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164 <br /> characteristics of a property (such as grade, condition, effective year built) so the <br /> property's assessed value will align more closely to its recent sales price without regard <br /> to consistency in valuation with other similar properties in the neighborhood/market <br /> area. An example would be changing the grade of a single property to A when all other <br /> similar homes in the neighborhood are graded B because the A grade leads to a higher <br /> assessed value closer to its recent sales price.] <br /> When considering the model, it appeared that since no neighborhood <br /> factor* was utilized *[not commonly used in Orange County], value was added to <br /> the land to reach the level of assessment targeted. By doing this, even <br /> though assessment levels appear to be reasonable when considering ratio <br /> and COD, it appears that land values were elevated in many areas. When <br /> considering Vertical Inequity, elevated land values have an immediate impact <br /> due to every property is subject to that elevated land value. This impact is <br /> compounded if the improvement is on the lower value range or especially <br /> when the property is vacant or in really poor condition. To further explain <br /> this situation, considering the residential base rate of $126.00 is relatively <br /> low; by not utilizing neighborhood factors, you are very limited in terms of <br /> raising that base cost to a realistic range. With this limitation of increasing <br /> base rates, another method of reaching market value would be required. <br /> The problem being, it would require elevating grades on improvements, <br /> elevating condition or effective years on improvements, or elevating land <br /> values in efforts to achieve market value. This generally leads to sales <br /> chasing where something is changed on the sold property in efforts to <br /> achieve market value rather than the ability to tweak the model or <br /> neighborhood factor so all properties could be accurately adjusted. <br /> An observation present that may require some research is that upper end <br /> valued improvements seem to be relatively undervalued. There could be <br /> various reasons for this to occur, but again, it would require extensive <br /> research to understand what the cause is. Obviously, by undervaluing upper <br /> end properties, that itself can lead to Vertical Inequity or at least contribute <br /> towards causing an inequity. In addition to the base rate being low and not <br /> [commonly] utilizing neighborhood factors, another key cause could be under <br />