Sunderman, Mark A., John W. Birch and Thomas Hamilton, "Components of the Coefficient of Dispersion," Property Tax Journal, 9(2): 127 - 139, 1990.

In our research in the area of property tax equity a great deal of attention is focused on the coefficient of dispersion (COD). COD is often used as a measure of assessor performance, as well as a gauge of equity in the property tax field.

We noted that there are two forms of inequity that may exist: horizontal and vertical inequity. Horizontal inequity is acceptable within limits, whereas any significant vertical inequity is generally unacceptable. COD is a measure of the extent of both forms of inequity.

This article presents a practical, simple method of breaking the overall COD measure into horizontal and vertical components. Assessors need a method for measuring these two different types of inequity since each results from different causes. Attempts to reduce inequity require knowing the type that exists, as well as its extent.

Birch, John W., Mark A. Sunderman and Thomas Hamilton, "Adjusting for Vertical Inequity in Property Assessment," Property Tax Journal, 9(3): 197 - 211, 1990.

Once a tax jurisdiction determines that vertical inequity is present, the question becomes what to do about it. We acknowledge that the factors causing vertical inequity need to be eliminated.

We present a "short run" approach to adjusting for vertical inequity. The approach does not eliminate the underlying causes of vertical inequity. Instead we recommend eliminating the effects, removing the "sting" so to speak. By adjusting for vertical inequity in the short run, the assessor has time over the longer run to determine the underlying cause(s) for the inequity and thus, hopefully, to correct the condition(s) generating the inequity.

This paper provides a first basis for (1) determining if there is statistically significant vertical inequity present in a jurisdiction, and (2) proceeding to make adjustments to eliminate that inequity.

Sunderman, Mark A., John W. Birch, Roger E. Cannaday and Thomas W. Hamilton, "Testing for Vertical Inequity in Property Tax Systems," Journal of Real Estate Research, 5(3): 319 - 334, 1990.

There is a series of journal articles that appeared from the 1960's to the late 1970's addressing the use of models to test statistically for the presence of vertical inequity. These models initially involved comparisons of mean assessment sales ratios. Later models involved the use of linear and nonlinear regression analysis where assessments and sales prices were compared.

As a result of initial work applying these regression tests on some Chicago condominium data, we concluded that the existing tests were indeterminate and inconsistent. This article is based on the recognition that earlier models are adequate for testing for vertical inequity provided the functional form specified is the one present in the data. Thus, the specification of a linear model, for example, can result in the conclusion of no vertical inequity when a nonlinear model leads to the opposite result. There are reasons for expecting appraisal and sales price data to be variously linear, quadratic or of a more complex nature, depending on the source of the data and recent conditions within the jurisdiction. Without knowing the functional form before testing, it is important to have a model sufficiently flexible in functional form to handle all cases. This paper suggests the use of a spline regression technique which has the flexibility to give appropriate statistical tests in practically all circumstances.

All models are applied to both contrived data and to Chicago condominium data to illustrate the superiority of spline modeling in testing for vertical inequity. Recent work has authenticated this approach as superior to prior methods (see Sirmans, Diskin, and Friday, "Vertical Inequity in the Taxation of Real Property," National Tax Journal, 1995)

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Birch, John W., Mark A. Sunderman and Thomas Hamilton, "Determining the Minimum Sample Size for Assessment and Reappraisal Work," Property Tax Journal, 10(3): 299 - 311, 1991.

Much assessment work is based on sales ratio data, where such ratios in turn depend on relatively small samples of property sold in some recent period. There seems to be general rules of thumb about making adjustments based on samples of greater than 25 to 30. There does not seem to be a good sense of the factors that determine if a sample size is large enough for property adjustments based on such a number. Even more important, there is no clear idea that the minimum sample size will vary considerably depending on the underlying conditions and desired reliability for adjustments. The end result is that adjustments are sometimes made when the number of sales is inadequate to support the adjustments, or no adjustment is made when the number of sales is more than sufficient for such support.

This paper describes the factors determining minimum sample size and develops appropriate formulas for application in any given case. With these formulas, sample size adequacy can easily be found for the whole jurisdiction or for subparts, such as neighborhoods. Underlying assumptions for the applicability of the formulas are clearly described and a nonparametric alternative is recommended if assumptions are violated. This article contributes to improving classwide property adjustment methods by making it clear when sample sizes in sales ratio data are adequate.

Birch, John W., Mark A. Sunderman and Thomas Hamilton, "Estimating the Importance of Outliers in Appraisal and Sales Data," Property Tax Journal, 10(4): 361 - 376, 1991.

The values represented in a set of data are generally a function of systematic forces and random influences. The exceptions are called outliers. Outliers are usually extreme values resulting from uncommon influences that have no effect on most observations. In sales ratio work, it is helpful to be able to measure if there is an important outlier presence within the data. Such a measure provides an empirical basis for costly efforts to search for and remove individual outliers. It can also indicate if the effort should be concentrated on the sales or appraisal side.

In this paper, we develop a measure for indicating the importance of the outlier influence in appraisal and sales data. A numerical illustration is also included.

Vertical and horizontal inequity occur in many property assessment districts. In this paper, we develop and apply an adjustment system for both kinds of inequity. The system is an extension of our work in "Adjusting for Vertical Inequity in Property Assessment," Property Tax Journal, 9(3): 197 - 211, 1990. In that work, a county wide, macro based adjustment was presented. This paper applies a micro based approach. The new method is thus capable of handling inequity adjustments the previous approach was unable to deal with. For example, "between" neighborhood horizontal inequity can be adjusted for by the method adopted in this paper. We argue the micro based procedure can be expected to further reduce inequity, compared with the pure macro approach previously suggested.

When the procedure was applied to actual data, there was a marked decline in coefficients of dispersion for neighborhood appraisal-sales ratios. More equal treatment of properties within neighborhoods was attained. Further, the vertical inequity within the county was practically eliminated when the system was applied. The overall coefficient of dispersion on sales ratios dropped by about 21 percent and the mean absolute deviation fell by 30 percent. Finally, neighborhood median sales ratios typically moved to the ideal value of 1.0. Generally, assessment equity was much improved.

Some background may be of interest. The equalization factors developed in this manuscript were applied to Natrona County (Casper, Wyoming is the county seat) by the Wyoming State Board of Equalization during the summer of 1991. The procedure came to be known as the VHAAS method (Vertical Horizontal Appraisal Adjustment system). The procedure resulted from a general request by the Director of the Ad Valorem Tax Division, Wyoming Department of Revenue, for help with a severe inequity problem that had occurred in Natrona County. Our results became Ad Valorem's recommendation to the State Board of Equalization as a means to resolve the problem. The State Board of Equalization adopted our recommendations. The application of this early version of the VHAAS procedure helped eliminate the majority of some 5000 property tax grievances that had been filed. VHAAS has become A common term in assessor's offices in Wyoming. A computer program was then developed independently for VHAAS analysis.

Birch, John W. and Mark A. Sunderman, "Equalizing Property Appraisals to Market: Comparing Old and New Methods," Assessment Journal, 2(2):47-53, 1995.

Assessors often find it is important to adjust appraisals to market for any class of property. This process of equalizing appraisals to market has been conducted in different ways. The most common is the universal single adjustment by some percentage to bring all appraisals to the new market level. The same adjustment is sometimes made at the neighborhood level, with different adjustment percentages depending on the market change in each district. This second method, like the first, encompasses only pure market adjustments.

A third method involves vertical as well as market adjustments, but is conducted only at the district wide level. Finally, individual significant vertical adjustments can be isolated and taken for each neighborhood separately.

In this paper we use a statistical analysis to compare the effectiveness of these four methods in reducing inequity. We use final sales ratio data for residential improved property for five Wyoming counties for 1991 to arrive at a conclusion based on actual data. Our main finding is that the fourth method described (the VHAAS method) is the most effective, showing definitely better adjustments with significantly reduce inequity compared with any of the other methods. The worst method is the most commonly used one, where a single percentage adjustment is applied in the district across the whole property class.

Birch, John W. and Mark A. Sunderman, "Adjusting for Market Movements Over Time: Is Subdistricting Necessary?" Assessment Journal, 3(1): 36-42, 1996.

It is often necessary to adjust all appraisals for their date of sale. Often, market prices are changing in some systematic way, and appraisals become out of date within months or even weeks. Thus, it is important to make short term (12-18 month) adjustments for market movements.

It is frequently the case, however, that different geographic segments of assessment districts are experiencing unequal market movements. Some may be rising rapidly while others are relatively much more constant. An aggregate analysis of an assessment district is really an analysis of the average of all subdistricts. If subdistricts have differing market movements, the aggregate analysis and resulting adjustments will overestimate or underestimate market level movement and resulting adjustments in some subdistricts.

This paper develops a method for determining if a given, small number of main subdistricts have market patterns for short time periods, such as one year, that are the same or not. The procedure leads to a clear indicator of which subdistricts can be combined and which should be treated separately when estimating and adjusting for short term market level movements.

Birch, John W. and Mark A. Sunderman, "Testing for Outliers in Sales and Appraisal Data, " Assessment Journal, 4(4): 31-38, 1997.

Assessors often have the problem of trying to identify extreme valued outliers in sales and appraisal data, motivated by the desire to eliminate observations not driven by the market, and thus to work with "clean" data. In addition, the presence of outliers results in larger coefficient of dispersion (COD) values. Since positive assessor evaluation is often related to lower COD values, assessors prefer to delete extremes. The result is often strong pressures to identify and eliminate outlier observations. At the same time, the examination of outliers, one case at a time, is often a slow, expensive process. For many assessors, with limited resources, there is much frustration attached to the effort. In contrast, automatic trimming of ratios is considered as a last resort by most oversight agencies and by the International Association of Assessing Officers (IAAO). Thus, due to conflicting pressures, there often may be too little or too much trimming in different situations. This environment often means no one really knows if trimming has been appropriate. Assessors and oversight agencies simply have no objective way to judge this matter. The purpose of this paper is to develop a statistical test for significant outlier presence. We also show how to determine optimal trim for outliers, should the test procedure indicate such values remain embedded in the data.

Mark A. Sunderman, Roger E. Cannaday and Peter F. Colwell, "The Value of Mortgage Assumptions: An Empirical Test," Journal of Real Estate Research, 5(2): 247 - 257, 1990.

It is commonly accepted that the assumption of an existing mortgage has an effect on the sales price of a single-family house. If the seller is successful in capturing the value attributed to a mortgage assumption in the sales price, this would result in a sales price that is inflated in relationship to a conventionally financed sale. The question is how to adjust for assumption financing. The two main adjustment procedures suggested in the literature are the cash equivalence adjustment (CEA) and the financed-fee valuation adjustment (FFVA). Even though there are very few conclusions with which all investigators would agree, it does appear clear that some adjustment is needed for sales including assumption financing. It appears that the CEA approach overvalues this premium. Whether or not the FFVA technique is the solution is unclear.

This study provides an empirical test of the two main techniques for calculating the financing premium for assumption financed sales, CEA and FFVA. The results indicate that both the CEA and FFVA computational techniques overvalue the premium associated with assumption financing. This study is differentiated from previous studies in that the proportion of the financing premium capitalized into the sales price is shown to be a function of the loan-to-price ratio.

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Mark A. Sunderman, Roger Cannaday and Peter Colwell, "The Effect of the Listing Price on Cash Equivalence," Appraisal Journal, 60(2): 275 - 282, 1992.

It is widely accepted that assumption financing has an effect upon the sales price of real estate. Unless an adjustment is made, real estate is overvalued when a sales price that reflects favorable seller financing is used as a proxy for market value. Unfortunately, no definitive answers have been provided to indicate how seller-financed sales, or in particular, assumption financing, should be adjusted.

The cash equivalence adjustment (CEA) has often been the suggested means to adjust for seller financing. However, empirical tests have shown that CEA typically overvalues the financing premium. The purpose of this paper is to determine whether listing price may place a ceiling on the amount of the financing premium that is capitalized into the price of the house.

The paper found that the simple computational CEA approach overvalues the premium associated with assumption financed sales unless listing price is properly considered.

Ronald W. Spahr and Mark A. Sunderman, "The Effect of Prepayment Modeling in Pricing Mortgage-Backed Securities" Journal of Housing Research, 3(2): 381 - 400, 1992.

An important capital market innovation gaining popular acceptance in the 1980's has been the mortgaged back security and its derivatives. These securities have been the target of considerable analysis; however, their valuation remains an unresolved issue due in large part to the mortgage borrower's prepayment behavior. This paper applies different prepayment functions in conjunction with an options-based pricing approach to the valuation of mortgage-backed securities to evaluate the important factors and the sensitivity of these factors in pricing mortgage-backed securities.

This paper examines five prepayment models that have been proposed in the recent literature. Each of these five prepayment models were applied to an options-based pricing framework that incorporates the current U.S. Treasury term structure, a constant elasticity of variance interest rate process, and prepayments. It was found that each of the proposed models prices mortgage-backed securities differently and that the prepayment model used is critical in correctly pricing these securities.

Ronald W. Spahr, Mark A. Sunderman and Chukwaka D. Amalu, "Corporate Bond Insurance: Feasibility and Insurer Risk Assessment," Journal of Risk and Insurance, 58(3): 418 - 437, 1991.

Bond insurance for municipalities has been available for more than ten years; however, the introduction of corporate bond insurance has only recently received attention from potential insurers.

The purpose of this article is to determine the feasibility of corporate bond guarantee insurance or risk insurance where the insurer assumes the full obligation of the bond issuer should they default. This article uses a model to assess the pure risk premium for corporate bond insurance where both nonzero correlation between frequency and severity and nonzero correlation between individual risk units are allowed. The results suggest that corporate bond risk insurance could be offered by a third party insurer at a lower cost than the prevailing market default risk premium.

Ronald W. Spahr and Mark A. Sunderman, "Property Tax Inequities on Ranch and Farm Properties", Land Economics, 74(3): 374-389, 1998.

Previous studies have investigated residential real property tax inequity; however, little work exists regarding property tax inequity of agricultural property. This may result from agricultural land in most states being taxed based on differential assessment. In Wyoming, agricultural land is assessed on productive value, even though some lands sell for considerably more than productive value. Due to the presence of non-productive features, these farms or ranches receive substantial tax subsidies. The purpose of this study is to investigate property tax horizontal, vertical and market inequity found on agricultural land in Wyoming. Hedonic modeling is used to determine an alternative estimate of productive value, and it is found that considerable agricultural property tax inequity exists. We conclude by suggesting methods by which these inequities may be resolved.

Mark A. Sunderman and Ronald W. Spahr, "Additional Evidence on the Homogeneity of the Value of Government Grazing Leases and Changing Attributes for Ranch Value", Journal of Real Estate Research, 10(5): 601-616, 1995.

Using Wyoming ranch sales from 1979-1983 and 1989-1993, this study investigates how ranch value determining attributes may have changed over this period. The 1979-1983 period is one of political stability and rising prices. In contrast, the 1989-1993 period is one of political uncertainty but stable prices. It is found, during 1989-1993, ranch prices were based more on productivity; whereas, during the earlier period, prices were based more on speculative potential. Also, it is found that government grazing leases were valued differently between time periods, ecological regions and types of leases. This suggests that the current single-price grazing fee commonly used misprices many leases. Because of the heterogeneity in the value of grazing leases, we recommend a variable-fee form of pricing be adopted.

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Mark A. Sunderman and Ronald W. Spahr, "Valuation of Government Grazing Leases," Journal of Real Estate Research, 9(2): 179-196, 1994.

This paper investigates the value and purposes a public policy regarding government grazing leases. It is found that federal grazing leases have little impact upon the value of ranches. It is speculated that state leases are valued more highly than federal grazing leases because of the higher level of certainty of future availability and reasonable leasing fees. Based on these findings, this paper recommends a change in the classification of multiple use and possible divesting of much of the BLM lands. In addition, it is recommended that the federal government should set grazing rates on higher than their fair market value and attempt to reduce the uncertainty regarding future availability.

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Roger E. Cannaday and Mark A. Sunderman, "Estimation of Depreciation for Single-Family Appraisals," Journal of the American Real Estate and Urban Economics Association, 14(Summer): 255 -273, 1986.

Methods for the estimation of depreciation within the cost approach to appraisal of single-family residential property have been the focus of very few empirical studies. The purpose of this paper is to generate empirical evidence related to one such method, specifically the age-life method.

Within the context of a hedonic price model, functional form of the model and the design of the age variable are chosen to test for alternative paths of depreciation with one model. We found that our data supports a path of depreciation for single-family residential property which is concave. Of the standard paths of depreciation often suggested, the reverse sum of years digits path most closely approximates the path indicated as appropriate by this study.

Ronald W. Spahr and Mark A. Sunderman, "Valuation of Agricultural Property Surronding a Resort Community," Journal of Real Estate Research, 17(2): 227 - 243, 1999.

This paper demonstrates the use of hedonic modeling for valuation of real estate located near Jackson, Wyoming and agricultural property located throughout the remainder of Wyoming. The hedonic model used to value resort properties is compared with the model used to value agricultural properties. By examining each hedonic model, it is apparent that attributes contributing to the value of resort property are significantly different from attributes contributing to the value of agricultural property outside of Jackson. Resort properties derive their values from scenic and recreational amenities, existance of streams, type of vegetation and relative location. Alternatively, agricultural lands located throughout the remainder of the state derive value from a combination of productive and nonproductive attributes.

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John W. Birch and Mark A. Sunderman, "Optimal Trimming of Appraisal - Sales Ratios" Assessment Journal, 6(4): 25 - 31, 1999.

Sale ratio studies help determine if property assessment is equitable. Two statistics that are used in these studies are the coefficient of dispersion (COD) and the price related differential (PRD). Large CODs and PRDs outside stated limits are often viewed as indicating excessive property tax inequity and poor assessment performance. At the same time, mechanical adaptation to show more acceptable COD and PRD values can always be obtained by eliminating the most extreme sale ratio values, commonly known as trimming. Substantial automatic trimming is frowned on by the International Association of Assessing Officers (IAAO). Given the temptation to excess trimming, the IAAO has set a standard limiting automatic trim to about 2.5 percent from each end of the array of observed ratios. Since this is a rule of thumb, it may or may not result in the elimination of the proper number or kinds of sales. This paper involves a new statistical method for determining optimal trim, an alternative to the current automatic 5 percent total trim procedure. The main purpose here is to encourage a better set of trimming rules. It is shown the new technique encourages better assessor performance and also results in COD and PRD values that are more sensitive indicators of that performance.

Mark A. Sunderman, Ronald W. Spahr, John W. Birch, and Russell M. Oster, "Impact of Ranch and Market Factors on an Index of Agricultural Holding Period Returns," Journal of Real Estate Research, 19(1/2), 209-234, 2000.

This study develops nominal and real holding period return indices for operating ranches. The indices contain two components, monthly ranch operating profit and capital appreciation. A regression model that determines the effect of various attributes on total market value is used to estimate capital appreciation, and a second model determines operating profit. These models control for ranch size, real improvements, type of production and scenic / recreational value. Two different ranch data series, composed of capital appreciation and operating profit, are compared with U.S. Long Term Government Bonds, the S&P 500, and Small Capitalization Stocks. Both ranch indices show very low correlation with the S&P 500 index and very low or negative betas. Further, both ranch series have excess actual nominal and real returns when compared to expected returns determined from the Captial Asset Pricing Model (CAPM). It is observed that investments in Wyoming ranches make solid additions to an asset portfolio.

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Ronald W. Spahr, Robert G. Schwebach, and Mark A. Sunderman, "Original-Issue Systematic and Default Risk Pricing Efficiency of Speculative Grade Bonds," Journal of Risk and Insurance, Forthcoming 2002.

We investigate whether primary market, original-issue, risk premiums on speculative grade debt are justified solely by expected defaults, or whether these risk premiums also include other orthogonal risk components. Studies of secondary market holding period risk and return have hypothesized that risk premiums on speculative grade debt may be explained by bond and equity-related systematic risk and possibly other types of risk. Using an actuarial approach that considers contemporaneous correlation between default frequency and severity and first-order serial correlation, we cannot reject the hypothesis that the entire original-issue risk premium can explained by expected default losses. This suggests that speculative grade bond primary markets efficiently price default risk and other types of risk are priced as coincident as opposed to orthogonal risks.

Mark A. Sunderman and John W. Birch, "Valuation of Land Using Regression Analysis," Real Estate Valuation Issue of Research in Real Estate Monograph Series, Kluwer Academic Publishers, 8: 325-339, 2002.

Land appraisal has been generally done using one of four alternative approaches: sales comparison; allocation; extraction; or income capitalization. For various reasons, these methods are not always acceptable. In particular, a limited number of comparable sales generates serious problems when estimating land value. An alternative method is employed in this paper. Regression modeling is applied, using both improved and vacant land sales within a single analysis. Individual land values are found by estimating and removing the predicted values for improvements. For the case illustrated, the model explained up to 92 percent of the sales price based market values. The resulting adjustments to land values brought them closer to their expected market levels, and the uniformity of appraisals was also improved.

Brent C. Smith, Mark A. Sunderman and John W. Birch, "Sources of Variation in County Property Tax Inequities," Journal of Public Budgeting, Accounting and Financial Management, 15(4): 571-92, 2003.

The understanding of assessment inequities in the local property tax is extended by examining the relationships between characteristics of a tax jurisdiction and the degree of vertical inequity in its assessments. A two-step analytical procedure is used on a sample of sales transactions occurring in 1999 in 39 counties in Indiana. First, we utilize a procedure developed by Birch and et al. (John W. Birch, Mark A. Sunderman, and Thomas W. Hamilton. 1992. Adjusting for Vertical and Horizontal Inequity: Supplementing Mass Appraisal Systems. Property Tax Journal. September. 11,3: 257-76. 1990, 1992) to create an index of vertical inequity by county. The index is then predicted as a function of economic, geographic and demographic characteristics. One of the findings from Indiana indicate that urban tax jurisdictions with higher concentrations of commercial and/or industrial properties have increasingly progressive assessment tax inequity. The main purposes of this research are to explain differences in vertical tax inequity across jurisdictions.

John W. Birch and Mark A. Sunderman, "Estimating Price Paths for Residential Real Estate," Journal of Real Estate Research, 25(3): 277-300, 2003.

The price of a property often changes over short time periods, sometimes in unpredictable ways. After adjusting or standardizing prices for any changes in real property characteristics, there often remains a significant movement in typical price levels. A sequence of monthly or other time intervals can be used to approximate the pure price path following these property adjustments. Several approaches have been taken when measuring movements in the dollar value of property. However, there are weaknesses in each, and these can lead to distortions in results.

The method introduced in this paper ensures all explainable forces influencing real estate price movements are accounted for in the final market price pattern depicted. The process thus isolates and removes from the observed series the combined effects of all the inexplicable, random forces that are present. In contrast, currently used methods for determining price index movements, including standard regression, do not contain a procedure that guarantees an optimal breakdown between the effects of these two kinds of time related forces. The impact of unusual or unpredictable phenomena on price movements is not likely to be properly accounted for when applying standard regression or repeat sales methodologies. Part of the problem is the subjective choice of the length of the time intervals to be employed in regression models. If intervals are too lengthy the market pattern tends to be too smooth, excluding some of the explainable phenomenon. If too short, it encompasses some of the random elements in the series and there is spurious accuracy in the resulting market pattern depicted.

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John W. Birch, Mark A. Sunderman, and Brent C. Smith, "Vertical Inequity in Property Taxation: A Neighborhood Based Analysis," The Journal of Real Estate Finance and Economics, 29(1): 71-78, 2004.

This paper applies a model to test for vertical inequity in property taxes using a set of residential sales from Bloomington, Indiana. The initial purpose is to compare results with those using the presently accepted regression approach as applied by Smith (2000) to the same data.

This paper also contains a discussion and demonstration of the VHAAS methodology for testing and adjusting value related inequity within an assessment jurisdiction. The procedure tests for neighborhood based uniformity of assessments relative to market values, as reflected by sales prices, and removes value related inequities. The procedure involves tests for uniformity of assessments both within and across neighborhoods. This VHAAS procedure is a step forward in the statistical analysis of vertical inequity in assessment districts. When the method has been applied, including both tests and resulting appraisal adjustments, the result is shown to more completely identify and eliminate property tax inequity within and across neighborhoods. This more comprehensive method is an efficient way to find and reduce inequity in district wide assessments.

The outcomes of this analysis demonstrate there can be significant inequity in a jurisdiction that remains hidden under previous testing methods. Findings imply that tests for value related inequity in property tax assessment should be conducted using multiple spatial scales.

Mark A. Sunderman, Ronald W. Spahr, and Samuel Runyan, "A Relationship of Trust: Are State Trust Lands Being Managed for Beneficiary?" Journal of Real Estate Research, 26(4): 345-370, 2004.

Farms and Ranches in many western states consist of deeded property and public and private grazing leases. Public grazing leases include BLM, Forest Service and state managed School Trust Lands. States entering the union subsequent to 1803 were granted School Trust Lands by the Federal Government to provide for the states' education system. Inherent in this federal gift is the fiduciary duty to prudently and effectively manage these assets for the beneficiary. This paper examines whether states, as managers of these lands, are obtaining the "maximum economic benefit" for their beneficiaries through their management of grazing leases by comparing current investment returns with those that could alternatively be generated if, the lands were sold and the proceeds reinvested in accordance with state law.

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Mark A. Sunderman Ronald W. Spahr, "Management Policy and Estimated Returns on School Trust Lands," Journal of Real Estate Finance and Economics, 33(4), 345-362, 2006.

Every state entering the Union since 1803 received land grants from the federal government for the support of their respective public school systems. Inherent in this federal grant is the fiduciary duty to prudently and effectively manage these assets for the beneficiary, their school systems. We develop a framework that measures the present value of the beneficiary's economic benefits to assist managers of school trust lands in determining future management policy. Using this framework, we assess whether managers of state school trust lands are currently meeting their fiduciary responsibilities of "maximum economic benefit" for their beneficiaries or whether changes in management policy are needed. The present value of realized economic returns from grazing lease revenues and capital appreciation are compared with the present value of income streams that may be generated from alternative investments available to the land trustees if the land were sold and the proceeds reinvested in U.S. Treasury securities. Market values and capital appreciation for school trust lands in Wyoming are estimated using hedonic models formulated from ranch sales data. Because we are comparing a risky return on land investments with a riskless return on Treasury bonds, we observe, in most cases, that the sale of land and reinvestment of proceeds will increase economic benefits on school trust lands.

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John W. Birch, Mark A. Sunderman, and Brent C. Smith, "Cost-Based Property Tax Inequity: Evidence from Indiana," Appraisal Journal, 74(3), 257-266, 2006.Mark A. Sunderman Ronald W. Spahr, "Management Policy and Estimated Returns on School Trust Lands," Journal of Real Estate Finance and Economics, 33(4), 345-362, 2006.

In recent years, twelve states have appraised residential property using construction cost data. Eleven of these states adjusted the resulting values, attempting to move them closer to currently existing market levels. In contrast, Indians's construction-based appraisals were not market adjusted. This article demonstrates that the coutcome was likely to be property tax inequity. The recent history of the Indiana assessment system and specific test results strongly suggest the presence of inequity. The article presents a robust methodology to find and eliminate any significate inequity that may be present in residential property assessment.

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