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 Delta 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. The state requires, however, that a CAD appraise agricultural land and timberland 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 district's tax roll values. Each school district must submit an annual self-report of its property values to PTAD so it can audit the reports for accuracy.
PTAD's calculates the total taxable value in a school district, called the state value, 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 over age 65 or with a disability and other state-mandated exemptions.
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 it can evaluate like property 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 property. A ratio of 1.0 indicates appraisal at market value-the legal standard. Appraisals that have ratios close to the standard, for instance between 0.95 and 1.05, are considered reasonably accurate for a property group.
Eligible School District
PTAD identified Cooper ISD as an eligible district when its local value fell outside of the confidence interval limit determined by the 2006 PVS. Three property categories were tested in Cooper ISD:
- Category A, Real Property: Single-Family Residential;
- Category D, Rural Real; and
- Category J, Real and Personal Property: Utilities.
Category A made up 43 percent of the total test value and 34 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 43 percent to a high of 218 percent of market value, with a weighted mean ratio of 0.8841.
Category D made up 37 percent of the total test value and 31 percent of the school district's value. Category D includes two subcategories: D1, Real Property: Qualified Agricultural Land, which includes primarily farm and ranch land that qualifies for the special productivity appraisal and D2, Non-Qualified Land, which is primarily rural homes and land that do not qualify as farm, ranch or timberlands. The differences in value between D1 and D2 are wide since D1 is appraised using a special statutory method to determine the land's productivity value, and D2 is based on what the land would sell for in an open-market transaction.
D1 made up 12 percent of the total test value and 9 percent of the school district's value. The ratio of tested D1 values was 1.0523. D2 made up 37 percent of school district's value and 28 percent of the school district's test value. The CAD appraised D2 from as low as 55 percent to a high of 227 percent of market value, with a weighted mean ratio of 0.9516.
Category J made up 8 percent of the total test value and 12 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 94 percent to a high of 103 percent of market value, with a weighted mean ratio of 0.9728.
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.
The ratios of sampled property in the PVS, 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 indicate equitable appraisals; while a high COD paired with low percentages indicate inequitable appraisals.
The median ratio for Category A in Cooper ISD was 98 percent, with 49 percent of the ratios within 10 percent of the median and 76 percent within 25 percent of the median.
The median ratio for D2 in Cooper ISD was 102 percent, with 28 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 in Cooper ISD was 100 percent, with 100 percent of the ratios within 10 percent of the median.
Delta CAD Summary
Delta CAD's overall median ratio was 1.0. Category ratios included the following:
- Category A sample ratios ranged from 0.43 to 2.18, with a median ratio of 1;
- D2 sample ratios ranged from 0.55 to 2.27, with a median ratio of 1; and
- Category J sample ratios ranged from 0.19 to 1.03 and had a median ratio of 0.99.
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 the CAD is appraising property at inconsistent percentages of market value. A COD that is very low, however, may suggest the CAD is "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 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 CODs for Delta CAD categories in the 2006 PVS included the following:
- Category A was 17.58;
- Category D was 24.91; and
- Category J was 8.91.
The COD for Cooper ISD categories were the following:
- Category A was 18.47;
- Category D was 27.17; and
- Category J was 2.24.
The ratios for the sample property tested show a lack of uniformity in Category A and Category D in both the school district and the CAD.