You asked what the difference is between physical and statistical revaluation.

SUMMARY

The terms suggest two distinctly different ways assessors can determine a property’s fair market value. “Physical revaluation” suggests that they do so by personally viewing the property. “Statistical revaluation” suggests that they derive the value from statistics, such as the recent sales of comparable, nearby properties. But the statutes do not define these terms, and assessors often view properties and use sales statistics when revaluing property.

TERMS’ ORIGINS

The idea that assessors conduct separate physical and statistical revaluations arose in 1995 when the legislature required towns to revalue property more frequently. Before then, they had to revalue property every 10 years, but the law did not specify how. PA 95-283 established a longer 12-year revaluation cycle, but divided it into three, four-year intervals. It required towns to revalue property in the fourth, eight, and twelfth years and specified how.

Starting in 1996, the act required towns to revalue property “by physical observation” no later than 12 years after their last revaluation. In the fourth and eight year following this revaluation, towns had to revalue property by using “a statistical method of adjusting the value, without a physical observation, reflecting any change in the value of such real estate as compared to its value determined for the purpose of said immediately preceding revaluation. ” Towns had to revalue again by physical observation four years later, thus completing the 12-year cycle.

POSSIBLE REASON FOR THE TWO REVALUATION METHODS

PA 95-283 seemed to address two goals. It sought to make property taxes fairer by shortening the time between revaluations, which capture changes in a property’s fair market value. The longer a town goes without revaluing property, the more likely a property’s assessed value (i. e. , the value upon which the tax is based) will be bigger or smaller than its actual fair market value. But revaluations are costly, time-consuming processes, especially when assessors must personally view or inspect each property.

To address this problem, PA 95-283 authorized what seems to be a less expense way to revalue property during the fourth and eighth years. It did this by distinguishing between two types of revaluation and limiting the more expense physical observation to only the 12^th year. To underscore this point, the act explicitly ruled out physical revaluation in the fourth and eighth years, and instead required towns to use statistical tools to adjust the previous revaluation’s values. But it did not specify the types of statistical tools or methods towns could use.

SUBSEQUENT CHANGES

The legislature continued to distinguished between two types of revaluation each time it changed the revaluation requirements. But it phrased the revaluation methods differently than it had in 1995.

In 2004, it reestablished the 10-year cycle and divided it into two five-year periods (CGS §12-62, as amended by PA 04-2, May Special Session). But the revaluation method a town must use now depends on several factors. If the town used “statistical means” the last time it revalued property, it must use “physical inspection” the next time it revalues property. If the opposite applies, the town can use either method for its next revaluation. In no case, though, can the town go more than 10 years without revaluing property by physical inspection.

PRACTICE

The statutory distinction between physical and statistical revaluation does not hold up in practice. While legislators and assessors still use these terms, “neither term is completely accurate. If real property is viewed by physical observation in conjunction with a revaluation, the assessor still uses statistical data in finalizing value estimates. Likewise, certain properties may be viewed in conjunction with a revaluation that primarily entails the use of statistical analyses and modeling” (Handbook for Connecticut Assessing Officers, 2004 Revision, Connecticut Association of Assessing Officers, Inc. , p. 5-3).

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