The Republic of Moldova’s National Revaluation

It has been a great honor to support the Moldovan government in the creation and implementation of their new automated valuation models (AVMs) for the taxation of residential properties. This project, with support from the World Bank, continues to overcome challenges and constraints through the hard work, dedication, and expertise of the Moldovan cadaster. Revaluation models are currently underway for a number of property classes, with apartments being the first to be publicly reviewed.

We believe the following leadership decisions of the Moldovan government have been key to their success and can help lead property tax authorities of transitioning and developed countries alike in successful revaluation efforts:

1. Use of regression-based AVMs: first proposed in 1922, regression-based AVMs are the leading methodology for mass valuation and property taxation today. A recent joint study by the Lincoln Institute of Land Policy(LILP) and the International Association of Assessing Officers (IAAO) that surveyed over 800 government assessment professionals found that such algorithms "are largely reported to offer increased accuracy, uniformity, and equity compared to non-regression-based valuation approaches, at lower costs and higher efficiencies". Moldova will be deploying AVMs to estimate market values for various classes of residential properties.

2. Use of geographic information systems (GIS): GIS allows for all stages of the valuation process (data collection, valuation, quality control, etc.) to benefit from increases in efficiency and accuracy. The cadaster is currently using digital mapping to better understand local real estate markets, delineate local submarkets, and test and calibrate AVMs to optimize valuation accuracy and property tax equity.

3. A transparent, informative, and persistent public relations campaign: The cadastre continues to update and inform the public of the revaluation process through channels of both social and other media. These touch points are crucial opportunities to remind taxpayers of the government’s intentions, progress, and dedication to excellence. Such communication should help foster more widespread acceptance, reduce valuation appeals, and lead to a more successful implementation.

4. Inclusion of stakeholders and local experts in model creation and explanation: The cadaster is ensuring stakeholders are represented in order to optimize model performance and increase public acceptance of valuation models. Inviting private and public sector real estate valuation professionals, local mayors, and other officials to review and offer comments/suggestions to make models more flexible, accurate, and overall appropriate for Moldovan real estate markets. This approach will not only improve model performance, but will also foster a sense of community, ownership, and pride that all parties will share

5. Incorporation of global best practices and international standards: The cadaster is incorporating technical standards from the IAAO to ensure valuation policies and procedures incorporate best practices of governments and research around the globe. Such precedence and guidelines not only help to identify optimal methodologies, but also promote defensibility and foster trust among both the public and government staff.

6. Inclusion of international consultants: The cadaster is working closely with experienced consultants of diverse property tax backgrounds to oversee specific areas of statistical modeling, technology, data quality, and tax policy. These consultants help identify policies and procedures, as well as lessons learned from other governments, to help avoid pitfalls and ensure revaluation implementations are successful.

We strongly believe that the revaluation efforts of the Republic of Moldova will be a leading example to taxing authorities of all nations for many years to come.