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 Harrison 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, Elysian Fields 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's office has accepted.
Elysian Fields ISD
Four property categories were tested in Elysian Fields ISD:
- Category A, Single-Family Residential;
- Category D, Rural Real;
- Category G, Oil, Gas & Mineral Leases; and
- Category J, Utilities.
Category A made up 30 percent of the ISD's total test value and 27 percent of its total value. A review of Category A sample ratios in the 2007 PVS indicates the CAD appraised from as low as 37 percent to a high of 134 percent of market value, with a weighted mean ratio of 0.90.
Category D made up 20 percent of the ISD's total test value and 17 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 are wide since Subcategory D1 is appraised using a special statutory method to determine the land's productivity value, while Subcategory D3 is based on what the land would sell for in an open-market transaction.
Subcategory D1 made up 3 percent of the ISD's total test value and 2 percent of its total value. The category ratio of the qualified rural values tested was 0.93.
Subcategory D3 made up 17 percent of the ISD's total test value and 15 percent of its total value. The CAD appraised Subcategory D3 from as low as 19 percent to a high of 132 percent of market value, with a weighted mean ratio of 0.71.
Category G made up 49 percent of the ISD's total test value and 45 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 42 percent to a high of 295 percent of market value, with a weighted mean ratio of 1.03.
Category J made up 1 percent of the ISD's total test value and 6 percent of its total value. A review of Category J sample ratios in the 2007 PVS indicates that the CAD appraised from as low as 82 percent to a high of 112 percent of market value, with a weighted mean ratio of 0.95.
While these figures show the range of property ratios in Harrison 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.
Elysian Fields ISD
The median ratio for Category A was 94 percent, with 54 percent of the ratios within 10 percent of the median and 75 percent within 25 percent of the median ratio.
The median ratio for Subcategory D3 was 54 percent, with 24 percent of the ratios within 10 percent of the median and 48 percent within 25 percent of the median ratio.
The median ratio for Category G was 100 percent, with 37 percent of the ratios within 10 percent of the median and 66 percent within 25 percent of the median ratio.
The median ratio for Category J was 93 percent, with 50 percent of the ratios within 10 percent of the median and 100 percent within 25 percent of the median ratio.
Harrison CAD Summary
The Harrison CAD overall median ratio was 1.00.
Category A sample ratios ranged from 0.37 to 2.10. The median ratio was 1.01.
Subcategory D3 sample ratios ranged from 0.17 to 1.74. The median ratio was 0.82.
Category F1, Commercial Real, sample ratios ranged from 0.34 to 1.25. The median ratio was 0.96.
Category G sample ratios ranged from 0.42 to 3.96. The median ratio was 1.01.
Category J sample ratios ranged from 0.44 to 1.26. The median ratio was 1.01.
Category L1, Commercial Personal, sample ratios ranged from 0.57 to 1.34. The median ratio was 1.01.
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 property 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 Harrison CAD Category A was 12.18; Category D was 33.23; Category F1 was 14.71; Category G was 22.10; Category J was 12.82; and Category L1 was 7.94.
The 2007 COD for Elysian Fields ISD Category A was 15.27; Category D was 44.00; Category G was 25.85; and Category J was 12.37.
These numbers indicate inconsistency or lack of appraisal uniformity in appraisal in Categories D and G in the CAD and ISD and in Category A in the ISD.