In 2006, Texas' county appraisal districts continued to appraise property with uniform results and close to market value. Market value is the price at which a property would transfer for cash or its equivalent under prevailing market conditions, if:
- it is exposed for sale in the open market with a reasonable time for the seller to find a purchaser;
- both the seller and the purchaser know of all the uses and purposes to which the property is adapted and for which it is capable of being used, and of the enforceable restrictions on its use; and
- both the seller and purchaser seek to maximize their gains and neither is in a position to take advantage of the exigencies of the other.
State law requires tax appraisals to be equal, uniform and at market value. The median appraisal ratio measures how close a CAD's typical appraisal is to market value. A median is a statistical measure of "central tendency"–the middle number in a group of numbers ranked from highest to lowest. If the sequence of numbers has an even number of entries, the median is the average of the two middle numbers. According to the 2006 Property Value Study, the CADs' median appraisal ratio for market value was 99 percent.
The tool the appraisal industry uses to measure appraisal uniformity is the coefficient of dispersion (COD), which measures whether appraisal districts are appraising properties at an equal percentage of market value. It does this by measuring how closely arrayed individual ratios are around the median ratio; the smaller the measure of dispersion, the greater the uniformity of the ratios.
Property assessment is more equitable when appraisers group the individual ratios more closely around the median. According to the International Association of Assessing Officers, "...a coefficient of 10 percent or less indicates a good distribution of assessments for residential properties. Similarly, a coefficient of 15 percent or less indicates a good distribution for more diverse classes (of property)..."
In 2006, the statewide COD was 11.61, compared to the previous year's 11.24.
Table 6 compares the statewide median appraisal ratios from the Property Value Studies for 1996 through 2006. The Comptroller calculates the statewide median appraisal ratio for an individual property category using the appraisal ratios of all sample properties in that category from across the state. The agency then calculates the overall statewide median appraisal ratio using the appraisal ratios for all sample properties.
TABLE 6: Statewide Median Appraisal Ratios - 1996 through 2006 Property Value Studies
|A: Single-family Residences||97%||97%||98%||98%||98%||97%||98%||99%||99%||98%||98%|
|B: Multifamily Residences||99%||98%||99%||98%||98%||99%||98%||98%||98%||98%||97%|
|C: Vacant Lots||100%||100%||100%||100%||100%||100%||100%||100%||100%||100%||100%|
|D: Rural Real||99%||98%||98%||98%||98%||98%||99%||99%||98%||99%||99%|
|F1: Commercial Real||99%||99%||99%||98%||97%||98%||98%||98%||97%||97%||97%|
|G: Oil, Gas, Minerals||102%||101%||100%||102%||103%||99%||101%||100%||100%||101%||102%|
|L1: Commercial Personal||100%||100%||100%||100%||100%||100%||100%||100%||100%||100%||100%|
Categories F2, L2, M, O and S are not included because too few sample observations were available to produce meaningful statewide median appraisal ratios.
Source: Texas Comptroller of Public Accounts, Property Value Studies, 1996 through 2006.
Table 7 compares the statewide CODs from the 1996 to the 2006 Property Value Studies. The Comptroller calculates the statewide coefficient of dispersion for an individual property category by using the appraisal ratios of all sample properties in that category from across the state. The Comptroller then calculates the overall statewide coefficient of dispersion using the appraisal ratios for all sample properties.
TABLE 7: Statewide Coefficients of Dispersion - 1996 through 2006 Property Value Studies
|A: Single-family Residences||11.36||11.06||9.68||9.23||10.05||10.68||10.33||9.48||9.57||9.83||9.44|
|B: Multifamily Residences||8.43||7.71||7.34||7.63||7.70||8.91||8.74||10.49||8.45||8.46||8.91|
|C: Vacant Lots||19.86||17.10||15.17||13.68||14.79||17.29||18.50||18.07||18.31||16.46||15.60|
|D: Rural Real||14.60||15.62||16.09||14.51||14.96||15.64||15.01||16.65||16.52||15.45||16.58|
|F1: Commercial Real||11.34||11.01||10.51||10.59||10.56||10.39||9.82||10.93||11.37||12.00||11.35|
|G: Oil, Gas, Minerals||18.95||4.85||7.38||20.52||7.15||31.30||11.50||10.46||9.25||9.88||21.58|
|L1: Commercial Personal||20.73||11.20||9.24||7.52||8.19||8.32||8.44||8.21||9.16||9.48||7.96|
Categories F2, L2, M, O and S are not included because too few sample observations were available to produce meaningful statewide coefficients of dispersion.
Source: Texas Comptroller of Public Accounts, Property Tax Division, Property Value Studies, 1996 through 2006.
Appraisal District Workload
The Comptroller reports on appraisal district operations in the Appraisal District Operations Report. Each year, the Comptroller's Property Tax Division (PTD) surveys the state's 253 appraisal offices to obtain data about their operations and their budgets and plans for the following year. Each year's report is available on the Comptroller's website.
In 2006, Texas CADs appraised more than 16.7 million pieces of property. The CADs performed this task with operating expenses of about $301.6 million. The total result of these appraised values exceeded $1.6 trillion. In 2005, appraised property totaled $1.5 trillion.
Property Tax Code Section 25.18 requires CADs to reappraise all real and personal property in their districts at least once every three years. Many CADs reappraise all property every year. For the 2006 tax year, 160 CADs, or 63.2 percent, reported complete reappraisals, while 127 CADs planned to reappraise for the 2007 tax year.
Texas CADs mailed 9.6 million notices of property value in 2006. In response to those notices, property owners filed 987,145 written protests, 15.4 percent more than the 855,245 filed in the previous year on 2005 values.
Appraisal review boards scheduled 505,951 formal hearings for the filed protests, 33,414 hearings or 7.1 percent more than in 2005. More than a third of the taxpayers involved, 193,892 or 38.3 percent, did not show up for their scheduled hearing.
Table 8 highlights the appraisal district workload for the 25-year period from 1982 through 2006. A parcel is any item of real property, regardless of size, that has a single owner or multiple owners in undivided ownership, and for which there is a separate appraisal record.
TABLE 8: 25-Year Review of Appraisal District Workload
| ARB Hearings
Source: Texas Comptroller of Public Accounts, Property Tax Division.
Appraisal District Expenditures
Final 2006 CAD operating expenses totaled $301.6 million, or an average of $18.87 per parcel. The average 2006 CAD operating budget exceeded $1.2 million, 7.2 percent greater expenses than in 2005.
The 2006 expenditures by individual CADs varied by size and types of property appraised. Panola CAD reported the lowest cost per parcel, at $2.16. Somervell CAD reported the higher operating costs of $56.88 per parcel. This range reflects the type of property a CAD appraises; for example, 90 percent of Panola CAD's value is mineral properties. Each interest, or share, in a mineral lease represents an account, and while the number of accounts within a lease can be numerous, only one appraisal is necessary per lease (the value is prorated among the mineral owners). Therefore, the costs per account for mineral properties seem unrealistically low. Somervell CAD, on the other hand, is home to the Comanche Peak nuclear facility and has a high concentration of industrial property that requires significant expertise to appraise, accounting for Somervell's high cost per parcel.
Local taxing units pay CAD expenses according to the proportion of the property tax levy to the total property taxes levied by all taxing units within the CAD. Since local taxing units fund CAD budgets, the taxing units may veto the budget adopted by the CAD's board of directors. Taxing units in five CADs vetoed their 2006 budgets, as allowed by Property Tax Code Section 6.06. While the average statewide cost per account was $18.87 in 2006, grouping the CADs by account sizes shows the variance in costs per account, with three groups of appraisal districts exceeding the state average ( Table 9).
TABLE 9: 2006 CAD Spending by Size
|Number of Accounts|| Number of
Cost Per Account
|Below 5,000||5||$ 81,422||$ 22.63|
|5,000 to 9,999||29||$ 154,595||$ 19.68|
|10,000 to 14,999||30||$ 181,176||$ 14.93|
|15,000 to 19,999||23||$ 292,928||$ 16.24|
|20,000 to 24,999||17||$ 363,101||$ 16.10|
|25,000 to 34,999||31||$ 508,266||$ 16.46|
|35,000 to 49,999||44||$ 593,387||$ 14.53|
|50,000 to 74,999||25||$ 919,293||$ 14.87|
|75,000 to 149,999||24||$ 1,741,414||$ 16.51|
|150,000 to 300,000||16||$ 3,140,523||$ 16.36|
|Over 300,000||9||$ 13,916,570||$ 25.56|
In the 5,000 to 9,999 group, Motley CAD budget figures were not available from either 2005 or 2006.
In the 10,000 to 14,999 group, Edwards and Mason CADs did not report 2006 figures. Their 2005 data was included.
In the 15,000 to 19,999 group, Kleberg CAD did not report 2006 figures. Their 2005 data was included.
In the 20,000 to 24,999 group, Jones CAD did not report 2006 figures. Their 2005 data was included.
In the 25,000 to 34,999 group, Wilson and Dawson CADs did not report 2006 figures. Their 2005 data was included. Crockett CAD budget figures were not available from either 2005 or 2006.
In the 35,000 to 49,999 group, Jasper and Colorado CADs did not report 2006 figures. Their 2005 data was included.
In the 50,000 to 74,999 group, Hunt CAD did not report 2006 figures. Their 2005 data was included.
In the 75,000 to 149,999 group, Cherokee CAD did not report 2006 figures. Their 2005 data was included.
In the 150,000 to 300,000 group, Webb CAD budget figures were not available from either 2005 or 2006.
Source: Texas Comptroller of Public Accounts, Property Tax Division.
Local Self Report Data - 2006
Table 10 includes detailed appraisal information reported by each CAD in Texas. For each CAD, the reports list total appraised value in 15 property categories developed by the Comptroller's office:
- Category A. Real Property: Single-family Residential. Houses, condominiums and mobile homes located on land owned by the occupant.
- Category B. Real Property: Multifamily Residential. Residential structures containing two or more dwelling units whose individual units do not have separate owners. Includes apartments but not motels or hotels.
- Category C. Real Property: Vacant Lots and Tracts. Unimproved land parcels usually located within or adjacent to cities. No minimum or maximum size requirement.
- Category D. Rural Real (D1, D2 and E): Productivity value of land qualified for special-use appraisal and the market value of unqualified rural tracts and farm and ranch improvements.
- Category F1. Real Property: Commercial. Land and improvements devoted to sales, entertainment or services to the public. Does not include utility property, which is included in Category J.
- Category F2. Real Property: Industrial. Land and improvements devoted to the development, manufacturing, fabrication, processing or storage of a product, except for utility property included in Category J.
- Category G. Oil, Gas and Other Minerals. Producing and non-producing wells, all other minerals and mineral interests and equipment used to bring the oil and gas to the surface. Does not include the surface rights.
- Category H. Tangible Personal Property: Nonbusiness Vehicles. Privately owned automobiles, motorcycles and light trucks not used to produce income.
- Category J. Real and Personal Property: Utilities. All real and tangible personal property of railroads, pipelines, electric companies, gas companies, telephone companies, water systems, cable TV companies and other utility companies.
- Category L1. Personal Property: Commercial. All tangible personal property, including fixtures, equipment and inventory, used by a commercial business to produce income.
- Category L2. Personal Property: Industrial. All tangible personal property, including fixtures, equipment and inventory, used by an industrial business to produce income.
- Category M. Mobile Homes and Other Tangible Personal Property (M1 and M2). Taxable personal property not included in other categories, such as mobile homes on land owned by someone else. May include privately owned aircraft, boats, travel trailers, motor homes and mobile homes on rented or leased land.
- Category N. Intangible Personal Property. All taxable intangible property not otherwise classified.
- Category O. Real Property: Residential Inventory. Residential real property inventory held for sale and appraised as provided by Property Tax Code Section 23.12.
- Category S. Special Inventory. Certain property inventories of businesses that provide items for sale to the public. State law requires the appraisal district to appraise these inventory items based on the business' total annual sales in the prior tax year. There are four types of Category S properties: dealers' motor vehicle inventory, dealers' heavy equipment inventory, dealers' vessel and outboard motor inventory and retail manufactured housing inventory.
The appraisal information includes the total appraised value for each CAD. Because taxing units in an appraisal district offer different exemptions, it is inappropriate to show total taxable value for each appraisal district. An exemption is the exclusion of all or part of a property's value from property taxation. Absolute exemption excludes the total value of property from taxation; partial exemption excludes a part of the property's total value. Total taxable value is the value after reducing the appraised value for exemptions.
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