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 Hunt 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 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 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 property value study, 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 PVS identified Cumby and Wolfe City as eligible ISDs when their respective local values fell outside of the confidence interval limit determined by the 2006 PVS.
Four property categories were tested in Cumby ISD:
1) Category A, Single-Family Residential;
2) Category D, Rural Real;
3) Category F1, Commercial Real; and
4) Category J, Utilities.
In Cumby ISD, Category A, Single-Family Residential, made up 21 percent of the total test value and 20 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 60 percent to a high of 165 percent of market value, with a weighted mean ratio of 1.1458.
Category D, Rural Real, made up 61 percent of the total test value and 58 percent of the school district's value. Rural property includes two subcategories: Subcategory D1, Qualified Acres, which is primarily farm and ranch land that qualifies for the special productivity appraisal; and Subcategory D3, Non-Qualifying Acres and Farm and Ranch Improvements, 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 8 percent of the total test value and 7 percent of the school district's value. The category ratio for qualified rural acres was 0.9833.
Subcategory D3, Non-Qualified Acres and Farm and Ranch Improvements, made up 53 percent of school district's test value and 51 percent of the school district's value. The CAD appraised non-qualified acres and farm and ranch improvements from as low as 43 percent to a high of 161 percent of market value, with a weighted mean ratio of 0.8336.
Category F1, Commercial Real, made up 15 percent of the total test value and 8 percent of the school district's value. A review of the Category F1 sample ratios in the 2006 PVS indicates that the CAD appraised from as low as 91 percent to a high of 99 percent of market value, with a weighted mean ratio of 0.9784.
Category J, Utilities, made up 4 percent of the total test value and 5 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 78 percent to a high of 100 percent of market value, with a weighted mean ratio of 0.8807.
Three property categories were tested in Wolfe City ISD:
1) Category A, Single-Family Residential;
2) Category D, Rural Real; and
3) Category J, Utilities.
In Wolfe City ISD, Category A, Single-Family Residential, made up 45 percent of the total test value and 38 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 64 percent to a high of 140 percent of market value, with a weighted mean ratio of 0.9284.
Category D, Rural Real, made up 50 percent of the total test value and 40 percent of the school district's value.
Subcategory D1 made up 6 percent of the total test value and 5 percent of the school district's value. The category ratio of Qualified Acres was 0.9612.
Non-qualified acres and farm and ranch improvements, subcategory D3, made up 44 percent of school district's test value and 35 percent of the school district's value. The CAD appraised rural improvements and non-qualified acres from as low as 48 percent to a high of 163 percent of market value, with a weighted mean ratio of 0.9401.
Category J, Utilities, made up 5 percent of the total test value and 5 percent of the school district's value. A review of the Category J sample ratios in the 2006 PVS indicates that the CAD's external appraiser's valuations were from as low as 97 percent to a high of 124 percent of market value, with a weighted mean ratio of 0.9904.
While these figures show the range of property category ratios in Hunt CAD, a clearer measure of appraisal performance includes how many of these ratios were clustered within 10 and 25 percent of the median ratio. The median ratio is the ratio in the middle of all other category sample ratios when sorted by size.
These figures, 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 indicates equitable appraisals; while a high COD paired with low percentages indicates inequitable appraisals.
The median of sample ratios for Category A, Single-Family Residential, in Cumby ISD was 118 percent, with 24 percent of the sample ratios within 10 percent of the median and 62 percent within 25 percent of the median.
The median of sample ratios for Category A, Single-Family Residential, in Wolfe City ISD was 93 percent, with 54 percent of the sample ratios within 10 percent of the median and 89 percent within 25 percent of the median.
The median of sample ratios for Subcategory D3, Non-Qualified Acres and Farm and Ranch Improvements, in Cumby ISD was 90 percent, with 13 percent of the ratios within 10 percent of the median and 57 percent within 25 percent of the median.
The median for sample ratios in Subcategory D3, Non-Qualified Acres and Farm and Ranch Improvements, in Wolfe City ISD was 106 percent, with 35 percent of the ratios within 10 percent of the median and 65 percent within 25 percent of the median.
The median for sample property ratios in Category F1, Commercial Real, in Cumby ISD was 98 percent, with 100 percent of the ratios within 10 percent of the median.
The median for sample property ratios in Category J, Utilities, tested in Cumby ISD was 98 percent, with 75 percent of the ratios within 10 percent of the median and 100 percent within 25 percent of the median.
The median for sample ratios for Category J, Utilities, tested in Wolf City ISD was 100 percent, with 83 percent of the ratios within 10 percent of the median and 100 percent within 25 percent of the median.
Hunt CAD Summary
Hunt CAD's overall median ratio was 0.99.
Sample ratios in Category A, Single-Family Residential, ranged from 0.54 to 2.43. The median ratio was 0.99.
Sample ratios from Category B, Multifamily Residential, ranged from 0.56 to 1.64. The median ratio was 0.93.
Sample ratios in Category C, Vacant Lots, ranged from 0.29 to 2.76. The median ratio was 1.04.
Sample ratios in Subcategory D3, Non-Qualified Acres and Farm and Ranch Improvements, ranged from 0.18 to 4.14. The median ratio was 1.00.
Sample ratios in Category F1, Commercial Real, ranged from 0.30 to 1.60. The median ratio was 0.87.
Sample ratios in Category J, Utilities, ranged from 0.78 to 3.11. The median ratio was 1.00.
Sample ratios in Category L1, Commercial Personal, ranged from 0.32 to 1.64. The median ratio was 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 in Property Appraisal and Assessment Administration, a low COD indicates appraisals within a category of property are uniform and a high COD indicates inconsistent appraisal of property as a percentage 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 Residential, should generally be 15 or less, and 10 or less for new and homogeneous areas. For Category C, Vacant Lots, 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 2006 COD for Hunt CAD Category A was 11.40; Category B was 13.92; Category C was 15.80; Category D was 24.30; Category F1 was 19.28; Category J was 14.17; and Category L1 was 10.88.
The 2006 COD for Cumby ISD Category A was 19.90; and Category D was 28.66. The sample size was too small to compute a COD in both Commercial Real property and in Utilities.
The 2006 COD for Wolfe City ISD Category A was 12.13; Category D was 21.57; and Category J was 6.24.
These CODs indicate relative uniformity in appraisal in these categories both in the CAD and ISDs with the exception of single-family residential and vacant land not used in agriculture in Cumby ISD and rural land in Wolfe City ISD.