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 Johnson 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 Joshua ISD as an eligible ISD when its local value fell outside of the confidence interval limit determined by the 2006 PVS.
Three property categories tested in Joshua ISD include:
1) Category A, Single-Family Residential;
2) Category D, Rural Real; and
3) Category F1, Commercial Real.
Single-family property (Category A) made up 81 percent of the total test value and 67 percent of the ISD's value. A review of the Category A sample ratios in the 2006 PVS indicates that the CAD appraised from as low as 53 percent to a high of 215 percent of market value, with a weighted mean ratio of 0.9526.
Rural real property made up 13 percent of the total test value and 10 percent of the ISD's value.
Rural property includes two subcategories: productivity value of qualifying acres (Subcategory D1), which is primarily farm and ranch land that qualifies for the special productivity appraisal; and non-qualifying acres and farm and ranch improvements (Subcategory 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 less than 1 percent of the total test value and less than 1 percent of the ISD's value. The category ratio was 1.0822.
Non-qualified property (Subcategory D3) made up 13 percent of the ISD's test value and 10 percent of the ISD's value. The CAD appraised rural homes and non-qualified rural land from as low as 42 percent to a high of 206 percent of market value, with a weighted mean ratio of 0.9562.
Commercial real property (Category F1) made up 6 percent of the total test value and 5 percent of the ISD's value. A review of the Category F1 sample ratios in the 2006 PVS indicates that the CAD appraised from as low as 59 percent to a high of 156 percent of market value, with a weighted mean ratio of 0.8998.
While these figures show the range of property ratios in Johnson CAD, 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.
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 percentages indicates equitable appraisals; while a high COD paired with low percentages indicates inequitable appraisals.
The median ratio for single family residences (Category A) in Joshua ISD was 97 percent, with 67 percent of the ratios within 10 percent of the median and 91 percent within 25 percent of the median.
The median ratio for non-qualified farm and ranch property (Subcategory D3) in Joshua ISD was 99 percent, with 37 percent of the ratios within 10 percent of the median and 59 percent within 25 percent of the median.
The median ratio for commercial real property (Category F1) in Joshua ISD was 93 percent, with 62 percent of the ratios within 10 percent of the median and 81 percent within 25 percent of the median.
The median ratio for utility property (Category J) in Joshua ISD was 103 percent, with 80 percent of the ratios within 10 percent of the median and 90 percent within 25 percent of the median.
Johnson CAD Summary
Johnson CAD's overall median ratio was 1.00.
Single-family (Category A) sample ratios ranged from 0.50 to 2.46. The median ratio was 1.00.
Multi-family (Category B) sample ratios ranged from 0.84 to 1.15. The median ratio was 0.96.
Vacant land (Category C) sample ratios ranged from 0.37 to 4.00. The median ratio was 1.00.
Non-qualified rural real (Subcategory D3) sample ratios ranged from 0.42 to 2.06. The median ratio was 1.00.
Commercial real property (Category F1) sample ratios ranged from 0.28 to 1.76. The median ratio was 0.96.
Oil, gas and mineral lease (Category G) sample ratios ranged from 0.94 to 6.76. The median ratio was 1.05.
Utility (Category J) sample ratios ranged from 0.65 to 1.62. The median ratio was 1.02.
Commercial personal property (Category L1) sample ratios ranged from 0.75 to 1.67. 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's Property Appraisal and Assessment Administration, a low COD indicates that appraisals within a category of property are uniform, while a high COD indicates properties are 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 Category A, Single- Family Residences, should generally be 15 or less, and 10 or less for new and fairly homogeneous areas. For Category C, 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 2006 COD for Johnson CAD Category A was 9.91; Category B was 7.96; Category C was 19.23; Category D was 12.90; Category F1 was 14.23; Category G was 34.04; Category J was 11.94; and Category L1 was 6.48.
The 2006 COD for Joshua ISD Category A was 10.73; Category D was 23.99; and Category F1 was 13.70.
These numbers indicate relative uniformity in appraisal in these categories in the CAD and ISD, except for Category G in the CAD and Category D in Joshua ISD.