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 Upshur 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 District
The PVS identified Ore City ISD as an eligible ISD when its local value fell outside of the confidence interval limit determined by the 2006 PVS. The PVS tested four property categories in Ore City ISD: Category A: Single-Family Residential; Category D: Rural Real; Category F1: Commercial Real; and Category G: Oil, Gas and Minerals.
Category A was 46 percent of the local test values and made up 40 percent of the school district's local value. A review of the Category A sample ratios in the 2006 PVS indicates that the CAD appraised from as low as 63 percent to a high of 145 percent of market value, with a weighted mean ratio of 0.9208.
Category D made up 29 percent of the school district's local value and tested with a weighted mean ratio of 0.9512. Category D represents rural property and contains two subcategories: D1 and D2. Subcategory D1, Productivity Value of Qualifying Acres, is primarily farm and ranch land that qualifies for the special productivity appraisal. Subcategory D2, Non-Qualifying Acres and Farm and Ranch Improvements, is primarily rural homes and land that does not qualify as farm, ranch or timberlands. The differences in value between D1 and D2 are wide since D1 land is appraised using a special statutory method to determine the land's productivity value and D2 is based on market value, or what the land would sell for in an open market transaction.
D1 comprised 11 percent of Category D's value and 4 percent of the local test values. D1 tested with a category ratio of 1.4437. Of the ISD's two largest land classes in the 2006 PVS, the ratio of timber at productivity's reported value to PTAD's value-per-acre was 1.75, and the ratio of improved pasture's reported value to PTAD's value-per-acre was 1.16.
D2 made up 89 percent of Category D's value and 30 percent of the ISD's local test values. The CAD appraised sample parcels from non-qualified acres and rural improvements from as low as 59 percent to a high of 184 percent of market value with a weighted mean ratio of 0.9115.
Category F1, which was 6 percent of the school district's local value, tested with a weighted mean ratio of 0.9706. The CAD appraised commercial real property from as low as 65 percent to a high of 189 percent of market value.
Category G, which was 10 percent of the school district's value, tested with a weighted mean ratio of 1.0037. The CAD's contractor appraised sample minerals property from as low as 97 percent to a high of 129 percent of market value.
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 ratios, 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 in Ore City ISD was 92 percent, with 51 percent of the ratios within 10 percent of the median and 87 percent within 25 percent of the median.
The median ratio for D2 in Ore City ISD was 92 percent, with 38 percent of the ratios within 10 percent of the median and 75 percent within 25 percent of the median.
The median ratio for Category F1 in Ore City ISD was 93 percent, with 61 percent of the ratios within 10 percent of the median and 87 percent within 25 percent of the median.
The median ratio for Category G in Ore City ISD was 100 percent, with 92 percent of the ratios within 10 percent of the median and 92 percent within 25 percent of the median.
Upshur CAD Summary
In summary, the Upshur CAD's overall median ratio is 0.96.
Category A sample ratios ranged from 0.51 to 2.33. The median ratio was 0.91.
D2 sample ratios ranged from 0.09 to 3.51. The median ratio was 1.01.
Category F1 sample ratios ranged from 0.45 to 1.89. The median ratio was 0.93.
Category G sample ratios ranged from 0.72 to 1.39. The median ratio was 1.00.
Category J sample ratios ranged from 1.00 to 1.28. The median ratio was 1.03.
Category L1 sample ratios ranged from 0.73 to 1.41. 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 single-family residences should generally be 15 or less, and 10 or less for new and homogeneous areas. For 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 Upshur CAD Category A was 13.90; Category D2 was 26.93; Category F1 was 16.38; Category G was 5.91; Category J was 6.51; and Category L1 was 10.33.
The 2006 COD for Ore City ISD Category A was 12.28; Category D2 was 20.25; Category F1 was 14.83; and Category G was 3.64.
The COD data indicates lack of uniformity of appraisal in the CAD and Ore City ISD for D2 property.