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 Chambers 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 properties to various categories, such as residential, commercial and rural property, so like properties 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 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 District
The PVS identified Barbers Hill as an eligible ISD when its local value fell outside of the confidence interval limit determined by the 2006 PVS.
Five property categories were tested in Barbers Hill ISD:
- Category A: Single-Family Residential;
- Category D: Rural Real;
- Category F1: Commercial Real;
- Category G: Oil, Gas and Mineral Leases; and
- Category J: Utilities.
Category A property made up 74 percent of the total test value and 19 percent of the ISD's value. A review of the Category A sample ratios in the 2006 PVS indicates that the CAD appraised from as low as 56 percent to a high of 133 percent of market value, with a weighted mean ratio of 0.9400.
Rural real property made up 6 percent of the total test value and 1 percent of the ISD's value. Rural property include 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 made up 1 percent of the test value and less than 1 percent of the ISD's value. The weighted mean ratio of the qualified rural values tested was 0.9853.
Non-qualified properties (D3) made up 5 percent of the ISD's test value and 1 percent of its value. The CAD appraised rural homes and non-qualified rural land from as low as 66 percent to a high of 127 percent of market value, with a weighted mean ratio of 0.9146.
Category F1 property made up 6 percent of the total test value and 2 percent of the ISD's value. A review of the Category F1 sample ratios in the 2006 PVS indicates the CAD appraised from as low as 61 percent to a high of 115 percent of market value, with a weighted mean ratio of 0.9189.
Category G property made up 11 percent of the total test value and 2 percent of the ISD's value. A review of the Category G sample ratios in the 2006 PVS indicates the CAD appraised from as low as 82 percent to a high of 109 percent of market value, with a weighted mean ratio of 0.9927.
Category J property made up 4 percent of the total test value and 2 percent of the ISD's value. A review of the Category J sample ratios in the 2006 PVS indicates the CAD appraised from as low as 56 percent to a high of 109 percent of market value, with a weighted mean ratio of 0.9513.
While these figures show the range of property ratios in Chambers CAD, a clearer measure of appraisal performance includes the number of ratios that 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 coefficient of dispersions (CODs) outlined below, measure the consistency of a CAD's property appraisals at the same percentage of market value, without regard to value. A low COD combined with high percentages indicate equitable appraisals, while a high COD paired with low percentages indicate inequitable appraisals.
The median ratio for single family residences (A) in Barbers Hill ISD was 95 percent, with 66 percent of the ratios within 10 percent of the median and 94 percent within 25 percent of the median.
The median ratio for non-qualified farm and ranch property (D3) in Barbers Hill ISD was 92 percent, with 59 percent of the ratios within 10 percent of the median and 82 percent within 25 percent of the median.
The median ratio for commercial real property (F1) in Barbers Hill ISD was 97 percent, with 50 percent of the ratios within 10 percent of the median and 85 percent within 25 percent of the median.
The median ratio for oil, gas and mineral leases (G) in Barbers Hill ISD was 100 percent, with 92 percent of the ratios within 10 percent of the median and 100 percent within 25 percent of the median.
The median ratio for utility property (J) in Barbers Hill ISD was 100 percent, with 67 percent of the ratios within 10 percent of the median and 78 percent within 25 percent of the median.
Chambers CAD Summary
The Chambers CAD's overall median ratio was 0.99.
Single-family (A) sample ratios ranged from 0.41 to 1.66. The median ratio was 0.97.
Non-qualified rural real (D3) sample ratios ranged from 0.54 to 1.89. The median ratio was 0.97.
Commercial real property (F1) sample ratios ranged from 0.61 to 1.50. The median ratio was 0.99.
Oil, gas and mineral lease (G) sample ratios ranged from 0.82 to 1.67. The median ratio was 1.01.
Utility (J) sample ratios ranged from 0.56 to 1.09. The median ratio was 1.00.
Coefficient of Dispersion
The coefficient of dispersion (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 properties are 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 properties, the COD should be 20 or less. For other real property and personal property, CODs should reflect the nature of the properties, market conditions and the availability of reliable market indicators.
The 2006 COD for Chambers CAD Category A was 10.54; Category D was 17.36; Category F1 was 12.97; Category G was 5.02; and Category J was 6.27.
The 2006 COD Barbers Hill ISD Category A was 9.57; Category D was 11.23; Category F1 was 12.60; Category G was 4.03; and Category J was 13.42.
These numbers indicate relative uniformity in appraisal in these categories in the CAD and ISD.