Texas Comptroller of Public Accounts

Texas Comptroller of Public Accounts, Glenn Hegar

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Chapter 3
Focus on Appraisal Districts Property Appraisals

In 2007, CADs 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 other.

As noted above, 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,” which is 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 2007 Property Value Study (PVS), the CADs’ median appraisal ratio for market value was 99 percent. Exhibit 13 compares the statewide median appraisal ratios from the PVS for 1997 through 2007.

Exhibit 13

Statewide Median Appraisal Ratios, 1997-2007 PVS
Property Category 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
A: Single-family Residences 97% 98% 98% 98% 97% 98% 99% 99% 98% 98% 98%
B: Multifamily Residences 98% 99% 98% 98% 99% 98% 98% 98% 98% 97% 97%
C: Vacant Lots 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
D: Rural Real 98% 98% 98% 98% 98% 99% 99% 98% 99% 99% 99%
F1: Commercial Real 99% 99% 98% 97% 98% 98% 98% 97% 97% 97% 96%
G: Oil, Gas, Minerals 101% 100% 102% 103% 99% 101% 100% 100% 101% 102% 100%
J: Utilities 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
L1: Commercial Personal 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
Overall 99% 99% 99% 99% 99% 100% 99% 99% 99% 99% 99%

Source: Texas Comptroller of Public Accounts.

Categories F2: Real Property: Industrial; L2: Personal Property: Industrial; M: Mobile Homes and Other Tangible Personal Property; O: Real Property: Residential Inventory; and S: Special Inventory are not included because not enough sample observations were available to produce meaningful statewide median appraisal ratios.

The statistic 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 individual ratios are arrayed 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. The International Association of Assessing Officers has this to say about CODs:

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 2007, the statewide COD was 12.08, compared to the previous year’s 11.61. Exhibit 14 compares the statewide CODs from the 1997 to the 2007 PVS.

Exhibit 14

Statewide Coefficients of Dispersion, 1997-2007 PVS
Property Category 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
A: Single-family Residences 11.06 9.68 9.23 10.05 10.68 10.33 9.48 9.57 9.83 9.44 9.78
B: Multifamily Residences 7.71 7.34 7.63 7.70 8.91 8.74 10.49 8.45 8.46 8.91 9.41
C: Vacant Lots 17.10 15.17 13.68 14.79 17.29 18.50 18.07 18.31 16.46 15.60 18.17
D: Rural Real 15.62 16.09 14.51 14.96 15.64 15.01 16.65 16.52 15.45 16.58 16.79
F1: Commercial Real 11.01 10.51 10.59 10.56 10.39 9.82 10.93 11.37 12.00 11.35 12.56
G: Oil, Gas, Minerals 4.85 7.38 20.52 7.15 31.30 11.50 10.46 9.25 9.88 21.58 17.29
J: Utilities 10.76 9.64 12.78 12.26 12.00 11.72 11.66 10.18 12.55 8.92 18.02
L1: Commercial Personal 11.20 9.24 7.52 8.19 8.32 8.44 8.21 9.16 9.48 7.96 8.30
Overall 11.64 10.86 11.79 11.53 12.26 11.49 11.38 11.29 11.24 11.61 12.08

Source: Texas Comptroller of Public Accounts.

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.

Local Self Report Data, 2007

CADs annually submit data to PTAD in self-reports that cover critical aspects of their appraisal work. Each CAD reports total appraised value in 15 property categories developed by the Comptroller’s office. These categories are defined as follows:

  • 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 with 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, not including 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 used by a commercial business to produce income, including fixtures, equipment and inventory.
  • Category L2, Personal Property: Industrial. All tangible personal property used by an industrial business to produce income, including fixtures, equipment and inventory.
  • 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. Category S properties include dealers' motor vehicle inventory; dealers' heavy equipment inventory; dealers' vessel and outboard motor inventory; and retail manufactured housing inventory.

Harris CAD had the state’s highest total appraised value in 2007 (Exhibit 15).

Exhibit 15

Top Ten Appraisal Districts in Total Value, 2007
Appraisal District Taxable Value
Harris $306,512,928,828
Dallas $196,288,494,958
Tarrant $150,150,277,565
Travis $102,396,525,760
Bexar $95,253,783,540
Collin $78,722,521,468
Denton $57,607,813,385
Williamson $41,176,255,895
Fort Bend $40,859,538,307
El Paso $35,016,283,497

Source: Texas Comptroller of Public Accounts, Property Tax Assistance Division.

Harris CAD also had the state’s highest value in three of eight categories (Exhibit 16).

Exhibit 16

Top Ten Appraisal District Rankings in Various Categories, 2007
Rank Single-family Residential Residential Inventory Mobile Homes Rural Acreage Industrial Real Minerals Vehicles Utilities
1 Harris Collin Harris Tarrant Harris Gaines Parmer Tarrant
2 Dallas Tarrant Bexar Harris Jefferson Denton Falls Harris
3 Tarrant Fort Bend Hidalgo Denton Brazoria Andrews Bailey Dallas
4 Travis Harris Tarrant Collin Galveston Panola Castro Collin
5 Bexar Denton Travis Bexar Chambers Ector Swisher Montgomery
6 Collin Bexar Montgomery Travis Calhoun Yoakum Floyd Nolan
7 Denton Travis Bastrop Parker Fort Bend Zapata Sherman Travis
8 Fort Bend El Paso Dallas Williamson Somervell Hockley Colorado Denton
9 Williamson Williamson Kaufman Waller Collin Wise Baylor Brazoria
10 El Paso Rockwall El Paso Hidalgo Rusk Upton Donley Bexar

Source: Texas Comptroller of Public Accounts.

The top 10 CADs are similar in most categories but other counties such as Jefferson, Calhoun, Chambers, Galveston, Somervell and Rusk made the 2007 top 10 in the industrial property category. The top 10 CADs for appraisals of mineral properties did not include any of the usual top 10; they included Gaines, Denton, Andrews, Panola, Ector, Yoakum, Zapata, Hockley, Wise and Upton counties.

Only 25 CADs reported vehicle values, and Parmer CAD led the pack with $29.9 million. Bexar CAD ranked second for appraised value of mobile homes and Hidalgo, Montgomery, Bastrop and Kaufman counties make the top 10 list in this category. Collin CAD had the most value in residential inventory, at $2 billion.

Because taxing units within an appraisal district may 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.

Full details of CAD appraisal values are available on the Comptroller’s Web site at http://www.window.state.tx.us/cadvalues/proptax/annrpt07/ (Excel, 62 KB).

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