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 San Augustine 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 San Augustine and Broaddus as eligible ISDs when their local values fell outside of the confidence interval limit determined by the 2006 PVS.
Five property categories were tested in San Augustine ISD:
1) Category A, Single-Family Residential;
2) Category D, Rural Real;
3) Category F1, Commercial Real;
4) Category J, Utilities; and
5) Category L1, Commercial Personal.
Single-family property (A) made up 31 percent of the total test value and 28 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 46 percent to a high of 254 percent of market value, with a weighted mean ratio of 0.9554.
Rural real property made up 43 percent of the total test value and 37 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 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 likely sell for in an open-market transaction.
Subcategory D1 made up 18 percent of the total test value and 16 percent of the ISD's value. The category ratio of the qualified rural values tested was 0.7198.
Non-qualified property (D3) made up 25 percent of ISD's test value and 21 percent of the ISD's value. The CAD appraised rural homes and non-qualified rural land from as low as 38 percent to a high of 362 percent of market value, with a weighted mean ratio of 0.8343.
Commercial real property (F1) made up 10 percent of the total test value and 9 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 46 percent to a high of 135 percent of market value, with a weighted mean ratio of 0.8387.
Utility property (J) made up 9 percent of the total test value and 10 percent of the ISD's value. A review of the Category J sample ratios in the 2006 PVS indicates that the CAD appraised from as low as 72 percent to a high of 102 percent of market value, with a weighted mean ratio of 0.9976.
Commercial personal property (L1) comprised 6 percent of the total test values and made up 6 percent of the ISD's value. A review of the Category L1 sample ratios in the 2006 PVS indicates that the CAD appraised from as low as 68 percent to a high of 186 percent of market value, with a weighted mean ratio of 1.0291.
Four property categories were tested in Broaddus ISD:
1) Category A, Single-Family Residential;
2) Category C, Vacant Lots;
3) Category D, Rural Real; and
4) Category J, Utilities.
Single-family property (A) made up 49 percent of the total test value and 45 percent of the ISD's value. A review of Category A sample ratios in the 2006 PVS indicates that the CAD appraised from as low as 24 percent to a high of 438 percent of market value, with a weighted mean ratio of 0.7393.
Vacant land parcels (C) made up 5 percent of the total test value and 5 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 19 percent to a high of 340 percent of market value, with a weighted mean ratio of 0.8154.
Rural real property made up 44 percent of the total test value and 38 percent of the ISD's value.
Subcategory D1 made up 17 percent of the total test value and 15 percent of the ISD's value. The weighted mean ratio of the qualified rural values tested was 1.0011.
Non-qualified property (D3) made up 27 percent of ISD's test value and 23 percent of the ISD's value. The CAD appraised rural homes and non-qualified rural land from as low as 69 percent to a high of 209 percent of market value, with a weighted mean ratio of 1.1114.
Utility property (J) made up 2 percent of the total test value and 5 percent of the ISD's value. A review of the Category J sample ratios in the 2006 PVS indicates that the CAD appraised from as low as 100 percent to a high of 105 percent of market value, with a weighted mean ratio of 1.0180.
While these figures show the range of property ratios in San Augustine 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 indicate equitable appraisals; while a high COD paired with low percentages indicate inequitable appraisals.
The median ratio for single family residences (A) in San Augustine ISD was 102 percent, with 37 percent of the ratios within 10 percent of the median and 74 percent within 25 percent of the median.
The median ratio for non-qualified farm and ranch property (D3) in San Augustine ISD was 91 percent, with 54 percent of the ratios within 10 percent of the median and 70 percent within 25 percent of the median.
The median ratio for commercial real property (F1) in San Augustine ISD was 84 percent, with 46 percent of the ratios within 10 percent of the median and 88 percent within 25 percent of the median.
The median ratio for utility property (J) in San Augustine ISD was 100 percent, with 71 percent of the ratios within 10 percent of the median and 83 percent within 25 percent of the median.
The median ratio for commercial personal property (L) in San Augustine ISD was 100 percent, with 71 percent of the ratios within 10 percent of the median and 83 percent within 25 percent of the median.
The median ratio for single family residences (A) in Broaddus ISD was 87 percent, with 31 percent of the ratios within 10 percent of the median and 67 percent within 25 percent of the median.
The median ratio for vacant land parcels (C) in Broaddus ISD was 94 percent, with 52 percent of the ratios within 10 percent of the median and 76 percent within 25 percent of the median.
The median ratio for non-qualified farm and ranch property (D3) in Broaddus ISD was 96 percent, with 81 percent of the ratios within 10 percent of the median and 88 percent within 25 percent of the median.
The median ratio for utility property (J) in Broaddus ISD was 102 percent, with 100 percent of the ratios within 10 percent of the median.
San Augustine CAD Summary
San Augustine CAD's overall median ratio was 0.95.
Single-family (A) sample ratios ranged from 0.24 to 4.38. The median ratio was 0.95.
Vacant land (C) sample ratios ranged from 0.19 to 3.40. The median ratio was 0.94.
Non-qualified rural real (D3) sample ratios ranged from 0.38 to 3.62. The median ratio was 0.95.
Commercial real property (F1) sample ratios ranged from 0.46 to 1.35. The median ratio was 0.84.
Utility (J) sample ratios ranged from 0.72 to 1.05. The median ratio was 1.00.
Commercial personal property (L1) sample ratios ranged from 0.68 to 1.86. 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 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 San Augustine CAD Category A was 23.58; Category C was 24.95; Category D was 23.29; Category F1 was 12.83; Category J was 4.38; and Category L1 was 14.21.
The 2006 COD for San Augustine ISD Category A was 19.01; Category D was 32.39; Category F1 was 12.87; Category J was 5.18; and Category L1 was 14.32.
The 2006 COD for Broaddus ISD Category A was 26.40; Category C was 24.84; and Category D was 12.05. No COD in Utilities was calculated because only two samples were taken.
These numbers indicate inconsistency and a lack of uniformity in appraisal in categories A, C and D in the CAD and ISDs.