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 Sabine 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. 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 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
In the 2006 PVS, Hemphill ISD fell outside the study's statistical margin of error and became an eligible ISD, leading to this ASR. The statistical margin of error – or confidence interval – is a range of ISD values that the Comptroller has accepted.
Four property categories were tested in Hemphill ISD:
(1) Category A, Single-Family Residential;
(2) Category C, Vacant Lots;
(3) Category D, Rural Real; and
(4) Category F1, Commercial Real.
Single-family residential (Category A) made up 68 percent of the total test value and 62 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 49 percent to a high of 269 percent of market value, with a weighted mean ratio of 0.8997.
Vacant lots (Category C) made up 7 percent of the total test value and 7 percent of the ISD's value. A review of the Category C sample ratios in the 2006 PVS indicates that the CAD appraised from as low as 25 percent to a high of 600 percent of market value, with a weighted mean ratio of 0.8667.
Rural real property made up 19 percent of the total test value and 16 percent of the ISD'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 not qualifying 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 ISD's value. The category ratio of the qualified rural values tested was 0.8957.
Non-qualified property (Category D3) made up 11 percent of ISD's test value and 9 percent of the school district's value. The CAD appraised rural homes and non-qualified rural land from as low as 63 percent to a high of 286 percent of market value, with a category ratio of 0.9488.
Commercial real property (Category F1) made up 6 percent of the total test value and 6 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 50 percent to a high of 237 percent of market value, with a weighted mean ratio of 0.8951.
While these figures show the range of property ratios in Sabine 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 percentages indicate equitable appraisals; while a high COD paired with low percentages indicate inequitable appraisals.
The median ratio for single-family residential (Category A) in Hemphill ISD was 95 percent, with 40 percent of the ratios within 10 percent of the median and 67 percent within 25 percent of the median.
The median ratio for vacant lots (Category C) in Hemphill ISD was 100 percent, with 54 percent of the ratios within 10 percent of the median and 69 percent within 25 percent of the median.
The median ratio for non-qualified farm and ranch property (D3) in Hemphill ISD was 107 percent, with 33 percent of the ratios within 10 percent of the median and 33 percent within 25 percent of the median.
The median ratio for commercial real property (F1) in Hemphill ISD was 97 percent, with 54 percent of the ratios within 10 percent of the median and 71 percent within 25 percent of the median.
Sabine CAD Summary
Sabine CAD's overall median ratio was 0.98.
Single-family residential (Category A) sample ratios ranged from 0.49 to 2.69. The median ratio was 0.96.
Vacant lots (Category C) sample ratios ranged from 0.25 to 6.00. The median ratio was 1.00.
Non-qualified rural real (Category D3) sample ratios ranged from 0.63 to 2.86. The median ratio was 1.01.
Commercial real property (Category F1) sample ratios ranged from 0.50 to 2.37. The median ratio was 0.97.
Utility (Category J) sample ratios ranged from 0.76 to 1.26. The median ratio was not calculated with only 5 samples.
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 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 properties, the COD should be 20 or less. For other real property and personal property, CODs should reflect the nature of the properties, market conditions and the availability of reliable market indicators.
The 2006 COD for Sabine CAD Category A was 21.66; Category C was 40.56; Category D was 31.13; and Category F1 was 18.69.
The 2006 COD for Hemphill ISD Category A was 25.64; Category C was 40.61; Category D was 46.61; and Category F1 was 18.78.
These numbers indicate inconsistency or a lack of uniformity in appraisal in all categories in the CAD and ISD, except commercial real (Category F1).