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 Donley 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 district's 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 is 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, Clarendon and Hedley ISDs fell outside the PVS' statistical margin of error and became eligible school districts, leading to this ASR. The statistical margin of error, or confidence interval, is a range of ISD values that the Comptroller has accepted.
Clarendon ISD
Four property categories were tested in Clarendon ISD:
- Category A, Single-Family Residential;
- Category D, Rural Real;
- Category F1, Commercial Real; and
- Category J, Utilities.
Category A made up 39 percent of the ISD's total test value and 34 percent of its total value. A review of the Category A sample ratios in the 2007 PVS indicates the CAD appraised from as low as 38 percent to a high of 217 percent of market value, with a weighted mean ratio of 0.89.
Category D made up 41 percent of the ISD's total test value and 34 percent of its total value. Category D 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 subcategory D1 and subcategory D3 rural land are wide since D1 land is appraised using a special statutory method to determine the land's productivity value, and D3 property is based on what the land would sell for in an open-market transaction.
Subcategory D1 made up 25 percent of the ISD's total test value and 21 percent of its total value. The category ratio tested was 1.01.
Subcategory D3 made up 16 percent of the ISD's total test value and 13 percent of its total value. The CAD appraised Subcategory D3 from as low as 42 percent to a high of 117 percent of market value, with a weighted mean ratio of 0.84.
Category F1 made up 9 percent of the ISD's total test value and 8 percent of its total value. A review of Category F1 sample ratios in the 2007 PVS indicates the CAD appraised from as low as 72 percent to a high of 108 percent of market value, with a weighted mean ratio of 0.94.
Category J made up 11 percent of the ISD's total test value and 15 percent of its total value. A review of the Category J sample ratios in the 2007 PVS indicates the CAD appraised from as low as 93 percent to a high of 104 percent of market value, with a weighted mean ratio of 0.94.
Hedley ISD
Four property categories were tested in Hedley ISD:
- Category A;
- Category D;
- Category J; and
- Category L1, Commercial Personal.
Category A made up 13 percent of the ISD's total test value and 11 percent of its total value. A review of the Category A sample ratios in the 2007 PVS indicates the CAD appraised from as low as 78 percent to a high of 119 percent of market value, with a weighted mean ratio of 0.96.
Category D made up 59 percent of the ISD's total test value and 49 percent of its total value.
Subcategory D1 made up 32 percent of the ISD's total test value and 27 percent of its total value. The category ratio tested was 1.03.
Subcategory D3 made up 27 percent of the ISD's total test value and 22 percent of its total value. The CAD appraised Subcategory D3 from as low as 41 percent to a high of 111 percent of market value, with a weighted mean ratio of 0.85.
Category J made up 22 percent of the ISD's total test value and 32 percent of its total value. A review of the Category J sample ratios in the 2007 PVS indicates the CAD appraised from as low as 93 percent to a high of 104 percent of market value, with a weighted mean ratio of 0.94.
Category L1 made up 6 percent of the ISD's total test value and 5 percent of its total value. A review of the Category L1 sample ratios in the 2007 PVS indicates the CAD appraised from as low as 78 percent to a high of 122 percent of market value, with a weighted mean ratio of 0.95.
While these figures show the range of property ratios in Donley 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 (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 ratios indicates equitable appraisals, while a high COD paired with low ratios indicates inequitable appraisals.
Clarendon ISD
The median ratio for Category A in Clarendon ISD was 95 percent, with 57 percent of the ratios within 10 percent of the median and 83 percent within 25 percent of the median ratio.
The median ratio for Subcategory D3 in Clarendon ISD was 98 percent, with 50 percent of the ratios within 10 percent of the median and 61 percent within 25 percent of the median ratio.
The median ratio for Category F1 in Clarendon ISD was 95 percent, with 83 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 in Clarendon ISD was 97 percent, with 100 percent of the ratios within 10 percent of the median.
Hedley ISD
The median ratio for Category A in Hedley ISD was 93 percent, with 71 percent of the ratios within 10 percent of the median and 95 percent within 25 percent of the median ratio.
The median ratio for Subcategory D3 in Hedley ISD was 88 percent, with 60 percent of the ratios within 10 percent of the median and 85 percent within 25 percent of the median ratio.
The median ratio for Category J in Hedley ISD was 97 percent, with 100 percent of the ratios within 10 percent of the median ratio.
The median ratio for Category L1 in Hedley ISD was 100 percent, with 67 percent of the ratios within 10 percent of the median and 100 percent within 25 percent of the median ratio.
Donley CAD Summary
The Donley CAD overall median ratio was 0.95.
Category A sample ratios ranged from 0.38 to 2.17, with a median ratio of 0.94.
Subcategory D3 sample ratios ranged from 0.41 to 1.77, with a median ratio of 0.89.
Category F1 sample ratios ranged from 0.72 to 1.08, with a median ratio of 0.95.
Category J sample ratios ranged from 0.93 to 1.04, with a median ratio of 0.97.
Category L1 sample ratios ranged from 0.78 to 1.22, with a median ratio of 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 single-family residential 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 COD for Donley CAD Category A was 12.43; Category D was 19.07; Category F1 was 7.16; Category J was 3.09; and Category L1 was 6.33.
The 2007 COD for Clarendon ISD Category A was 14.28; Category D was 24.94; Category F1 was 7.16; and Category J was 2.89.
The 2007 COD for Hedley ISD Category A was 6.91; Category D was 10.85; Category J was 3.78; and Category L1 was 6.33.
With the exception of Category D in Clarendon ISD, these numbers indicate relative uniformity of appraisal in the CAD and the ISDs.