About Land Use Classification Codes
INTRODUCTION
Rhode Island Assessors and others have discussed updating Classification Codes for many years. Classification or Class Codes are important to Assessors and many other users. Class Codes provide information about property “at a glance”. They enable users to query large databases and summarize large quantities of data for analysis. Assessors use Class Codes to identify taxable status of property, administer property tax classification and provide annual reports to the RI Dept. of Revenue (DOR) and municipal departments. Assessors and appraisers use Class Codes to search for assessment and sale comparables. The State DOR uses them for various studies and reports. Municipal and State planners use them to reveal existing land use patterns and assist in managing future land uses. Economic development and GIS users at the Municipal and State level use them for various purposes.
EXISTING STATE CODES
In Rhode Island, the Class Codes that Assessors use are known as State Codes. Currently the list of codes is not on the State DOR Web site. Rhode Island State Codes describe the type, use and taxable status of property and are assigned to every taxable and tax-exempt property in the State. RI cities and towns use the same basic list of State Codes however they are not always applied uniformly due in part to various Tax Classification* schemes and differing interpretations by assessors of the Code descriptions. New codes have been added by some cities and towns. For assessors, the primary function of the existing RI State Codes is to classify the TAXABLE STATUS of a property. Describing property use is a secondary function of State Codes.
*Taxing property at different rates based on the ownership and use of a property
PROBLEMS WITH THE EXISTING STATE CODES
Lack of detail with the current State Codes is the major problem. With the existing State Code system, a bank has the same code as a restaurant or a ski area. Nearly as problematic is that similar uses are not grouped together numerically, which means the codes were not designed for use with databases. This makes it difficult to query a database or run reports. Also, if a property is fully or partially exempt, if it's in tax title, or if it carries the exempt code “Vote of the City”, the code provides no insight into the use of the property. Properties coded as mixed use also have no other details. Little detail is available for “vacant land”. In addition to the State Codes, assessors also maintain "land line codes" in CAMA systems and they do provide more detail. However, the primary function of the land line code is to determine land value, and they do not always correspond to the use of the property. Land line codes vary widely from municipality to municipality to accommodate local land valuation models and various exemption and tax classification schemes. Also, land line codes are tied into state codes and building cost models in many CAMA systems in the state.
ADD NEW CODES OR “EXPAND” EXISTING STATE CODES
The existing State Codes were not designed for use with databases. Due to the way the existing codes are numbered, an expansion is not feasible for use with relational databases such as CAMA, Tax Administration or GIS. The primary purpose of the Rhode Island State Code system is to identify the taxable status of property and to administer property tax classification. Any new class code system must preserve the tax and classification status of property. A new Class Code system should be capable of replacing the existing State Codes someday. However, it would not be necessary or even possible for this to happen immediately because of the length of time it would take to implement a new system statewide (at least one complete revaluation cycle). Adding the new codes while maintaining the existing codes will be necessary as the system is phased in. Maintaining class codes independent from state codes and land line codes in CAMA will allow a property’s actual use to be classified independently from its taxable status and land pricing.
WHAT IS NEEDED FROM A NEW SET OF CODES?
Obviously more detail is needed. However, the codes must also be numbered logically with similar uses grouped together so they are easy to find on a list or query in a database. Tax exempt properties should be described with the same level of detail as taxable property. Mixed use property codes should describe property with the same level of detail as single use property. The system must be simple yet scalable enough to cover all situations that may occur in the future and all codes need to have clear, detailed, and consistent descriptions. The codes must be designed so all cities and towns and revaluation companies will be able to apply them uniformly. Finally, adopting new codes must provide more benefits to assessors and other users than the effort it will take to implement and maintain them. Implemented statewide; assessment data with detailed and uniform classification data would be extremely useful to assessors as well as other users.
CURRENT STANDARDS FOR LAND CLASSIFICATION
The International Association of Assessing Officers (IAAO) publishes technical standards “to provide a systematic means by which assessing officers can improve and standardize the operation of their offices”. The old IAAO standard for class codes was retired in 2000 in favor of endorsing LBCS (Land Based Classification System). LBCS is the only system that solves all the problems and issues described above. In 2006 at the annual IAAO Conference in Boston, there was a seminar on LBCS. Several years ago, when last checked, only Kansas had adopted the LBCS system statewide. However, many county assessing jurisdictions throughout the US had adopted it. City and county zoning authorities have adopted it as well. Even some private companies have adopted it. LBCS was developed in the late 90's by several Federal agencies to replace the 1965 Standard Land Use Coding Manual (SLUCM). Most state land use coding systems are loosely based on the old SLUCM system. LBCS is the de-facto national standard that federal government agencies and assessing jurisdictions are adopting as they upgrade from existing systems. The LBCS website, which is hosted by the American Planning Association, has many resources including detailed descriptions of each code to minimize confusion and ensure uniform coding in all cities and towns.
LBCS DRAFT LIST
The list of codes on the "Document/Links" page is a very rough draft. It's based on the full list of LBCS Functional and Ownership codes with some additional codes necessary for RI. The list is only a rough draft and still contains many codes we will not need. There is a column with corresponding RI state codes, but it is incomplete and still being edited. Also included are Ownership codes which could be used in combination with the Functional codes. These Ownership codes describe tax exempt status and factors such as development rights, common land, easements, and other constraints. These ownership codes could augment or replace the existing State Codes sometime in the future. As an additional option, Site Codes are included at the end of the list which could replace or supplement the CAMA “Vacant / Improved” field with additional detail about land that has improvements or characteristics other than buildings. Once the list is edited to include only the codes we need, the full list of codes should end up being similar in size to other states.
IMPLEMENTATION AND MAINTENANCE
Assessors will not need to implement a new Class Code System “in house”. Revaluation contractors would convert existing data to create new codes at the beginning of a revaluation project. Converted data would be reviewed and verified in the field. How it would be reviewed would depend on the type of revaluation project. Every 9 years, full revaluation projects put boots on the ground and a greater level of detail could be collected than with 3-year update projects that only include a “drive by” of each property. In cities with a greater percentage of commercial and industrial properties, there would be a commensurate higher level of review for converted data. Once a new system is in place, assessing staff would only need to handle annual maintenance (changes in use due to building permits, zoning decisions, etc.).
The statements and opinions contained here do not necessarily reflect the opinions of my employer or the Rhode Island Association of Assessing Officers or the State of Rhode Island Department of Revenue.