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The New Normal in Property Tax Assessment Involves AI Powered Image Analysis
6 min read

The New Normal in Property Tax Assessment Involves AI Powered Image Analysis

Property tax assessment has always been difficult, and the COVID-19 pandemic has made it worse. We investigate the problems that tax assessors face. Then, we explore how AI driven automated image analytics can enable fair and equitable tax administration. Lastly, we introduce HyperAppraisal.
The New Normal in Property Tax Assessment Involves AI Powered  Image Analysis

Legacy Issues

The world is a large place and every country and county is different. Yet, when it comes to property tax, some of the traditional problems are the same — property owners either willingly or unwillingly fail to get permits or make modifications different from the permits they have received. In either case, the assessed property tax falls short of what the county would need to balance payments for public initiatives.

A well-sized team of assessors visiting land parcels every once in a while can ensure high compliance and low property tax leakage. However, this can be costly. Also, taxpayers don't like frequent visits from tax assessors because it implies a lack of trust.

How many land use violations are there for assessors to identify? A county may have modifications going on in anywhere from 2% to 10% of land parcels depending on whether it is a well-settled county or an upcoming one. Of these, how many have no permit or an incorrect permit is anybody’s guess. In one rare case, tax investigators in Greece looked at Google Earth and found 16974 swimming pools attached to villas in an area where official records showed just 324.

An aerial view of a beach side resort with lots of swimming pools

How do local authorities know which land parcels to visit? Local authorities make visits to all properties as per a pre-decided frequency. Assessors who have been on the beat for decades are experienced on what triggers to look for. Additionally, local contractors and agencies tip them on unauthorized changes, and so do vigilante neighbours.

Most counties today also depend heavily on use of aerial imagery to spot land parcels with visible changes.

Use of Imagery

Aerial imagery taken by low flying planes and drones and satellite imagery has been the next big thing in property tax assessment for almost a decade now. An aerial image of an area can be compared to an image of the same area from earlier to identify land parcels which have changed. These identified land parcels can then be visited by assessors, if needed. Thus each assessor will be more productive, and the county can manage with a lean (and mean) team. Easy.

Except that this is anything but easy. In our conversations with county tax assessors, we learnt that existing solutions come with a broad set of problems.

Table 1: Problems with existing change detection systems
1 Missing changes without permits Manual change detection in aerial images misses land parcels of interest. So does automated change detection.
2 Time consuming and slow Change detection analysis takes 2-3 months (sometimes more) pushing revenue recognition to the next cycle.
3 Poor reliability Because of low accuracy of current systems there are too many false results, or irrelevant ones.
4 No prioritization by value A list of land parcels with changes are un-usable unless they can be filtered and prioritized by value.
5 Escalating Costs Buying imagery frequently can be expensive even if costs are shared between departments. Plus, analyzing costs additional money.
6 Inflexible / un-customizable software The final output of change detection software doesn't integrate with existing software.

What is the cadence of aerial imagery that is commercially available? Aerial imagery is available in most counties in the US at an annual or bi-annual cadence. In some areas, it is available at a 6-month cadence now.

The Double Impact of COVID-19

World over, the onus remains on the local government to ensure tax assessment and collection. But, pandemic induced local shutdowns means that assessors can’t make as many visits as earlier.

Further, since the local government finds it hard to make visits and assess changes, the general public might have an incentive to take a risk (unauthorized change) as they may feel they are unlikely to be found out. So the non-compliance goes up.

How long will the impact of COVID-19 be? Estimates vary. As per Bill Gates, whose foundation is funding some of the vaccine efforts, "for the rich world, we should largely be able to end this thing by the end of 2021, and for the world at large by the end of 2022."

There’s no hiding from the fact that it will take till the end of 2021 for the ‘old normal’ to be back.

Enter Artificial Intelligence

Every once in a while a new technology comes that has the potential to change the game completely. We saw this with computers in the ’80s, the internet in the ’90s, mobile phones in the ’00s, cloud software in the ’10s. The 20’s will belong to AI.

In many industries, AI has already made possibly what was earlier completely impossible. We all know the popular examples of Maps, Siri and Alexa. At HyperVerge, in 2019, we powered telecom companies Vodafone and Reliance Jio to correctly ID 250 million people during their new SIM-card purchase journey, each in real-time. (In India, every new SIM-card must be issued against a verified ID matched to the applicant as per law.) A year prior to that, we created an energy map (digital twin) of Texas using only satellite imagery.

AI and Property Tax

In this article so far, we have explained the various problems faced by tax assessors. Now we describe what AI can do to help property tax assessment.

In a nutshell, AI driven feature extraction and change detection can automate analytics on aerial imagery. By comparing images from two different times, land parcels where there are changes can be flagged. These land parcels can then be classified as per the change detected (new building, expansion, swimming pool, etc). The end product is a map layer that can be imported into the county’s existing software and can be used to plan on-ground assessment visits.

Further, when the AI-assisted software can talk to other software being used the county, then new possibilities get unlocked. Land parcels where changes are found can be classified and prioritised as per estimated tax value. Software can check whether the identified land parcels have the required permits. Priority lists of land parcels where assessors should focus their attention can be auto-generated.

As a last point, AI identified boundaries of buildings from aerial images can be compared with boundaries of sketches available with local governments. This can be used to flag parcels where there is a mismatch - perhaps the sketches have to be updated.


Introducing HyperAppraisal

At HyperVerge, we worked to create an ideal workflow that uses the power of AI, sits with existing systems, and solves the real problems that assessors face, as noted in table 1. We call it HyperAppraisal.

In designing HyperAppraisal, we considered the problems that assessors face and designed the exact set of features to solve them.
Table 2: Key Benefits of HyperAppraisals
1 Detect without permits Increase compliance and revenue by detecting violations with or without permits.
2 Faster analysis Go from images to results in a matter of 3 weeks increasing efficiencies and productivity.
3 Higher accuracies Accuracies of 99% greatly reduces field visits translating to more appraisals per appraiser.
4 Prioritize High Value Changes Filter down to the highest value changes by size of change, asset type, location, etc.
5 Increased Revenue Faster analysis + detecting all changes ensures increased revenue that can be realized in the same year.
6 Easy to integrate Easily integratable with existing CAMA software or workflows. Outputs can be delivered in any format: polygons, web viewer, CSV files, etc.

Free Land Parcel Assessment

Having started in 2010 as a research lab, HyperVerge has been around for a while. With presence in the US, Europe, India and SEA, we are a global AI startup with products in financial services, telecom and geospatial. We count large enterprises like Airbus, Vodafone, Reliance Jio, State Bank of India, FE Credit, etc as our clients. We also were part of the US Air Force’s Catalyst Space Accelerator in 2019.

We currently have a 1000 land parcel HyperAppraisal pilot program. You could take our technology for a test drive at no cost.

Inputs needed from the country office - (a) Imagery from two appraisal years, (b) 1000 land parcels where changes need to be detected.

Within a week of receiving the data, we will return these - (a) List of land parcels which have changed between the two appraisal years, (b) Shape-files/boundaries of the changes with the area that has changed, (c) Categorization of units into new construction, enhancement, demolition and other changes.Contact us at rinkesh@hyperverge.co or simply fill out the form below.

Form for Free Land Parcel Assessment HyperAppraisal Pilot