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State Board questions vacant-land assessments after sales comparison; staff says formal ratio study needed
Summary
Chair Paul Bancroft presented a compilation showing average assessed values for vacant lots far below the target range; Department of Taxation staff said the compilation is not a conclusive ratio study and recommended stratified, cleaned sampling before any correction or equalization action.
Chair Paul Bancroft said the board's packet includes a compilation comparing vacant-land sales prices with assessed values that showed an average assessed-value-to-sales-price ratio of 23.83% and a median of 22.31%, well below the board's target range of 32% to 36%.
"Among that group of sales, the average assessed value as a percentage of sales price was 23.83% and the median was 22.31%, which is much lower than the target range," Bancroft said as he described the compilation and asked department staff whether that suggested vacant land may be undervalued for assessment purposes.
Jeff Mitchell, deputy director of excise and local government services for the Department of Taxation, told the board the compilation is useful but not dispositive. "I don't believe that this is conclusive," Mitchell said, explaining that the department's formal ratio study process requires stratifying the sales data, cleaning the sales to remove non-arms-length transactions, and reviewing parcels for special categories (for example agricultural classifications or subdivision discounts) before drawing conclusions.
Mitchell described the department's standard approach: the ratio study uses statistically selected samples across property classifications and compares those samples to market sales, rather than a raw compilation of all sales. He said a more thorough analysis would require dedicating staff resources to research and to verify which sales in a list are usable and reflective of market value.
Board members pressed for procedural follow-ups. Member Bruce Cadwallader asked specifically what happens when a county shows parcels ‘‘out of ratio,'' citing a roughly 26% out-of-ratio finding for Douglas County in the department's work. Mitchell said recommendations vary with severity; some findings prompt county-level corrections in the next cycle, and more significant or systemic discrepancies can lead the department to recommend further action to the Nevada Tax Commission.
The chair also asked staff to include Pershing County's not-yet-filed tax roll on the next meeting agenda so the board can review complete statewide data before determining whether to pursue any equalization actions.
The board took no immediate equalization action at the March meeting; staff advised further sampling and formal ratio-study procedures before the board considers preliminary findings or schedules hearings under NAC 361.664.
