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 Garza 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 over 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
The 2007 PVS identified Southland ISD as an eligible school district when its local value fell outside the confidence interval limit.
Southland ISD
Three property categories were tested in Southland ISD:
- Category D, Rural Real;
- Category G, Oil, Gas and Mineral Leases; and
- Category J, Utilities.
Category D made up 20 percent of the ISD's total test value and 18 percent of the ISD's 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 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 12 percent of the ISD's total test value and 11 percent of the ISD's total value. The category ratio of the qualified rural values tested was 0.64.
Subcategory D3 made up 7 percent of the ISD's total test value and 6 percent of the ISD's total value. The CAD appraised Subcategory D3 from as low as 81 percent to a high of 114 percent of market value, with a weighted mean ratio of 0.96.
Category G made up 72 percent of the ISD's total test value and 68 percent of the ISD's total value. A review of the Category G sample ratios in the 2007 PVS indicates that the CAD appraised from as low as 80 percent to a high of 126 percent of market value, with a weighted mean ratio of 0.98.
Category J made up 9 percent of the ISD's total test value and 9 percent of the ISD's total value. A review of the Category J sample ratios in the 2007 PVS indicates that the CAD appraised from as low as 82 percent to a high of 107 percent of market value, with a weighted mean ratio of 0.95.
While these figures show the range of property ratios in Garza 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 indicate equitable appraisals; while a high COD paired with low ratios indicate inequitable appraisals.
The median ratio for Category D3 was 100 percent, with 79 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 G was 99 percent, with 50 percent of the ratios within 10 percent of the median and 86 percent within 25 percent of the median ratio.
The median ratio for Category J was 99 percent, with 75 percent of the ratios within 10 percent of the median and 100 percent within 25 percent of the median ratio.
Garza CAD Summary
The PVS tested three property categories in Garza CAD. The CAD's overall median ratio was 0.97.
Category A sample ratios ranged from 0.47 to 1.22. The median ratio was 0.84.
Category D3 sample ratios ranged from 0.59 to 1.30. The median ratio was 0.96.
Category G sample ratios ranged from 0.74 to 3.21. The median ratio was 1.01.
Coefficient of Dispersion
The COD is 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 Garza CAD Category A was 17.33; Category D was 13.16; and Category G was 15.43.
The 2007 COD for Southland ISD Category D was 6; Category G was 9; and Category J was 8.
These numbers indicate relative uniformity of appraisal in the Garza CAD and Southland ISD, except for Category A in Garza CAD.