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The first slep in the valuation of the improvements involve a matched pairs analysis in the City of Ramsey. This was done in May, 1989. It involved analyzing improved property sales by ~i~di~g two almost exactly similar properties with the difference of one amenity. The theory in this matched pairs analysis is that you subtract the value of one from the other, and get the value of the amenity sought (assuming that the two properties are almost exactly alike in other respects). Several good matched pairs were found. Some of the various amenities which were adjusted are: Garages, central air conditioning units, decks, three season porches, screened porches, concrete and blacktop driveways, whirlpool baths, saunas,, etc. All of the amenilies ,~.,~.re found to have measurable market value from data obtained from the Ramsey real estate market. Afler all the matched pairs have been identified and value given to them, the next step is to come up with a face value for the remaining property or remaining improvement. This was done by use of the computer system supplied by. Anoka County. The theory behind this method is to first of all take the improved property sales, subtract the land value, then subtract the value of the various amenities. Once this is done, then a base value for the property based on square footage can be determined. It is very important in this process that comparable properties are all classified in the same group. For instance, two story's must be compared with other two story's, ramblers must be compared with other ramblers and split levels must be compared with other split levels. The other important consideration in that analysis was to determine the amount of depreciation which should be applied to each individual property. This is done by a market extraction method which involved taking the exact same house built new in the City of Ramsey and comparing it to an older property and subtracting the difference in the sale amount minus the land value. This gives an indicated value for depreciation of properties over the time period for which this analysis is made. For instance, a new 1,000 square foot rambler costs approximately $67,000.00 to build. The exact same house built back in 1972 sells for $60,000.00. After subtracting the land values from each of these sales, you are left with two figures; the first would be the improvement value of the older property and the remaining value for the improvements on the new property. In this case the amount is $7,000.00. You take the $7,000.00 and divide it by the number of years between the two sales. In this case, you divide by 17 years. This gives you the amount of depreciation for each individual year. If you divide this amount into the new construction value, you get a percentage. When this is done with the mass appraisal system of the computer, you average the percentage rates applied from the various different sales. In the City of Ramsey, it was found that in most cases, the depreciation factor was approximately 1% per year deducted from the cost new to build. Once the deprecation factor is arrived at, all sales can be compared to one another to formulate a per square foot value of each type of improvement by again taking all the values and averaging so you get an indicated square foot value for each type of property. When this has been completed, tile ~.~,~,/;~luations are placed into tables. The tables and all of the other information is applied to each individual improvement in the City of Ramsey to arrive at an indicated value for the year 1990. 6