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 Calhoun CAD. With a few notable exceptions, the law requires all CADs and PTAD 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 school districts' tax roll values. Each school district must submit an annual self-report of its property values to PTAD, which audits the reports for accuracy.
PTAD'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. PTAD 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 aged 65 and older or with a disability and other state-mandated exemptions. The result is the school district's total taxable value.
PTAD 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. PTAD may amend the findings of the preliminary PVS based on the submission of a written protest, a conference between PTAD 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 PTAD employee. A school district that disagrees with the hearing examiner's final decision may appeal it to Travis County District Court.
When conducting the PVS, PTAD 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 PTAD, at which a CAD appraises a property or group of properties. 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
In the 2007 PVS, one school district in Calhoun CAD, Calhoun County ISD, fell outside the study's statistical margin of error and became an eligible school district, leading to this ASR. The statistical margin of error, or confidence interval, is a range of school district values that the Comptroller has accepted.
PTAD tested eight property categories in Calhoun County ISD:
- Category A: Real Property, Single-Family Residential;
- Category C: Real Property, Vacant Lots and Tracts;
- Subcategory D1: Real Property, Qualified Agricultural Land;
- Subcategory D3: Real Property, Non-Qualifying Acres and Farm and Ranch Improvements;
- Category F1: Real Property, Commercial;
- Category G: Oil, Gas and Other Minerals;
- Category J: Real and Personal Property, Utilities; and
- Category L1: Personal Property, Commercial.
Category A made up 56 percent of the school district's total test value and 16 percent of its total value. A review of the Category A sample ratios in the 2007 PVS indicates that the CAD appraised from as low as 34 percent to a high of 195 percent of market value, with a weighted mean ratio of 0.85.
Category C made up 6 percent of the school district's total test value and 2 percent of its total value. A review of the Category C sample ratios in the 2007 PVS indicates that the CAD appraised from as low as 14 percent to a high of 159 percent of market value, with a weighted mean ratio of 0.70.
Subcategories D1 and D3 properties made up 6 percent of the school district's total test value and 2 percent of its total value. Subcategory D1 is primarily farm and ranch land that qualifies for the special productivity appraisal; and non-qualifying acres and farm and ranch improvements. Subcategory D3 consists primarily of rural homes and land that do not qualify as farm, ranch or timberlands. The differences in value between Subcategory D1 and Subcategory D3 is 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 made up 2 percent of the school district's total test value and 1 percent of its total value. The category ratio of the qualified rural values tested was 0.84.
Subcategory D3 made up 4 percent of the school district's total test value and 1 percent of its total value. The CAD appraised Subcategory D3 from as low as 33 percent to a high of 230 percent of market value, with a weighted mean ratio of 0.74.
Category F1 made up 10 percent of the school district's total test value and 3 percent of its total value. A review of the Category F1 sample ratios in the 2007 PVS indicates that the CAD appraised from as low as 55 percent to a high of 129 percent of market value, with a weighted mean ratio of 0.90.
Category G made up 11 percent of the school district's total test value and 3 percent of its total value. A review of the Category G sample ratios in the 2007 PVS indicates that the CAD appraised from as low as 82 percent to a high of 105 percent of market value, with a weighted mean ratio of 0.97.
Category J made up 3 percent of the school district's total test value and 2 percent of its total value. A review of the Category J sample ratios in the 2007 PVS indicates that the CAD appraised from as low as 95 percent to a high of 274 percent of market value, with a weighted mean ratio of 1.01.
Category L1 made up 8 percent of school district's total test value and 2 percent of its total value. A review of the Category L1 sample ratios in the 2007 PVS indicates that the CAD appraised from as low as 59 percent to a high of 110 percent of market value with a weighted mean ratio of 0.99.
While these figures show the range of property ratios in Calhoun CAD, a clearer measure of appraisal performance includes how many of these ratios were within 10 to 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 (COD) outlined below, measure the consistency of a CAD's property appraisals at the same ratios of market value, without regard to value. A low COD combined with high ratios indicates equitable appraisals, while a high COD paired with low percentages indicates inequitable appraisals.
The median ratio for Category A was 90 percent, with 37 percent of the ratios within 10 percent of the median and 78 percent within 25 percent of the median ratio.
The median ratio for Category C was 79 percent, with 13 percent of the ratios within 10 percent of the median and 53 percent within 25 percent of the median ratio.
The median ratio for Subcategory D3 was 82 percent, with 21 percent of the ratios within 10 percent of the median and 56 percent within 25 percent of the median ratio.
The median ratio for Category F1 was 95 percent, with 54 percent of the ratios within 10 percent of the median and 84 percent within 25 percent of the median ratio.
The median Ratio for Category G was 98 percent, with 89 percent of the ratios within 10 percent of the median and 100 percent within 25 percent of the median ratio.
The median ratio for Category J was 100 percent, with 90 percent of the ratios within 10 percent of the median and 90 percent within 25 percent of the median ratio.
The median ratio for Category L1 was 100 percent, with 88 percent of the ratios within 10 percent of the median and 94 percent within 25 percent of the median ratio.
Calhoun CAD Summary
The Calhoun CAD overall median ratio was 0.94. Individual category ratios included:
- Category A sample ratios ranged from 0.34 to 1.95 with a median ratio of 0.90;
- Category C sample ratios ranged from 0.14 to 1.59 with a median ratio of 0.79;
- Subcategory D3 sample ratios ranged from 0.33 to 2.30 with a median ratio of 0.82;
- Category F1 sample ratios ranged from 0.55 to 1.29 with a median ratio of 0.95;
- Category G sample ratios ranged from 0.82 to 1.05 with a median ratio of 0.98;
- Category J sample ratios ranged from 0.95 to 2.74 with a median ratio of 1.00;
- Category L1 sample ratios ranged from 0.59 to 1.10 with a median ratio was 1.00.
Coefficient of Dispersion
The COD is the primary measure of appraisal uniformity and 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 single-family residences, should generally be 15 or less, and 10 or less for new and fairly homogeneous areas. For 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 2007 CODs for Calhoun CAD were as follows:
- Category A was 18.52;
- Category C was 28.67;
- Category D was 37.70;
- Category F1 was 13.25;
- Category G was 4.77;
- Category J was 19.60; and
- Category L1 was 5.12.
The 2007 CODs for Calhoun County ISD were as follows:
- Category A was 19;
- Category C was 29;
- Category D was 38;
- Category F1 was 13;
- Category G was 5;
- Category J was 20; and
- Category L1 was 5.
These numbers indicate a lack of uniformity of appraisal in Categories A, C and D in both the CAD and school district.