Tyler Technologies, Inc. · NYSE:TYL
Tyler Technologies — Investor Presentation (September 2022)
61 slides from Tyler Technologies's investor presentation, Sep 22, 2022
Slide 1: New Castle Commercial Reassessment 2025
New Castle Commercial Reassessment 2025 Tyler Technologies
Slide 2: Death and Taxes
DEATH AND TAXES
Slide 3: Court's Decision in Reassessment Litigation
Court’s Decision in Reassessment Litigation The court determined that property values had changed significantly enough since the previous reassessment years ago and were no longer represented as the “true value of money” and that the current assessments were not uniform (i.e. not equitable). The new
Slide 4: Reassessment Litigation
Reassessment Litigation May 2020 To resolve pending litigation, New Castle County agreed to conduct a countywide reassessment.
Slide 5: True Value of Money
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Slide 6: Definition of Market Value
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Slide 7: USPAP Market Value Definition
USPAP Market Value Definition Market value is: "the most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulu
Slide 8: USPAP Market Value Definition
USPAP Market Value Definition Implicit in this definition are the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: Buyer and seller are typically motivated; Both parties are well informed or well advised, and acting in what the
Slide 9: Date of Value
Date of Value Market Value and Market Conditions as of July 1, 2024 Assessments must be between 95% and 100% of the median of all valid sales as of the Date of Value The new assessed values will be effective for the 2025 tax year. © Tyler Technologies 2019
Slide 10: Why Reassess?
Why Reassess? Reliable 100% Equitable Market Accurate Value Valid
Slide 11: Fear…
FEAR… • Pay more taxes • Government will spend more • Will Lose Tenants • Have to Sell © Tyler Technologies 2019
Slide 12: Revenue Neutral Assessment
Revenue Neutral ASSESSMENT Assessment Tax Rate Increase Decrease TAX RATE (+40%) (-40%) REDISTRIBUTE TAX BURDEN © Tyler Technologies 2019
Slide 13: Tax Formula: The Art of Property Taxation
TAX FORMULA THE ART OF PROPERTY TAXATION Rate (R) $200,000 X .74% = $1,480 Assessment (A) Tax (T)
Slide 14: Assessment Increases 4 Times
ASSESSMENT INCREASES 4 TIMES Rate (R) $200,000 X .74% $1,480 Assessment (A) Tax (T) Rate (R) $800,000 X .185% $1,480 Assessment (A) Tax (T) Sussex County Reassessment 2024
Slide 15: Countywide Reassessment – Revenue Neutral
Countywide Reassessment – Revenue Neutral
Slide 16: More County and School Taxes?
More County and School Taxes? Tax Increase Caps County 15% School 10%
Slide 17: What about Municipality Taxes?
What about Municipality Taxes? • Some municipalities use the county assessments and others do not. • A municipality may, by separate and specific vote, seek to increase their property tax rate.
Slide 18: Reassessment Goals
Reassessment Goals Last Conducted in 1983 Implement new values for all properties to reflect 100% market value as of JULY 1, 2024 Meet or exceeds the Uniform Standards of Professional Appraisal Practice (USPAP) Meet or exceeds the “Standard on Mass Appraisal” - International Association of Ass
Slide 19: Key Questions
KEY QUESTIONS HOW HAVE COMMERCIAL MARKET VALUES CHANGED IN 41 YEARS? • Did they change consistently? • Will everyone go up or down the same amount? • How will this affect me? © Tyler Technologies 2019
Slide 20: Phases of Reassessment
Phases of Reassessment Aerial Data Data Informal Imaging Collection Analysis Meetings and Review Spring 2022 of to 2022 Fall/Winter 2022 2023 to 2024 2024
Slide 21: Aerial Imaging, Sketch Verification
• AERIAL IMAGING • SKETCH VERIFICATION/DETECTION Sussex County Reassessment 2024
Slide 22: Sussex County Reassessment 2024
Sussex County Reassessment 2024
Slide 23: Help
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Slide 24: Oblique Imagery
(8) Copyright 2008; Pistometry Intemational Corp
Slide 25: Data Collection, Data Gathering, Analysis
• DATA COLLECTION • DATA GATHERING • ANALYSIS Sussex County Reassessment 2024
Slide 26: Data Collection and Gathering
DATA COLLECTION AND GATHERING Physical Sales Data Economic Data • Inspection • County Files • Income • Measurements • Data Mining Submissions • Survey Data • Data Mining • Survey Data
Slide 27: Historical Transaction Trends
$150,000 $130,000 $110,000 $90,000 $70,000 $50,000 Mar-05 “<>. tyler technologies Real Capital Analytics - Historical Transaction Trends Jan-06 Nov-06 Sep-07 Jul-08 10.00% 9.50% 9.00% 8.50% 8.00% wl : 7.00% SSP PP sees esgs SSRPFPFPRPF AEE Wm Price /Key =——<=Cap Rate
Slide 28: Comparable Sales
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Slide 29: Capitalization Rates
FIGURE 7: CAP RATES FOR MAJOR PROPERTY TYPES IN THE U.S. Office Retail Industrial Apartment Hotel 13 Forecast I 3 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Source: CBRE Econometric Advisors, Q3 2020.
Slide 30: Sussex County Reassessment 2024
Sussex County Reassessment 2024
Slide 31: Market (Asking) Rents by Bedroom
MARKET (ASKING) RENTS BY BEDROOM
Slide 32: Vacancy
3,000 2,500 2,000 1,500 1,000 500 . tyler technologies Vacancy in New Castle, County DE 6.0% 2012 2013 2014 2015 710% 6.0% 5.0% 40% 3.0% 2.0% 1.0% 0.0% 2016 2017 2018 2019 2021 2022 YTD were Vacancy Units —<=Vacancy Percent
Slide 33: Market Cap Rate
“ae. tyler technologies Market Cap Rate Forecast
Slide 34: Traffic Counts - Neighborhoods
TRAFFIC COUNTS - NEIGHBORHOODS Sussex County Reassessment 2024
Slide 35: Traffic Counts - Neighborhoods
TRAFFIC COUNTS - NEIGHBORHOODS Sussex County Reassessment 2024
Slide 36: Wilmington Neighborhoods
WILMINGTON NEIGHBORHOODS MAP OF NEIGHBORHOODS IN WILMINGTON, NEW CASTLE COUNTY
Slide 37: Methodologies
METHODOLOGIES Cost Approach Sales Approach Income Approach
Slide 38: Valuation
Valuation Three accepted approaches/methods to arrive at value. • Cost approach provides an estimate of value based upon the replacement cost of the improvements, less depreciation, plus the value of the land. • Income approach estimates value by capitalizing the net operating income of a property.
Slide 39: Cost Approach
COST APPROACH DEPRECIATED BUILDING VALUE 20,000 SF X $100/SF 10 Acres X Less 10% $2,800,000 $100,000 Depreciation Added To LAND VALUE MARKET VALUE
Slide 40: Sales Approach
SALES APPROACH • The sales approach estimates market value through the analysis and application of standard units of comparison. • Examples of standard units of comparison are sale price per square foot, sale price per apartment unit, or sale price per acre.
Slide 41: Commercial & Industrial Models
Commercial & Industrial Models • The income approach estimates market value by capitalizing net income. • Net income and capitalization rates are arrived at by an analysis of Income & Expense forms • These forms provide data on local market rents, expenses, and vacancies. • Income approach models ar
Slide 42: Income and Expense Surveys
Income and Expense Surveys Property owners/managers are encouraged to complete the forms provided to the best of their knowledge, as accurate and complete information is critical to determining fair and equitable values that reflect current local market conditions and will preclude the use of availa
Slide 43: Sussex County Reassessment 2024
Sussex County Reassessment 2024
Slide 44: Sussex County Reassessment 2024
Sussex County Reassessment 2024
Slide 45: Sussex County Reassessment 2024
Sussex County Reassessment 2024
Slide 46: Income and Expense Surveys
Income and Expense Surveys WILL YOU TELL MY NEIGHBOR OR ANYONE ELSE WHAT MY INCOME AND EXPENSES ARE? WHY USE AN INCOME APPROACH? ISN’T APPRAISED VALUE BASED ON WHAT PROPERTIES SELL FOR? WHAT HAPPENS IF I DO NOT FILL THIS OUT? All information provided will remain strictly confidential
Slide 47: Income and Expense Surveys
Income and Expense Surveys MY BUSINESS AND REAL ESTATE WERE REALLY IMPACTED BY COVID. ARE YOU GOING TO REFLECT THAT IMPACT IN MY NEW ASSESSMENT? I JUST HAD AN APPRAISAL CONDUCTED ON MY PROPERTY SHOULD I SUBMIT THAT AS WELL? IF MY TENANT PAYS THE EXPENSES, SHOULD I STILL WRITE DOWN THE EXPENSES
Slide 48: Income and Expense Surveys
Income and Expense Surveys I OWN RESIDENTIAL APARTMENTS WHY DID I GET THIS FORM? CAN I JUST SUBMITTED TAX RETURNS OR SPREADSHEETS FROM MY ACCOUNTING PROGRAMS? IF MY TENANT PAYS THE EXPENSES, SHOULD I STILL WRITE DOWN THE EXPENSES? WON’T MY TAXES GO UP IF I FILL OUT THIS FORM?
Slide 49: Income
INCOME ° () Rentals $788,000 "eae tyler Other Property Income $12,000 of — TOTAL POTENTIAL INCOME $300,000 VACANCY AND CREDIT $80,000 10.0% EFFECTIVE ANNUAL INCOME $720,000 Heating $76.566 10 6% Electricity $15,125 2.1% Other Utilities $10,116 1.4% Payroll $44 697 6.2% Management $43,200 6.0% Insura
Slide 50: Income Approach
INCOME APPROACH CAP RATE 10% $419,723 $4,197,723 Divided By MARKET NOI VALUE
Slide 51: Valuation Testing?
VALUATION TESTING? SPECIFICATION Which Approach? What Property Characteristics? CALIBRATION Quantifying the Variables ITERATIVE
Slide 52: Sussex County Reassessment 2024
Sussex County Reassessment 2024
Slide 53: Process Summary
PROCESS SUMMARY Hearings Valuation Review Modeling and Pre-Review Analysis Data Collection
Slide 54: Notice to Taxpayers
Notice to Taxpayers Late in 2024, property owners will receive a notice of the new tentative appraised value. The property owners are encouraged to evaluate whether the assessment appears to be reasonable. If it is, no further action is required.
Slide 55: Informal Hearings
Informal Hearings Informal Meetings with Tyler Appraisal Staff • If you believe the proposed value does not reflect the current market value, instructions will be provided with the notice on how to arrange an informal review of the value with Tyler. • These reviews give the property owner a simple a
Slide 56: Informal Property Review
Informal Property Review Informal Review Goals • One on one meetings with property owners • Review property data • Collect new information • Correct existing data as needed • Educate property owners on the valuation process
Slide 57: Quality-Driven Process = Quality Results
Quality-Driven Process = Quality Results Quality Data Collection Detailed Fairness Analysis and Equity Modeling Transparency Accurate Valuation Review and Hearings
Slide 58: Tyler Technologies Contact Information
Tyler Technologies Contact Information Michael McFarlane Tyler Project Supervisor (302) 395-3620 NewCastleCounty@tylertech.com New Castle County Reassessment
Slide 59: County Assessment Contact Information
County Assessment Contact Information Denzil Hardman Accounting & Fiscal Manager Assessment (302) 395-5083 New Castle County Reassessment
Slide 60: Reassessment Project Website
Reassessment Project Website For Further Information: https://empower.tylertech.com/New‐Castle‐ County‐Delaware.html New Castle County Reassessment
Slide 61: Thank you for joining us today
Thank you for joining us today. We would be happy to answer any questions at this time. Visit us at tylertech.com
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