Texas Comptroller's Property Tax Rules
Chapter 9. Property Tax Administration
Texas Administrative Code, Title 34, Part I
Subchapter A. Practice and Procedure.
(a) A taxing unit that is required by the Tax Code, Sec. 26.06, to publish a notice of public hearing on a proposed tax increase shall use the form and wording of Model Form 50-197 in publishing the notice.
(b) The Comptroller adopts Model Form 50-197, as amended in April 2000, by reference. Copies of this form are available for inspection at the offices of the Texas Register or may be obtained from the Comptroller of Public Accounts, P. O. Box 13528, Austin, Texas 78711. Copies may also be requested by calling our toll-free number 1-800-252-9121. In Austin, call 305-9999. From a Telecommunications Device for the Deaf (TDD), call 1-800-248-4099, toll free. In Austin, the local TDD number is 463-4621.
Effective September 4, 1992, 17 TexReg 5732, amended to be effective September 13, 1993, 18 TexReg 5841; amended to be effective August 23, 1994, 19 TexReg 6232; amended to be effective February 3, 1998, 23 TexReg 796; amended to be effective August 14, 2000, 25 TexReg 7776.
(a) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise:
(1) Maintenance and operations component - the amount calculated by the Texas Education Agency "Worksheet to Assist Districts in Calculating Rollback Rate," which includes an adjustment for the amount of state funds received for the optional homestead exemption.
(2) Current total value - the amount calculated under Tax Code, Sec. 26.012(6) and Sec. 26.08(h).
(b) For the purposes of computing a rollback tax rate under Tax Code, Sec. 26.08, a school district shall reduce the district's tax rate limit to reflect the assistance received for optional homestead exemption assistance provided by Education Code, Sec. 42.2522. The tax rate limit is reduced as follows:
Maintenance and Operations Component
__________ (divided by) __________
Current Total Value
Effective August 14, 2000, 25 TexReg 7776.
(a) Definitions. The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise.
(1) Appraisal - A statement that estimates the market value or other legally required value of property.
(2) Appraisal ratio - The ratio of a property's appraised value as determined by the appraisal office or appraisal review board (the County Appraisal District (CAD)) value, as applicable to:
(A) the sale price of the property; or
(B) an independent appraisal of the property, as applicable.
(3) Appraiser - A comptroller employee or contractor who conducts appraisals for the property value study.
(4) Assigned value - The value of property determined in the property value study.
(5) Coefficient of dispersion - The absolute average deviation of appraisal ratios in a sample from the median appraisal ratio for the sample, expressed as a percentage of the median.
(6) Comptroller - The Comptroller of Public Accounts or the Comptroller of Public Accounts designee.
(7) Confirm - A sale is confirmed when the comptroller has documented that the sale price for a property is correct.
(8) Documentary evidence - Writings such as letters, memoranda, appraisal records, or deeds.
(9) Local property - Property other than utility, industrial, mineral, or 1-d or 1-d-1 qualified agricultural property.
(10) Median appraisal ratio - The median level of appraisal is the median appraisal ratio of a sample of properties collected as part of the school district taxable value study in an appraisal district. The median appraisal ratio for a sample of properties is, in a numerically ordered list of the appraisal ratios for the properties:
(A) if the sample contains an odd number of properties, the appraisal ratio above and below which there is an equal number of appraisal ratios in the list; or
(B) if the sample contains an even number of properties, the average of the two consecutive appraisal ratios above and below which there is an equal number of appraisal ratios in the list.
(11) Price related differential - The price related differential is the mean of a property sample divided by the weighted mean of that sample.
(12) Property value study - The studies conducted by the comptroller pursuant to Government Code, Sec. 403.302 and Tax Code, Sec. 5.10.
(13) Random sample - A sample in which each item of the population has an equal chance of being included.
(14) Representative sample - Representative means composed of individual properties that collectively reflect the individual characteristics of the population from which they were drawn. A representative sample meets the requirements for operational representativeness set forth in the International Association of Assessing Officers' Standard on Ratio Studies.
(15) Sale - A transfer of property for consideration.
(16) Sale date - The date on which a deed or other document transferring title to real property by sale is executed.
(17) Sample - A group of properties analyzed to determine characteristics of property in a school or appraisal district.
(18) Stratification - Stratification divides the range of information for property in a district or property category into intervals and lists the number and CAD value of properties falling into each interval.
(19) Stratified weighted mean appraisal ratio - A stratified weighted mean appraisal ratio is calculated by separating the properties in a category sample into subcategories by value range or other property characteristics (strata) and determining the weighted mean appraisal ratio for each of the strata. The value of property in each of the strata is calculated by dividing the total CAD value by the weighted mean appraisal ratio. These individual market value estimates are then added to produce a market value estimate for the total category sample. The total CAD value of property in the category is then divided by the total category market value estimate to produce the stratified weighted mean ratio.
(20) Verify - A sale is verified when the comptroller has documented that a sale is a market value transaction as defined by the Tax Code, Sec. 1.04(7).
(21) Weighted mean appraisal ratio - The weighted mean appraisal ratio is a number calculated by dividing the total CAD value of property in a sample by the total of corresponding sale prices or appraised values of property in that sample.
(b) General statement of policy. The study constitutes a limited audit of the taxable value of property in the districts. The purpose of this section is to ensure that sufficient competent and relevant evidence affords a reasonable basis for the comptroller's judgments and conclusions regarding the taxable value of property in a school district and the appropriate measures of appraisal level and uniformity in an appraisal district.
(c) General standard. Except where inconsistent with these sections, the Standard on Ratio Studies, International Association of Assessing Officers, is adopted by reference as a standard for the conduct of the property value study.
(d) Changing appraisal methods. The comptroller will consult regularly with representatives of property owners, industries, appraisal firms, and other interested parties to keep abreast of changing appraisal methods.
(e) Selection of property categories studied. The priority in determining categories of samples is the accuracy of the estimate of taxable property value for each school district in this state.
(1) The comptroller may determine whether a category or class of property in a school district is a major category or class of property on a case-by-case basis. To maximize accuracy or efficient use of resources, the comptroller may decline to sample or estimate category values or measures.
(2) If the comptroller does not sample a category or a subcategory of property in a school district, the comptroller may calculate the district's taxable value by using the district's locally reported value to represent the value of the unsampled category.
(f) Taxpayer data. Owners of large unique or complex properties should be advised if these properties are included in the property value study. Taxpayers shall have the option of presenting data to the comptroller to verify the CAD value as representative of market value for inclusion in the study. The comptroller shall have the option of accepting the indicated market value for inclusion in the property value study.
(g) Determining taxable value. The procedures for determining the taxable value of certain classes of property are as follows:
(1) agricultural land qualified for productivity appraisal. The comptroller may determine the productivity value of land qualified for productivity appraisal in a school district through direct appraisal. The staff shall estimate an average value per acre for each land class in each school district using information provided by published sources and by individuals knowledgeable concerning local agricultural conditions. The estimated average productivity value per acre shall be developed using the same methods applicable to appraisal districts under Sec. 9.4001 of this title (relating to Valuation of Open-space and Agricultural Lands). The estimated value per acre shall be applied to the total number of acres in each land class reported in the school district report of property value to determine the total value of property in each class. The sum of the values of each class is the total value of agricultural property receiving productivity appraisal in the school district.
(2) Timber land qualified for productivity appraisal. The comptroller may determine the productivity value of land qualified for timber appraisal in a school district through direct appraisal. The staff shall estimate an average value per acre for each soil class and type of timber in each school district using information provided by published sources and by individuals knowledgeable concerning local timber production. The estimated average productivity value per acre shall be developed using the same methods applicable to appraisal districts under Sec. 9.4011 of this title (relating to Appraisal of Timberlands). The estimated value per acre shall be applied to the total number of acres in each soil class for each type of timber reported in the school district report of property value to determine the total value of property in each class. The sum of the values of each class is the total value of timber property receiving productivity appraisal in the school district.
(3) Utility property. Utility samples in a school district are chosen using a method that ensures sampling dominant properties and other properties as appropriate. Utilities shall be valued using recognized unitary valuation methods, that may include one or more of the cost, income, and market (sales comparison or stock and debt) approaches. Utility unit values will be allocated using generally accepted allocation methods based on the best information available. Appraisers shall consider the effects of regulation, if applicable.
(4) Industrial property. If the comptroller appraises an industrial property, the property shall be valued using generally accepted appraisal methods. If staff selects an industrial property sample, the property sample shall be selected without regard to whether the appraisal district performs its own industrial property appraisals.
(5) Mineral property. Mineral samples in a school district shall be chosen using a method that ensures sampling dominant leases and a sample of other leases as appropriate. Minerals shall be appraised using generally accepted appraisal methods, emphasizing the income approach to value.
(6) Local property. The comptroller shall make its determination of local property values on the basis of representative samples of property selected within school districts. Except as provided in this section, the comptroller shall select samples of properties based on their judgment of the number and kind of properties required to be sampled to reasonably reflect the taxable value of property in each school district. The comptroller staff are not required to but may employ random sampling or other sampling procedures where feasible and appropriate.
(A) Estimated sample sizes shall initially be assigned by supervisory staff. The overall goal in setting the sample size is to obtain school district taxable values that are acceptably accurate and reliable. The sample size assigned for a particular category of property in a particular school district is based on the available comptroller time, the availability of current sales, variability of ratios, and the relative value of the category. A sample may be larger or smaller than the assigned sample if the school district's resulting taxable value is determined by supervisory staff to be acceptably accurate and reliable.
(B) Samples may include a combination of sales and appraisals that satisfies both size and representativeness requirements. However, a sample may consist of sales only or appraisals only. All meaningful property characteristics shall be considered in selecting non-random samples. The following guidelines should be followed in non-random selection:
(i) the sample should not be weighted in favor of sold properties that are appraised at a different level from unsold properties;
(ii) a sample should include properties from each primary geographic area, if the geographic area contains a significant number of the kind of property being tested and the property has significant value;
(iii) a sample should include improvements of varying ages;
(iv) sample selection should consider other property characteristics such as construction type, size, use, and business type, as required;
(v) stratification information should be used to ensure that samples are representative. If stratification data are unavailable, an appraiser should use informed judgment and knowledge of the area in a reasonable effort to ensure that samples are representative.
(C) Appraisers shall categorize sample properties as they are categorized by appraisal districts (Category A, B, C, etc.).
(D) Appraisers should develop a sales population to maintain a thorough knowledge of local markets and appraisal practices; and to provide a population of sales from which to select property samples. Appraisers should gather sales that occurred over as broad a time period as practicable and should gather sales from a variety of sources, such as appraisal districts, real estate professionals, title companies, financial institutions, courthouse records, and other reliable sources.
(i) As a general rule, if an appraiser's sample size is less than all the sales within a relevant time period, the sales sample will be selected randomly. However, other sample selection methods may be used.
(ii) The appraiser must document the source of each sale included in the property value study. The appraiser must use codes provided in the appraisal guide to identify the source of each sale entered into the comptroller sale/appraisal system. The appraiser must maintain sufficient written documentation to permit source verification upon request.
(iii) The appraiser must confirm and verify at least 20% of the sales included in each category sample for each school district from sources other than the appraisal district.
(iv) Sales included in a sample must be market transactions. Market transactions are consistent with the definition of market value found in the Tax Code, Sec. 1.04(7). For the purposes of that section, the term "price" means the most probable price. As provided in the Standard on Ratio Studies, International Association of Assessing Officers, transactions that may be non-arm's-length sales should be clearly identified and used only if it can be established that they are consistent with the definition of market value.
(v) If an appraiser questions whether a transaction selected for use in the study is a market sale, the appraiser should obtain sales agreements, closing statements, statements from parties to the transaction, deed records that disclose full consideration, or other evidence sufficient to determine whether or not the transaction is a market transaction.
(vi) The appraiser must exclude sales of properties that change category or significant physical characteristics after the sale but before the assessment date.
(vii) The appraiser may not exclude a sale solely because it appears to be inconsistent with other sales in the sample. Such sales should be verified. The inconsistencies may indicate that a sale is not a market transaction, but they also may indicate that information regarding the sale was recorded incorrectly. If further investigation reveals that the sale was indeed a legitimate market transaction, the appraiser may include it in the sample, despite its apparent inconsistency. If the investigation, however, reveals that the sale was not a legitimate market transaction, the sale should be excluded.
(viii) Generally, when financing reflects prevailing market practices and interest rates, sales prices require no adjustment. Adjustments should be considered if:
(I) the seller and lender are the same party and financing is not at prevailing market rates;
(II) the buyer assumes an existing mortgage at a non-market rate of interest; or
(III) lenders charge the seller "points" (a percentage of the loan amount) for making money available to the purchaser/borrower.
(ix) Some forms of mortgage terms also may require adjustment. If these adjustments alter the sales price significantly, the use of the sale as a good indicator of market value may be questionable.
(x) The appraiser shall adjust sales samples for the effect of time if there is evidence of a significant value increase or decrease during the period from which sales are drawn. The appraiser must document the procedures used to develop time adjustments. As an alternative to time adjustment, the appraiser may randomly select samples so that the value of properties sold during a specified period before the assessment date roughly approximates the value of properties sold during a similar period after the assessment date. A sample balanced in this manner will negate the effect of changes in the level of market values if those changes occurred uniformly over the study time frame.
(xi) The comptroller may use a method of adjusting for financing, time, personal property, or other matters affecting the sales price, that includes an overall adjustment affecting all or any relevant portion of the sales in the sample.
(xii) If the comptroller determines that recently sold properties are appraised by the appraisal district at a different level of value than unsold properties, the comptroller may take actions to ensure that the unsold properties are fairly represented in the sample. These actions may include using appraisals in the sample, using sales that occurred after the appraisal district certified the school district tax rolls in the sample, deleting sales from the sample, or other adjustments the comptroller deems necessary to maintain the integrity of the property value study.
(E) Appraisals of local property are performed if the comptroller determines they are necessary to ensure the study develops competent evidence of the value of all property in the school district. Appraisals are used to ensure a representative sample of sufficient size and to test whether sold and unsold properties are assessed at the same level. The following guidelines govern the use of appraisals:
(i) appraisal samples shall be selected randomly if practicable;
(ii) appraisals shall be conducted using generally accepted appraisal practices. The comptroller shall prepare an appraisal guide and other procedures as needed to conduct appraisals. Accurate and verifiable data from the market is usually preferable to information contained in the guide. Such information should be used in appraisals to the greatest extent possible. The guide and any other written instructions are open records. Supervisory staff shall selectively test appraisals to ensure the consistency and accuracy of data throughout the state;
(iii) appraisers should physically inspect each property appraised. If acreage or lots cannot be physically inspected, the appraiser may use appraisal cards, aerial photographs, soil maps, and other relevant information in performing appraisals;
(iv) in appraising a particular property, the appraiser may not consider the value placed on that property by the appraisal district. However, the appraiser may consult with appraisal district staff and review appraisal district records to gather information relevant to the appraisal;
(v) the market value estimate for a particular property account must include the value of all property associated with that account, e.g., multiple improvements, paving, outbuildings, signs, business vehicles, additional lots, etc. The appraiser may use the appraisal district's value for any item(s) that the appraiser is unable to appraise if the item(s) in question represent an insignificant portion of the appraisal district's total appraised value for the account.
(h) Local reports of taxable value. Local reports of taxable value are essential parts of the property value study. The comptroller shall issue and revise report forms as needed to incorporate necessary legal and technical changes. The comptroller shall thoroughly review and revise reports of property value as needed to ensure their reliability. The comptroller must document the date of and reasons for each revision. Between the time a report is filed and the time preliminary study findings based upon the report are issued, the reporting entity may request changes in the report. The comptroller may not make the requested changes in reported values or facts unless the reporting entity provides sufficient competent evidence supporting a change. The comptroller shall set reasonable deadlines for the return of local reports and may grant extensions of filing time of up to 30 days.
(i) Protest or request for audit. A protest or request for an audit of the Property Value Study findings may be made in accordance with Property Tax Division sections.
(j) Determination of school district value. School district taxable values shall be determined in a manner that maximizes the accuracy and reliability of the taxable value in each school district.
(1) The taxable value of a category of property in a school district shall be determined by dividing the total locally appraised value of property in that category by the weighted mean or stratified weighted mean ratio for the sample of property selected from that category. However, the taxable value of property in a category may be determined by other methods if it is determined that sufficient competent evidence requires their use.
(2) The taxable value of property in a school district shall be determined by adding together the taxable value of property in each category of property in the school district and subtracting from the total the items listed in the Government Code, Sec. 403.302(d). However, the taxable value of property in a school district may be determined by other methods if it is determined that sufficient competent evidence requires their use.
(k) Determination of appraisal district measures. Appraisal district measures shall be determined from the sales and appraisals gathered as a part of the school district taxable value study.
(1) The median level of appraisal for each category of property in the appraisal district and for the appraisal district as a whole is determined as provided by the Tax Code, Sec. 5.10.
(2) The coefficient of dispersion for each category of property in the appraisal district and for the appraisal district as a whole is determined as provided by the Tax Code, Sec. 5.10.
(3) The comptroller may determine and report other measures of appraisal accuracy and uniformity it deems useful and informative.
Effective December 13, 1996, 21 TexReg 11811.