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 Nueces CAD. With a few notable exceptions, the law requires all CADs and PTD 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. State law requires CADs to appraise agricultural land and timberland 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 PTD, which audits the reports for accuracy.
PTD'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. PTD 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.
PTD 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. PTD may amend the findings of the preliminary PVS based on the submission of a written protest, a conference between PTD 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 PTD 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, PTD 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 PTD, 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
PTD identified Tuloso-Midway ISD as an eligible school district when its local value fell outside of the confidence interval limit determined by the 2006 PVS. Six property categories were tested in Tuloso-Midway ISD:
- Category A: Single-Family Residential;
- Category C: Vacant Lots and Tracts;
- Category D: Agricultural Land, Qualified and Non-qualified;
- Category F1: Commercial;
- Category J: Utilities; and
- Category L1: Commercial, Personal Property.
Category A: Single-Family Residential property made up 46 percent of the total test value and 18 percent of the school district's value. A review of the Category A: Single-Family Residential sample ratios in the 2006 PVS indicates that the CAD appraised from as low as 43 percent to a high of 148 percent of market value, with a weighted mean ratio of 0.9160.
Category C: Vacant Lots and Tracts made up 6 percent of the total test value and 2 percent of the school district's value. A review of the Category C: Vacant Lots and Tracts sample ratios in the 2006 PVS indicates that the CAD appraised from as low as 86 percent to a high of 114 percent of market value, with a weighted mean ratio of 0.9891.
Category D: Agricultural Land, Qualified and Non-qualified made up 9 percent of the total test value and 3 percent of the school district's value. Category D: Agricultural Land, Qualified and Non-qualified property includes two subcategories:
- D1: Real Property: Qualified Agricultural Land includes primarily farm and ranch land that qualifies for the special productivity appraisal.
- D2: Real Property: Non-Qualified Land is primarily rural homes and land that do not qualify as farm, ranch or timberlands.
The differences in value between D1: Real Property: Qualified Agricultural Land and D2: Real Property: Non-Qualified Land are wide since D1: Real Property: Qualified Agricultural Land is appraised using a special statutory method to determine the land's productivity value, and D2: Real Property: Non-Qualified Land is based on what the land would sell for in an open-market transaction.
D1: Real Property: Qualified Agricultural Land made up 2 percent of the total test value and 1 percent of the school district's value. The weighted mean ratio of the D1: Real Property: Qualified Agricultural Land values tested was 1.0376. D2: Real Property: Non-Qualified Land made up 7 percent of school district's value and 3 percent of the school district's test value. The CAD appraised D2: Real Property: Non-Qualified Land from as low as 77 percent to a high of 100 percent of market value, with a weighted mean ratio of 0.9596.
Category F1: Commercial made up 17 percent of the total test value and 7 percent of the school district's value. A review of the Category F1: Commercial property sample ratios in the 2006 PVS indicates that the CAD appraised from as low as 86 percent to a high of 130 percent of market value, with a weighted mean ratio of 0.9849.
Utility property made up 4 percent of the total test value and 3 percent of the school district's value. A review of the utility properties sample ratios in the 2006 PVS indicates that the CAD appraised from as low as 82 percent to a high of 111 percent of market value, with a weighted mean ratio of 0.9963.
Category L1: Commercial, Personal Property made up 19 percent of the total test values and 7 percent of the school district's value. A review of the Category L1: Commercial, Personal Property sample ratios in the 2006 PVS indicates that the CAD appraised from as low as 86 percent to a high of 118 percent of market value, with a weighted mean ratio of 0.9903.
While these figures show the range of property ratios in Nueces 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 (COD) outlined below, measure the consistency of 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 Category A: Single-Family Residential in Tuloso-Midway ISD was 91 percent, with 62 percent of the ratios within 10 percent of the median and 95 percent within 25 percent of the median.
The median ratio for Category C: Vacant Lots and Tracts land parcels in Tuloso-Midway ISD was 100 percent, with 73 percent of the ratios within 10 percent of the median and 100 percent within 25 percent of the median.
The median ratio for non-qualified farm and ranch property in Tuloso-Midway ISD was 94 percent, with 90 percent of the ratios within 10 percent of the median and 100 percent within 25 percent of the median.
The median ratio for Category F1: Commercial property in Tuloso-Midway ISD was 98 percent, with 93 percent of the ratios within 10 percent of the median and 96 percent within 25 percent of the median.
The median ratio for utility property in Tuloso-Midway ISD was 101 percent, with 90 percent of the ratios within 10 percent of the median and 100 percent within 25 percent of the median.
Nueces CAD Summary
Nueces CAD's overall median ratio was 0.98. Category ratios included:
- Category A: Single-Family Residential sample ratios ranged from 0.66 to 2.22, with a median ratio of 0.97;
- Category B: Real Property: Multifamily Residential sample ratios ranged from 0.80 to 1.12, with a median ratio of 0.96;
- Category C: Vacant Lots and Tracts sample ratios ranged from 0.75 to 1.51, with a median ratio of 1;
- Category D2: Real Property: Non-Qualified Land sample ratios ranged from 0.75 to 1.72, with a median ratio of 0.96;
- Category F1: Commercial sample ratios ranged from 0.69 to 1.50, with a median ratio of 0.97;
- Category G: Oil, Gas and Other Minerals sample ratios ranged from 0.30 to 2.07, with a median ratio of 1.01;
- Category J: Real and Personal Property: Utilities sample ratios ranged from 0.06 to 475 and had a median ratio of 1.02; and
- Category L1: Commercial, Personal Property sample ratios ranged from 0.61 to 1.91, with a median ratio of 1.
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 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 and Tracts, and for income-producing properties, 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 CODs for Nueces CAD categories in the 2006 PVS included:
- Category A: Single-Family Residential property was 8.68;
- Category B: Real Property: Multifamily Residential property was 6.50;
- Category C: Vacant Lots and Tracts was 5.84;
- Category D: Agricultural Land, Qualified and Non-qualified was 7.02;
- Category F1: Commercial was 6.03;
- Category G: Oil, Gas and Other Minerals was 18.65;
- Category J: Real and Personal Property: Utilities was 8.91 and
- Category L1: Commercial, Personal Property was 6.99.
The COD for Tuloso-Midway ISD categories were:
- Category A: Single-Family Residential property was 9.73;
- Category C: Vacant Lots and Tracts land parcels was 6.20;
- Category D: Agricultural Land, Qualified and Non-qualified was 6.74;
- Category F1: Commercial was 4.97;
- Category J: Utilities was 2.24; and
- Category L1: Commercial, Personal Property was 3.06.
The median ratio for Category L1: Commercial, Personal Property in Tuloso-Midway ISD was 100 percent, with 87 percent of the ratios within 10 percent of the median and 100 percent within 25 percent of the median.