which may be applicable. This method of using basic units can also be extended to establish prices for larger components in-place, such as complete structural floors (including the finish flooring, subfloor, joists and framing), which are likely to occur repeatedly across multiple buildings. The Model Method is still a further extension, in that unit-in-place costs are used to develop base unit square foot or cubic foot costs for total specified representative structures in place, which may then serve as “models” to derive the base unit cost of comparable structures to be appraised. The base unit cost of the model most representative of the subject building is applied to the subject building and appropriate tables of additions and deductions are used to adjust the base cost of the subject building to account for any significant variations between it and the model. 26 | P a g e Schedule of Values Lincoln County 2027 Developed and applied properly, these pricing techniques will assist the appraiser in arriving at valid and accurate estimates of replacement cost new as of a given time. This given time for ad valorem tax purposes is always January 1 of the reappraisal year. The cost generally represents the upper limit of value of a structure. The difference between its replacement cost new and its present value is depreciation. The final step in completing the Cost Approach then is to estimate the amount of depreciation and deduct said amount from the replacement cost new. DEPRECIATION Simply stated, depreciation can be defined as “a loss in value from all causes.” As applied to real estate, it represents the loss in value between market value and the sum of the replacement cost new of the improvements plus the land value as of a given time. The causes of the loss in value may be divided into three broad classifications: Physical Deterioration, Functional Obsolescence, and Economic Obsolescence. Physical Deterioration pertains to the wearing out of the various building components, referring to both short-life and long-life terms, through the action of the elements, age, and use. The condition may be considered either “curable” or “incurable”, depending upon whether it may or may not be practical and economically feasible to cure the deficiency by repair and replacement. Functional Obsolescence is a condition caused by either inadequacies or over-adequacies in design, style, composition, or arrangement inherent to the structure itself, which tends to lessen its usefulness. Like physical deterioration, the condition may be considered either curable or incurable. Some of the more common examples of functional obsolescence are excessive wall and ceiling heights, excessive structural construction, surplus capacity, ineffective layouts, and inadequate building services. Economic Obsolescence is a condition caused by factors extraneous to the property itself, such as changes in population characteristics and economic trends, encroachment of inharmonious land uses, excessive taxes, and governmental restrictions. The condition is generally incurable in that the causes lie outside the property owner's realm of control. ESTIMATING DEPRECIATION An estimate of depreciation represents an opinion of the appraiser as to the degree that the present and future appeal of a property has been diminished by deterioration and obsolescence. Of the three estimates necessary to the Cost Approach, it is the one most difficult to make. The accuracy of the estimate will be a product of the appraiser's 27 | P a g e Schedule of Values Lincoln County 2027 experience in recognizing the symptoms of deterioration and obsolescence and the ability to exercise sound judgment in equating all observations to the proper monetary allowance to be deducted from the replacement cost new. There are several acceptable methods that may be employed: ▪ Physical deterioration and/or functional obsolescence can be measured by observing and comparing the physical condition and/or functional deficiencies of the subject property as of a given time with either an actual or hypothetical, comparable, new and properly planned structure. ▪ Curable physical deterioration and functional obsolescence can be measured by estimating the cost of restoring each item of depreciation to a physical condition as good as new or estimating the cost of eliminating the functional deficiency. ▪ Functional and economic obsolescence can be measured by capitalizing the estimated loss in rental due to the structural deficiency or lack of market demand. ▪ Total accrued depreciation may be estimated by first estimating the total useful life of a structure and then translating its present condition, desirability, and usefulness into an effective age (rather than an actual age) which would represent that portion of its total life (percentage) which has been used up. ▪ Total accrued depreciation may also be estimated by deriving the amount of depreciation recognized by purchasers as evidenced in the prices paid for property in the marketplace; the loss of value being the difference between the cost of replacing the structure now and its actual selling price (total property selling price less the estimated value of the land). APPLYING THE SALES COMPARISON APPROACH An indication of the value of a property can be derived through analysis of the selling prices of comparable properties. The use of this technique, often referred to as the sales comparison approach or comparable sales approach, involves the selection of a sufficient number of valid comparable sales and the adjustment of each sale to the subject property to account for variations in time, location, site and structural characteristics. 28 | P a g e Schedule of Values Lincoln County 2027 INTRODUCTION TO THE SALES COMPARISON APPROACH For assessment purposes, market values are defined by constitutions, statutes and case law. When sales data is available, the sales comparison approach is generally considered the most reliable of the approaches to value. However, in North Carolina assessment litigation, under the “rules of evidence”, a bona fide sale of the subject property may not be considered the best evidence of market value “when competent evidence of different value is presented”. In re Greensboro Office Partnership, 72 N.C. App. 635, 325 S.E.2d24, cert. denied, 313 N.C. 602,330 S.E.2d 610 (1995). Emphasizing uniformity and the equitable distribution of the tax burden relative to the premise that similar properties should share similarly in that burden, North Carolina statutory language and the interpretation of relating actual sales to market value by the North Carolina Courts both provide this guidance. The sales comparison approach models the behavior of the market by comparing the properties being appraised (subject property) with similar properties that have recently sold (comparable properties). Comparable properties are selected for their similarity to the subject property. Their sales prices are then adjusted for their differences from the subject. Finally, the market value for the subject is determined from the adjusted sales prices of the comparable properties. To understand the sales comparison approach, an appraiser must understand the principles of supply and demand. The interaction of supply and demand factors impacts property prices. Supply depends on current inventories and, in a larger sense, the availability of human skills, materials, and capital, while demand is influenced by population levels, mortgage rates, income levels, local services, housing trends, and the cost of substitutes. The principal of substitution is one demand factor that implies that the market will recognize differences in utility between the subject and its best alternatives by a difference in price. The Sales Comparison Approach requires the following steps: 1. Definition of the appraisal problem. 2. Data collection. 3. Analysis of market data to develop units of comparison and select attributes for adjustment (model specifications) 4. Development of reasonable adjustments (model calibration). 29 | P a g e Schedule of Values Lincoln County 2027 5. Application of the model to adjust the sales prices of comparable properties to the subject property. 6. Analysis of the adjusted sales price to indicate the value of the subject property. The entire valuation process depends on accurately defining the subject property because the nature of the property determines the sources of information, methods of comparable selection, and adjustment techniques. Defining the subject property includes: 1. Identifying the property (parcel number or pin for ad valorem tax purposes) 2. The rights to be appraised (generally Fee Simple for ad valorem tax purposes) 3. The date of appraisal (January 1 of the appraisal year for NC ad valorem tax purposes) 4. The use (highest and best use) 5. The type of value to estimate (market value, for NC ad valorem tax purposes) This approach has a wide application as a method of estimating value; however, there are factors that can or do limit the usefulness of the sales comparison approach. Despite these limitations, this approach has a board application in all appraisal work. The value estimates found using this approach are considered particularly significant because they are expressions of value established by transactions in the marketplace. Even though the sales comparison approach is mostly used for estimating market value for residential property, it may also be used for some commercial and industrial properties if sufficient data is available. Additionally, some valuation parameters of the other valuation approaches (cost and income) are influenced by the application of and observations learned from the sales comparison approach. SELECTING VALID COMPARABLES Since market value has been defined as the price which an informed and knowledgeable buyer, fully aware of the existence of competing properties and not being compelled to act, is justified in paying for a particular property, it follows that, if market value is to be derived from analyzing comparable sales, the sales must represent valid, arm’s-length transactions. Due consideration must be given to the conditions and circumstances of each sale before selecting the sales for analysis. Some examples of sales that do not normally reflect valid market conditions are as follows: 30 | P a g e Schedule of Values Lincoln County 2027 ▪ Sales in connection with foreclosures, short sales, bankruptcies, condemnations, and other legal actions. ▪ Sales involving federal, state, county, and local governmental agencies. ▪ Sales involving religious, charitable, or benevolent tax-exempt agencies. ▪ Sales involving family transfers. ▪ Sales involving intra-corporate affiliations. ▪ Sales involving the retention of life interests. ▪ Sales involving cemetery lots. ▪ Sales involving real property and personal property. ▪ Sales involving mineral or timber rights, and access or drainage rights. ▪ Sales involving the transfer of partial interests. In addition to selecting valid market transactions, it is equally important to select properties that are truly comparable to the property under appraisement. For instance, sales involving both real property and personal property or chattels may not be used unless the sale can be adjusted to reflect only the real property transaction, nor can sales of non-operating or deficient industrial plants be validly compared with operating plants. The comparable sales and subject properties must exhibit the same use, and the site and structural characteristics must exhibit an acceptable degree of comparability. 31 | P a g e Schedule of Values Lincoln County 2027 PROCESSING COMPARABLE SALES All comparable sales must be adjusted to the subject property to account for variations in time, location, and physical characteristics. The other major elements of comparison will differ depending upon the type of property being appraised. In selecting these elements, the appraiser must consider the same factors that influence the prospective buyers of types of properties. The typical homebuyer is interested in the property's capacity to provide the family with a place to live. A primary concern is with the living area, utility area, number of rooms, number of baths, age, structural quality and condition, and the presence of a modern kitchen and recreational conveniences of the house. Equally important is the location and neighborhood, including the proximity to and the quality of schools, public transportation, and recreational and shopping facilities. In addition to the residential amenities, the buyer of agricultural property is primarily interested in the productive capacity of the land, the accessibility to the marketplace, and the condition and functional utility of the farm buildings and structures on the land. The typical buyer of commercial property, including warehouses and certain light industrial plants, is primarily concerned with its capability to produce revenue. Of special interest will be the age, design and structural quality and condition of the improvements, the parking facilities, and the location relative to transportation, labor markets and trade centers. In applying the market data approach to commercial/industrial property, the appraiser will generally find it difficult to locate enough comparable sales, especially of properties that are truly comparable in their entirety. It will, therefore, generally be necessary to select smaller units of comparison such as price per square foot, per unit, per room, etc. In doing so, great care must be exercised in selecting a unit of comparison that represents a logical common denominator for the properties being compared. A unit of comparison that is commonly used and proven to be effective is the Gross Rent Multiplier, generally referred to as G.R.M., which is derived by dividing the gross annual income into the sales price. Using such units of comparison enables the appraiser to compare two properties that are similar in use and structural features but differ in size and other characteristics. Having selected the major factors of comparison, it remains for the appraiser to adjust each of the factors to the subject property. In comparing the site, adjustments for size, location, accessibility, and site improvements must be made. In comparing the structures, adjustments for size, quality, design, condition, and significant structural and mechanical components also must be made. The adjusted selling prices of the comparable properties will establish a range in value in which the value of the subject property will fall. Further analysis of the factors should enable the appraiser to narrow the range down to the value level that is most applicable to the subject property. 32 | P a g e Schedule of Values Lincoln County 2027 APPLYING THE INCOME APPROACH INTRODUCTION The justified price paid for income-producing property is no more than the amount of investment required to produce a comparably desirable return; and, since the market can be analyzed to determine the net return anticipated by investors, it follows that the value of income-producing property can be derived from the income which it can produce. What is involved is an estimate of income through the collection and analysis of available economic data, the development of a property capitalization rate, and the processing of the net income into an indication of value by employing one or more of the acceptable capitalization methods and techniques. THE PRINCIPALS OF CAPITALIZATION Capitalization is the process for converting the net income produced by property into an indication of value. Through the years of appraisal history, several procedures have been recognized and employed by appraisal authorities in determining the value of real estate by the Income Approach. Although present-day practice recommends only certain methods, we will at least touch on the other approaches to value – even though they may not be accepted in today's appraisal scene because they do not accurately reflect the current market conditions. EXPLORING THE RENTAL MARKET The starting point for the appraiser is an investigation of current economic rent in a specific area to establish a sound basis for estimating the gross income that should be returned from competitive properties. The appraiser must make a distinction between economic rent, or the rent which property is normally expected to produce on the open market; as opposed to control (actual) rent, or the rent which property is realizing at the time of the appraisal due to lease terms established in the past. The first step then is to obtain specific income and expense data on properties that best typify normal market activity. The data is necessary to develop local guidelines for establishing the economic rent and related expenses for various types of properties. The next step is to similarly collect income and expense data on individual properties and to evaluate the data against the established guidelines. The collection of income and expense data (I & E) is an essential phase in the valuation of commercial properties. The appraiser is primarily concerned with the potential earning power of the property. The 33 | P a g e Schedule of Values Lincoln County 2027 objective is to estimate its expected net income. Income and Expense Statements of past years are valuable only to the extent that they serve this end. The statements must not only be complete and accurate but must also stand the test of market validity. Consideration of the following factors should assist the appraiser in evaluating the income and expense (I & E) data to arrive at an accurate and realistic estimate of net income. This is sometimes referred to as net income before recapture. Income and expense data from property owners and lessees of commercial (income- producing) property are most often received by Lincoln County as part of the appeal process. This income and expense data is generally provided in support of a claim seeking a decrease in appraisal value. The quality and worth of that data is dependent on the documentation provided. Specific lease information (lease rates, terms, and other stated considerations) is best while undocumented statements are less useful. The county may utilize other outside sources of information to help determine the market income and expense rates when applying the income approach. QUESTIONS AND COMMENTS RELATING TO INCOME DATA A. Was the reported income produced entirely by the subject property? Very often the rent will include an amount attributable to one or more additional parcels of real estate. In this case, it would be necessary to obtain the proper allocations of rent. B. Was the income attributable to the subject property as it physically existed at the time of the appraisal, or did the appraisal include the value of leasehold improvements and remodeling for which the tenant paid in addition to rent? If so, it may be necessary to adjust the income to reflect economic rent. C. Does the reported income represent a full year's return? It is often advisable to obtain both monthly and annual amounts as verification. D. Does the income reflect current economic rent? Is either part or all the income predicated on old leases? If so, what are the provisions for renewal options and rates? E. Does the reported income reflect 100% occupancy? What percentage of occupancy does it reflect? Is this percentage typical of this type of property, or is it due to special non-recurring causes? 34 | P a g e Schedule of Values Lincoln County 2027 F. Does the income include rental income for all marketable space? Does it include an allowance for space, if any, which is either owner or manager occupied? Is the allowance realistic? G. Is the income attributable directly to the real estate and conventional amenities? Is some of the income derived from furnishings and appliances? If so, it will be necessary to adjust the income or make provisions for reserves to eventually replace them, whichever local custom dictates. H. In many properties, an actual rental does not exist because the real estate is owner occupied. In this event it is necessary to obtain other information to provide a basis to estimate economic rent. The information required pertains to the business operation using the property. Proper analysis of the annual operating statements of the business, including gross sales or receipts, can provide an accurate estimate of economic rent. Information requirements for a few of the more common property uses are as follows: Retail Stores The annual net gross sales. (Gross sales less returned merchandise). Hotels and The annual operating statement of the business. If retail or office Motels space is leased in these properties, obtain the actual rent paid. The annual gross receipts (including admissions and concessions) Theaters and seating capacity. Note: All data received from property owners/lessors where their income and expense information is stated is held confidential. ANALYSIS OF EXPENSE DATA The appraiser must consider only those expenses that are applicable to the cost of ownership; that is, those expenses that are normally owner-incurred. Any portion of the expenses incurred directly or indirectly by the tenant should not be considered. Each expense item must stand the test of both legitimacy and accuracy. How do they compare with the established guidelines and norms? Are they consistent with the expenses incurred by comparable properties? 35 | P a g e Schedule of Values Lincoln County 2027 Management - refers to the cost of administration. These charges should realistically reflect what a real estate management company would charge to manage the property. If no management fee is shown on the statement, an allowance must be made by the appraiser. However, if excessive management charges are reported, as is often the case, the appraiser must disregard the reported charges and use an amount that is appropriate and consistent with comparable type properties. The cost of management bears a relationship with the risk of ownership and will generally range between 4% to 10% of the gross income. General expenses - may include such items as the cost of services and supplies not charged to a particular category. Unemployment and F.I.C.A. taxes, Workmen's Compensation, and other employee insurance plans are usually legitimate deductions when employees are a part of the building operation. Reimbursed expenses - refer to the cost associated with the maintenance of public or common areas of the commercial property. This expense is passed on to the tenants and should, therefore, only be considered when the amount of reimbursement is included as income. Miscellaneous expenses - is the “catch-all” category for incidentals. This item should reflect a very nominal percentage of the income. If expenses reported seem to be excessive, the appraiser must examine the figures carefully to determine if they are legitimate expenses; and if so, to allocate them to their proper category. Cleaning expenses - are legitimate charges. They are for such items as general housekeeping and maid service and include the total cost of labor and related supplies. All or a portion of the cleaning services may be provided by outside firms working on a “contract” basis. Cleaning expenses vary considerably and are particularly significant in operations such as offices and hotels. “Rule of thumb” norms for various operations are made available through national management associations. The appraiser should have little difficulty in establishing local guidelines. Utilities - are generally legitimate expenses and, if reported accurately, need very little reconstruction by the appraiser other than to determine if the charges are consistent with comparable properties. Local utility companies can provide the appraiser with definite guidelines. Heat and Air Conditioning - costs are often reported separately and in addition to utilities. The expenses would include the cost of fuel other than the above-mentioned utilities and may include, especially in large installations, the cost of related supplies, inspection fees, and maintenance charges. These are generally legitimate costs and the same precautions prescribed for “utilities” are in order. 36 | P a g e Schedule of Values Lincoln County 2027 Elevator expenses - including the cost of repairs and services, are legitimate deductions, and are generally handled through service contracts. These fees can generally be regarded as stable annual recurring expenses. Decorating and minor alterations - are necessary to maintain the income stream of many commercial properties. In this respect they are legitimate expenses. However, scrutiny of these figures is required. Owners tend to include the cost of major alterations and remodeling which are, in fact, capital expenditures and, as such, are not legitimate operating expenses. Repairs and Maintenance - expenses reported for any given year, are not necessarily a true indication of the average or typical annual expense for these items. For example, a statement could reflect a substantial expenditure for a specific year (possibly because the roof was replaced and/or several items of deferred maintenance were corrected); yet the statement for the following year may indicate that repairs and maintenance charges were practically nothing. It is necessary for the appraiser to either obtain complete economic history on each property to make a proper judgment as to the average annual expense for these items, or include a proper allowance based on norms for the type and age of the improvements to cover annual expenses. Since it is neither possible nor practical to obtain enough economic history on every property, the latter method is generally used and the amounts reported for repairs and maintenance are then estimated by the appraiser. Insurance - Caution must be used in accepting insurance expense figures. The cost shown may be for more than one year or may be for blanket policies including more than one building. It is generally more effective for the appraiser to establish their own guidelines. They must also be careful to include only items applicable to real estate. Fire extended coverage and owner's liability are the main insurance expense items. Separate coverage on special component parts of the buildings, such as elevators and plate glass, are also legitimate expenses. Real Estate Taxes - In making appraisals for tax purposes, the appraiser may exclude the actual amount reported for real estate taxes. Since future taxes will be based on the appraised value, the appraiser may express the taxes as a factor of the estimated value. This can be done by including an additional percentage in the capitalization rate to account for real estate taxes. Depreciation - The figure shown for depreciation on an operating statement is a “bookkeeping figure” which the owner uses for Internal Revenue purposes and should not be considered in the Income Approach. This reflects a tax advantage that is one of the benefits of ownership. 37 | P a g e Schedule of Values Lincoln County 2027 Interest - Although interest is considered a legitimate expense, it is always included in the Capitalization Rate. Most property is appraised as if it were “free and clear”; however, the appraiser does consider the interest of a current mortgage in the Capitalization Rate build- up. Land Rent - When appraising for real estate tax purposes, only the sum of the leasehold and the leased fee are usually considered. Land rent is not deducted as an expense. Considered separately, rent from a ground lease would be an expense to the leasehold interest and an income to the leased fee. However, if land were rented from another property to supply additional parking for example, that land rent would be an allowable expense. It is obvious that there are some expense items encountered on operating statements that the appraiser should not consider as allowable. This is because they are interested in legitimate cash expenses only. Income statements are usually designed for income tax purposes where credit can be taken for borrowing costs and theoretical depreciation losses. It is virtually impossible and certainly not always practical to obtain a complete economic history on every commercial property being appraised. On many properties, however, detailed economic information can be obtained using Income and Expense forms. One must realistically recognize the fact that the data obtainable on some properties is limited. In most cases, the gross income and a list of the services and amenities furnished can be obtained during the data gathering operation. However, to ensure a sound appraisal, it may be necessary to estimate the fixed and operating expenses. This is best accomplished by setting guidelines for expenses, based on a percentage of Effective Gross Income or a cost per square foot of leased area. These percentages or costs will vary depending on the services supplied and the type of property. CAPITALIZATION METHODS The most prominent methods of capitalization are Direct, Straight Line, Sinking Fund, and Annuity. Each of these is a valid method for capitalizing income into an indication of value. The basis for their validity lies in the action of the market, which indicates that the value of income-producing property can be derived by equating the net income with the net return anticipated by informed investors. This can be expressed in terms of a simple equation: Value = Net Income divided by Capitalization Rate 38 | P a g e Schedule of Values Lincoln County 2027 The Straight Line and Sinking Fund methods are both actual forms of Straight Capitalization, with one using Straight Line recapture and the other using Sinking Fund recapture. Both methods follow the same basic principles as Direct Capitalization, differing only in that they provide separate capitalization rates for land and buildings, the building rate differing from the land rate in that it includes an allowance for recapture. Straight Line Capitalization allows for “recapture” based on remaining economic life of the building – implying that, at the end of that period, there would be no improvement value. There are three fallacies in this thinking. First, the potential buyer (investor) has no intention of holding the property that long. The average investment period might average ten years. Second, the investor anticipates that, at the end of that period, they will either get all their money back or will make a profit. And third, is the depreciation allowance possible in connection with federal income taxes? Depreciation allowances begin to “run out” between seven and ten years, so the advantages of owning the property are reduced considerably. A prudent owner may choose to sell the property at this point and reinvest in another property so that they may begin the depreciation cycle again and continue to take full advantage of the favorable tax laws. For these reasons, the Straight-Line Capitalization Method does not usually follow what the market indicates. Straight-Line recapture calls for the return of investment capital in equal increments or percentage allowances spread over the estimated remaining economic life of the building. Sinking Fund recapture calls for the return of invested capital in one lump sum at the termination of the estimated remaining economic life of the building. This is accomplished by providing for the annual return of a sufficient amount needed to invest and annually reinvest in “safe” interest-bearing accounts, such as government bonds or certificates of deposit, which will ultimately yield the entire capital investment during the building's economic life. Annuity Capitalization lends itself to the valuation of long-term leases. In this method, the appraiser determines, using annuity tables, the present value of the right to receive a certain specified income over the stipulated duration of the lease. In addition to the value of the income stream, the appraiser must also consider the value that the property will have once it reverts to the owner at the termination of the lease. This reversion is valued by discounting its anticipated value against its present-day worth. The total property value then is the sum of the capitalized income stream plus the present worth of the reversion value. 39 | P a g e Schedule of Values Lincoln County 2027 CURRENT TECHNIQUES There are two methods, however, that do lend themselves to an accurate measure of market value based on potential income. These are Direct Capitalization, utilizing the Direct Comparison Method of Rate Selection, and Mortgage Equity Capitalization. In Direct Capitalization, the appraiser determines a single “overall” capitalization rate. This is done through analysis of actual market sales of similar types of properties. They develop the net income of each property and divide the net income by the sales price to arrive at an overall rate to provide an indication of value. Direct capitalization rates have been relied on in many appellate court rulings for the valuation of income-producing properties for ad valorem tax purposes. Mortgage Equity Capitalization is a form of direct capitalization with the major difference in the two approaches being the development of the overall capitalization rate. In this method, equity yields and mortgage terms are considered influencing factors in construction of the interest rate. In addition, a plus or minus adjustment is required to compensate for anticipated depreciation or appreciation. This adjustment can be related to the recapture provisions used in other capitalization methods and techniques. RESIDUAL TECHNIQUES It can readily be seen that any one of the factors of the Capitalization Equation (Value = Net Income divided by Capitalization Rate) can be determined if the other two factors are known. Furthermore, since the value of property is the sum of the land value plus the building value, it holds that either of these can be determined if the other is known. The uses of these mathematical formulas in capitalizing income into an indication of value are referred to as the residual techniques, or more specifically, the property residual, the building residual, and the land residual techniques. The Property Residual Technique is an application of Direct Capitalization. In this technique, the total net income is divided by an overall capitalization rate (which provides for the return on the total investment) to arrive at an indicated value for the property. This technique has received more popular support in recent years because it closely reflects the market. With this technique, the capitalization rate may be developed by either “direct comparison” in the market or by the Mortgage Equity Method. The Building Residual Technique requires the value of the land to be a known factor. The amount of net income required to earn an appropriate rate of return on the land investment is deducted from the total net income. The remainder of the net income (residual) is divided 40 | P a g e  Schedule of Values Lincoln County 2027 by the building capitalization rate (which is composed of a percentage for the return on the investment, plus a percentage for the recapture of the investment) to arrive at an indicated value for the building. The Land Residual Technique requires the value of the building to be a known factor. The amount of net income required to provide both a proper return on and the recapture of the investment is deducted from the total net income. The remainder of the net income (residual) is then divided by the land capitalization rate (which is composed of a percentage for the return on the investment) to arrive at an indicated value for the land. MORTGAGE EQUITY METHOD EXAMPLE For purposes of illustration, assume an investment financed with a 70% loan at 14.0% interest. The mortgage term is 20 years, paid off in level monthly payments. The total annual cost for principal and interest on such a loan can be determined by referring to the mortgage equity tables. Select the Constant Annual percent for an interest rate of 14.0% and a term of 20 years. Note that the constant is 14.92% of the amount borrowed, or .92% more than the interest rate alone. Assume that the equity investor will not be satisfied with less than an 18% yield. The income necessary to satisfy both Lender and Equity can now be shown. The product of the percent portion and the rate equal the weighted rate. The total of each weighted rate equals the weighted average. PORTION RATE WEIGHTED RATE Mortgage loan (principal interest) 70% .1492 = .1044 Equity (down payment) 30% .18 = .0540 Weighted Average 100% .1584 Note that the “constant annual percent” is used for the rate of the loan. Since there is a gain in equity's position through the years by the loan being paid off little by little, it is necessary to calculate the credit for “Equity Build-Up”. Assume that the investor plans to hold the property for ten years. Since the mortgage is for 20 years, only a portion of the principal will be paid off and this amount must be discounted, as it won't be received for ten years. From the Table of Loan Balance and Debt Reduction, at the end of ten years for a 20-year mortgage at 14%, the figure is .199108. Consulting the sinking fund tables indicates that the discount factor for 18% and 10 years is .0425. 41 | P a g e Schedule of Values Lincoln County 2027 The credit for Equity Build-Up can now be deducted from the basic rate, thus . . . .199108 x 70% x .0425 = .0059 (% of loan paid in 10 yrs.) (loan rate) (sinking fund 18% for 10 yrs.) Resulting Net Rate = .1525 42 | P a g e Schedule of Values Lincoln County 2027 LAND VALUATION TECHNIQUES In making appraisals for Ad Valorem Tax purposes, it is generally necessary to estimate separate values for the land and the improvements on the land. In actuality, the two are not separated and the final estimate of the property as a single unit must be given prime consideration. However, in arriving at that final estimate of value, aside from the requirements for property tax appraisals, there are certain other reasons for making a separate estimate of value for the land: ▪ An estimate of land value is required in the application of the Cost Approach. ▪ An estimate of land value is required to be deducted from the total property sales price to derive indications of depreciation through market-data analysis. (Depreciation being equal to the difference between the replacement cost new of a structure and the actual price paid in the marketplace for the structure.) ▪ As land is not a depreciable item, a separate estimate of land value is required for bookkeeping and accounting purposes; likewise, the total capitalization rate applicable to land will differ from the rate applicable to the improvements on the land. ▪ Since land may or may not be used to its highest potential, the value of land may be completely independent of the existing improvements on the land. ▪ Real Estate is valued in terms of its highest and best use. The highest and best use of the land (if vacant and available for use) may be different from the highest and best use of the improved property. This will be true when the improvement is not an appropriate use and yet contributes to total property value more than the value of the site. Highest and Best Use (Highest and Most Profitable Use; Optimum Use) is that reasonable and probable use which will support the highest present value as of the date of the appraisal. Alternatively, it is the most profitable likely use to which a property can be put. It may be measured in terms of the present worth of the highest net return that the property can be expected to produce over a stipulated long run period. (American Institute of Real Estate Appraisers' Appraisal Terminology Handbook, 1981 edition.) ▪ As appraisers' opinions are based on data derived from the market, it is necessary to study and adapt, if possible, procedures used by those closest to everyday transactions. 43 | P a g e Schedule of Values Lincoln County 2027 COMPARABLE SALES METHOD The most frequently used method in estimating the value of land is the comparable sales method in which land values are derived from analyzing the selling prices of similar sites. This method is in essence the application of the market data approach to value and all the considerations pertaining thereto are equally applicable here. The appraiser must select comparable and valid market transactions and must weigh and give due consideration to all the factors significant to value, adjusting each to the subject property. The comparable sites must be used in the same way as is the subject property and subjected to the same zoning regulations and restrictions. It is also preferable, whenever possible, to select comparable sales from the same or a similar neighborhood. The major adjustments will be to account for variations in time, location, and physical characteristics to include size, shape, topography, landscaping, access, as well as other factors which may significantly influence the selling price, such as the productivity of farmland. Although it is always preferable to use sales of unimproved lots for comparison, it is not always possible to do so. Older neighborhoods are not likely to yield enough representative sales of unimproved lots to permit a valid analysis. In such cases, to arrive at an estimate of land values using the comparable sales approach, it is necessary to consider improved property sales and to estimate the portion of the selling price applicable to the structure. The procedure would be to estimate the replacement cost of the buildings as of the date of sale, estimate the accrued depreciation and deduct that amount from the replacement cost resulting in the estimated selling price of the buildings, which can be deducted from the total selling price of the property to derive the portion of the selling price which can be allocated to the land. The equation is as follows: Selling Price of Property - Estimated Depreciated Value of Buildings = Indication of Land Value In some of these older neighborhoods, vacant lots will exist often because of fire or normal deterioration. Since the desirability as a new building site is restricted, value is generally determined by adjoining property owners who have a desire for additional land area. 44 | P a g e Schedule of Values Lincoln County 2027 To apply the comparable sales method, it is first necessary to establish a common unit of comparison. The units generally used in the valuation of land are price per front foot, price per square foot, price per acre, price per lot or site or homesite, price per apartment unit, and price per motel unit. The selection of any one unit depends upon the type of property being appraised. Frontage is commonly used for platted, uniform type residential lots, and square footage and acreage for larger, unplatted tracts, as well as irregularly shaped lots lacking in uniformity. The use of square footage is particularly appropriate in Central Business Districts, where the entire lot typically maintains a consistent level of value and traditional depth adjustments may distort this concept. Commercial properties located along major commercial arteries may also be valued on the square footage basis. The utility of a site will vary with the frontage, width, depth, and overall area. Similarly, the unit land values should be adjusted to account for differences in size and shape between the comparable and the subject property. Since such an adjustment is generally necessary for each lot, it is beneficial that the appraiser adopts and/or develops standardized procedures for adjusting the lot size and the unit values to account for the variations. It is not uncommon for all lots within a development to market at the same price. Should data indicate this, it is necessary to make alterations or adjustments to maintain this value level. In some cases, a “site value” concept has advantages. Site value tables provide uniform pricing of standard sized lots within homogenous neighborhoods or subdivisions. Some of the techniques commonly employed are as follows: ▪ Standard lot sizing techniques provide for the adjustment of the frontage, width, and depth of irregular shaped lots to make the units of measurement more comparable with uniform rectangular lots. Incremental and decremental adjustments can be applied to account for size differences. ▪ Standard Depth Tables provide for the adjustment of front foot unit values to account for variations in depth from a predetermined norm. ▪ Frontage Tables provide for the adjustment of front footage unit values to account for variations in the relative utility value of excessive or insufficient frontage as compared to a predetermined norm. ▪ Acreage or Square Footage Tables provide for the adjustment of unit values to account for variations in the relative utility value of excessive or insufficient land sizes as compared to a predetermined norm. During the process of adjusting comparable sales to account for variations between them and the subject property, the appraiser must exercise great care to include all significant 45 | P a g e Schedule of Values Lincoln County 2027 factors and to properly consider the impact of each of the factors upon the total value. If done properly, the adjusted selling prices of the comparable properties will establish a range in value in which the value of the subject property is expected to fall. Further analysis of the factors should enable the appraiser to narrow the range down to the value level that is most applicable to the subject property. THE LAND RESIDUAL TECHNIQUE In the absence of sufficient market data, income-producing land may be valued by determining the portion of the net income attributable to the land and capitalizing the net income into an indication of value. The procedure is as follows: 1. Determine the highest and best use of the land, which may be either its present use or hypothetical use. 2. Estimate the net income which the property can be expected to yield. 3. Estimate the replacement cost new of the improvements. 4. If the case involves the present use, estimate the proper allowance for depreciation, and deduct that amount from the replacement cost new of the improvements to arrive at an estimate of their depreciated value. 5. Develop appropriate capitalization rates. 6. Calculate the income requirements of the improvements and deduct the amount from the total net income to derive that portion of the income that can be said to be attributable to the land. 7. Capitalize the residual income attributable to the land to an indication of value. RATIO METHOD A technique useful for establishing broad indications of land values is a “typical” allocation or ratio method. In this technique, the ratio of the land value to the total value of improved properties is observed in situations where there is good market and/or cost evidence to support both the land values and total values. This market abstracted ratio is then applied to similar properties where the total values are known, but the allocation of values between land and improvements are not known. The ratio is usually expressed as a percentage that represents the portion of the total improved value that is land value, or as a formula: 46 | P a g e Schedule of Values Lincoln County 2027 Total Land Value x 100% = % Land Is of Total Property Value Total Property Value This technique can be used on most types of improved properties, with important exceptions being farms and recreational facilities, provided that the necessary market and/or cost information is available. In actual practice, available market information limits this technique primarily to residential properties and, to a much lesser extent, commercial and industrial properties such as apartments, offices, shopping centers, and warehouses. The ratio technique cannot give exact indications of land values. It is nevertheless useful, especially when used in conjunction with other techniques of estimating land values because it provides an indication of the reasonableness of the final estimate of land value. The ratio should be extracted from available market information and applied to closely similar properties. It should be noted that any factor that affects the value could also affect the ratio of values. Zoning is particularly important because it may require more improvements or fewer improvements to be made to the land or may require a larger or smaller minimum size. This tends to have a bearing on the land values and may influence the ratio of values considerably from community to community. 47 | P a g e Schedule of Values Lincoln County 2027 The following is an example of a residential land valuation situation: Market information derived from an active new subdivision Typical Lot Sale Price (most lots equivalent) $15,000 Improved Lot Sales (range) $65,000 to $75,000 $15,000 15,000 Indicated Ratio To X 100% 20% to 23% 75,000 65,000 Similar subdivision, but 100% developed Typical Lot Sale Price (most lots equivalent) Unavailable Improved Lot Sales (range) $85,000 to $105,000 Broadest Indicated Range of Lot Values $17,000 to $24,150 (20% x $85,000 to 23% x $105,000) Narrowest Indicated Range of Lot Values $19,550 to $21,000 (23% x $85,000 to 20% x $105,000) If most lots vary little and are judged equivalent, but the improvements vary somewhat, the narrowest range is appropriate. Most subdivisions exhibit a combination of the two ranges, showing a narrow typical range, but a wider actual range of land values. 48 | P a g e Schedule of Values Lincoln County 2027 MASS APPRAISING In preceding sections, we have outlined the fundamental concepts, principles, and valuation techniques underlying the Appraisal Process. We will now approach the problem at hand . . . the reappraisal of certain specified real property within a total taxing jurisdiction, be it an entire county or any subdivision thereof . . . and to structure a systematic mass appraisal program to effect the appraisal of said properties in such a way as to yield valid, accurate, and equitable property valuations at a reasonable cost dictated by budgetary limitations, and within a time span totally compatible with assessing administration needs. The key elements of the program are validity, accuracy, equity, economy, and efficiency. To be effective, the program must… ▪ incorporate the application of proven and professionally acceptable techniques and procedures ▪ provide for the compilation of complete and accurate data and the processing of that data into an indication of value approximating the prices being paid in the marketplace as of the effective assessment date ▪ provide the necessary standardization measures and quality controls essential to promoting and maintaining uniformity throughout the jurisdiction ▪ provide the appropriate production controls necessary to execute each phase of the operation in accordance with a carefully planned budget and work schedule ▪ provide techniques especially designed to streamline each phase of the operation, eliminating superfluous functions, and reducing the complexities inherent in the Appraisal Process to more simplified but equally effective procedures. In summary, the objective of an individual appraisal is to arrive at an opinion of value, the key elements being the validity of the approach and the accuracy of the estimate. The objective of a mass appraisal for tax purposes is essentially the same. However, in addition to being valid and accurate, the value of each property must be equitable to that of other property and, what's more, these valid, accurate, and equitable valuations must be generated as economically and efficiently as possible. 49 | P a g e Schedule of Values Lincoln County 2027 OVERVIEW The prime objective of mass appraisals for tax purposes is to equalize property values. Not only must the value of one residential property be equalized with another, but it must also be equalized with each agricultural, commercial, and industrial property within the political unit. The common denominator or the basis for equalization is market value as set forth by N.C.G.S. 105-283 . . . “ … the price estimated in terms of money at which the property would change hands between a willing and financially able buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of all the uses to which the property is adapted and for which it is capable of being used.” The job of the appraiser is to arrive at a reasonable estimate of that justified price. To accomplish this, the coordination of approaches to the valuation of the various classes of property must be made so that they are related one to another in such a way as to reflect the motives of the prospective purchasers of each type of property. A prospective purchaser of a residential property is primarily interested in its capacity to render service to the family as a place to live. Its location, size, quality, design, age, condition, desirability and usefulness are the primary factors to be considered in making a selection. By relying heavily upon powers of observation and inherent judgment, knowing what could be afforded and simply comparing what is available, one property will eventually stand out to be more appealing than another. So, it is likewise the job of the appraisers to evaluate the relative degree of appeal of one property to another for tax purposes. The prospective purchaser of agricultural property will be motivated somewhat differently. The primary interest will be in the productive capabilities of the land. It is reasonable to assume that the purchaser will be familiar, at least in a general way, with the productive capacity of the farm. It might be expected that the prudent investor will have compared one farm's capabilities to another. Accordingly, the appraiser for local tax equalization purposes must rely heavily upon prices being paid for comparable farmland in the community. The prospective purchaser of commercial property is primarily interested in the potential net return and tax shelter the property will provide. That price which is justified to pay for the property is a measure of the prospects for a net return from the investment. Real estate, as an investment then, must not only compete with other real estate, but also with stocks, bonds, annuities, and other similar investment areas. The commercial appraiser must explore the rental market and compare the income-producing capabilities of one property to another. 50 | P a g e Schedule of Values Lincoln County 2027 The prospective purchaser of industrial property is primarily interested in the overall utility value of the property. Of course, in evaluating the overall utility, individual consideration must be given to the land and each improvement thereon. Industrial buildings are generally of special purpose design and, as such, cannot readily be separated from the operation for which they were built. As long as the operation remains effective, the building will hold its value; if the operation becomes obsolete, the building likewise becomes obsolete. The upper limit of its value is its replacement cost new, and its present-day value is some measure of its present-day usefulness in relation to the purpose for which it was originally designed. Any effective approach to valuations for tax purposes must be patterned in such a way as to reflect the “modus operandi” of buyers in the marketplace. As indicated above, the motives influencing prospective buyers tend to differ depending upon the type of property involved. It follows that the appraiser's approach to value must differ accordingly. The residential appraiser must rely heavily upon the market data approach to value … analyzing the selling prices of comparable properties and considering the very same factors of location, size, quality, design, age, condition, desirability, and usefulness, which were considered by the buyer. The commercial appraiser will find that, since commercial property is not bought and sold as frequently as is residential property, the sales market cannot be readily established. By relying heavily on the Income Approach to value, the net economic rent that the property is capable of yielding can be determined, and the amount of investment required to affect that net return at a rate commensurate with that normally expected by investors could also be determined. This can only be achieved through a comprehensive study of the income- producing capabilities of comparable properties and an analysis of present-day investment practices. The industrial appraiser will not be able to rely on the market data approach because of the absence of comparable sales, each sale generally reflecting different circumstances and conditions. Also, it is not possible to rely upon the Income Approach because of the absence of comparable investments, and because of the inability to accurately determine the contribution of each unit of production to the overall income produced. Therefore, by relying heavily on the Cost Approach to value, a determination must be made of the upper limit or replacement cost new of each improvement and the subsequent loss of value resulting overall from physical, functional and economic factors. The fact that there are different approaches to value, some of which are more applicable to one class of property than to another does not, by any means, preclude equalization between classes. Remember that the objective in each approach is to arrive at a price at 51 | P a g e Schedule of Values Lincoln County 2027 which an informed and knowledgeable person, fully aware of the existence of competing properties and not being compelled to act, is justified in paying for any one particular property. Underlying and fundamental to each of the approaches is the comparison process. Regardless of whether the principal criteria are actual selling prices, income- producing capabilities, or functional usefulness, like properties must be treated alike. The primary objective is equalization, which seeks to ensure the equitable distribution of the tax burden among property owners. The various approaches to value, although valid in themselves, must nevertheless be coordinated one to the other in such a way as to produce values that are not only valid and accurate, but are also equitable. The same “yardstick” of values must be applied to all properties and must be applied by systematic and uniform procedures. It is obvious that sales on all properties are not required to effectively apply the market data approach. The same is true regarding any other approach. What is needed is a comprehensive record of all the significant physical and economic characteristics of each property to compare the properties of “unknown” values with the properties of “known” values. All significant differences between properties must in some measure, either positively or negatively, be reflected in the final estimate of value. Each property must be given individual treatment, but the treatment must be uniform and standardized, and essentially no different than that given to any other property. All the factors affecting value must be analyzed and evaluated for each property within the entire political unit. It is only by doing this that equalization between properties and between classes of properties can be ultimately affected. All this, at best, is an oversimplification of the equalization process underlying the entire Mass Appraisal Program. The program itself consists of various operational phases, and its success depends primarily upon the systematic coordination of collecting and recording data, analyzing the data, and processing the data to an indication of value. SALES RATIO General Discussion: One of the most used methods of analyzing sales is the sales ratio. Property tax is an ad valorem tax (according to value) and, because value is defined as “market” value and because market value is evaluated by measuring “sales” of properties in the marketplace, then the quality of a group of assessments may be evaluated by measuring their ratio to the real estate sales from the same geographical area as of the assessments. Assessment/sales ratio study is the comparing of appraised value to sale prices. 52 | P a g e Schedule of Values Lincoln County 2027 The word “ratio” is a statistical term that, when numerically expressed, simplifies the comparison of magnitude of numbers. They are various types of ratios, distinguished by their base of comparison, that is the denominator of the fraction, and they may take the form of fractions, proportions, percentages or rates. Some of the leading types of ratios are the result of comparing a part to its whole, comparing a part to a part within a whole, or comparing one whole to another whole. The assessor’s office’s main purpose is to value all properties uniformly and equitably. Therefore, it is incumbent on the appraiser to place property values that represent the current probable selling price or some constant fraction thereof. One of the most meaningful and useful tools in measuring the quality of real property appraisal is the ratio study. The measurements (commonly referred to as ratio studies and median assessment levels) can be either in the aggregate or sectional and are found by comparing the value placed on properties which have sold with the amount for which the property sold. Caution should be exercised when reviewing sales ratio results, as the properties included in the sales file may not constitute a representative sample of the broader property class within the County. Consequently, the calculated results may be subject to bias, even when carefully weighted, because certain significant property classes are seldom, if ever, sold and therefore may be underrepresented in the sales data. 53 | P a g e Schedule of Values Lincoln County 2027 DATA INVENTORY Basic to the appraisal process is the collecting and recording of pertinent data. The data will consist of general supporting data, referring to the data required to develop the elements essential to the valuation process; neighborhood data, referring to information regarding predelineated neighborhood units; and specific property data, referring to the data compiled for each parcel of property to be processed into an indication of value by the cost, market and/or Income Approach. The data must be comprehensive enough to allow for the adequate consideration of all factors that significantly affect property values. In keeping with the economics of a mass appraisal program, it is costly and impractical to collect, maintain, and process data of no or marginal contribution to the desired objectives. The axiom “too much data is better than insufficient data” does not apply. What does apply is the proper amount of data, no more or no less, which is necessary to provide the database necessary to generate the desired output. Cost data must be sufficient to develop or select and validate the pricing schedules and cost tables required to compute the replacement cost new of improvements needed to apply the Cost Approach to value. All data pertaining to the cost of total buildings in place should include the parcel identification number, property address, and date of completion, construction cost, builder’s name, information source, structural characteristics, and other information pertinent to analysis. Cost information may be recorded on the same form (assigned property record card) used to record specific property data. The sources for obtaining cost data include contractors, suppliers, and developers, as well as cost services and industry research. It is advisable that appraisers attempt to verify cost data in conjunction with new construction listings. Sales data must be sufficient to provide a representative sampling of comparable sales needed to apply the market data approach, to derive unit land values and depreciation indicators needed to apply the Cost Approach, and to derive gross rent multipliers and elements of the capitalization rate needed to apply the Income Approach. All sales data should include the parcel identification number, property qualification code, month and year of sale, selling price, source of information, i.e., buyer, seller, agent, or fee, and a reliable judgment as to whether the sale is representative of a true arm's-length transaction. Sales data should be recorded on the same form (assigned property record card) used to record specific property data and verified during the property-listing phase. 54 | P a g e Schedule of Values Lincoln County 2027 Sources for obtaining sales data include the County Register of Deeds Office, Multiple Listing Service (MLS), fee appraisers, and real estate transfer returns. Additional sources may include developers, real estate brokers, lending institutions, and individual property owners, particularly during the listing and verification phases of the appraisal process. Income and expense data must be sufficient to derive capitalization rates and accurate estimates of net income needed to apply the Income Approach. Income and expense data should include both general data regarding existing financial attitudes and practices, and specific data regarding the actual incomes and expenses realized by specific properties. The general data should include such information as equity return expectations, gross rentals, vacancy and operating cost expectations and trends, prevailing property management costs, and prevailing mortgage costs. Specific data should include the parcel identification number, property address (or building ID), source of information, the amount of equity, the mortgage and lease terms, and an itemized account of the annual gross income, vacancy loss, and operating expenses for the most recent two-year to three-year period. The general data should be documented in conjunction with the development of capitalization procedural guidelines. The specific data, since it is often considered confidential and not subject to public access, should be recorded on special forms, designed in such a way as to accommodate the property owner or agent thereof in submitting the required information. The forms should also have space reserved for the appraiser's analysis and calculations. Sources for obtaining general financial data include investors, lending institutions, fee appraisers, property managers, subscription services, and industry research. Specific property-level financial data are obtained from individual property owners and/or tenants, particularly during the listing and verification phases of the appraisal process. Neighborhood data. At the earliest feasible time during the data inventory phase of the operation, and after a thorough consideration of the living environment and economic characteristics of the overall county, or any political subdivision thereof, the appraisal staff should delineate the larger jurisdictions into smaller “neighborhood units,” each exhibiting a high degree of homogeneity in residential amenities, land use, economic trends, and housing characteristics such as structural quality, age, and condition. The neighborhood delineation should be outlined on an index (or comparable) map, and each assigned an arbitrary Neighborhood Identification Code which, when combined with the parcel identification numbering system, will serve to uniquely identify it from other neighborhoods. 55 | P a g e Schedule of Values Lincoln County 2027 Neighborhood data must be comprehensive enough to permit the adequate consideration of value- influencing factors to determine the variations in selling prices and income yields attributable to benefits arising from the location of one specific property as compared to another. The data should include the taxing district, the school district, the neighborhood identification code, special reasons for delineation (other than obvious physical and economic boundaries), and various neighborhood characteristics such as the type (urban, suburban, etc.), the predominant class (residential, commercial, etc.), the trend (whether it is declining, improving, or relatively stable), its accessibility to the central business district, shopping centers, interstate highways and primary transportation terminals, its housing characteristics, the estimated range of selling prices for residentially improved properties, and a rating of its relative durability. All neighborhood data should be recorded on a specially designed form during the delineation phase. The existing property record card can serve in this capacity as it contains the current data on file. Specific property data must be comprehensive enough to provide the data base needed to process each parcel of property to an indication of value, to generate the tax roll requirements, to generate other specified output, and to provide the assessing officials with a permanent record to facilitate maintenance functions and to administer taxpayer assistance and grievance proceedings. The data should include the parcel identification number, ownership and mailing address, legal description, property address, property classification code, local zoning code, neighborhood identification code, site characteristics, and structural characteristics. All the data should be recorded on a single, specially designed property record card customized to meet individual assessing needs. Each card should be designed and formatted in such a way as to accommodate the listing of information and to facilitate data processing. In addition to the property data items noted above, space must be provided for a building sketch, land and building computations, summarization, and memoranda. In keeping with the economy and efficiency of a mass appraisal program, the card should be formatted to minimize writing by including enough site and structural descriptive data that can be checked and/or circled. The descriptive data should be comprehensive enough to be suitable for listing any type of land and improvement data regardless of class, except for large industrial, institutional, and utility complexes that require lengthy descriptions. In these cases, it will generally be necessary to use a specially designed supplemental property record document, keyed and indexed to the corresponding property record card. The property record card should be made a permanent part of the assessing system, and used not only in conjunction with the revaluation, but also to update the property records for subsequent assessments. The specific property data should be compiled from existing assessing records and field inspections. The parcel identification number, ownership, mailing address, and legal description 56 | P a g e Schedule of Values Lincoln County 2027 may be obtained from existing tax rolls. Property classification codes may also be obtained from existing tax rolls (whenever available) and verified in the field. Local zoning codes may be obtained from existing zoning maps. Neighborhood identification codes may be obtained from the neighborhood delineation maps. Lot sizes and acreage may be obtained from existing tax maps. The property address and the site and structural characteristics may be obtained by making a physical inspection of each property. In transferring lot sizes from the tax maps to the property record cards, the personnel performing the tasks must be specially trained in the use of standardized lot sizing techniques and depth tables may be used, which are necessary to adjust irregular shaped lots and abnormal depths to account for variations from predetermined norms. Regarding acreage, the total acreage may be transferred, but the acreage breakdowns affecting the valuation of agricultural, residential, forestry, commercial, and industrial properties must be obtained in the field from the property owner and verified by personal observation and aerial pictometry. Field inspections or the listing of new construction must be conducted by the appraiser or qualified data collectors under the close supervision of the appraisal staff. During any inspection, the following procedures must be adhered to. ▪ Identification of the property ▪ Viewing the property classification and zoning codes ▪ Recording the property address ▪ If possible, interview the occupant of the building and record all pertinent data ▪ Interior inspection of the building when requested by the property owner or when permissible ▪ Measuring and inspecting the exterior of the building, as well as all other improvements on the property, and recording the story height and the dimensions and/or size of each ▪ Recording a sketch of the principal building(s), consisting of a plan view showing the main portion of the structure along with any significant attached exterior features, such as porches, etc. All components must be identified and the exterior dimensions shown for each ▪ Selection of and recording the proper quality grade of the improvement. ▪ Selection of and recording the proper adjustments for all field priced items. ▪ Reviewing the property record card for completeness and accuracy. 57 | P a g e Schedule of Values Lincoln County 2027 After the field inspection is completed, the property record cards must be submitted to clerical personnel to review the cards for completeness, calculate the areas, and make any necessary mathematical extensions. Complete and accurate data is essential to the program. Definite standardized data collection and recording procedures must be followed if these objectives are to be met. PROCESSING THE DATA This phase of the operation involves the analysis of data compiled during the data inventory phase and the processing of that data to an indication of value using the Cost Approach, Sales Comparison Approach, and Income Approach. During the analytical phase, it will be necessary to analyze cost, market, and income data in order to provide a basis for validating the appropriate cost schedules and tables required to compute the replacement cost new of all buildings and structures; for establishing comparative unit land values for each class of property; for establishing the appropriate depreciation tables and guidelines for each class of property; and for developing gross rent multipliers, economic rent and operating expense norms, capitalization rate tables and other related standards and norms required to effect the mass appraisal of all the property within an entire political unit on an equitable basis. After establishing the appropriate standards and norms, it remains to analyze the specific data compiled for each property by giving due consideration to the factors influencing the value of that particular property as compared to another, and then to process the data into an indication of value by employing the techniques described in the section of the manual dealing with the application of the traditional approaches to value. Any one, or all three of the approaches, if applied properly, should lead to an indication of market value; of primary concern is applying the approaches on an equitable basis. This will require the coordinated effort of several individual appraisers, each appraiser acting as a member of a team, with the team effort directed toward a valid, accurate and equitable appraisal of each property within the political unit. As parcels are reviewed during this phase, the following procedures should be followed, as applicable: ▪ Verification of the characteristics recorded on the property record card. ▪ Certification that the proper schedules and cost tables were used in computing the replacement cost of each building and structure. ▪ Determination of the proper quality grade and design factor to be applied to each building to account for variations from the base specifications. 58 | P a g e Schedule of Values Lincoln County 2027 ▪ Making a judgment of the overall condition, desirability, and usefulness of each improvement to arrive at a sound allowance for depreciation. ▪ Capitalization of net income capabilities into an indication of value to determine the loss of value attributable to functional and economic obsolescence. ▪ Addition of the depreciated value of all improvements to the land value and reviewing the total property value in relation to the value of comparable properties. At the completion of the review phase, the property record cards must be, once again, submitted to clerical personnel for final mathematical calculations and extensions and a final check for completeness and accuracy. Once the final values have been established for each property, the entire program should be evaluated in terms of its primary objectives.... do the values approximate a satisfactory level of market value and, what's more important, are the values equitable? Satisfactory answers to these questions can best be obtained through a statistical analysis of recent sales in an appraisal-to-sale ratio study, if sufficient sales are available. To perform the study, it is necessary to take a representative sample of recent valid sales and compute the appraisal-to-sale ratio for each of the sales. If the sample is representative, the computed median appraisal-to-sale ratio will give an indication of how close the appraisals within each district approximate the market value. This is providing, of course, that the sales included represent true market transactions. It is then necessary to determine the deviation of each individual appraisal-to-sale ratio from the median ratio and to compute either the average or the standard deviation, which will give an indication of the degree of equity within each individual district. What remains then is to compare the statistical measures across property classes to determine those areas, if any, which need to be further investigated, revising the appraisal, if necessary, to attain a satisfactory level of value and equity throughout the entire jurisdiction. The techniques and procedures set forth herein, if applied skillfully, should yield highly accurate and equitable property valuations, and should provide a sound property tax base. It should be noted, however, that no program, regardless of how skillfully administered, can ever be expected to be error free. The appraisal must be fine-tuned, and this can best be done by giving the taxpayer an opportunity to question the value placed upon their property and to produce evidence that the value is inaccurate or inequitable. During this time, the significant errors will be brought to light, and taking the proper corrective action will serve to further the objectives of the program. What's important in the final analysis is to use all these measures as well as any other resources available to affect the highest degree of accuracy and equity possible. 59 | P a g e Schedule of Values Lincoln County 2027 OPERATING STATEMENT (INCOME & EXPENSE) The Operating Statement (I&E) is designed to collect and analyze income and expense information on income-producing properties. With this information, the appraiser can estimate value through capitalization of income. The Operating Statement is divided into four major categories: Market Data, Cost Data, Remodeling Data, and Income and Expense Data. The Income and Expense area of the statement is divided into three specialized areas: Apartments, General Commercial (retail, warehousing, industry), and Office Buildings. The purpose of the specific income and expense areas is to allow the property owner/manager space to enter applicable income, expense, and amenity data. MARKET DATA Space is provided to enter any sales information for both vacant and improved parcels. In addition, space is provided to enter the value of any personal property, inventories, or licenses that may have been included in the purchase price. Also, space is provided to enter the percent of mortgage, mortgage term, and interest rate. COST DATA Space is provided to enter any construction cost information that is available concerning the subject property. When possible, sizes of additions, paving, etc., should be entered under the comments area. REMODELING DATA Space is provided to enter the cost and a description of significant remodeling that has been associated with the building, the year of the remodeling, and whether the cost was attributable to the owner or a tenant. APARTMENTS – OPERATING STATEMENT Space is provided to enter a detailed current quoted rent per month by unit type. In instances where rents are computed on a square foot basis, space is provided to note the total apartment complex rentable area. Project amenities and unit built-ins should be noted as to what is included/available in the apartment complex. The owner’s expense statement includes areas to enter what is paid by the owner and the costs associated for a two-year period. The occupancy percentage should be entered into the space provided. Space is also provided to enter the number of garage/carport spaces available and the monthly rental charge, if applicable. 60 | P a g e Schedule of Values Lincoln County 2027 GENERAL RETAIL, WAREHOUSING, INDUSTRIAL, OTHER – OPERATING STATEMENT This area is designed to enter income and expense amounts on general retail (retail sales), small industrial, and warehouse type facilities. Space is provided to enter the tenants, floor level, lease term, and floor area of the lease. Expenses are broken down into the general areas of insurance, taxes, maintenance, and utilities. Actual expense should be entered when available. OFFICE BUILDING – OPERATING STATEMENT This area of the operating statement is to enter the applicable income and expense information for office buildings. Space is provided to enter the building total gross area, net rentable area, and lease terms on a total gross or net rentable area. The income statement is designed to quote rent per square foot, based on floor level, and whether escalation of rental clause is included. Expenses are broken down into the general areas of insurance, taxes, maintenance, and utilities. Actual expense should be entered when available. 61 | P a g e Schedule of Values Lincoln County 2027 REAL PROPERTY VS. PERSONAL PROPERTY § 105-273. Definitions (13) "Real property," "real estate," and "land" mean not only the land itself, but also buildings, structures, improvements, and permanent fixtures on the land, and all rights and privileges belonging or in any way appertaining to the property. (14) "Tangible personal property" means all personal property that is not intangible and that is not permanently affixed to real property. In general, machinery and equipment used primarily as part of a manufacturing process (process equipment) is taken as Personal Property. Machinery and equipment which is part of the land or building improvement is taken as Real Property. Item Real Personal Acoustical fire-resistant drapes & curtains XX (commercial/industrial) Air Conditioning - building air conditioning, for comfort of XX occupants, built-in Air Conditioning - manufacturing / product XX Air Conditioning - window units, that are used in data XX processing rooms and in manufacturing processing Airplanes XX Alarm system (security or fire) and wiring XX Asphalt plants - batch mix, etc., Moveable XX ATM - all equipment and self-standing booths XX Auto exhaust systems - built-in floor or ceiling XX Auto exhaust systems - flexible tube type XX Awnings XX Balers (paper, cardboard, etc.) XX Bank teller counters - service area and related XX XX Bank teller lockers - moveable or built-in XX Bar and bar equipment (moveable or built-in) XX XX Billboards XX 62 | P a g e Schedule of Values Lincoln County 2027 Boats and motors - all XX Boiler - for service of building XX Boiler - primarily for process XX Bowling alley lanes XX Broadcasting equipment XX C.I.P. (construction in progress) equipment & materials XX Cabinets XX XX Cable TV distribution systems XX Cable TV equipment and wiring XX Cable TV subscriber connections XX Camera equipment XX Canopies - Fabric, Vinyl or Plastic XX Canopies - Generally XX Canopy Lighting XX Car Wash - all equipment, filters and tanks XX Carpet - installed XX Catwalks XX Chairs - all types XX Closed circuit TV XX Cold storage - built-in cold storage rooms XX Cold storage - refrigeration equipment XX Compressed air or gas systems (other than building heat) XX Computer room a/c XX Computer room raised floor XX Computers and data lines XX Concrete plant - electronic mixing, conveyors, tanks, etc. XX Construction and grading equipment (non-licensed vehicles, etc.) XX Control systems - building and equipment XX 63 | P a g e Schedule of Values Lincoln County 2027 Conveyors and material handling systems XX Cooking equipment (restaurant, etc.) XX Coolers - walk-in or self-standing XX Cooling towers - primary use for building XX Cooling towers - primary use in manufacturing XX Dairy processing plants - all process items XX Dance floors XX Data processing equipment - all items XX Deli equipment XX Desks - all XX Diagnostic center equipment - moveable or built in XX Display cases - moveable or built-in XX Dock levelers XX Drapes and curtains, blinds, etc. XX Drive-thru windows - all XX Drying systems (special heating in process system) XX Dumpsters XX Dumpster Enclosures (Fence, Walls, Gates) XX Dust catchers, control systems, etc. XX Electronic control systems (weighting, mixing, etc.) XX Elevators / Escalators XX Fans - freestanding XX Farm equipment XX XX Fencing - inside XX Fencing - outside XX Flagpole XX Floors, computer room XX Foundations for machinery & equipment XX 64 | P a g e Schedule of Values Lincoln County 2027 Freight charges XX Fuels - not for sale (list as supplies) XX Furnaces - steel mill process, etc., foundry XX Furniture and fixtures XX Gazebos XX Golf course & improvements (drainage / irrigation) XX Grain bins XX XX Greenhouses (all except glass) XX Greenhouses - Glass XX Greenhouses benches, heating systems, etc. XX Heating systems, process XX Hoppers - metal bin type XX Hospital systems - oxygen, public address, emergency electric, XX closed T.V. call system, autoclave, etc. Hot air balloons XX Hotel/Motel televisions & wiring XX Humidifiers, process XX Incinerators - moveable, metal type XX Industrial piping, process XX Installation cost XX Irrigation equipment XX Kiln heating system XX Kilns - metal tunnel, moveable XX Laboratory equipment XX Lagoons / settling ponds XX Laundry bins XX Law and professional libraries (books, etc.) XX Leased equipment - lesser or lessee possession XX 65 | P a g e Schedule of Values Lincoln County 2027 Leasehold improvements (list in detail yearly to determine real or XX XX personal) Lifts - other than elevators XX Lighting - portable, moveable, special XX Lighting – parking, yard, grounds, perimeter lighting XX Machinery and equipment XX Medical equipment XX Milk handling - milking, cooling, piping, storage XX Mineral rights XX Mirrors (other than bathroom) XX Mobile home - single wide, double wide, triple wide XX Mobile home - single wide, double wide, triple wide – meets XX definition of N.C.G.S. 105-273(13) Monitoring systems - building or equipment XX Night depository XX Office equipment - all XX Oil company equipment - pumps, supplies, etc. XX Ovens - processing / manufacturing XX Overhead conveyor systems XX Package and labeling equipment XX Painting - interior, commercial XX Paving XX Piping systems - process piping XX Playground equipment - all XX Pneumatic tube systems XX Portable buildings (greenhouses, constructions, etc. XX Power generator systems (auxiliary emergency, etc.) XX Power house or plant XX Power transformers - equipment XX 66 | P a g e Schedule of Values Lincoln County 2027 Public address systems (intercom, music, etc.) XX Railroad sidings (other than railroad-owned XX Refrigeration systems - compressors, etc. XX Repairs - building XX Repairs (Major) - equipment (50% cost) XX Restaurant furniture (incl. attached to floor or building) XX Restaurant/kitchen equip. - vent hoods, sinks, etc. (commercial) XX Returnable containers XX Rock crusher XX Roll-up doors (inside wall) XX Roll-up doors (outside wall) XX Roofing XX Rooms – self-contained or special purpose (walls, ceiling, floor) XX Safes (wall or self-standing) XX Sales tax XX Satellite dishes (all wiring & installation to TV & equipment XX Scale houses (unless portable) XX Scales XX Screens - drive-in, outdoor XX Screens - movie, indoor XX Seats - theater XX Service station equipment - pumps, tanks, lifts XX Sewer systems XX Shelving XX Signs - all types (including billboards, etc.) XX Software - capitalized XX Sound projection equipment XX Sound systems XX 67 | P a g e Schedule of Values Lincoln County 2027 Spare parts - list as supplies XX Speakers - Built-in or freestanding XX Spray booths XX Sprinkler system - attached to product storage racks XX Sprinkler system - fire protection (building) XX Supplies (office and other) XX Swimming pools - inground or indoor XX XX Switchboard (motel, etc., when not owned by utility XX Tanks - permanently affixed structure, etc. (e.g., bulk plant) XX Tanks - manufacturing, process, etc. XX Tanks - service station, underground fuel XX Telephone systems and wiring - private XX Tents XX Tooling, dies, molds XX Towers - microwave and equipment, wiring and foundation XX Towers - TV, radio, CATV, two-way radio, wiring and XX foundation Transportation cost - all XX Tunnels - unless part of process system XX Upgrades to equipment XX Vacuum system, process XX Vault XX Vault door, inner gates, vents and equipment XX Vent fans - freestanding XX Ventilation systems - general building XX Ventilation systems - manufacturing, process, etc. XX Video tapes / movies / reel movies XX Wall covering XX Walls - Partitions, moveable and room dividers XX 68 | P a g e Schedule of Values Lincoln County 2027 Water coolers - all XX Water lines - for process, above or below ground XX Water systems - residential or general building XX XX Water tanks, process equipment XX Whirlpool / Jacuzzi / Hot tubs XX XX Wind tunnel equipment XX Wiring - power wiring for machinery and equipment XX 69 | P a g e Schedule of Values Lincoln County 2027 ESTIMATING REPLACEMENT COST NEW The informed buyer is not justified in paying anything more for a property than what it would cost him to acquire an equally desirable substitute property. Likewise, the upper limit of value of most improvements is the cost of reproducing an equally desirable substitute improvement. It follows, then, that a uniform starting point for an Equalization Program is to determine the Replacement Cost New of each improvement. REPLACEMENT COST Replacement Cost is the current cost of producing an improvement of equal utility to the subject property; it may or may not be the cost of reproducing a replica property. The distinction being drawn is one between Replacement Cost, which refers to a substitute property of equal utility, as opposed to Reproduction Cost, which refers to a substitute replica property. The Replacement Cost of an improvement includes the total cost of construction incurred by the builder, whether preliminary to, during, or after completion of its construction. Among these are materials, labor, all subcontracts, builder's overhead and profit, architectural and engineering fees, consultation fees, survey and permit fees, legal fees, taxes, insurance and the cost of interim financing. PRICING SCHEDULES Pricing schedules and related cost tables are included in this manual to assist the appraiser in arriving at accurate estimation of Replacement Cost New. They have been developed by applying unit-in-place costs to the construction of specified hypothetical or model buildings. Application of the schedules involves the selection of the model which most nearly resembles the subject building and adjusting its price to compensate for all significant variations. Pricing schedules are included for various types of Residential, Agricultural, Institutional, Commercial and Industrial structures. Cost adjustments for the variations which are most frequently encountered in a particular type of building are included. Adjustments for other variations may be made by using either the other Feature Cost Tables or other appropriate schedules. 70 | P a g e Schedule of Values Lincoln County 2027 SELECTING THE PROPER QUALITY GRADE The quality of materials, caliber of workmanship, and complexity of design are among the most significant variables to consider when estimating the replacement cost of a structure. Two buildings may be constructed from the same general plans, provide similar facilities, and contain comparable features, yet have substantially different replacement costs due to differences in the quality of materials, workmanship, and design. For example, a dwelling constructed with high-quality materials, superior workmanship, and more complex design elements may cost more than twice as much to replace as a dwelling with the same floor plan and features but constructed with lower-quality materials, less-skilled workmanship, and simpler design. The schedules included in this manual have been developed to provide the appraiser with a range of grades comprehensive enough to distinguish all significant variations in the quality of materials, workmanship and design which may be encountered. The basic specifications for each grade remain relatively consistent throughout, and the primary criterion for establishing the grade being the overall quality of materials, workmanship, and design. Most buildings erected fall within a definite class of construction, involving the use of average quality of materials with average quality of workmanship. This type of construction being the most common, it can readily be distinguished by the layman as well as the professional appraiser. Consequently, better or inferior quality of construction can be comparatively observed. The quality grading system and pricing schedules in this manual are designed to reflect this fundamental principle. The basic grade represents the typical cost of construction for a structure with a simple floor plan, average-quality materials, and average-quality workmanship. The principal Quality Grade classifications are as follows: Grade AAA Exceptional Quality Grade AA Excellent Quality Grade A Very Good Quality Grade B Good Quality Grade C Average Quality Grade D Fair Quality Grade E Low Quality The seven grades listed above are intended to encompass the full range of construction quality, from the lowest-quality construction to the highest-quality construction. 71 | P a g e Schedule of Values Lincoln County 2027 The general quality specifications for each grade are as follows: Buildings generally have an exceptional architectural style and design, constructed with the finest quality materials and custom workmanship. AAA Grade Superior quality interior finish, built-in features, deluxe heating system, plumbing and lighting fixtures. Buildings generally have an excellent architectural style and design, constructed with the finest quality materials and workmanship. Superior AA Grade quality interior finish, built-in features, deluxe heating system, plumbing and lighting fixtures. Architecturally attractive buildings constructed with very good quality materials and workmanship throughout. High-quality interior finish and A Grade built-in features. Deluxe heating system and very good grade plumbing and lighting fixtures. Buildings constructed with good quality materials and above average workmanship throughout. Moderate architectural treatment. Good B Grade quality interior finish and built-in features. Good grade heating, plumbing and lighting fixtures. Buildings constructed with average quality materials and workmanship throughout, conforming to the base specifications used to develop the C Grade pricing schedule. Minimal architectural treatment. Average quality interior finish and built-in features. Standard grade heating, plumbing and lighting fixtures. Buildings constructed with economy quality materials and fair workmanship throughout. Void of architectural treatment. Budget D Grade quality interior finish and few built-in features. Low grade heating, plumbing and lighting fixtures. Buildings constructed with a substandard grade of materials, usually “culls” and “seconds” and inferior workmanship resulting from E Grade unskilled, inexperienced, “do-it-yourself” type labor. Low grade heating, plumbing, and lighting fixtures. To facilitate using this grading system and, again to promote and maintain uniformity in approach, the value relationship of grade to grade as just described has been incorporated into the development of the base specifications relating to each schedule used in the manual. 72 | P a g e Schedule of Values Lincoln County 2027 Note: The appraiser must exercise caution not to confuse the concepts “quality” and “condition” when selecting the proper grade. This is especially applicable to older buildings, wherein a deteriorated condition can have a noticeable effect on their physical appearance. A building will tend to retain its initial grade of construction, regardless of its existing deteriorated condition. The Quality Grade ultimately selected must reflect that original built-in quality and the selection of that grade cannot be influenced in any way by the physical condition of the building. APPLYING THE PROPER GRADE FACTOR Grading would be a relatively simple process if all buildings were built to conform to the quality grade specifications outlined above. The fact is, however, that this ideal condition does not exist. It is not unusual for any conventional building to be built incorporating construction qualities that fall between the established grade levels. The grading system in this manual has been designed in such a way as to provide the appraiser with a method for accounting for such variations by establishing intermediate grades. If the Subject building is judged to be of a better or inferior quality than the actual grade levels, a grade factor of plus (+) or minus (-) should be applied, i.e., C+ would be better than a straight “C” Grade, B- lesser than a straight “B” Grade, etc. There is rarely a clear-cut designation of a specific grade factor. The appraiser will generally select a range, such as C+ to B-, and then weigh the various quality factors exhibited in the construction to select the proper factor. Note: The quality factor ultimately selected should represent a composite judgment of the overall Quality Grade. Generally, the quality of materials and workmanship is consistent throughout the construction of a specific building; however, since this is not always the case, it is frequently necessary to weight the quality of each major component to arrive at the proper “overall” Quality Grade. Equal consideration must also be given to any “Additions” which are constructed of materials and workmanship inconsistent with the quality of the main building. APPLYING THE PROPER MARKET RATIO The Market Ratio Adjustment to the building becomes necessary after all the adjustments to the cost have been completed accurately, but the value still needs to be adjusted to represent the sales market for an appraisal neighborhood. The sales information for the appraisal neighborhood will determine the amount of market adjustment required. These market adjustments may range from 75% to 150%. 73 | P a g e Schedule of Values Lincoln County 2027 PRICING SCHEDULE AND COST TABLES The Pricing Schedules and Cost Tables in this manual are provided to assist the appraiser in arriving at accurate and uniform valuations. Used properly, they should be a valuable tool. Quality valuations, however, are not the product of schedules and tables themselves, but rather of the appraiser’s ability to use them effectively. To bring this about, a thorough understanding of the makeup and the capabilities and limitations of each schedule is essential. The appraiser must know where the specifications for the base prices were derived, the composition of the prices, and the proper techniques and procedures for applying the prices. What’s more important, the appraiser must be able to exercise sound judgment in selecting and using them. It should also be noted that the schedules and tables in the manual have been developed primarily for mass appraisal and tax equalization purposes. They have therefore been designed to provide the appraiser with a straightforward, efficient, and effective method for developing an accurate estimate of replacement cost. To maintain simplicity and practicality in the schedules, techniques, and procedures, it is often necessary to make reasonable compromises from a strictly technical or engineering perspective. Considerable effort has been devoted to developing the schedules to minimize these compromises and limit them to variables that have a minimal impact on the final estimated value of the building. The schedules have been developed to reflect actual building costs and prevailing construction practices. Empirical testing has demonstrated that they are accurate and reliable and, when properly applied, provide an effective means of developing realistic replacement cost estimates. 74 | P a g e Schedule of Values Lincoln County 2027 GENERAL PRICING SCHEDULES RESIDENTIAL QUALITY GRADE OR CLASS As previously stated, the quality of materials, caliber of workmanship, and complexity of design are among the most significant variables to consider when estimating the replacement cost of a structure. The following schedule has been developed to distinguish between variations in cost. This schedule represents the full range of conventional dwelling construction. The basic specifications for each grade are relatively constant; that is, each has a specific type of heating system, two bathrooms, one kitchen unit, and other typical living facilities, but with variable quality of materials and workmanship prevailing. The basic grade represents cost of construction using average quality materials with average workmanship. The majority of dwellings erected fall within one class above and one class below the base grade of C. The layman or professional appraiser can readily distinguish between these classes. The three classes of grade of quality for this group of dwelling have been established as follows: B Good Quality 125% C Average Quality 100% D Fair Quality 85% To justify variation in cost, maintain uniformity and retain complete control throughout the cost range, we have established these base grades. For example, B Grade dwellings are found to have better individual features and interior finish, which reflects approximately 25% higher costs than C Grade. Likewise, the D Grade dwelling would be constructed of approximately 15% less quality than C Grade, due to the type of materials used and workmanship. Consequently, better quality of construction or construction of lesser quality can be comparatively observed. 75 | P a g e Schedule of Values Lincoln County 2027 To cover the entire range of dwelling construction, three additional classes of dwellings above the three base grade dwellings must be considered along with one grade dwelling below the base three grades. The three base grades above are: A Very Good Quality 150% AA Excellent Quality 250% AAA Exceptional Quality 350% The A, AA, and AAA Grade dwelling incorporates the best quality of materials, workmanship and design. Construction costs of AAA Grade dwellings usually run about 350% of the cost of C Grade dwellings. The exceptionally styled, prestige-type mansion, or country estate-type homes, are usually in this class. The AA Grade dwellings having excellent architectural style and design are generally custom-built homes and are approximately 250% of the cost of C Grade dwellings. The A Grade dwellings having superior architectural style and design are generally custom-built homes and are around 150% of the cost of C Grade dwellings. E Grade represents the lowest level of construction quality and is characterized by low- grade materials and basic workmanship. The indicated replacement cost is approximately 55% of the cost of a C Grade dwelling. The seven grades will cover the full range of construction quality, from the lowest-quality construction to the highest-quality construction. BASE SPECIFICATIONS Base prices assume normal construction, mechanical, and other features, such as plumbing, heating, air conditioning, interior finish, framing, elevators, etc., according to the designed building structure type. USE OF GRADE FACTORS The grading method is based on C Grade as standards of quality and design. A factor that is the highest grade level to the lowest grade level is established by means of grade factor multipliers. Since not all dwellings are constructed to fall into one of the precise grade levels with no adjustments, it becomes necessary to further refine our grading system. It is not unusual for conventional houses to be built incorporating qualities that fall above or below these established grades. If the house that is being appraised does not fall exactly 76 | P a g e Schedule of Values Lincoln County 2027 on a specific grade, but should be classified within that grade, the use of Grade Factor Symbols (+ or -) will accomplish this adjustment in the Grade AAA, AA, A, B, C, D, and E Classes. As previously notes, the appraiser must distinguish between “quality” and “condition” when grading older dwellings. Quality grades should reflect the original quality of construction and the replacement cost of the structure as new, regardless of its current physical condition or deterioration. AAA QUALITY DWELLINGS These dwellings are constructed of the finest quality materials and workmanship, exhibiting exceptional, unique and elaborate architecturally styling and treatment, and having all the features typically characteristic of mansion-type homes. BASE SPECIFICATIONS FOUNDATION: Brick or reinforced concrete foundation walls on concrete footings with interior piers. EXTERIOR WALLS: Stone, brick veneer, stucco, log, or frame siding. All exterior walls will be of high quality and constructed with much detail and workmanship. Ample insulation and numerous openings for windows and doors are typical. ROOF: Slate, tile, cedar shake, or architectural asphalt shingles on quality sheathing with well braced rafters having various slopes and ridges. INTERIOR FINISH: The interior of these homes is of the highest custom design and construction with much attention given to fine detail and master craftsmanship. FLOORS: Heavy construction utilizing wood or steel joists and sub floor with the best quality combination of hardwoods, ceramic tile, terrazzo, marble or granite tile, vinyl, or luxurious carpeting. PLUMBING: A combination of high-quality fixtures, high-quality materials, and skilled workmanship. Considered typically and adequate for the type of construction, generally exceeding a total of twelve fixtures. CLIMATE CONTROL: A heating system equal to forced air with ample capacity and insulated ductwork throughout. Air conditioning is included as a part of the specifications; however, this item is considered an add-on item and is excluded from base pricing. ELECTRICAL: Good quality wiring, maximum electrical outlets and expensive light fixtures 77 | P a g e Schedule of Values Lincoln County 2027 AA QUALITY DWELLINGS These homes are architecturally designed and custom built by contractors who specialize in excellent quality construction. Extensive detail is given to ornamentation with the use of good grade materials and skilled craftsmanship. Homes of this quality are in affluent areas that will enhance and benefit the home the most. BASE SPECIFICATIONS FOUNDATION: Brick or reinforced concrete foundation walls on concrete footings with interior piers. EXTERIOR WALLS: Stone, brick veneer, stucco, log, or frame siding. All exterior walls will be of high quality and constructed with much detail and workmanship. Ample insulation and numerous openings for windows and doors are typical. ROOF: Slate, tile, cedar shake, or architectural asphalt shingles on quality sheathing with well braced rafters having various slopes and ridges. INTERIOR FINISH: The interior of these homes is of the highest custom design and construction with much attention given to fine detail and master craftsmanship. FLOORS: Heavy construction utilizing wood or steel joists and sub floor with the best quality combination of hardwoods, ceramic tile, terrazzo, marble or granite tile, vinyl, or luxurious carpeting. PLUMBING: A combination of high-quality fixtures, good quality materials, and skilled workmanship. Considered typically and adequate for the type of construction, generally exceeding a total of twelve fixtures. CLIMATE CONTROL: A heating system equal to forced air with ample capacity and insulated ductwork throughout. Air conditioning is included as a part of the specifications; however, this item is considered an add-on item and is excluded from base pricing. ELECTRICAL: Good quality wiring, maximum electrical outlets and expensive light fixtures. 78 | P a g e Schedule of Values Lincoln County 2027 A QUALITY DWELLINGS These homes are architecturally designed and custom built by contractors who specialize in very good quality construction. Extensive detail is given to ornamentation with the use of good grade materials and skilled craftsmanship. Homes of this type are in areas that are specifically developed for this level of quality. BASE SPECIFICATIONS FOUNDATION: Brick or reinforced concrete foundation walls on concrete footings with interior piers. EXTERIOR WALLS: Stone, brick veneer, stucco, log, or frame siding. All exterior walls will be of good quality and constructed with detail and workmanship. Ample insulation and adequate openings for windows and doors are typical. ROOF: Slate, tile, cedar shake, or architecture asphalt shingles on quality sheathing with well braced rafters having various slopes and ridges. INTERIOR FINISH: The interior of these homes is of good design and good construction with much attention given to detail and good quality craftsmanship. FLOORS: Heavy construction utilizing wood or steel joists and sub floor with a good quality combination of hardwood, ceramic tile, marble or granite tile, vinyl, or good quality carpeting. PLUMBING: A combination of good quality fixtures, good quality materials, and skilled workmanship. Considered typically and adequate for the type of construction, generally having around ten to fourteen fixtures. CLIMATE CONTROL: A heating system equal to forced air with ample capacity and insulated ductwork throughout. Air conditioning is included as a part of the specifications; however, this item is considered an add-on item and is excluded from base pricing. ELECTRICAL: Good quality wiring, maximum electrical outlets and expensive light fixtures. 79 | P a g e Schedule of Values Lincoln County 2027 B QUALITY DWELLINGS These homes are architecturally designed and built by contractors who specialize in good quality construction. Much detail is given to ornamentation with the use of good grade materials and skilled workmanship. Custom-built homes normally fall into this classification. BASE SPECIFICATIONS FOUNDATION: Brick or reinforced concrete foundation walls on concrete footings with interior piers. EXTERIOR WALLS: Stone, brick veneer, stucco, log, or frame siding. All exterior walls will be of good quality and constructed with detail and workmanship. Ample insulation and adequate openings for windows and doors are typical. ROOF: Slate, tile, cedar shake, or architectural asphalt shingles on quality sheathing with well braced rafters having various slopes and ridges. INTERIOR FINISH: The interior of these homes is of good design and good construction and good quality workmanship. FLOORS: Moderate construction utilizing wood or steel joists and sub floor with a good combination of hardwood, ceramic tile, vinyl, or good quality carpeting. PLUMBING: A combination of quality fixtures, quality materials, and skilled workmanship. Considered typically and adequate for this type of construction, generally having around eight to twelve fixtures. CLIMATE CONTROL: A heating system equal to forced air with ample capacity and insulated ductwork throughout. Air conditioning is included as a part of the specifications; however, this item is considered an add-on item and is excluded from base pricing. ELECTRICAL: Good quality wiring, maximum electrical outlets and good light fixtures. 80 | P a g e Schedule of Values Lincoln County 2027 C QUALITY DWELLINGS These homes are designed and built by contractors who specialize in average quality construction. Adequate detail is given to ornamentation with the use of average grade materials and typical workmanship. Homes of this type are in areas that are specifically developed for this level of quality. These homes represent the prevalent quality. BASE SPECIFICATIONS FOUNDATION: Brick or reinforced concrete foundation walls on concrete footings with interior piers. EXTERIOR WALLS: Stone, brick veneer, stucco, log, or frame siding. All exterior walls will be average quality and constructed with detail and workmanship. Ample insulation and adequate openings for windows and doors are typical. ROOF: Tile, cedar shake, or asphalt shingles on average quality sheathing with frame trusses and having typical slopes. INTERIOR FINISH: The interior of these homes is of average design and average construction with attention given to detail and average quality workmanship. FLOORS: Moderate construction utilizing wood or steel joists and sub floor with an average combination of hardwoods, ceramic tile, vinyl, or average quality carpeting. PLUMBING: A combination of average quality fixtures, average quality materials, and workmanship. Considered typically and adequate for the type of construction, generally having around eight to ten fixtures. CLIMATE CONTROL: A heating system equal to forced air with ample capacity and insulated ductwork throughout. Air conditioning is included as a part of the specifications; however, this item is considered an add-on item and is excluded ELECTRICAL: Average quality wiring, adequate electrical outlets and average light fixtures from base pricing. 81 | P a g e Schedule of Values Lincoln County 2027 D QUALITY DWELLINGS These homes are usually built of fair quality materials with expense-saving construction. Economy built homes would normally fall into this classification. BASE SPECIFICATIONS FOUNDATION: Brick or concrete block walls on concrete footings. EXTERIOR WALLS: Stone, brick veneer, stucco, log, or frame siding. All exterior walls are average quality or less and constructed with minimal detail and workmanship. Insulation is minimal and openings for windows and doors are typical. ROOF: Light weight asphalt shingles on adequate sheathing and frame trusses with minimal slope. INTERIOR FINISH: The interior of these homes is below average design and construction with limited attention given to detail and quality workmanship. FLOORS: Low-cost construction utilizing wood or steel joists and sub floor with some hardwood, vinyl, and/or low-quality carpeting. PLUMBING: A combination of fair quality fixtures and typical quality materials and workmanship. Considered typical and adequate for this type of construction, normally having eight fixtures or less. CLIMATE CONTROL: A heating system equal to forced air with minimal capacity and ductwork throughout. Air conditioning is not a part of the specifications. This item is excluded from base pricing and should be added if applicable. ELECTRICAL: Adequate quality wiring, minimal electrical outlets and low-cost light fixtures. 82 | P a g e Schedule of Values Lincoln County 2027 E QUALITY DWELLINGS These homes are constructed of low-quality materials and are usually designed not to exceed minimal building code. Little detail is given to interior or exterior finish. They are usually built for functional use only. Homes of this type are not specifically located within developments but may be built as in-fill housing. BASE SPECIFICATIONS FOUNDATION: Brick or concrete block foundation walls on concrete footings, piers, or concrete slab. EXTERIOR WALLS: Stone, brick veneer, stucco, log, frame siding, or concrete block. All walls are cheaply constructed with minimal detail and workmanship. Little or no insulation and minimal windows and doors are typical. ROOF: Light weight asphalt shingles, roll roofing, or metal on plywood sheathing and framed trusses with minimal slope. INTERIOR FINISH: The interior of these homes is of fair design and construction with low-cost materials. Little attention is given to detail and quality workmanship. FLOORS: Low-cost construction utilizing wood or steel joists and sub floor with some hardwood, vinyl, and/or low-quality carpeting. PLUMBING: A combination of fair quality fixtures, typical quality materials, and workmanship. Considered adequate for the type of construction. Generally, not having more than five fixtures. CLIMATE CONTROL: A heating system equal to forced air with minimal capacity and ductwork throughout. Air conditioning is not a part of the specifications. This item is excluded from base pricing and should be added if applicable. ELECTRICAL: Minimal quality wiring, limited electrical outlets and inexpensive lighting. 83 | P a g e Schedule of Values Lincoln County 2027 MANUFACTURED HOUSING Manufactured housing can be single-wide mobile homes, double-wide mobile homes, multi- sectional homes, or modular homes. Non-modular structures are designed with a steel undercarriage and wheel assemblies for transporting to the site. Most modular homes have wood joist rather than a steel undercarriage. For mass appraisal purposes, both wood joist and steel undercarriage homes that are classified as modular are like stick-built homes. As of June 15, 1976, all manufactured homes built, after that time, must meet or exceed Federal Standards outlined in Title VI, Housing and Community Development Act of 1974. These standards (building codes) are administered by United States Department of Housing and Urban Development (HUD). The HUD code, unlike conventional building codes, requires manufactured homes to be constructed on permanent chassis. Manufactured homes that are not considered modular homes must have a red/silver certification (HUD certification) on the exterior of each transportable section when transported from the factory. Modular homes are constructed on the same state, local and regional building codes (conventional building codes) as site-built homes which exceed the HUD code and have a “State of North Carolina Modular Construction Validating Stamp” on the interior of the home. For mass appraisal purposes all factory constructed homes are to be classified as either manufactured (single-wide, double-wide, etc.) or modular. MODULAR HOME CLASSIFICATION STANDARDS All homes constructed in a factory may be considered a manufactured home, but only those that meet or exceed the North Carolina State Residential Building Code may be considered modular homes. North Carolina General Statute 105-164.3(143) defines modular home as “a factory-built structure that is designed to be used as a dwelling, is manufactured in accordance with the specifications for modular homes under the North Carolina State Residential Building Code (NCSRBC), and bears a seal or label issued by the Department of Insurance pursuant to G.S. 143-139.1”. Also, in addition to NCSRBC, modular homes may be required to be constructed to local and/or regional building codes. North Carolina addresses the construction and definition of modular homes under the North Carolina State Building Code Volume VIII – Modular Construction Regulations. The quality of modular homes is considered to be the same as site-built homes per memorandum from the North Carolina Department of Insurance (see memorandum, page 383). For mass appraisal purposes, structures that are considered modular must meet current general statute requirements. Note: All homes classified as modular will be considered as real property, even if on someone else’s land. 84 | P a g e Schedule of Values Lincoln County 2027 MANUFACTURED HOME CLASSIFICATION STANDARDS All manufactured homes not meeting the requirements of a modular home are to be considered using the term “manufactured home” for mass appraisal purposes. N.C.G.S. 105-273(13), in defining real property, provides for the inclusion of manufactured homes. Also, N.C.G.S. 105-316.7 defines mobile home and manufactured home. Any manufactured home will be considered real property and will be valued in accordance with the schedule of values if the owner of the land and the owner of the home placed upon the land are the same, having the towing hitch and axle assembly removed and placed upon a permanent foundation as required by the Lincoln County Planning & Inspections Department; also, any manufactured home on land leased for twenty (20) years or more or on a land/home purchase contract. If the owner of the manufactured home does not own the land it occupies, the home will be considered a personal property item. If the manufactured home is considered a personal item, it will be noted within the miscellaneous items section of the property record card. 85 | P a g e Schedule of Values Lincoln County 2027 CALCULATING VALUE BASED ON RESIDENTIAL COST SCHEDULES The Cost Approach to value lends itself best to property valuation for tax purposes for two principal reasons. 1) Appraisals for Ad Valorem purposes require separate land value estimates. 2) The Cost Approach can be applied to all classes of property. The use of one approach to the exclusion of others is contrary to the appraisal process. The approach outlined in this manual includes cost schedules which have been developed and are supported through analysis and incorporation of economic factors indicated by all three approaches to value: Cost, Income and Market. The following cost schedules are based on a model residence constructed using typical components, average quality workmanship and materials (C Grade), consisting of 1,500 square feet (sf), two full baths, central heating, central air conditioning, and crawl space foundation. EXAMPLE: The general pricing procedure is as follows: The subject being valued is a 1,800sf brick home of slightly above-average quality built in 2003. The home has 1,200sf on the first floor and 600sf on the upper floor. It has central heating, no air conditioning, a slab foundation, two full baths, one half bath, a prefab fireplace, 1,200sf of unfinished walk-out basement, an elevator, and a 480sf covered porch. 1. Determine the main area (MA) Code by exterior wall type and type of residential building. For a brick, site-built home: MA-37M 2. Multiply the base square footage of the first floor by the main area price and by the size adjustment for the total main area. With 1,200sf on the first floor and 1,800sf in total: 1,200 X $179 X .95 = $204,060 3. For buildings with an upper floor, multiply the square footage of the upper floor by the main area price, then by the size adjustment for the total main area, and then by the multiple story adjustment (ST) of 85%. With 600sf of upper floor and 1,800sf total: 600 X $179 X .95 X .85 = $86,725 4. Adjustments to the main area are calculated from the norm of the base structure. A) Heating & Cooling (standard is central heat and central air): Determine the heat type and multiply the total square footage by the heating & cooling type rate, then by the size adjustment for the total main area. With only Forced Hot Air (No AC) use AR-05: 1,800 X -$5.00 X .95 = -$8,550 86 | P a g e Schedule of Values Lincoln County 2027 B) Foundation (standard is crawl space): Determine the foundation type and multiply the first-floor square footage by the foundation type rate, then by the size adjustment for the total main area. With Slab Foundation use FN-03: 1,200 X -$3.00 X .95 = -$3,420 C) Plumbing (standard is 2 full baths): Determine the number of fixtures from the standard and multiply the number of fixtures times the Residential Plumbing rate (PL-RS). With 2½ baths, the house has two extra fixtures: 2 X $2,500 = $5,000 D) Fireplace (standard is no fireplace): Determine the type of fireplace and multiply the fireplace type rate times the number of fireplaces. With one prefab fireplace use FP-03: 1 X $5,000 = $5,000 E) Basement (standard is no basement): Determine the type of basement and multiply the basement square footage by the basement type rate, then by the size adjustment for the first-floor square footage. With 1,200sf of unfinished walk-out basement use BA-UW: 1,200sf X $46 X 1.09 = $60,168 F) Elevator (standard is no elevator): Determine the type of elevator and number of floors and multiply the elevator type rate times the number of elevators. With one, 3-story hydraulic elevator use RE-EH3: 1 X $23,000 = $23,000 5. AC Codes: Determine all addition types attached to the main structure and multiply the base rate of each AC code by the size adjustment for that AC code. With 200sf of covered porch: 480sf X $46 X .91 = $20,092 6. Subtotal all areas of the structure’s components. First Floor $204,060 Second Floor $ 86,725 Heat/Cool $ (8,550) Foundation $ (3,420) Plumbing $ 5,000 Fireplace $ 5,000 Basement $ 60,168 Elevator $ 23,000 Porch $ 20,092 Total $392,075 7. Quality Grade (standard is C grade): Apply the proper Grade factor to the total of the structure’s components to arrive at the Replacement Cost New (RCN). With a Grade of C+05: $392,075 X 1.05 = $411,678 87 | P a g e Schedule of Values Lincoln County 2027 8. Depreciation: Apply the proper percent from the Percent Good CDU Table to the RCN to arrive at the depreciated building value. For a home built in 2003 that has a CDU of Good, the Percent Good is 84% indicating the building is being depreciated 16% (100% - 84% = 16%): $411,678 X 84% = $345,809 9. Market adjustments, if any, are applied at this stage. None for this example. 10. The final value for the building is finished at $345,809 BASE RESIDENTIAL CHARACTERISTICS MA-37 SINGLE FAMILY RESIDENCE Foundation Continuous Footing Exterior Wall Vinyl Siding or Equal Partitions Adequate for separation of rooms/storage areas Framing Wood Joist Floor Cover/Finish Hardwood/Vinyl/Carpet Interior Finish Drywall/Panel Heating/Cooling Heat Pump or Equal Plumbing 8 Fixtures Note: Add fireplaces, garages, porches, basement areas, additional plumbing fixtures, etc. MA-18 DUPLEX/TRIPLEX Foundation Continuous Footing Exterior Wall Vinyl Siding or Equal Partitions Adequate for separation of rooms/storage areas Framing Wood Joist Floor Cover/Finish Hardwood/Vinyl/Carpet Interior Finish Drywall/Panel Heating/Cooling Heat Pump or Equal Plumbing 10 Fixtures (2 bathrooms, 2 kitchen sinks, 2 water heaters) Note: Add fireplaces, garages, porches, additional plumbing fixtures, etc. 88 | P a g e Schedule of Values Lincoln County 2027 MA-12 CONDO/TOWNHOUSE Foundation Continuous Footing Exterior Wall Hardwood/Vinyl Siding or Equal Partitions Adequate for separation of rooms/storage areas Framing Wood Joist Floor Cover/Finish Vinyl/Carpet Interior Finish Drywall/Panel Heating/Cooling Heat Pump or Equal Plumbing 8 Fixtures Note: Add fireplaces, garages, porches, additional plumbing fixtures, etc. MA-85 MODULAR HOME Foundation Continuous Footing Exterior Wall Vinyl Siding or Equal Partitions Adequate for separation of rooms/storage areas Framing Wood Joist Floor Cover/Finish Vinyl/Carpet/Prefab Interior Finish Drywall/Panel Heating/Cooling Heat Pump or Equal Plumbing 8 Fixtures Note: Add fireplaces, garages, porches, basements, additional plumbing fixtures, etc. 89 | P a g e Schedule of Values Lincoln County 2027 MA-30W MANUFACTURED HOME (MULTI-SECTION) Foundation Continuous Footing Exterior Wall Vinyl Siding or Equal Partitions Adequate for separation of rooms/storage areas Framing Wood Joist Floor Cover/Finish Vinyl/Carpet Interior Finish Drywall/Panel Heating/Cooling Heat Pump or Equal Plumbing 8 Fixtures Note: Add fireplaces, garages, porches, additional plumbing fixtures, etc. MA-30S MANUFACTURED HOME (SINGLE SECTION) Foundation Continuous Footing Exterior Wall Vinyl Siding/Metal or Equal Partitions Adequate for separation of rooms/storage areas Framing Wood Joist Floor Cover/Finish Vinyl/Carpet Interior Finish Drywall/Panel Heating/Cooling Heat Pump or Equal Plumbing 8 Fixtures Note: Add fireplaces, garages, porches, additional plumbing fixtures, etc. 90 | P a g e Schedule of Values Lincoln County 2027 CALCULATING VALUE BASED ON AGRICULTURAL BUILDING, OTHER BUILDING, & YARD ITEM COST SCHEDULES The accessory buildings, agricultural buildings, and yard items pricing schedules are provided to calculate the replacement cost new of a variety of types of structures typically associated with residential property. Base prices and adjustments are provided for swimming pools, detached garages, greenhouses, poultry houses, carports, utility buildings, tennis courts, boat houses, boat docks, etc. Each structure has been assigned a unique Structure Type Code to be utilized on our computer-assisted mass appraisal (CAMA) programs. Depreciation allowances, where applicable, are included in the appropriate schedule. Additional tables can be found in the Depreciation Schedules and Tables section of the Manual. EXAMPLE: The general pricing procedure is as follows: The subject being valued is a detached frame garage of average quality with 800sf built in 2015. 1. Determine the Miscellaneous Structure (MS) code that best describes the structure. For a Detached Frame Garage: MS-10. 2. Multiply the square footage of the structure by the square foot rate for that structure, then by the size factor for that structure code. With an MS-10 of 800sf: 800 X $48 X .91 = $34,944 3. Quality Grade (standard is C grade): Apply the proper Quality Grade Factor to arrive at the Replacement Cost New (RCN). With average quality (C grade) being the standard, there is no adjustment to the subject. 4. Depreciation: Apply the proper percent from the Outbuildings and Yard Items Percent Good Table to the RCN to arrive at the depreciated building value. With an MS-10, the default depreciation is D3 and with a year built of 2015, the Percent Good is 78% indicating the building is being depreciated 22% (100% - 78% = 22%): $34,944 X 78% = $27,256 5. The final value for the building is finished at $27,256 91 | P a g e Schedule of Values Lincoln County 2027 WATERFRONT IMPROVEMENTS (MS-40) Waterfront Improvements are generally used for recreational boating, fishing, swimming access, watercraft storage or mooring, and other waterfront activities. These are permanent structures constructed along or over the shoreline of a lake, river, pond, or other body of water to provide access to the water and a stable area for loading, unloading, mooring, and securing boats and other watercraft. Such improvements may be constructed from wood, metal, concrete, composite materials, or a combination of materials and may be designed as fixed or floating structures. Typical components may include walkways, planks/gangways/ramps, or piers extending from the shoreline; platforms or deck areas; boat docks, boat slips and fingers; as well as pilings, buoyancy units (dock floats, float drums, pontoons), ladders, steps, handrails, benches, bumpers, and related supports or accessories. Often properties will have waterfront improvements that consist of a combination of many of these components or sections. For assessment purposes, waterfront improvements should be evaluated based on the real property improvements present, their ability for utilization, and their contributory value to the property. Measurement of these structures should focus on the constructed area that is deemed "useable," which is defined as space that can be traversed by people and/or watercraft, as well as areas capable of containing or protecting motorized boat lifts, personal watercraft (PWC) ramps or lifts, or other similar devices. Once this “useable” area is established, appraisers should measure the outside dimensions of the structure to determine its total square footage. Because various sections of waterfront installations may have undergone construction, replacement, improvement, repair, or removal at different times, these sections should be listed separately and evaluated based on each section’s specific size, quality, and condition. Note: Lincoln County does not list motorized or mechanical elements (such as boat lifts) that are attached to or contained within waterfront improvements or boat shelters as real property; this includes PWC ramps or lifts. However, the presence of electrical and/or plumbing systems to waterfront improvements is evaluated and, when applicable, reflected in the Quality Grade. Note: Duke Energy manages and reviews certain waterfront improvements within the federally licensed Catawba-Wateree Hydroelectric Project which comprises 11 lakes, including Lake Norman, and 225+ miles of river across 14 counties in North Carolina and South Carolina. Through its Shoreline Management Plan and Lake Services program, Duke Energy oversees permitting for piers, docks, shoreline stabilization, landscaping, vegetation removal, and other shoreline activities. Property owners generally must submit the appropriate application and receive approval before beginning regulated work. Reviews consider factors such as the proposed location, size, design, environmental impacts, navigation, safety, and applicable shoreline requirements. Duke Energy’s permitting authority operates in conjunction with applicable federal, state, and local requirements; therefore, Duke approval does not replace permits required from other agencies. Boat docks, piers and other waterfront improvements located on Lake Norman may be considered taxable real property improvements when they are permanently affixed to or associated with the real property and contribute value to the parcel. The existence of a Duke Energy permit 92 | P a g e Schedule of Values Lincoln County 2027 or approval does not, by itself, establish taxable value or guarantee an improvement’s continued use. Duke Energy, as the project licensee and shoreline manager, may impose conditions on waterfront improvements and may require repair, modification, or removal when applicable requirements are not met. The mere possibility that Duke Energy could require removal should not automatically result in a zero or nominal taxable value.2 EXAMPLE OF MS-40 SECTIONS & MEASUREMENTS 2 Some information in this paragraph from https://www.duke-energy.com/Community/Lakes/Services and Duke Energy’s Catawba-Wateree Project (FERC Project No. 2232) Shoreline Management Plan (October 3, 2016) 93 | P a g e Schedule of Values Lincoln County 2027 PRICING SCHEDULE INFORMATION EXEMPT/INSTITUTIONAL BUILDINGS This section of the Manual includes basic procedures and applications to be utilized to determine the Replacement Cost New for a variety of institutional type structures. Prices are provided based on the structure type and exterior wall material. BASE SPECIFICATIONS Base prices assume normal construction, mechanical, and other features, such as plumbing, heating, air conditioning, interior finish, framing, elevators, etc., according to the designed building structure type. SCHEDULE APPLICATION Select the structure type which is most representative of the subject building. Establish the Quality Grade of the building, which is contingent upon the exterior wall material of the structure type. Determine the total square feet of floor area and multiply the cost per square foot by the total area to establish the replacement cost. Note: Separate prices are provided for finished or unfinished basements. PERCENT (%) GOOD GUIDELINES Physical deterioration of institutional buildings should be based on the effective age and condition. Structures of this type normally have an expected life which is longer than other types of similar structures. Actual age and life expectancy can be extended through continued maintenance and renovation. When establishing the percent (%) good, the adjustment should be based on anticipated additional life as compared to normal life guidelines. COMMERCIAL/INDUSTRIAL SCHEDULES Commercial and Industrial pricing schedules are provided for a variety of buildings based on the use of the buildings. Commercial/Industrial Schedules are to be used as a guide for computing the replacement cost of mercantile type buildings, offices, and similar type structures, commercial living accommodations and associated support structures and manufacturing and warehouse storage type structures. 94 | P a g e Schedule of Values Lincoln County 2027 The general application of all the schedules is essentially the same; select the base price (per square foot) which is most representative of the subject building and adjust the base price to account for any significant variations. SCHEDULE FORMAT – BASE PRICES The schedules designate base prices by use type and wall types. "C" Grade base prices are provided for various finish types at different floor levels with specified floor-to-floor heights for the following construction types: fire resistant construction, masonry or equal, frame or equal, reinforced concrete and rigid steel construction. The base price is determined by selecting the appropriate square foot price based on exterior wall type, construction and use. The base price is driven by construction type and is adjusted for variations in wall height, and size adjustments. The base prices for each use type include the exterior walls with normal openings, interior finish, mechanical features, partitions, plumbing, lighting and other basic features typical for that particular use. Base prices also include normal footings and foundation construction for a building at grade level, normal parapets and coping, ground floor slab including base and cement finish, normal roof construction consisting of insulation, decking, framing, and utility service. Basements include excavation, backfill, and structural floor construction consisting of subfloor and framing for first floor. Note: The cost of the basement exterior wall construction and spread footings exclude an allowance for the normal foundation construction included with the first floor. Stairways with enclosures in the finished use types are included in the basement and upper floor prices. EXTERIOR WALLS Wood Frame (W) are buildings constructed of combustible materials with wood framed exterior walls covered by shingles, wood siding, stucco, asbestos, aluminum, or vinyl. Roof structure is usually wood frame or preconstructed trusses with wood sheathing and composition shingles, built-up or corrugated metal cover. Floor Structure may be perimeter footing with reinforced concrete slab or wood joists and sheathing. 95 | P a g e Schedule of Values Lincoln County 2027 Masonry (M) are buildings constructed of double brick, brick on concrete block, stone or ornamental concrete block exterior walls which are usually load bearing. Roof structure is usually wood frame or preconstructed trusses with wood sheathing and composition shingles, built-up or corrugated metal cover. Floor structure may be perimeter footing with reinforced concrete slab or wood joist and sheathing. Concrete (C/S) are buildings constructed with poured reinforced concrete super structure, or reinforced concrete or precast concrete panel load bearing exterior walls. Super structure may have a variety of exterior wall covers including precast panels and masonry veneers, or steel frame and stationary glass. Roof structure may be steel joists with metal decking and poured concrete or concrete planks or other non-combustible construction. Floors are usually reinforced concrete slab on grade. Rigid Steel or Pre-Engineered (R) are buildings constructed with prefabricated structural members and exterior wall cover of preconstructed panels or sheet siding. Roof structure is steel joists or beams usually with corrugated metal cover. Floors are usually reinforced concrete slab on grade. CONSTRUCTION TYPES Wood Frame/Joist/Beam indicate buildings that incorporate wood, stud balloon or platform framing or wood post and beam framing (mill construction). This category also includes masonry structures, which incorporate wood joist or plank floor systems, or wood joist, truss, or rafter roof systems. Fire Resistant indicates buildings with exposed structural steel or reinforced concrete columns and beams. Multi-story structures will have steel floor joists with concrete planks or a reinforced concrete floor system. Exterior walls will typically be masonry or metal and glass panels. Fireproof indicates typically high-rise buildings with fabricated, heavy, structural steel columns and beam framing which have been enveloped in a fireproof material such as concrete or gypsum. Floors will be reinforced concrete or precast concrete plank on steel joists protected by a gypsum-vermiculite plaster on metal lath ceiling. Exterior walls will be masonry or metal and glass panels. Pre-Engineered Steel indicates buildings framed with prefabricated steel members. The structure will incorporate metal beams, girders columns and purloins, or light gauge steel joists manufactured from cold-formed shapes of sheet or strip steel. Multi-story buildings may have floors of wood, steel or concrete. Exterior walls will typically be prefinished metal siding or sandwich panels. 96 | P a g e Schedule of Values Lincoln County 2027 CALCULATING VALUE BASED ON COMMERCIAL/INDUSTRIAL COST SCHEDULES The schedules can be effectively applied to either a total building or a portion of the building… i.e., floor section…if the size, construction, and quality are consistent. It is not uncommon for the first floor of a commercial building to be of a higher quality construction than the upper floors. This situation is especially likely to occur in older buildings where it is often not economically feasible to renovate and modernize the upper floors comparable to the first floor. It is also possible for the first floor or lower floor to be larger in area than the upper floors. In either case, it may be advisable to compute the replacement cost of individual floors or groups of floors separately. The individual replacement cost can then be totaled to arrive at a single replacement cost or treated separately; depending upon which procedure would best facilitate the application of depreciation. The general pricing procedure is as follows: 1. Determine the Main Area (MA) Code by floor level and construction type. 2. Select the proper base price for each floor level; or 3. Calculate story height and add size of upper floors to base main floor area. 4. Apply story height adjustment (STA) to upper floor price. 5. Adjust for wall height, Table H1 or H2. 6. Make necessary square foot adjustments for variations in the base price (heating and cooling, sprinkler system, etc.). 7. Adjust for the size (size factor table). 8. Add lump sum valued features (elevators, etc.). 9. Subtotal the replacement cost of all main area components. 10. Add the cost of attachments or additions to arrive at the total “C” Grade Replacement Cost 11. Apply the proper Quality Grade Factor to arrive at the Replacement Cost New. 12. Deduct for physical depreciation and functional or economic obsolescence. 97 | P a g e Schedule of Values Lincoln County 2027 MULTI-FAMILY APARTMENTS An apartment is a residential living unit with the same living accommodations normally found in a single-family residence. An apartment building is a multifamily residence containing four or more residential living units, and generally providing each unit with several common facilities, services and amenities. Two or more apartment buildings operating as a single unit are generally referred to as an apartment complex. The increased development of multi-family residential housing units since the 1950's has brought the development of both apartment complexes and "high-rise" apartment buildings. Each of these offers complete living accommodations with all the modern conveniences and amenities. In addition, they generally provide a variety of recreational facilities and services for their occupants. VALUATION As with other types of property, the replacement cost method of valuation is a starting point for the appraiser. There are two types of apartment buildings that must be considered: 1) the walk-up or garden apartment normally found in apartment complexes; and 2) townhouse style or multi-story building. Apartment units found in each apartment building or complex of buildings vary in size and arrangement. They may be one room efficiency units consisting of a bedroom and kitchenette; two room studio units consisting of a bedroom and living room/den and kitchenette combination; and conventional units consisting of a kitchen, dining area, living room and one or more bedrooms. Each apartment unit has one or more bathrooms, and conventional units often have a separate dining room, den, or family room. One of the most significant variables in determining the replacement cost of an apartment building is the average size of the individual units. The pricing schedule provided in this section is designed to account for this variation. BASE PRICES – GARDEN APARTMENTS Base square foot prices have been developed for typical average "C" Grade quality construction apartment units, based on average unit sizes at various floor levels for Wood Joist construction. Adjustments are provided for Fire Resistant and Reinforced Concrete, together with Brick (or equal) and Frame/Concrete Block exterior walls. The foundation, roof, and normal built-ins are included with the first-floor prices, thus making the schedule applicable to both one story and multi-story buildings. 98 | P a g e Schedule of Values Lincoln County 2027 APPLICATION Application of the pricing schedule involves the selection of the appropriate base price per floor based on the average unit sizes. Adjustments to the base price for air conditioning, central heating, and the type of construction should be made to account for any variations between the subject building and the model building. SPECIAL APPLICATION The Apartment Pricing Schedule is designed for garden/walk-up apartment and townhouse apartment buildings of four or more units. Two and three family residences should be priced by using the Residential Dwelling Schedule (included in the Residential section of the manual) for an MA-18 Duplex/Triplex. QUALITY FACTOR The schedule prices are for average "C" Grade construction quality, erected with average materials and workmanship. A table of Quality Factors is provided to adjust the "C" Grade prices to account for variations in construction quality. INCOME APPROACH Apartment buildings, regardless of the type, are built, bought, and sold as investment or income-producing property. The appraisal of apartments utilizing the Income Approach follows the same procedures discussed in the Property Valuation section of the manual. The basic procedure is. . . 1. Collection of the income generated including monthly rents for the units, parking, and other receipts, such as laundry facilities. 2. Collection of the expenses associated with the management and maintenance of the property. 3. Capitalization of the net income into an indication of value. A special section is provided on the use of the economic data form to record all necessary income and expense data. 99 | P a g e Schedule of Values Lincoln County 2027 PERCENT (%) GUIDELINES Physical deterioration of the structure should be based on the age and condition of the property. Guidelines for normal life estimates are found in the Percent Good section of the manual. Functional and Economic Depreciation allowances must be derived from the income and expense of each apartment project as it relates to other properties of similar utility and condition. This is expressed as the percent (%) good of the structure. SECTION 42 LOW-INCOME HOUSING North Carolina General Statute # 105-277.16 A North Carolina low-income housing development to which the North Carolina Housing Finance Agency allocated a federal tax credit under section 42 of the Code is designated a special class of property under Article V, Section 2(2) of the North Carolina Constitution and must be appraised, assessed and taxed in accordance with this section. The assessor must use the Income Approach as the method of valuation for property classified under this section and must take rent restrictions that apply to the property into consideration in determining the income attributable to the property. The assessor may not consider income tax credits received under section 42 of the Code or under G.S. 105-129.42 in determining the income attributable to the property. (2008-146, s. 3.1:2008- 187, s. 47.6). GENERAL APPLICATION Identify the low-income housing property being appraised and request copies of the audited financial statements for current year (revaluation year) and three prior years. Analyze the actual income stream: apply expense ratios, capitalization rates, and Gross Rent Multipliers (GRM) developed for use in the 2027 Lincoln County Revaluation Project. OPERATING EXPENSES A typical range of expense ratios from 30% to 50% for apartments has been adopted for use by Lincoln County. VACANCY RATES A normal rate of around 5% has been adopted for use by Lincoln County. 100 | P a g e Schedule of Values Lincoln County 2027 RESERVE FOR REPLACEMENTS Typical reserve for replacements for traditional apartment properties in Lincoln County indicates a range of around 5%. A rate of around 5% has been selected for use in Section 42 low-income housing appraisal. CAPITALIZATION RATE Lincoln County uses a capitalization rate range of 5% to 10% for apartments that are not Section 42. A rate of 5% was selected for use in Section 42 low-income housing appraisal. SAMPLE INCOME APPROACH APPRAISAL 100 UNIT SECTION 42 APARTMENT COMPLEX WITH $700 PER MONTH BASE RENT POTENTIAL GROSS INCOME $840,000 (100 x $700 x 12 MONTHS) VACANCY (5%) (-$42,000) EFFECTIVE GROSS INCOME $798,000 OPERATING EXPENSES (50%) (-$399,000) RESERVE FOR REPLACEMENTS (-$39,900) (5%) NET OPERATING INCOME $359,100 CAPITALIZATION RATE (5%) {.05} APPRAISED VALUE $7,182,000 VALUE PER UNIT $71,820 101 | P a g e Schedule of Values Lincoln County 2027 FRANCHISE FOOD RESTAURANTS Franchise Food restaurants have become common place beginning in the 1950's. The buildings, though they offer similar accommodations, are highly distinctive in architectural style and design. Each operation is readily identifiable with a particular design and motif and relies heavily on the appearance or "eye appeal" of its buildings to attract, maintain, and promote business. The wide range of styles and designs has a direct influence on the replacement costs of the buildings. The size and quality of materials and workmanship alone are not the prime determining factors. Two restaurants showing no marked difference in size and construction quality may still show a considerable difference in cost due to the difference in design and décor. The replacement cost schedule provided is based upon specifications of size, quality, and design. The schedule is to be used as a guide for estimating replacement costs of franchise food restaurants. The proper use of the schedule, along with experience and sound judgment, should enable the appraiser to establish a reasonable estimate of replacement cost. BASE SPECIFICATIONS The Cost Schedule assumes a basic layout which includes a serving area, food preparation area, a small office area, an employee dressing area, two toilet rooms and, depending upon size, a dining area. General construction features include masonry foundation walls on spread footings; 4" reinforced concrete floor slab on a granular base; roof and exterior wall construction; interior finish; and building equipment and fixtures commensurate with the grade; stud and masonry partitioning; unfinished floor and painted masonry or dry wall interior finish in storage areas and mechanical rooms; utility service, heating, fluorescent lighting fixtures in the preparation and office areas, plumbing fixtures and drains. SCHEDULE APPLICATION Base prices are included for Average "C" Grade construction for four typical exterior wall types. Select the base price based upon the structure size and exterior wall construction, and adjust for attached improvements, air conditioning and sprinkler systems as required. Apply the proper quality Grade factor to establish the replacement cost new. PERCENT (%) GOOD GUIDELINES Franchise Food restaurants are special purpose buildings which are not readily adaptable to other uses. They go out of style both functionally and economically at a much faster rate than they deteriorate physically. The business is highly competitive and relies heavily on the site location and the physical appearance of its buildings. To keep abreast of competition, owners must frequently renovate the structures. Changing consumer habits, traffic patterns, and competition are but a few of the factors that influence the life span of the buildings and must therefore be considered in the evaluation process. 102 | P a g e Schedule of Values Lincoln County 2027 GOLF COURSES Golf courses are designed and built in a variety of types and sizes. The pricing schedules in this section are provided as a guide to assist the appraiser in arriving at a reasonable and equitable estimate of the cost of developing the various types of courses. REGULATION COURSES A regulation golf course usually consists of 18 holes of varied length. There are generally four short holes, 130 to 200 yards (par 3); ten average holes 350 to 400 yards (par 4); and four long holes 450 to 550 yards (par 5). Average costs per hole are given for five grades of courses; the general specifications are as follows: Excellent Excellent course designed for professional play; rolling terrain; well landscaped with wide tree lined fairways and large, excellent quality greens and tees; numerous natural and man-made hazards; generally, 7200 yards long with a par 72 rating. Very Good Very good course design for championship play; rolling terrain; well landscaped with wide fairways and large, very good quality greens and tees; many natural and man-made hazards; generally, 6900 yards long with a par 72 rating. Good Good course design for private club membership; rolling terrain; well landscaped with wide fairways and large good quality greens and tees; natural and some man-made hazards; generally, 6500 yards long with a par 70 rating. Average Average course designed for municipal or public play; flat terrain; landscaped fairways; average size and quality greens and tees; some natural and few, if any, man-made hazards; generally, 6000 yards long with a par 67 to 70 rating. Fair Simply developed course often referred to as a "cow-pasture course"; flat terrain; very little landscaping; small greens and tees; few natural hazards; generally, 5400 yards long with a par 64 to 67 rating. BASE PRICE COMPONENTS The costs per hole have been developed to include the cost of normal on-course improvements and do not include the cost of land, clubhouse, or any recreational facilities. The base price components are as follows: 103 | P a g e Schedule of Values Lincoln County 2027 • Grading and Clearing includes the removal of brush and trees from the fairways, greens, or tees as well as landscaping and the seeding of grass. • Sprinkler System includes water sources, pumps, piping, and sprinkler heads. • Greens include the building, seeding and care of the greens until the opening of the course. • Tees include the building and care of the tees until the opening of the course. • Bunkers include the building and care of the bunkers. • Service and Cart Road include base preparation, paving, and bridges over hazards. • Architect's Fees include all plans and supervision during construction. OTHER COURSES The entire course is comprised of a putting surface which has various Miniature Course obstacles and hazards placed between the tee and the cup. The course has greens, bunkers, tees, fairways, and very little, if any, Pitch and Putt Course rough area separating the holes. The holes are usually 60-120 yards long and the course often has lighting for night play. The course is the same as a regulation course, but on a smaller scale Par 3 Course with all the holes rated par 3, 140 to 160 yards long and the course may have lighting for night play. Also called a par 60 course; the course is the same as a regulation Executive Course course, but on a smaller scale with holes 200 to 300 yards long. The holes are mostly par 3 with some par 4 and par 5 ratings. Consists of a piece of land, usually 10 to 15 acres, with elevated tees Driving Range along one side used for practice of hitting tee shots on regulation courses. Consists of a large green with numerous cups used for putting Practice Putting Greens practice. 104 | P a g e Schedule of Values Lincoln County 2027 GENERAL APPLICATIONS The primary variables in golf courses are size, layout, sprinkler system, greens, tees, fairways, and bunkers. Costs of courses may vary from $54,000 per hole for a course with minimal improvements to $270,000 per hole for the best championship courses. The costs given are for average courses in each quality grade. Included in the cost per hole are normal clearing and grading, complete sprinkler systems, landscaping, greens, tees, bunkers, service and cart roads, and architect's fees. Costs do not include buildings, swimming pools, parking areas, or any other off-course improvements. Listed below is the procedure to be used for the appraisal of golf courses. 1. Identify the course by name. 2. Determine the type of course (regulation size, pitch and putt, miniature, etc.). 3. Denote the year of completion (if developed in phases, describe the number of holes completed each year). 4. List the number of holes and the amount of land used for the course. 5. List the course length and par. 6. Check the terrain and topographical features. 7. List the average size of the greens, tees, and the number of bunkers. 8. List the type of sprinkler system. 9. Analyze the various components of the subject property, giving special consideration to the following: the extent of planning; natural contour of the land; clearing and grading of fairways, greens and tees; extent, quality and operation of the sprinkler system; the average green and tee size; the average number of bunkers per hole; the quality of cart and service roads; and any other characteristics essential to establishing the proper grade level of the course. 10. Determine the Quality of the course by comparing its components with the given specifications for each grade and select the corresponding base cost per hole. 11. Multiply the replacement cost per hole based on the quality, as derived in Step #3, by the total number of holes to arrive at the total replacement cost of the course. 12. Determine the proper depreciation allowance based upon the condition, desirability, and usefulness of the course relative to its age, and apply it to the total replacement cost as derived in Step #4, to arrive at the depreciated value of the course. 13. Sketch, list, and compute by using the appropriate pricing schedule, the replacement cost and depreciated value of all improvements not included in the base cost. 105 | P a g e Schedule of Values Lincoln County 2027 GOLF COURSE PRICING EXAMPLE Hogan Point Golf Course is an 18-hole regulation size course, 6,500 yards long, par 72, located on 150 acres of rolling terrain. The course is 10 years old and has 10,000 square foot greens, three (3) 2,500 square foot tee locations for each hole, and three (3) bunkers per hole. Fairways and greens have automatic sprinkler system. This course is judged to be a Good Quality Course with very good greens and tees, good overall condition, desirability and utility. Land value is estimated at $6,000 per acre. Base Cost Per Hole Good Quality $170,000 Replacement Cost Per Hole $170,000 Number of Holes X 18 Total Replacement Cost $3,060,000 Less Depreciation -20% - $612,000 Total Value of Course Improvements $2,448,000 Land Value (150 acres x $6,000) +$900,000 Total Value $3,348,000 Value Per Hole (18 holes) $186,000 GOLF COURSE GRADES MS 88 EXCELLENT Professional Course: 18 holes located on 160 to 250 acres, 6900 to 7200 yards long, rated par 72, rolling terrain. Costs include automatic sprinkler system on greens and fairways; greens are 8000 square feet or above top-quality construction with drainage tile; tees are 2100 square feet or above with 5 tee locations; 3 to 8 bunkers per hole; excellent quality cart paths. MS 60 VERY GOOD Championship Course: 18 holes located on 160 to 200 acres, 6900 to 7000 yards long, rated par 72, rolling terrain. Costs include automatic sprinkler system on greens and fairways; greens are 8000 to 10000 square foot top quality construction with drainage tile; tees are 2100 to 2400 square feet with 3 tee locations; 3 to 4 bunkers per hole; very good quality cart paths. 106 | P a g e Schedule of Values Lincoln County 2027 MS 78 GOOD Private Club Course: 18 holes located on 130 to 175 acres, 6500 to 6900 yards long, rated par 70 to 72, rolling terrain. Costs include automatic sprinkler system on greens and fairways; greens are 5000 to 8000 square foot good quality construction with drainage tile; tees are 1800 to 2100 square feet with 2 to 3 locations; 2 to 3 bunkers per hole; good quality cart paths. MS 79 AVERAGE Public or Semi-Private Course: 18 holes located on 100 to 125 acres, 5500 to 6500 yards long, rated par 68 to 72, gently rolling or flat terrain. Costs include automatic sprinkler system on greens, manual system on fairways; greens are 3000 to 5000 square foot average quality with minimal drainage tile; tees are 1500 to 1800 square feet with 2 locations; 2 bunkers per hole; average quality cart paths. MS 80 FAIR Public Course: 9 to 18 holes located on 75 to 100 acres, up to 5400 yards long, rated par 34 to 70, flat terrain; automatic or manual sprinkler system on greens; manual on fairways; greens are 2000 to 3000 square feet with l or 2 locations; average of l or less bunkers per hole; fair quality cart paths. MS 81 PAR 3 Executive Course: 9 to 18 holes located on 25 to 50 acres, 1800 to 2500 yards long, par 27 to 54, flat or gently rolling terrain; manual sprinkler system on greens and fairways; greens are 1000 to 1500 square foot fair quality construction with natural drainage; tees are 500 to 1000 square feet with 1 location; minimal number of bunkers; no cart paths. INCOME APPROACH TO GOLF COURSES The Income Approach is typically the most accurate measure of value for golf courses. It reduces the differences between golf courses to the least common denominator, Golf Income Revenue (GIR). This revenue can be quantified from the marketplace and analyzed based on the actual or anticipated number of rounds played and average daily rates per round. Following is the formula for estimating the value of golf courses in Lincoln County, based on the Income Approach. Stabilized # Rounds (SNR) x Stabilized Daily Rate (SDR) = Golf Income Revenue (GIR) x Golf Income Multiplier (GIM) = Indicated Value 107 | P a g e Schedule of Values Lincoln County 2027 GOLF COURSE INCOME MODELS STABILIZED RATES DAILY & STABILIZED GRADE GIM # ROUNDS SEASONAL RATE EXCELLENT 20,000-30,000 $125 to $300 $150 to $250 1.0 to 2.0 VERY GOOD 20,000-30,000 $60 to $200 $75 to $150 1.0 to 2.0 GOOD 20,000-30,000 $40 to $150 $50 to $100 1.0 to 2.0 AVERAGE 20,000-30,000 $30 to $70 $30 to $70 1.0 to 2.0 FAIR 15,000-20,000 $20 to $35 $20 to $35 1.0 to 2.0 PAR 3 15,000-20,000 $15 to $30 $10 to $30 1.0 to 2.0 Note: Stabilized Daily Rates include cart rental and green fees only. Values generated by this formula are for golf course improvements and the land necessary to support the golf holes. Values for excess land and other buildings will be added based on separate cost or income analysis as outlined within the body of the Schedule of Values. EXAMPLE Catapult Golf Club – an 18-hole, regulation size golf course, with a stabilized number of rounds of 20,000 per year and a stabilized daily rate of $75. 20,000 x $75 = $1,500,000 x 2.0 = $3,000,000 or $167,000 (rounded) per hole. (SNR) x (SDR) = (GIR) x (GIM) = Indicated Value PERCENT GOOD SCHEDULES AND TABLES It is often advisable to develop schedules and tables to be used as a guide for the appraiser to determine value. The use of such tables is especially applicable in mass appraisals for tax equalization purposes where it is essential to establish and maintain uniformity. Percent Good tables, however, based on actual age alone are impractical. Remodeling, for instance, has the effect of prolonging the remaining life of a building, thus making its effective age considerably different than its actual age. Consideration must be given to all the factors operating to influence the overall condition, desirability, and degree of usefulness of each structure. DWELLING PERCENT GOOD CDU RATING SYSTEM As houses grow older, they wear out; they become less desirable, less useful. This universal decline in value is called depreciation, and appraisers are required to determine the degree of this loss in each property they examine. If all houses deteriorated at the same rate, this 108 | P a g e Schedule of Values Lincoln County 2027 decline in value would be a simple function of the age of the structure in terms of a certain percentage per year. However, houses depreciate at varying rates depending on several variables. Every building is acted upon by two value reducing forces. One tends to shorten the physical life; the other shortens the economic life. Both forces act concurrently, overlap, and affect each other. A new house, or any type of structure for that matter, has its greatest value at the moment of completion. Its expectancy of life – both physical and economic – is longest on the day the key is handed over by the builder. The building is then the most desirable and most useful. The future benefits which the occupant may expect to enjoy are at the maximum. From that day forward, however, decay and wear and tear act to lessen the value of the structure by curtailing its remaining capacity for use. At the same time the house is "wearing out ", it is also "going out of style". It is becoming less desirable. It is progressively becoming less useful, both from the effect of forces within the property (obsolescence), and outside of it as well (encroachment of undesirable influences such as less desirable property uses). Neither physical decline nor functional loss is constant in their action. Deterioration is a relatively steady process which is offset periodically by maintenance. Worn-out elements of the building are repaired or replaced at intervals, depending upon the policy of the owner. Lesser quality houses generally deteriorate faster than better ones. Obsolescence and encroachment may come slowly or happen almost overnight. The forces which cause both deterioration and functional/economic depreciation may act simultaneously, but they are not necessarily related. A house may decline in physical condition and remain relatively functional throughout its entire life. Obviously enough, the age of a house remains an important factor in estimating accrued depreciation. A certain number of houses will receive "normal" maintenance and will experience "average" economic loss due to obsolescence and functional depreciation. These buildings will depreciate at an average rate as they grow older. Other houses will lose value at slower or more rapid rates. CDU Ratings provide a logical reasoning process, by means of which normal age depreciation may be modified according to the appraiser's best determination of the relative loss of value in a structure, as compared with the average loss that might be expected. Thus, the age of a dwelling is not, by itself, a reliable indicator of the degree of depreciation from its cost new. Dwellings depreciate not simply because they become older, but because they physically deteriorate and may become less desirable or functional for a variety of reasons. 109 | P a g e Schedule of Values Lincoln County 2027 To assist the appraiser in establishing the CDU Ratings of buildings, several simple classifications have been established. These classifications or ratings are entirely natural and will fit the normal impressions of the appraiser as they examine a building. Following is a tabulation of CDU Ratings, with their accompanying definitions of the observed physical Condition of the building, and its degree of Desirability and Usefulness (or Utility) for its age and for its type. Age is reflected as an index of the normal deterioration and obsolescence in a structure which may be expected over the years. Condition represents a variable measure of the effects of maintenance and remodeling on a building. Desirability is a measure of the degree of appeal a particular building may have to prospective purchasers. Usefulness is a measure of the utility value of the structure for the purpose for which it may be used. Percent good is defined as the resultant estimate of the diminishing value of an improvement, after subtracting the amount of estimated depreciation from the Replacement Cost New. For example, a structure which is estimated to be 45 percent depreciated as of a given time has a percent good of 55. Therefore, depreciation and percent good are complements of each other. Once the CDU Rating of a building has been established through a consideration of its condition, desirability, and usefulness for its age and its type, reference to the Percent Good Table will indicate the appropriate value percent remaining for a structure possessing these qualities in the degree observed and noted by the appraiser. The degree of deterioration and obsolescence, or loss of value from all causes, both within and without the property, is automatically considered. This is accomplished by means of a simple rating of the capabilities and qualities of the structure in precisely the same terms as a prospective purchaser would. Sound valuation theory presupposes the existence of a prospective buyer with judgment enough to compare the advantages and disadvantages of competing properties, and to rate the property they are examining according to its relative degree of desirability and usefulness. 110 | P a g e Schedule of Values Lincoln County 2027 CDU RATING GUIDE CDU Rating Definition of Dwelling Excellent Close to perfect condition; highly attractive and highly desirable Very Good Minimal evidence of deterioration; very attractive and very desirable Good Minor deterioration visible; quite attractive and quite desirable Average Normal wear and tear are apparent; average attractiveness and desirability Fair Moderate deterioration; usable; rather unattractive and undesirable Poor Significant deterioration; still usable; very unattractive and very undesirable Severe deterioration; barely useable; extremely undesirable; approaches Very Poor unsoundness Unsound Essentially unfit for use APPLYING THE CDU SYSTEM To apply the CDU System, the appraiser rates each house according to their composite impression of its relative condition, desirability, and usefulness for its age and type. The following four actual cases illustrate this convenient and practical method of determining percent good in houses. Case One: A fifteen-year-old single-family residence situated in an attractive residential suburb of a typical American community. Grade "B" with two baths. Minor deterioration is visible: slightly less attractive and desirable than new, but useful. A qualified observer would rate this house above average on the CDU Rating System. Accordingly, our appraiser has assigned it a CDU Rating of "Good". Referring to the table, 90% Good is indicated. Case Two: A one-story frame house, seven years old. Grade "C" or average quality construction: three bedrooms, one and one-half baths. Structure shows normal wear and tear and has average attractiveness and desirability. The appraiser's impression is that for a seven-year-old Grade "C" house, this would be rated as “Average”. Referring to the table, 94% Good is indicated. 111 | P a g e Schedule of Values Lincoln County 2027 Case Three: A century-old colonial style frame house is in a waterfront community with a Grade "B" or good quality construction. The building has been extremely well maintained and completely modernized with central heating, electric lighting, and plumbing added. The structure is in good physical condition despite its age. The building is architecturally attractive and quite desirable. The appraiser's impression is that for a very old house of Grade "B" quality, this is an “Excellent” one. Referring to the table, 80% Good is indicated. Case Four: A thirty-six-year-old single-family residence of Grade "C" quality; one story and basement, frame construction, three bedrooms with bath. The structure has had normal maintenance and is average in physical condition. Within the past two years, an elevated six-lane expressway, passing over the adjoining lot, has been erected. This encroachment has seriously detracted from the attractiveness and desirability of the property. Accordingly, the appraiser has assigned a CDU Rating of "Very Poor". Referring to the table 31% Good is indicated. EFFECTIVE AGE / WEIGHTED AGE In situations where modernization has occurred during the life of a structure, the appraiser must estimate the RCN of each type of structure and compute the effective age and/or the weighted age. EFFECTIVE AGE The effective age is calculated by taking the percentage of the remodeling or modernization in relation to the whole. For example: 50% of the total structure of a house is 40 years old, 20% is 20 years old, and 30% of the structure is 5 years old. 0.50 X 40 = 20.0 years 0.20 X 20 = + 4.0 years 0.30 X 5 = + 1.5 years Total 25.5 years Therefore, the effective age of the structure is 25.5 years. 112 | P a g e Schedule of Values Lincoln County 2027 When determining the effective age of a structure, the following percentage guidelines are implemented. ACTION PERCENT New windows and doors 10% Replace Foundation 10% New Roof 8% Replace interior walls (sheetrock/paneling) 8% New HVAC 8% Replace Siding 5% Replace Studs 5% Replace electrical wiring 5% New Plumbing (excluding fixtures) 5% New Kitchen Countertops 5% Replace Kitchen Cabinets 5% New flooring 5% New bathroom fixtures 4% Interior Paint 3% Replace Subfloor 3% Replace duct work 3% Replace insulation 3% New lighting fixtures 2% New interior trim (window/door molding) 2% New kitchen sink 1% WEIGHTED AGE The weighted age differs from the effective age in that it is used when an improvement has 2 or more "segments," each with a different construction date (as opposed to modernization or remodeling). The age is weighted according to the percentage attributable to each construction date. This approach may be used when the quality of construction is the same for both the original building and the addition(s). For example: A 10,000 square foot building was constructed in 1977. A 2,000 square foot addition was built in 1987 of equal quality to the original building. The total square footage is therefore 12,000. 10,000 ÷ 12,000 = 83.3% is the original 1977 building 2,000 ÷ 12,000 = 16.7% is the 1987 addition 113 | P a g e Schedule of Values Lincoln County 2027 0.833 X 1977 = 1646.84 0.167 X 1987 = + 331.83 Total 1978.67 The weighted age of the building is 1978.67, rounded to 1979. Note: If an improvement has both remodeling and additions of differing ages, the effective age of the modernized portions is calculated first, then a weighted age of the entire improvement is calculated. NEW CONSTRUCTION / PERCENT COMPLETE Regarding real property assessments, N.C.G.S. 317(a)(3) states that the appraisers’ duty is “To appraise partially completed buildings in accordance with the degree of completion of January 1.” This is referred to as Percent Complete and defined as an estimate of the stage of construction a building has reached as of a specific date. It reflects the extent to which the planned construction has been completed and provides a basis for determining the assessed value of a building under construction. The following guidelines are intended to assist in establishing the appropriate Percent Complete. The percentages identified in these guidelines are general benchmarks and are not the only percentages that may be applied. Based on the specific circumstances and stage of construction, appraiser judgment may be used to assign any percentage from 1% to 100% that most accurately reflects the building’s actual level of completion as of January 1. How to Determine Percent Complete: • Review the construction items listed under each percentage level. • Check each item that has been completed as of January 1. • When the majority of items within a percentage level have been completed, apply that percentage of completion. • Use the highest applicable percentage level supported by the completed construction items. GENERAL BENCHMARKS 25% Complete • Rough-In Plumbing • Rough-In Wiring • Permanent Roof (Shingles/Metal) • Windows & Exterior Doors Installed 114 | P a g e Schedule of Values Lincoln County 2027 50% Complete • Gables Enclosed • Insulation Installed • Sheetrock/Paneling Installed • Exterior Siding and/or Brick Veneer 75% Complete • Exterior Siding and/or Brick Veneer • Kitchen Cabinets Installed • Floor Covering Installed • Interior Doors Installed and Painting Completed 100% Complete • Certificate of Occupancy Issued • All Construction Items Finished DWELLING PERCENT GOOD 1. Rate the dwelling in terms of its overall condition, desirability, and usefulness. 2. Select the proper percent good relative to its actual age. COMMERCIAL/INDUSTRIAL PERCENT GOOD & COMMON CAUSES OF OBSOLESCENCE In the final analysis, an estimate of depreciation or value loss represents an opinion of the appraiser as to the degree that the present and future appeal of a property has been diminished by deterioration and obsolescence. The accuracy of the estimate will be a product of the appraiser's experience in recognizing the symptoms of deterioration and obsolescence and their ability to exercise sound judgment in equating their observations to the proper monetary allowance to be deducted from the replacement cost new. The following tables have been provided as guidelines to assist the appraiser in arriving at the resultant estimate of the diminishing value of improvements after subtracting all forms of depreciation. Following is a list of some of the most common sources of functional and economic obsolescence which should further assist him in arriving at a reasonable estimate of obsolescence. Common Causes of Functional Obsolescence • Inadequate amount of land for the building area • Inadequate parking and/or truck/railroad loading and unloading facilities 115 | P a g e Schedule of Values Lincoln County 2027 • An appearance unattractive and inconsistent with present use and surrounding properties. • Poor proportion of office, rental, manufacturing, or warehouse space • Inadequate or unsuited utility space • Limited use and excessive material and product handling costs caused by irregular and inefficient floor plans, varying floor elevations, inadequate clearance, and cut up interiors with small bays and an excessive number of walls, posts, and columns • Multi-story design when single story would be more efficient and economical • Deficient floor load capacity • Insufficient and inadequate elevator service • High maintenance costs resulting from mixed building constructions and/or the use of obsolete building materials • Effects of corrosion created by manufacturing, processing, or storing of chemicals • Foundational and structural failures due to poor soil conditions, poor design, excessive loading, poor maintenance, or excessive vibration of building and process equipment • Inadequate power distribution, heating, lighting, ventilation, air conditioning, or lighting systems Common Causes of Economic Obsolescence • Zoning laws and other governmental regulations which affect the usage and operation of the property • Building code requirements which set current acceptable construction standards • Market acceptability of the product or services for which the property was constructed or is currently used • Profitability of the operation of the property and the justifiable investment which the business would support • Termination of the need for the property due to actual or probable changes in economic or social conditions 116 | P a g e Schedule of Values Lincoln County 2027 COMMERCIAL/INDUSTRIAL ECONOMIC LIFE GUIDELINES Economic life is an estimate of the normal life expectancy of a component. The following are some suggested guidelines for the average expected life (years) of various commercial/industrial buildings and yard improvements and the time in which an improvement in average condition reaches its maximum depreciation. BUILDINGS ECONOMIC LIFE (YEARS) Apartment 40 Automated Car Wash 40 Bank 40 Community Building 50 Convenience Store 40 Fast Food Restaurant 40 Hangar 50 Hotel 60 Manufacturing 40 Medical Office 50 Mini-Warehouse 50 Office 40 Restaurant 40 Retail Store 40 Service Garage 40 Shopping Center 60 Warehouse 50 COMM. YARD IMPROVEMENTS ECONOMIC LIFE (YEARS) Asphalt Paving 10 Concrete Paving 10 Fencing 10 Guard House 50 Lighting 10 Loading Docks 15 Service Station Canopy 50 OTHER BUILDING AND YARD ITEM PERCENT GOOD GUIDELINES The appraisal of other buildings and yard improvements for both residential and agricultural properties is a challenging task. Other buildings and yard improvements are rarely purchased or sold separately from the balance of the property. The cost of construction of a swimming pool, which is built for the convenience and comfort of a 117 | P a g e Schedule of Values Lincoln County 2027 property owner, will rarely add an equivalent amount to the market value of the property. The cost of construction of a farm outbuilding that can be justified by its contribution to the farming operation will again seldom add an equivalent amount to the market value of the property. In effect, other buildings and yard improvements have value in direct proportion to their degree of utility or usefulness. This is an extension of the principle of contribution, which affirms that the value of any factor in production is dependent upon the amount which it contributes to the overall net return, irrespective of the cost of its construction. Any effective approach to the valuation of other buildings and yard improvements must reflect the action of investors. Informed farm owners and operators would not invest in buildings which could not pay for themselves by either maintaining or adding to the required level of productivity. Homeowners would not invest in swimming pools, detached garages, storage buildings, etc. which would not supply the degree of comfort and/or convenience they desire. 118 | P a g e Schedule of Values Lincoln County 2027 LAND LAND CODE LAND TYPES DESCRIPTION Primary Site for possible construction of B Primary building or for existing building. Same as above with public water available to B1 Primary with Public Water the site. A second primary site for possible B2 Primary construction of building inside a large neighborhood. Used for acreage used by poultry houses or S Secondary for any dwelling that exists beyond the primary dwelling. Same as above with public water available to S1 Secondary with Public Water the site. Land that is either being actively developed, being prepared for development, or the highest and best use is suitable for and likely to be developed soon. Typically located in suburban areas with many active subdivisions U Undeveloped and concentrated population centers but can also be found in rural areas with extra road frontage or pocket areas of construction. Public water and sewer are preferred but is not a requirement. Land with nominal value, typically land which only has value relative to its R Residual contribution to the overall parcel value. Also, for land that will not pass a percolation test. Land typically located in rural areas of the county where much of the land is being actively farmed or is lying idle. Development O Open Land is generally limited to major highway intersections and rural hamlet communities. Same value as residual land. Same definition as open land, except for the D Woodland presence of marketable timber. Same value as residual land. Land located within designated floodplain FP Flood Plain areas where development is generally restricted due to the potential for flooding. 119 | P a g e Schedule of Values Lincoln County 2027 LAND CODE LAND TYPES DESCRIPTION Allocation of value to individual properties located in townhouse or condominium CA Common Area developments. Value includes interest in all common areas, e.g. parking areas, pools, tennis courts, etc. Allocation of value to individual properties located in commercial townhouses or CA1, CA2 Common Area condominium developments. Value includes interest in all common areas valued by the percentage of common area market value. CT Cell Tower Land that has a cell tower placed on it. The value attributed to lake rights. The value LAC Lake Access is the waterfront valued divided by the number of lots. Land which directly adjoins Lake Norman, refers to Residential, Commercial, and WF Waterfront Industrial Improved Building Sites as well as Undeveloped Lots and Acreage tracts. WF1 Waterfront with Public Water Same as above with public water available Waterfront land which typically only has value relative to its contribution to the overall WFR Waterfront Residual parcel value. May also be used for unbuildable waterfront land. Commercial Building Site - includes cost of typical site preparation, landscaping, and CB, CB1, CB2 Commercial Primary water and sewer system access. May be used for average or above-average location within the appraisal neighborhood. Commercial Building Site - includes cost of minimal site preparation, landscaping, and CS Commercial Secondary water and sewer service. May be used for average or below-average locations within the appraisal neighborhood. Commercial land which has nominal value, CR Commercial Residual typically land which only has value relative to its contribution to the overall parcel value. Vacant Commercial Land which is suitable in CU Commercial Undeveloped size, zoning, and location for commercial development. Land that is used for golf courses, not GC Golf Course including club house or extra amenities. SW Solar/Wind Farm Land that has solar panels or wind farms. 120 | P a g e Schedule of Values Lincoln County 2027 LAND CODE LAND TYPES DESCRIPTION Industrial Building Site - includes cost of IB Industrial Primary typical site preparation, landscaping, and water and sewer system access. Industrial Secondary Site - includes cost of IS Industrial Secondary minimal site preparation, landscaping, and water and sewer service. IR Industrial Residual Industrial land which has nominal value, typically land which only has value relative to its contribution to the overall parcel value. IU Industrial Undeveloped Vacant Industrial Land which is suitable in size, zoning, and location for industrial development. EB Exempt Primary Exempt Site – site for possible construction of exempt building. EB1 Exempt Primary / Public Same as above with public water available to Water the site. ES Exempt Secondary Exempt Site – limited site for possible construction of exempt building or parking area. EU Exempt Undeveloped Vacant Exempt Land which is suitable in size, zoning and location for exempt or governmental development. ER Exempt Residual Exempt land which has nominal value, typically land which only has value relative to its contribution to the overall parcel value. Land segment is used for descriptive purposes ZV Zero Value to identify quantities of land for reference. Ex: Agricultural or Forestry Land Use acres 121 | P a g e Schedule of Values Lincoln County 2027 LAND SITE IMPROVEMENTS SITE CODE SITE TYPE DESCRIPTION Site improvements with well WS Well & Septic and septic tank. Site improvements with CWS County Water & Septic County water and septic tank. Site improvements inside the Lincolnton city limits with LP Lincolnton Water & Sewer Lincolnton water and sewer connections. Site improvements outside the PS Lincolnton Water & Septic city limits with Lincolnton water and septic tank. Site improvements with PB County Water & Sewer County water and sewer connections. Site improvements with well WPS Well & County Sewer and County sewer connections. Site improvements inside the Maiden city limits with MP Maiden Water & Sewer Maiden water and sewer connections. 122 | P a g e Schedule of Values Lincoln County 2027 LAND INFLUENCE FACTORS GENERAL The technique of land pricing, as described in other sections of this manual, provides for the development of unit land rates for all classes of real property within a given area or neighborhood. These land rates are developed from verified, recent sales and are expected to reflect market value for various prevalent land types as of the effective valuation date for each given area. Land rates will be developed for parcels in the following categories: ▪ Lot ▪ Acreage ▪ Square Foot It is significant to point out that assigned land rates are based on typical or normal conditions for that class of property and land type within a specific neighborhood or area. It is likely that certain parcels within a neighborhood will have unique characteristics that affect their value. These “Land Influence Factors” may have a beneficial or detrimental impact on a specific parcel relative to the norm for the neighborhood, resulting in a positive or negative adjustment to value. Proper appraisal practice indicates that a land rate adjustment or “Land Influence Factor” should be applied by the review appraiser to properly reflect the unique considerations for a parcel with significant physical or economic characteristics that deviate from the normal conditions reflected by the neighborhood land rates. The primary goal of a revaluation is equalization; therefore, users of this manual are strongly encouraged to exercise sound judgment and caution when applying land influence factors. 123 | P a g e Schedule of Values Lincoln County 2027 TOPOGRAPHY This category allows the reviewer's judgment of the degree of difficulty due to adverse topography in erecting a suitable improvement on the subject parcel. Normally, if a suitable improvement is present on the subject lot, the topography problem has been corrected. Therefore, an improved lot normally should have no allowance for topography. However, a topography influence may need to be applied in significant cases of unimproved lots or tracts where adverse topography represents an actual detriment to the utilization of the parcel. Topography factors include irregular land contour, poor drainage, potential subsidence, subsurface rock ledge, potential erosion, and flood plain areas. The following is presented as topography factor guide: CONDITION DESCRIPTION FACTOR Problem has been corrected or is Normal 0% insignificant. The problem is a moderate issue to the complete utilization of the lot but is Minor correctable. The lot is buildable, but less -5% to -25% desirable than typical lots in the area due to a topographical issue. Problem is significant enough to prevent the Moderate development of the lot until the -25% to -75% topographical issue is corrected. The topographical issue is so severe that it Severe -75% to -95% is not economically feasible to develop. 124 | P a g e Schedule of Values Lincoln County 2027 SHAPE OR SIZE Shape or size factor is normally a negative adjustment to account for loss of value to a parcel due to highly irregular shape or insufficient size for the presumed utilization of the parcel. Shape or size factor is a review judgment and may apply to all land types. The basis for any factor is a negative adjustment reducing the subject lot value to the amount and degree of land utility applicable for the presumed utilization. The following is presented as a shape/size factor guide: CONDITION DESCRIPTION FACTOR Shape or size is no significant detriment to Normal 0% the presumed utilization of the parcel. The lot is buildable and/or economically usable for the presumed utilization. Minor However, irregular shape or insufficient -5% to -25% size precludes the full utilization of the parcel. Irregular shape or insufficient size represents a significant handicap to the presumed utilization and/or development of Moderate -25% to -75% the land category and is restricted to a significant under-improvement or under- utilization of the parcel. The shape or size problem is so severe that it renders the land category unusable and/or unbuildable for the presumed utilization. A Severe typical example would be an undersized lot -75% to -95% subject to minimum zoning regulations which effectively prevent any economical utilization. 125 | P a g e Schedule of Values Lincoln County 2027 RESTRICTIONS A negative land influence adjustment for restrictions is applicable for cases where the property is subject to a legal or physical restriction to its utilization. Typical examples would include: • Utility easements, power lines, and sewer lines. Zoning or deed restrictions to the property, limiting the utilization to a less than normal use for typical lots in the neighborhood. • Physical barriers to the property such as bridges, highway medians, fences or abutments. The following is presented as a land influence factor guide for restrictions: CONDITION DESCRIPTION FACTOR No significant restriction to the property Normal 0% exists. A legal or physical restriction of minor significance exists which causes the property to be less desirable than similar Minor -5% to -25% lots in the area which are not subject to this restriction but does not prevent utilization of the property for the presumed use. A legal or physical restriction of moderate significance exists which causes the property to be restricted to a less than full utilization compared to similar lots in the area which are not subject to this restriction. Moderate -25% to -75% An example would be power lines bisecting a lot which prevents the building of a dwelling but would be suitable for a garage or secondary structure. A legal or physical restriction that creates a severe impact and causes the property to be rendered virtually unbuildable or unusable Severe -75% to -95% for any significant utilization compared to similar lots in the area which are not subject to this restriction. 126 | P a g e Schedule of Values Lincoln County 2027 CONSERVATION EASEMENTS The following is presented as a land influence factor guide for conservation easements: CONDITION DESCRIPTION FACTOR Easement does not restrict the utilization of Unaffected 0% the property. Land becomes unbuildable. Agriculture, horticulture, and/or commercial timber Minor production are still permitted. May contain -20% to -55% wildlife protection. Recreational enjoyment is permitted. Land becomes unbuildable. Agriculture, horticulture, and/or commercial timber production is not allowed. May contain Moderate -40% to -65% wildlife protection. Recreational enjoyment is permitted. Access across land may be permitted. Strict ecological protection. Land becomes unbuildable. Agriculture, horticulture, and/or commercial timber production is not Severe -65% to -90% allowed. Land is unable to be touched. No recreational use. Access across land is likely forbidden. 127 | P a g e Schedule of Values Lincoln County 2027 ECONOMIC MIS-IMPROVEMENT This category is reserved as a reviewer's judgment of the comparative loss of value in land (either under-improvement or over-improvement). In essence, this judgment expresses the appraiser's opinion that the existing structure represents an encumbrance to the full utilization of the land. The application of a mis-improvement factor for Residential/Agricultural property is possible but very rare. Most instances occur in commercial or industrial situations where market evidence indicates a different economic utilization of the land than the current utilization. It is important to recognize in the application of economic mis-improvement factors that the land is presumed to be valued based on typical “highest and best” utilization and the existing structure is non-contributory to the most economical utilization. Obviously, vacant tracts are not encumbered by any structure; therefore, vacant tracts are not subject to economic mis-improvement factors. Further, the appraiser should recognize that the economic mis-improvement condition is “curable”. If the structure is removed, the previously applied economic mis-improvement factor is normally no longer applicable. Typical examples include: Dwellings in areas converting to commercial development or Gross Under-improvement such as an old warehouse located in an area where market evidence indicates modern office complex development. The following is an Economic Mis-Improvement Factor Guide: CONDITION DESCRIPTION FACTOR The property is unimproved (no major structures are present) or the existing Normal 0% structure is consistent with the economical utilization of the land. The land is encumbered with a structure that represents economic mis-improvement, and Minor/Moderate the structure has an assigned value of 5% to -5% to -50% 50% of the land value at its highest and best use. The land is encumbered with a structure that represents economic mis-improvement, and Severe the structure has an assigned value of -50% to -95% greater than 50% of the land value at its highest and best use. 128 | P a g e Schedule of Values Lincoln County 2027 CORNER AND/OR ALLEY INFLUENCE This category is reserved for the recognition of the enhancement in land value attributable to the potential utilization of a corner lot, over and above the value of an otherwise comparable inside lot. The enhancement due to the presence of a rear or side alley is not normally common to all lots in each area or block. Therefore, recommended procedure for enhancement due to alley influence, if any, is to consider this factor in the land rate itself. The amount of enhancement attributable to a corner lot should be based on the specific merits of each corner location. Normally, corner influence is not applicable to Residential/Agricultural property. Corner influence factors should be applied to only those cases of commercial or industrial property where the corner is an actual enhancement to the land. Following is presented as a guide for Corner Influence Factors: CONDITION DESCRIPTION FACTOR The presence of a corner or alley has no Normal significant enhancement effect to the 0% property. The lot value is moderately enhanced by the present of corner or alley exposure. Minor/Moderate +5% to +25% Example: Intersection of two secondary streets or a major arterial street and a secondary street. The lot value is significantly enhanced by the presence of corner or alley exposure. Major +25% to +100% Example: The intersection or two major arterial streets. 129 | P a g e Schedule of Values Lincoln County 2027 VIEW INFLUENCE This factor is normally a positive adjustment for lots or parcels where the land value is significantly enhanced by the presence of a scenic or waterfront view when compared to similar lots in the area where no significant view is present. This factor also applies to golf course lots. It is highly recommended that the appraiser exercise due caution in the application of view influence. It is useful to remember that, while the subject may have an appealing view, if this condition is common to most parcels in the area, then comparatively there is probably no real view enhancement. The appraiser should also consider the permanency of the view and the probability of potential obstruction. The following is a View Influence Factor Guide: CONDITION DESCRIPTION FACTOR The view is considered common to the area Normal and market evidence indicates no actual 0% value enhancement exists. The subject property has a moderate enhancement due to an appealing view and Minor +5% to +25% market evidence indicates that a value enhancement exists. The subject property has a significant enhancement due to an appealing view. Further, the view enhancement is not Major +25% to +150% common to similar lots in the area and there is little or no potential for obstruction of the view by other structures. For properties with less than normal or typical views, the appraiser should apply a Negative -5% to -75% negative factor to the affected properties as indicated by market analysis and evidence. 130 | P a g e Schedule of Values Lincoln County 2027 WATERFRONT INFLUENCE Waterfront Cove Adjustment (WFC) – This adjustment is for waterfront lots located in a cove ranging from no cove to a very narrow cove. This can also be used for the restriction of water depth. This is a negative influence. Waterfront Frontage (WFF) – This adjustment is for waterfront lots that either have extra or limited water frontage that significantly enhances or restricts the land value because it is not typical for the neighborhood. Parcels that contain enough water frontage and are large enough to satisfy size requirements may be valued as multiple lots. Waterfront Restriction (WFR) – This adjustment is for waterfront lots that have a restriction. For example, a parcel with buttonwood growing on the land has an environmental restriction. This is a negative influence to the waterfront value. Waterfront View (WFV) – This can be a negative or a positive. This adjustment is for waterfront lots that have a better than normal view or a restricted view. For example, a view of the main channel could warrant a positive adjustment or a view blocked by a bridge could warrant a negative adjustment. Land that is not on the water can have a waterfront view and the adjustment can range from a positive 5% to 250%. The following are guides to various waterfront adjustments: WATERFRONT COVE ADJUSTMENT (WFC) CONDITION DESCRIPTION FACTOR The property is either not in a cove or the width of the cove No Cove 0% has no effect on the value of the property. The property is in a wide cove Minor and/or is in a cove close to the -5% to -10% main channel. The property is in a cove that the width of the cove has Moderate -15% to -25% narrowed but still has full use of the water. The property is in a narrow Major -30% to -50% cove. The property is in a very narrow cove and/or the water Severe -55% to -90% depth affects the movement of a boat. 131 | P a g e Schedule of Values Lincoln County 2027 WATERFRONT FRONTAGE (WFF) CONDITION DESCRIPTION FACTOR The frontage is considered typical for the area and market Normal evidence indicates no actual 0% value enhancement or reduction exists. The frontage on the lake is more or less than typical for Minor the neighborhood and analysis +/-5% to +/-10% of the market indicates a value enhancement or reduction. The frontage on the lake is significantly more than typical Major for the neighborhood or is +/-15% to +/-25% limited to the point where it might affect the use. WATERFRONT RESTRICTION (WFR) CONDITION DESCRIPTION FACTOR The property has no Normal 0% restrictions that affect value. The property has a minor Minor restriction that slightly affects -5% to -10% value. The property has a restriction that affects the use of the Moderate riparian rights but does not -15% to -50% affect the ability to develop the remainder of the property. The property has restrictions on riparian rights and other Major restrictions that render the -55% to -90% property unbuildable, but useable for water access. 132 | P a g e Schedule of Values Lincoln County 2027 WATERFRONT VIEW (WFV) CONDITION DESCRIPTION FACTOR The view has no obstructions and no full view of main Normal channel. A cove adjustment 0% accounts for the limitations of view when it is applied. The view has a slight view of the main channel, a distant Minor view of the main channel +/-5% to +/-10% within a cove, or the view is slightly obstructed. The property has a good view Major of the main channel, or the +/-15% to +/-25% view is severely obstructed. 133 | P a g e Schedule of Values Lincoln County 2027 BASE RATE LAND VALUATION TECHNIQUE The Base Rate Land Valuation Technique allows the appraiser to establish land rates using either a price per acre, price per square foot or price per lot for each parcel located within an individual neighborhood unit. This method also allows the appraiser to develop base land sizes for each land segment type within the neighborhood. Incremental/Decremental Rates are developed as a percentage of the Base Land Rates to allow for size adjustments for those parcels which are either smaller or larger than the indicated base sizes established for the neighborhood. Unless more than 1 acre of the parcel is likely to be developed into additional building lots, only use one acre as the primary (B, B1, B2, etc.) site. The additional acreage can be Undeveloped (U), Residual (R), Flood Plain (FP), etc. Example Rates: LAND TYPE BASE SIZE BASE RATE DECREMENT INCREMENT (ACREAGE) (ACREAGE) (PER ACRE) RATE RATE Primary (B) 1.00 $16,000 $3,200 $16,000 Residual (R) 10.00 $4,800 $4,800 $2,880 Flood Plain (FP) 10.00 $2,400 $2,400 $1,440 Example 1: The subject parcel consists of 40 total acres. It is comprised of one (1) acre of primary, nine (9) acres of flood plain, and thirty (30) acres of residual land. Applying the Base Rate Land Valuation Technique to this parcel, using the rates given above will go as follows: LAND TYPE ACREAGE RATE PER ACRE VALUE (ACREAGE) Primary (B) 1.00 $16,000 $16,000 Flood Plain (FP) 9.00 $2,400 $21,600 10 acres @ Base ($4,800) Residual (R) 30.00 $105,600 20 acres @ Increment ($2,880) TOTAL APPRAISED VALUE $143,200 Example 2: The subject parcel consists of .87 total acres of Primary. Applying the Base Rate Land Valuation Technique to this parcel, using the rates given above will go as follows: 1.00 (Base Acreage) – 0.87 (Actual Acreage) = .13 acre 0.13 acre x $3,200 (Decremental Rate) = $416 $16,000 (Base Rate for 1 acres) - $416 = $15,584 Total Appraised Value 134 | P a g e Schedule of Values Lincoln County 2027 TABLES & RATES 135 | P a g e Schedule of Values Lincoln County 2027 BASE CHARACTERISTICS FOR COMMERCIAL SCHEDULE MA Wall Story Foundation / Partitions / Common Description Exterior Walls Code Height Height Basement Walls Adequate for First Floor Continuous Footing or Wood Frame, MA01 Garden Apartment 9 separation of living Area Concrete Slab Vinyl, or Equal units Adequate for Townhouse First Floor Continuous Footing or Wood Frame, MA02 9 separation of living Apartment Area Concrete Slab Vinyl, or Equal units Adequate for First Floor Continuous Footing or Wood Frame, MA03 Armory 10 separation of office Area Concrete Slab Vinyl, or Equal areas Adequate for First Floor Continuous Footing or Wood Frame, MA04 Auditorium 14 separation of office Area Concrete Slab Vinyl, or Equal areas Adequate for First Floor Continuous Footing or Wood Frame, MA05 Auto Dealership 14 separation of office Area Concrete Slab Vinyl, or Equal areas Adequate for First Floor Continuous Footing or Face Brick or MA06 Bank 12 separation of office Area Concrete Slab Equal areas Beauty / Barber First Floor Continuous Footing or Face / Jumbo MA07 12 Adequate Shop Area Concrete Slab Brick First Floor Continuous Footing or Wood Frame, MA08 Cafeteria 10 Adequate Area Concrete Slab Vinyl, or Equal Adequate for Automatic First Floor Continuous Footing or MA09 14 Jumbo Brick separation of bays / Carwash Area Concrete Slab sales area 136 | P a g e Schedule of Values Lincoln County 2027 BASE CHARACTERISTICS FOR COMMERCIAL SCHEDULE Floor Remarks / MA Interior Plumbing Framing Cover / Other Features Additional Add For… Code Finish Fixtures Finish Features Attachments, Additional Wood Vinyl / Drywall / 5 per MA01 Plumbing Fixtures, Joist Carpet Panel unit Heating / Cooling Attachments, Additional Wood Vinyl / Drywall / 6 per MA02 Plumbing Fixtures, Joist Carpet Panel unit Heating / Cooling Vinyl / Wood Drywall / Heating / Cooling, MA03 Concrete 8-12 Joist Panel Sprinkler System Slab Vinyl / Wood Drywall / Heating / Cooling, MA04 Concrete 8-12 Joist Panel Sprinkler System Slab Vinyl / Wood Drywall / Heating / Cooling, MA05 Concrete 8-12 Joist Panel Sprinkler System Slab Drywall / Drive-Up Windows, Abundant Heating / Cooling, Wood Vinyl / Panel / MA06 8-12 Record Vault, Fluorescent Sprinkler System, Joist Carpet Painted Money Vault Lighting Elevators Block Wood / Wood Drywall / MA07 Vinyl / 5-10 Heating / Cooling Joist Panel Carpet Vinyl / Wood Drywall / Heating / Cooling, MA08 Concrete 8-12 Joist Panel Sprinkler System Slab Rigid Vinyl / Steel Exposed Fluorescent MA09 Concrete 5-8 Floor Drains Heating / Cooling Joist / Brick Lighting Slab Truss 137 | P a g e Schedule of Values Lincoln County 2027 MA Wall Story Foundation / Partitions / Common Description Exterior Walls Code Height Height Basement Walls First Continuous Footing or Wood Frame, MA10 Church 14 Floor Adequate Concrete Slab Vinyl, or Equal Area First Continuous Footing or Wood Frame, MA11 Classroom 10 Floor Adequate Concrete Slab Vinyl, or Equal Area First Adequate for Vinyl Siding or MA13 Conversion 10 Floor Continuous Footing separation of rooms / Equal Area storage areas Adequate for First Country Club / Continuous Footing or Face Brick or separation of retail / MA14 14 Floor Clubhouse Concrete Slab Equal dining / locker rooms Area / support areas First Adequate for Continuous Footing or Face Brick or MA15 Department Store 14 Floor separation of retail / Concrete Slab Equal Area storage area First Adequate for Continuous Footing or Face Brick or MA16 Discount Store 14 Floor separation of retail / Concrete Slab Equal Area storage area First Continuous Footing or Wood Frame, MA17 Dormitory 10 Floor Adequate Concrete Slab Vinyl, or Equal Area First Face Brick or MA19 Gym 14 Floor Concrete Slab Adequate Equal Area First Face Brick or MA20 Firestation 14 Floor Concrete Slab Adequate Equal Area First Continuous Footing or Wood Frame, MA21 Fraternity 10 Floor Adequate Concrete Slab Vinyl, or Equal Area 138 | P a g e Schedule of Values Lincoln County 2027 Floor Remarks / MA Interior Plumbing Framing Cover / Other Features Additional Add For… Code Finish Fixtures Finish Features Wood Vinyl / Drywall / Heating / Cooling, MA10 5-8 Joist Carpet Panel Sprinkler System Vinyl / Wood Drywall / Heating / Cooling, MA11 Concrete 5-8 Joist Panel Sprinkler System Slab Fireplaces, Garages, Vinyl / Forced Hot Air Porches, Basement Wood Drywall / MA13 Linoleum 8 or Equal is Areas, Additional Joist Panel / Carpet included in base Plumbing, Cooling System Vinyl / Kitchen Area / Sprinkler System, Wood Drywall / MA14 Linoleum 15-20 Quarry Tile Floor Heating / Cooling, Joist Panel / Carpet Drains Elevators Drywall / Vinyl / Panel / Metal / Vitreous / Abundant Wood Heating / Cooling, MA15 Heavy Plaster / 10-15 Glass Store Front / Fluorescent Joist Sprinkler System Linoleum Exposed Display Lighting Brick Drywall / Vinyl / Panel / Aluminum / Glass Abundant Wood Heating / Cooling, MA16 Heavy Plaster / 8-10 Store Front, Fluorescent Joist Sprinkler System Linoleum Painted Automatic Doors Lighting Block Vinyl / Wood Drywall / Heating / Cooling, MA17 Concrete 5-8 Joist Panel Sprinkler System Slab Rigid Vinyl / Steel Drywall / Heating / Cooling, MA19 Concrete 5-8 Joist / Panel Sprinkler System Slab Truss Rigid Vinyl / Steel Drywall / Heating / Cooling, MA20 Concrete 5-8 Joist / Panel Sprinkler System Slab Truss Vinyl / Wood Drywall / Heating / Cooling, MA21 Concrete 5-8 Joist Panel Sprinkler System Slab 139 | P a g e Schedule of Values Lincoln County 2027 MA Wall Story Foundation / Partitions / Common Description Exterior Walls Code Height Height Basement Walls First MA22 Hangar 14 Floor Concrete Slab Rigid Steel Frame Minimal Area First Face Brick or MA23 Hospital 14 Floor Concrete Slab Adequate Equal Area First Adequate for Continuous Footing or Face Brick or MA24 Hotel 12 Floor separation of service Concrete Slab Equal Area areas / guest rooms First Continuous Footing or Face / Jumbo MA25 Manufacturing 14 Floor Small Office Areas Concrete Slab Brick Area First Tilt-Up Panel / Continuous Footing or MA26 Laboratory 14 Floor Load-Bearing Small Office Areas Concrete Slab Area Walls First Continuous Footing or Face / Jumbo MA27 Laundry / Cleaners 12 Floor Adequate Concrete Slab Brick Area First Adequate for Continuous Footing or Face Brick or MA31 Motel 10 Floor separation of service Concrete Slab Equal Area areas / guest rooms First Adequate for Continuous Footing or Face Brick or MA32 General Office 10 Floor separation of service Concrete Slab Equal Area area First Adequate for Continuous Footing or Face Brick or MA33 Restaurant 12 Floor separation of kitchen Concrete Slab Equal Area / dining area First Continuous Footing or Face Brick or MA34 General Retail 12 Floor Minimal Concrete Slab Equal Area 140 | P a g e Schedule of Values Lincoln County 2027 Floor Remarks / MA Interior Plumbing Framing Cover / Other Features Additional Add For… Code Finish Fixtures Finish Features Overhead Doors / Abundant Rigid Steel Concrete Heating / Cooling, MA22 None 1-3 Sliding Hangar Fluorescent Frame Slab Sprinkler System Doors Lighting Rigid Steel Vinyl / Heating / Cooling, Drywall / 3-5 per MA23 Joist / Concrete Sprinkler System, Panel room Truss Slab Elevators Drywall / Vinyl / Panel / Abundant Heating / Cooling, Wood Heavy 3-5 per Quarry Tile / MA24 Plaster / Fluorescent Sprinkler System, Joist Linoleum room Kitchen Area Painted Lighting Elevators / Carpet Block Enclosures, Vinyl / Mezzanines, Heating / Steel Heavy Painted Overhead Doors / MA25 10-15 Cooling, Sprinkler Frame Linoleum Block Dock Bumpers System, Passenger / / Carpet Freight Elevators Enclosures, Painted Abundant Reinforced Concrete Overhead Doors / Mezzanines, Heating / MA26 Block or 10-15 Fluorescent Concrete Slab Dock Bumpers Cooling, Sprinkler Equal Lighting System, Elevators Wood / Drywall / Wood MA27 Vinyl / Panel / 5-10 Heating / Cooling Joist Carpet Unfinished Vinyl / Drywall / Heating / Cooling, Wood Heavy Panel / 3-5 per Aluminum / Glass MA31 Sprinkler System, Joist Linoleum Painted room Window Walls Elevators / Carpet Block Heating / Cooling, Wood Vinyl / Drywall / Aluminum / Glass MA32 8-10 Sprinkler System, Joist Carpet Panel Window Walls Elevators Vinyl / Quarry Tile / Abundant Heating / Cooling, Wood Drywall / MA33 Heavy 10-15 Kitchen Area / Fluorescent Sprinkler System, Joist Panel Linoleum Floor Drains Lighting Elevators Aluminum / Plate Heating / Cooling, Wood Carpet / Drywall / Glass Front, MA34 5 Sprinkler System, Joist Vinyl Panel Average Display Elevators Area, Glass Doors 141 | P a g e Schedule of Values Lincoln County 2027 MA Wall Story Foundation / Partitions / Common Description Exterior Walls Code Height Height Basement Walls First Adequate for Continuous Footing or Face Brick or MA35 Service Garage 14 Floor separation of service Concrete Slab Equal Area / storage areas First Adequate for Continuous Footing or Steel or Equal MA36 Service Station 12 Floor separation of office / Concrete Slab Painted Area service area First Adequate for Continuous Footing or Face Brick or MA38 Supermarket 14 Floor separation of service Concrete Slab Equal Area / storage areas First Adequate for Continuous Footing or Face Brick or MA39 Theater 14 Floor separation of service Concrete Slab Equal Area / storage areas First Continuous Footing or Face Brick or MA40 Warehouse 14 Floor Small Office Areas Concrete Slab Equal Area First Continuous Footing or Face Brick or MA41 Convenience Store 12 Floor Minimal Concrete Slab Equal Area Abundant for First Continuous Footing or Face Brick or separation of MA42 Veterinary Clinic 10 Floor Concrete Slab Equal treatment / Exam Area rooms First Adequate for Continuous Footing or Face Brick or MA44 Funeral Home 14 Floor separation of sales / Concrete Slab Equal Area viewing chapel Abundant for First Continuous Footing or Face Brick or separation of MA46 Medical Office 10 Floor Concrete Slab Equal treatment / Exam Area rooms 142 | P a g e Schedule of Values Lincoln County 2027 Floor Remarks / MA Interior Plumbing Framing Cover / Other Features Additional Add For… Code Finish Fixtures Finish Features Finished Good Wood Painted Garage Doors, Hose Heating / Cooling, MA35 Concrete 2-5 Fluorescent Joist Block Bibs, Floor Drains Sprinkler System Slab Lighting Finished Overhead Doors, Concrete Hose Bibs, Drains, Good Wood Slab, Painted MA36 5-8 Sales Area, Office Fluorescent Heating / Cooling Joist Quarry Block Area, Plate Glass Lighting Tile, or Windows Equal Drywall / Finished Aluminum / Glass Abundant Wood Panel / Heating / Cooling, MA38 Concrete 8-10 Store Front, Fluorescent Joist Painted Sprinkler System Slab Automatic Doors Lighting Block Vinyl / Heavy Rigid Drywall / Linoleum Elevated Projection Steel Panel / Heating / Cooling, MA39 / 10-12 Booths, Plate Glass Joist / Painted Sprinkler System Finished Front, Ticket Booth Truss Block Concrete Slab Heating / Cooling, Finished Overhead / Rolling Steel Painted Sprinkler System, Major MA40 Concrete 0-5 Doors Wood or Frame Block Enclosures, Mezzanines, Slab Steel Freight Elevators Drywall / Aluminum / Plate Vinyl / Abundant Wood Panel / Glass Front, Average Heating / Cooling, MA41 Heavy 5 Fluorescent Joist Exposed Display Area, Glass Sprinkler System Linoleum Lighting Brick Doors Heating / Cooling, Wood Vinyl / Drywall / Floor Drains, Kennel MA42 15-20 Sprinkler System, Frame Carpet Panel Areas Elevators Carpet / Floor Draining, Wood Vinyl / Drywall / Heating / Cooling, Lifts, MA44 10-15 Quarry Tile, Joist Rubber Panel Elevators Preparation Area Tile Heating / Cooling, Wood Vinyl / Drywall / MA46 15-25 Sprinkler System, Frame Carpet Panel Elevators 143 | P a g e Schedule of Values Lincoln County 2027 MA Wall Story Foundation / Partitions / Common Description Exterior Walls Code Height Height Basement Walls First Adequate for Continuous Footing or Face Brick or MA47 Government 10 Floor separation of office Concrete Slab Equal Area areas Nursing First Adequate for Continuous Footing or Face Brick or MA49 Convalescent 14 Floor separation of housing Concrete Slab Equal Home Area / treatment / kitchen First Adequate for Fast Food Continuous Footing or Face Brick / Plate MA50 12 Floor separation of kitchen Restaurant Concrete Slab Glass or Equal Area / dining area First Community Continuous Footing or Wood Frame, MA52 10 Floor Adequate Building Concrete Slab Vinyl, or Equal Area First Adequate for Continuous Footing or Face Brick or MA53 Health Club 12 Floor separation of service Concrete Slab Equal Area / storage areas First Adequate for Automotive Continuous Footing or Face / Jumbo MA54 14 Floor separation of retail / Center Concrete Slab Brick Area service area First Continuous Footing or MA55 Mini-Lube 14 Floor Face Brick Retail / Service Concrete Slab Area First Adequate for Continuous Footing or Wood Frame, MA56 Dairy Sales 10 Floor separation of retail / Concrete Slab Vinyl, or Equal Area service area First Continuous Footing or MA57 Service Shop 14 Floor Face Brick Minimal Concrete Slab Area First Adequate for Neighborhood Continuous Footing or Face Brick or MA58 14 Floor separation of retail Shops Concrete Slab Painted Block Area stores 144 | P a g e Schedule of Values Lincoln County 2027 Floor Remarks / MA Interior Plumbing Framing Cover / Other Features Additional Add For… Code Finish Fixtures Finish Features Heating / Cooling, Wood Vinyl / Drywall / MA47 10-15 Sprinkler System, Frame Carpet Panel Elevators Drywall / Vinyl / Good Heating / Cooling, Wood Panel / 3-5 per Quarry Tile / Kitchen MA49 Heavy Fluorescent Sprinkler System, Joist Painted room Area / Floor Drains Linoleum Lighting Elevators Block Vinyl / Heavy Drywall / Linoleum Kitchen Area / Wood Panel / Abundant Heating / Cooling, MA50 / 10-15 Quarry Tile Floor Joist Exposed Lighting Sprinkler System Terrazzo Drains Brick / Quarry Tile Vinyl / Wood Drywall / Heating / Cooling, MA52 Concrete 5-8 Joist Panel Sprinkler System Slab Vinyl / Painted Overhead Doors Good Wood Heavy Block / MA53 3-11 (Abundant), Dock Fluorescent Heating / Cooling Joist Linoleum Exposed Bumpers Lighting / Carpet Brick Concrete Overhead Doors, Wood Painted Sprinkler System, MA54 Slab / 5-10 Hose Bibs, Floor Frame Block Heating / Cooling Vinyl Drains Finished Wood Painted MA55 Concrete 2-5 Overhead Doors Heating / Cooling Joist Block Slab Finished Wood Drywall / Heating / Cooling, MA56 Concrete 5-8 Joist Panel Sprinkler System Slab Finished Wood Painted Heating / Cooling, MA57 Concrete 2-6 Overhead Doors Joist Block Enclosures Slab Drywall / Vinyl / Aluminum / Glass Abundant Wood Panel / Sprinkler System, MA58 Heavy 10-15 Store Front, Fluorescent Joist Painted Heating / Cooling Linoleum Automatic Doors Lighting Block 145 | P a g e Schedule of Values Lincoln County 2027 MA Wall Story Foundation / Partitions / Common Description Exterior Walls Code Height Height Basement Walls First Adequate for Neighborhood Continuous Footing or Face Brick or MA60 14 Floor separation of retail Shops Concrete Slab Painted Block Area stores First Tilt-Up Panel / Distribution Continuous Footing or MA62 14 Floor Load-Bearing Small Office Areas Warehouse Concrete Slab Area Walls First Adequate for Metal / MA63 Mini-Warehouse 10 Floor Poured Concrete Slab separation of storage Aluminum Area units First Continuous Footing or Wood Frame, MA66 Post Office 10 Floor Adequate Concrete Slab Vinyl, or Equal Area First Self-Service Car Continuous Footing or Adequate for MA67 12 Floor Jumbo Brick Wash Concrete Slab separation of bays Area First Adequate to separate Continuous Footing or Face Brick or MA70 Daycare Center 12 Floor office / classrooms / Concrete Slab Equal Area kitchen Face Brick / First Cold Storage Continuous Footing or Prefab Panels / MA71 14 Floor Small Office Areas Facility Concrete Slab Load Bearing Area Walls First Continuous Footing or Face Brick or MA73 Library 12 Floor Adequate Concrete Slab Equal Area First Continuous Footing or Face Brick or MA74 Jail 12 Floor Adequate Concrete Slab Equal Area First Continuous Footing or MA75 Open Office 10 Floor Fire Brick or Equal Minimal Concrete Slab Area 146 | P a g e Schedule of Values Lincoln County 2027 Floor Remarks / MA Interior Plumbing Framing Cover / Other Features Additional Add For… Code Finish Fixtures Finish Features Drywall / Vinyl / Aluminum / Glass Abundant Wood Panel / Sprinkler System, MA60 Heavy 10-15 Store Front, Fluorescent Joist Painted Heating / Cooling Linoleum Automatic Doors Lighting Block Exposed Overhead / Rolling Heating / Cooling, Reinforced Concrete Adequate MA62 Concrete / 5-10 Doors Metal or Sprinkler System, Concrete Slab Lighting Block Steel Elevators Overhead / Heating / Cooling, Rigid Steel Concrete MA63 Unfinished None Pedestrian Doors Sprinkler System, Frame Slab Metal / Wood Enclosures, Plumbing Finished Wood Drywall / Heating / Cooling, MA66 Concrete 5-8 Joist Panel Sprinkler System Slab Rigid Steel Concrete Exposed Floor Fluorescent MA67 Joist / Slab Brick / Block Drains Lighting Truss Concrete Painted Wood Slab / Heating / Cooling, MA70 Block / 10-15 Joist Vinyl / Sprinkler System Drywall Carpet Exposed Overhead / Rolling Heating / Cooling Steel Bar Concrete MA71 Brick / 5-10 Doors Metal or (Creature Comfort Joist Slab Panels Steel Only), Sprinkler System Wood Vinyl / Drywall / Heating / Cooling, MA73 5-8 Joist Carpet Panel Sprinkler System Wood Concrete Drywall / Heating / Cooling, MA74 10-15 Joist Slab Panel Sprinkler System Wood Vinyl / Drywall / Heating / Cooling, MA75 8-10 Joist Carpet Panel Sprinkler System 147 | P a g e Schedule of Values Lincoln County 2027 MA Wall Story Foundation / Partitions / Common Description Exterior Walls Code Height Height Basement Walls First Storage / Support Continuous Footing or Face Brick or MA77 14 Floor Minimal Area Concrete Slab Equal Area First Continuous Footing or Face Brick or Separation Office / MA78 Kennel 10 Floor Concrete Slab Equal Stalls Area Adequate for First Continuous Footing or Face Brick or separation of Retail / MA79 Winery 14 Floor Concrete Slab Equal Dining / Processing Area Areas First Adequate for Continuous Footing or Face Brick or MA80 Pro Shop 14 Floor separation of retail Concrete Slab Equal Area and support areas First Adequate for Continuous Footing or Light Steel or MA81 Office / Shop 10 Floor separation of Office / Concrete Slab Equal Area Shop / Storage Areas First Adequate for Continuous Footing or Ornamental Block MA82 Auto Parts Store 14 Floor separation of retail / Concrete Slab or Equal Area storage area First Adequate for Continuous Footing or Face Brick or MA83 Drug Store 14 Floor separation of retail / Concrete Slab Equal Area storage area Adequate for First Conv Store / Fast Continuous Footing or Face Brick or separation of Retail / MA84 14 Floor Food Store Concrete Slab Equal Restaurant / Storage Area Areas 148 | P a g e Schedule of Values Lincoln County 2027 Floor Remarks / MA Interior Plumbing Framing Cover / Other Features Additional Add For… Code Finish Fixtures Finish Features Heating / Cooling, Finished Overhead / Rolling Steel Painted Sprinkler System, Major MA77 Concrete 0-5 Doors Wood or Frame Block Enclosures, Mezzanines, Slab Steel Freight Elevators Finished Painted Wood Overhead / Rolling Heating / Cooling, MA78 Concrete Block / 3-10 Frame Doors Sprinkler System Slab Drywall Heating / Cooling, Wood Vinyl / Drywall / MA79 10-15 Floor Drains Sprinkler System, Frame Carpet Panel Elevators Vinyl / Wood Drywall / Heating / Cooling, MA80 Linoleum 10-15 Joist Panel Sprinkler System / Carpet Vinyl / Drywall / Rigid Carpet / Panel / Overhead / Heating / Cooling, MA81 Steel 5-8 Finished Exposed Pedestrian Doors Sprinkler System Frame Concrete Steel Drywall / Vinyl / Panel / Aluminum / Glass Abundant Light Heating / Cooling, MA82 Heavy Plaster / 8-10 Store Front, Fluorescent Steel Sprinkler System Linoleum Painted Automatic Doors Lighting Block Drywall / Vinyl / Panel / Aluminum / Glass Abundant Light Heating / Cooling, MA83 Heavy Plaster / 8-11 Store Front, Fluorescent Steel Sprinkler System Linoleum Painted Automatic Doors Lighting Block Drywall / Vinyl / Panel / Abundant Wood Quarry Tile Floor, Heating / Cooling, MA84 Heavy Plaster / 10-15 Fluorescent Joist Floor Drains Sprinkler System Linoleum Painted Lighting Block 149 | P a g e Schedule of Values Lincoln County 2027 TYPE CODE BASE_QTY BASE_RATE INCREMENTAL DECREMENTAL LT CT 1 $150,000.00 $150,000.00 $150,000.00 AC SW 1 $12,000.00 $12,000.00 $12,000.00 SITE IMPROVEMENT RATES TYPE CODE DESCRIPTION RATE SI CWS COUNTY WATER/SEPTIC $12,000.00 SI LP LINCOLNTON WATER/SEWER $5,000.00 SI MP MAIDEN WATER/SEWER $10,000.00 SI PB COUNTY WATER/SEWER $14,000.00 SI PS LINCOLNTON WATER/SEPTIC $7,000.00 SI WPS COUNTY SEWER/WELL $12,000.00 SI WS WELL/SEPTIC $10,000.00 GRADE ADJ_PERCENT AAA+ 400% AAA 350% AAA- 325% AA+50 300% AA+25 275% AA+- 250% AA-25 225% AA-50 200% A+40 180% A+20 170% A+10 160% A+- 150% A-10 140% B+10 130% B+- 125% B-10 115% C+10 110% C+05 105% C+- 100% C-10 95% D+10 90% D+- 85% D-10 75% E+10 65% E+- 55% E-20 45% E-30 40% 150 | P a g e Schedule of Values Lincoln County 2027 TYPE DESCRIPTION AC ACRES LT LOT SS SQUARE FEET CODE DESCRIPTION B PRIMARY B1 PRIMARY/PUBLIC WATER B2 PRIMARY/PUBLIC WATER 2 CA COMMON AREA CA1 COMMON AREA 1 CA2 COMMON AREA 2 CB COMMERCIAL PRIMARY CR COMMERCIAL RESIDUAL CS COMMERCIAL SECONDARY CT CELL TOWER SITE CU COMMERCIAL UNDEVELOPED D WOODS EB EXEMPT PRIMARY EB1 EXEMPT PRIMARY/PUBLIC WATER ER EXEMPT RESIDUAL ES EXEMPT SECONDARY EU EXEMPT UNDEVELOPED FP FLOOD PLAIN GC GOLF COURSE IB INDUSTRIAL PRIMARY IR INDUSTRIAL RESIDUAL IS INDUSTRIAL SECONDARY IU INDUSTRIAL UNDEVELOPED LAC LAKE ACCESS O OPEN (NOT WOODS) R RESIDUAL S SECONDARY S1 SECONDARY/PUBLIC WATER SW SOLAR/WIND FARM U UNDEVELOPED WF WATERFRONT WF1 WATERFRONT/PUBLIC WATER WFR WATERFRONT RESIDUAL 151 | P a g e Schedule of Values Lincoln County 2027 LAND ACCESS ADJUSTMENTS TYPE CODE DESCRIPTION ADJUSTMENT PERCENT LA 01 NO ACCESS