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 Runnels 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 property. 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 2006 PVS identified Miles and Olfen ISDs as eligible school districts when their local values fell outside of the study's statistical margin of error. The statistical margin of error, or confidence interval, is a range of school district values that the Comptroller has accepted.
Three property categories were tested in Miles ISD:
(1) Category A, Single-Family Residential;
(2) Category D, Rural Real; and
(3) Category J, Utilities.
Category A, Single-Family Residential, made up 47 percent of the total test value and 39 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 76 percent to a high of 114 percent of market value, with a weighted mean ratio of 0.9677.
Category D, Rural Real, made up 43 percent of the total test value and 33 percent of the school district's value.
Rural property 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, Productivity Value of Qualifying Acres, made up 16 percent of the total test value and 12 percent of the school district's value. The category ratio of the qualified rural values tested was 0.7326.
Subcategory D3, Non-Qualifying Acres and Farm and Ranch Improvements, made up 27 percent of school district's test value and 21 percent of the school district's value. The CAD appraised rural homes and non-qualified rural land from as low as 88 percent to a high of 136 percent of market value, with a weighted mean ratio of 1.0387.
Category J, Utilities, made up 10 percent of the total test value and 12 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 94 percent to a high of 107 percent of market value, with a weighted mean ratio of 0.9953.
Two property categories were tested in Olfen ISD:
(1) Category D, Rural Real; and
(2) Category J, Utilities.
Category D, Rural Real, made up 75 percent of the total test value and 71 percent of the school district's value.
Subcategory D1, Productivity Value of Qualifying Acres, made up 27 percent of the total test value and 25 percent of the school district's value. The category ratio of the qualified rural values tested was 0.6880.
Subcategory D3, Non-Qualifying Acres and Farm and Ranch Improvements, made up 48 percent of school district's test value and 46 percent of the school district's value. The CAD appraised rural homes and non-qualified rural land from as low as 83 percent to a high of 109 percent of market value, with a weighted mean ratio of 0.9700.
Category J, Utilities, made up 25 percent of the total test value and 25 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 99 percent to a high of 103 percent of market value, with a weighted mean ratio of 0.9952.
While these figures show the range of property ratios in Runnels 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 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 ratio for Category A, Single-Family Residential, in Miles ISD was 95 percent, with 74 percent of the ratios within 10 percent of the median and 100 percent within 25 percent of the median.
The median ratio for Subcategory D3, Non-Qualifying Acres and Farm and Ranch Improvements, in Miles ISD was 98 percent, with 90 percent of the ratios within 10 percent of the median and 95 percent within 25 percent of the median.
The median ratio for Category J, Utilities, in Miles ISD was 99 percent, with 100 percent of the ratios within 10 percent of the median.
The median ratio for Subcategory D3, Non-Qualifying Acres and Farm and Ranch Improvements, in Olfen ISD was 96 percent, with 85 percent of the ratios within 10 percent of the median and 100 percent within 25 percent of the median.
The median ratio for Category J, Utilities, in Olfen ISD was 101 percent, with 100 percent of the ratios within 10 percent of the median.
Runnels CAD Summary
The Runnels CAD overall median ratio was 0.98.
Category A, Single-Family Residential, sample ratios ranged from 0.66 to 1.68. The median ratio was 0.98.
Subcategory D3, Non-Qualifying Acres and Farm and Ranch Improvements, sample ratios ranged from 0.62 to 1.51. The median ratio was 0.98.
Category F1, Commercial Real, sample ratios ranged from 0.57 to 1.55. The median ratio was 0.98.
Category G, Oil, Gas and Mineral Leases, sample ratios ranged from 0.64 to 1.12. The median ratio was 0.99.
Category J, Utilities, sample ratios ranged from 0.94 to 1.07. The median ratio was 0.99.
Category L1, Commercial Personal, sample ratios ranged from 0.92 to 1.06. 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 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 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 Runnels CAD Category A was 10.28; Category D was 8.66; Category F1 was 7.67; Category G was 11.19; Category J was 2.49; and Category L1 was 2.68.
The 2006 COD for Miles ISD Category A was 6.92; Category D was 5.40; and Category J was 3.28.
The 2006 COD for Olfen ISD Category D was 4.18.
A COD for Olfen ISD was not calculated for Category J because there were only two sample properties.