What’s new with the adjusted tax assessment valuation method?


Recent changes in some Florida assessment ratios serve as a reminder that the adjusted tax assessment method requires alertness and periodic updating. I wrote an article about this in the September 2020 Insider magazine published by the Association of State Floodplain Managers (ASFPM).

The adjusted tax assessment method is the NFIP default building valuation method, and it often works well for small projects. The downside is that some buildings aren’t assessed at all, and tax assessments were never intended to be used for this purpose, so they aren’t as reliable as appraisals.

Here’s how it works:

Under-roof building assessment ÷ assessment ratio = NFIP building value

In Florida, by statute, the target assessment ratio is 85%. Each year County Property Appraisers in Florida file form DR-493 with the Florida Department of Revenue certifying the percentage deduction applied for “costs of sale”. Almost always the deduction is 15% resulting in an apparent assessment ratio of 85%.

However, the level of assessment varies from county to county. The Florida department of revenue audits counties and publishes a table of statewide levels of assessment (see Statewide Summary Statistics at https://floridarevenue.com/property/Pages/DataPortal.aspx). Using this information, a local official can calculate the true assessment ratio for a given Florida county. For Collier County, the countywide level of assessment is 90.5% of the 85% statewide target, or a true assessment ratio of .7693 derived by multiplying the two fractions. So, a Collier County local official using the adjusted tax assessment method will divide the under-roof building assessment by .7693. If one prefers to multiply, then the math is to multiply the under-roof building assessment by 1.2999 (1/.7693).

In adjacent Lee County, the level of assessment is reported to be 93.7%, so the local official there would either divide by .7965, or multiply by 1.255.

The point is that levels of assessment change because of periodic, countywide reappraisals, because the office of county appraiser/assessor changes, or because of politics at a higher level. It is the responsibility of local officials to stay on top of the change and make the correct adjustment.