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 2008, 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.[16]

The median appraisal ratio measures how closely 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 2008 Property Value Study (PVS), the CADs' median appraisal ratio for market value was 99 percent. Exhibit 15 compares the statewide median appraisal ratios from the PVS for 1998 through 2008.

Exhibit 15
Statewide Median Appraisal Ratios, 1998-2008 PVS

Property Category 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
A: Single-family Residences 98% 98% 98% 97% 98% 99% 99% 98% 98% 98% 98%
B: Multi-family Residences 99% 98% 98% 99% 98% 98% 98% 98% 97% 97% 99%
C: Vacant Lots 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
D: Rural Real 98% 98% 98% 98% 99% 99% 98% 99% 99% 99% 98%
F1: Commercial Real 99% 98% 97% 98% 98% 98% 97% 97% 97% 96% 97%
G: Oil, Gas, Minerals 100% 102% 103% 99% 101% 100% 100% 101% 102% 100% 100%
J: Utilities 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 99%
L1: Commercial Personal 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
Overall 99% 99% 99% 99% 100% 99% 99% 99% 99% 99% 99%

Source: Texas Comptroller of Public Accounts.

Exhibit 15 does not include figures for the following categories, because not enough sample observations were available to produce meaningful statewide median appraisal ratios:

  • F2: Real Property;
  • L2: Personal Property – Industrial;
  • M: Mobile Homes and Other Tangible Personal Property;
  • O: Real Property, Residential Inventory; and
  • S: Special Inventory.

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 (IAAO) recommends levels of uniformity for various types of properties (Exhibit 16).

Exhibit 16
Recommended Appraisal Uniformity Measured by COD

Type of property – General Type of property – Specific COD Range
Single-family Residential Newer or more uniform areas 5.0 to 10.0
Single-family Residential Older or more diverse areas 5.0 to 15.0
Other Residential Rural, seasonal, recreational, mobile homes 5.0 to 20.0
Income-producing Properties Larger areas represented by large samples 5.0 to 15.0
Income-producing Properties Smaller areas represented by smaller samples 5.0 to 20.0
Vacant Land   5.0 to 20.0
Other Real and Personal Property   Varies with local conditions

Source: International Association of Assessing Officers (IAAO), Standard on Ratio Studies, p. 17, 2007

In 2008, the statewide COD was 9.88 for single-family residential property, 17.58 for vacant lots and 11.99 for commercial real estate. Only oil and gas properties had a COD outside the IAAO recommended standards (Exhibit 17).

Exhibit 17
Statewide Coefficients of Dispersion, 1998-2008 PVS

Property Category 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
A: Single-family Residences 9.68 9.23 10.05 10.68 10.33 9.48 9.57 9.83 9.44 9.78 9.88
B: Multi-family Residences 7.34 7.63 7.70 8.91 8.74 10.49 8.45 8.46 8.91 9.41 7.72
C: Vacant Lots 15.17 13.68 14.79 17.29 18.50 18.07 18.31 16.46 15.60 18.17 17.58
D: Rural Real 16.09 14.51 14.96 15.64 15.01 16.65 16.52 15.45 16.58 16.79 16.74
F1: Commercial Real 10.51 10.59 10.56 10.39 9.82 10.93 11.37 12.00 11.35 12.56 11.99
G: Oil, Gas, Minerals 7.38 20.52 7.15 31.30 11.50 10.46 9.25 9.88 21.58 17.29 27.02
J: Utilities 9.64 12.78 12.26 12.00 11.72 11.66 10.18 12.55 8.92 18.02 9.87
L1: Commercial Personal 9.24 7.52 8.19 8.32 8.44 8.21 9.16 9.48 7.96 8.30 8.79
Overall 10.86 11.79 11.53 12.26 11.49 11.38 11.29 11.24 11.61 12.08 12.65

Source: Texas Comptroller of Public Accounts.

The Comptroller's office calculates the statewide COD for an individual property category by using the appraisal ratios of all sample properties in that category from across the state. The Comptroller's office then calculates the overall statewide COD using the appraisal ratios for all sample properties.

Local Self Report Data, 2008

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: Multi-family 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. It also 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 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 business's 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 2008 (Exhibit 18).

Exhibit 18
Top Ten Appraisal Districts in Total Value, 2008

Appraisal District Taxable Value
Harris $335,261,882,376
Dallas $202,849,031,277
Tarrant $156,814,014,537
Travis $114,053,704,599
Bexar $104,833,548,891
Collin $76,547,368,306
Denton $56,351,127,248
Fort Bend $45,652,371,725
El Paso $36,801,730,789
Williamson $34,257,684,984

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

Harris CAD also had the state's highest value in four of eight categories (Exhibit 19).

Exhibit 19
Top 10 Appraisal District Rankings in Various Categories, 2008

Rank Single-family Residential Residential Inventory Mobile
Minerals Vehicles Utilities
1 Harris Tarrant Harris Harris Harris Gaines Parmer Tarrant
2 Dallas Collin Bexar Tarrant Jefferson Yoakum Falls Harris
3 Tarrant Fort Bend Hidalgo Collin Brazoria Ector Bailey Dallas
4 Travis Harris Tarrant Denton Galveston Andrews Castro Denton
5 Bexar Denton Travis Bexar Chambers Panola Sherman Montgomery
6 Collin Bexar Montgomery Williamson Fort Bend Pecos Donley Nolan
7 Denton Travis Ector Parker Somervell Johnson Hall Collin
8 Fort Bend El Paso El Paso Travis Calhoun Upton Armstrong Brazoria
9 Montgomery Williamson Dallas Gillespie Collin Zapata Baylor Travis
10 El Paso Galveston Bastrop Wise Rusk Hockley Lamb Fort Bend

Source: Texas Comptroller of Public Accounts.

The top 10 CADs are similar in most categories, but other counties such as Jefferson, Brazoria, Galveston, Chambers, Somervell, Calhoun and Rusk made the 2008 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, Yoakum, Ector, Andrews, Panola, Pecos, Johnson, Upton, Zapata and Hockley. Only 25 CADs reported vehicle values. Bexar CAD ranked second for appraised value of mobile homes and Hidalgo, Montgomery, Bastrop and Ector counties made the top 10 list in this category. Tarrant CAD had the most value in residential inventory and utilities, at $1.7 billion and $9.2 billion, respectively.

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 www.window.state.tx.us/taxinfo/proptax/annual08/2008_appraisal_district_values.xls.

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