Chapter 1
Findings of the Property Value Study and Summary
Overview of Property Value Study
The annual PVS estimates the total taxable property value in each school district in Angelina CAD. With a few notable exceptions, the law requires all CADs and PTD to appraise property at market value. Market value, in essence, is the price a willing buyer would pay a willing seller for the property under normal conditions. Agricultural land and timberland, however, are appraised according to the productivity value of the land's category.
The CAD determines the local appraisal roll value and certifies it to each school district; these values become the districts' tax roll values. Each school district must submit an annual self-report of its property values to PTD, which audits the reports for accuracy.
PTD's estimate of the total taxable value in a school district, called the state value, is made by estimating market value or by accepting the local appraised value in each property category and then adding these category values for an overall school district value. PTD then deducts the school district's self-reported, state-mandated homestead exemptions, disabled veterans exemptions, value limitations, reinvestment zones, freeport exemptions, the loss between market value and productivity value of qualified agricultural lands, the school tax ceiling for homeowners over age 65 or with a disability and other state-mandated exemptions.
PTD issues a preliminary and a final PVS each year. School districts and CADs may protest the findings of the preliminary PVS through an administrative hearings process. This process requires the protester to file a written protest with supporting documentation within 40 days of the issuance of the preliminary PVS. PTD may amend the findings of the preliminary PVS based on the submission of a written protest, a conference between PTD and CAD representatives or a formal hearing. A hearings examiner appointed by the Comptroller's general counsel holds the formal hearing; this person is not a PTD employee. A school district that disagrees with the hearing examiner's final decision may appeal it to Travis County district court.
When conducting the property value study, PTD assigns property to various categories, such as residential, commercial and rural property, so like property can be studied together.
In general, a ratio indicates the percentage of market value, as determined by PTD, at which a CAD appraises a property or group of property. A ratio of 1.0 indicates appraisal at market value - the legal standard. Generally, appraisals with ratios that are close to the standard, for instance between 0.95 and 1.05, are considered reasonably accurate for a property group.
Eligible School Districts
The 2006 PVS identified one ISD, Lufkin, as an eligible school district when its local value fell outside the study's statistical margin of error. The statistical margin of error or confidence interval is a range of school district values that the Comptroller has accepted.
Five property categories were tested in Lufkin ISD:
(1) Category A, Single-Family Residential;
(2) Category D, Rural Real;
(3) Category F1, Commercial Real;
(4) Category J, Utilities; and
(5) Category L1, Commercial Personal.
Category A, Single-Family Residential, made up 59 percent of the total test value and 44 percent of the school district's value. A review of the Category A sample ratios in the 2006 PVS indicates that the CAD appraised from as low as 63 percent to a high of 154 percent of market value, with a weighted mean ratio of 0.9482.
Category D, Rural Real, made up 1 percent of the school district's value and sample parcels tested with a category ratio of 1.0230.
Rural property includes two subcategories: productivity value of qualifying acres (D1), which is primarily farm and ranch land that qualifies for the special productivity appraisal; and non-qualifying acres and farm and ranch improvements (D3), which are primarily rural homes and land that do not qualify as farm, ranch or timberlands. The differences in value between qualified and non-qualified rural land are wide since qualified land is appraised using a special statutory method to determine the land's productivity value, and non-qualified property is based on what the land would sell for in an open-market transaction.
Subcategory D1 comprised 1 percent of the rural real property value in the school district and 1 percent of the total test values. The category ratio of the qualified rural property tested was 1.0578.
Subcategory D3 was not tested in Lufkin ISD.
Category F1, Commercial Real, made up 21 percent of the total test value and 15 percent of the school district's value. A review of the Category F1 sample ratios in the 2006 PVS indicates that the CAD appraised from as low as 43 percent to a high of 153 percent of market value, with a weighted mean ratio of 0.8707.
Category J, Utilities, made up 5 percent of the total test value and 5 percent of the school district's value. A review of the Category J sample ratios in the 2006 PVS indicates that the CAD appraised from as low as 97 percent to a high of 118 percent of market value, with a weighted mean ratio of 1.0142.
Category L1, Commercial Personal, made up 14 percent of the total test value and 11 percent of the school district's value. A review of the Category L1 sample ratios in the 2006 PVS indicates that the CAD appraised from as low as 96 percent to a high of 115 percent of market value, with a weighted mean ratio of 0.9998.
While these figures show the range of property ratios in Angelina CAD, a clearer measure of appraisal performance includes how many of these ratios were within 10 and 25 percent of the median ratio. The median ratio is the ratio in the middle of all the other ratios when sorted by size.
These figures, in conjunction with the Coefficients of Dispersion (CODs) outlined below, measure the consistency of an appraisal district's property appraisals at the same percentage of market value, without regard to value. A low COD combined with high percentages indicates equitable appraisals; while a high COD paired with low percentages indicates inequitable appraisals.
The median ratio for Category A, Single-Family Residences, in Lufkin ISD was 96 percent, with 60 percent of the ratios within 10 percent of the median and 92 percent within 25 percent of the median.
The median ratio for Category F1, Commercial Real, in Lufkin ISD was 97 percent, with 42 percent of the ratios within 10 percent of the median and 65 percent within 25 percent of the median.
The median ratio for Category J, Utilities, in Lufkin ISD was 103 percent, with 89 percent of the ratios within 10 percent of the median and 100 percent within 25 percent of the median.
The median ratio for Category L, Commercial Personal, in Lufkin ISD was 100 percent, with 96 percent of the ratios within 10 percent of the median and 100 percent within 25 percent of the median.
Angelina CAD Summary
Angelina CAD's overall median ratio was 0.98.
- Category A, Single-Family Residences, sample ratios ranged from 0.50 to 1.86. The median ratio was 0.97.
- Category D3, Non-Qualified Rural Real, sample ratios ranged from 0.48 to 1.22. The median ratio was 0.97.
- Category F1, Commercial Real, sample ratios ranged from 0.43 to 1.53. The median ratio was 0.94.
- Category J, Utilities, sample ratios ranged from 0.97 to 2.34. The median ratio was 1.03.
- Category L1, Commercial Personal, sample ratios ranged from 0.42 to 1.15. The median ratio was 1.00
Coefficient of Dispersion
The COD, the primary measure of appraisal uniformity, measures the average percentage by which individual ratios vary from the median ratio. According to IAAO's Property Appraisal and Assessment Administration, a low COD indicates that appraisals within a category of property are uniform, while a high COD indicates property is being appraised at inconsistent percentages of market value. A COD that is very low, however, may indicate "sales chasing," a form of unequal appraisal.
According to IAAO's Standard on Ratio Studies, CODs for Category A, Single-Family Residences, should generally be 15 or less, and 10 or less for new and fairly homogeneous areas. For Category C, Vacant Lots, and for income-producing property, the COD should be 20 or less. For other real property and personal property, CODs should reflect the nature of the property, market conditions and the availability of reliable market indicators.
The 2006 COD for Angelina CAD Category A was 10.94; Category D was 12.76; Category F1 was 17.57; Category J was 11.02; and Category L1 was 4.54.
The 2006 COD for Lufkin ISD Category A was 10.39; Category F1 was 18.98; Category J was 4.38; and Category L1 was 2.25.
These numbers indicate uniformity in appraisal in these categories in the CAD and ISD.