1. Property Value Study
October 12th , 2017

2. The Peveto Bill established the State Property Tax Board

3. A Short History School Tax Assessment Practice Board 1979
State Property Tax Board
1991
Comptroller’s Property Tax Division
The Comptroller’s Property Tax Division (PTD) was formed after the merger of the State Property Tax Board (SPTB) with the Comptroller’s office in The SPTB was created with the passage of HB 621 in Prior to the SPTB, the School Tax Assessment Practice Board conducted ratio studies for school funding purposes.

6. PTAD Appraisal Staff Residential Appraisers = 26
Commercial Appraisers = 8
Personal Property Appraisers = 4
Utility Appraisers = 2
Ag Appraisers = 2
Mineral Appraiser = 1

8. Indirect Equalization
Texas – PTAD
No authority over CAD’s
PVS affects School Districts

9. Direct Equalization Authority over Appraisal Districts
Jurisdictional adjustments
Property Class adjustments

10. Primary Reason for PVs

11. Ensure equitable distribution of state funding for public education.

12. Secondary Reason for PVS

13. To measure CAD performance (Report Card)

14. Tax Code Section 5.10(a) Ratio Studies
At least every 2 years
Each appraisal district
Degree of uniformity
Median level of appraisals
Each major property category
At least once every two years, the comptroller shall conduct a study in each appraisal district to determine the degree of uniformity of and the median level of appraisals by the appraisal district within each major category of property

15. PVS Major Category Metro Areas - CAT A: Residential
East Texas – CAT E: Rural Residential
West Texas – CAT D1: Agriculture
South Texas – CAT A: Residential
Permian Basin – CAT G: Minerals

16. What is a Ratio Study? Evaluate appraisal performance
Determine taxable value
Appraised values vs. independent market values
A generic term for all studies designed to evaluate appraisal performance or determine taxable value by comparing appraisal district values with independent estimates of market value based on either sales prices or independent appraisals.
Key point: Compares locally appraised values with independent market value estimates.

17. Uses of Ratio Studies Appraisal districts Taxpayers Texas legislature
Policy makers
Direct equalization
Indirect equalization
Used by appraisal districts
Used by taxpayers
Used by the legislature and other policy makers
Direct equalization
Indirect equalization
Ratio studies cannot be used to judge the accuracy of individual property values.
The PVS does not determine or set the value for any individual property in Texas.

18. IAAO Standard on Ratio Studies

19. Steps in Ratio Studies Define the purpose, scope and objectives Design1
Define the purpose, scope and objectives 2
Design 3
Stratification 4
Collection and preparation of market data 5
Matching appraisal and market data 6
Statistical analysis 7
Evaluation and use of results
Steps in Ratio Studies
Ratio studies generally involve the seven basic steps
listed below.
1. define the purpose, scope and objectives
2. design
3. stratification
4. collection and preparation of market data
5. matching of appraisal and market data
6. statistical analysis
7. evaluation and use of results

20. Categories
A = Residential
B = Multi-family
C = Land
D1 = Ag land
D2 = Farm & Ranch improvements
E = Rural Residential & Non Qualified land
F = Commercial
G = Minerals
J = Utilities
L = Business Personal Property

21. When is a Category Tested?
Add up all categories
Subtract D1, F2, L2 & S = adjusted total
Divide category total with adjusted total
All categories over 5% are tested except for
Categories under 5% but over $250,000,000

22. Sampling Applied statistics
Conclusions about the population based on a sample
Sample of sales and independent appraisals
Not sampled
property categories with less than 5% of ISD value
industrial properties
personal use vehicles
inventories of automobile or equipment dealers
A ratio study is a form of applied statistics, because the analyst draws conclusions about the appraisal of the population of properties based only on a property sample.
The sample consists of sales and independent appraisals.
PTD does not sample property categories with less than 5% of ISD value, industrial properties, personal use vehicles or the inventories of automobile or equipment dealers.

23. Sample Size Statistical model ISD 3% margin Generate samples PVS
The sample size for each ISD is determined by using a statistical model designed to achieve a uniform 3 percent margin of error in each ISD The program uses a 3 percent margin of error as the default to ensure enough samples are generated to achieve a 5 percent margin of error in the PVS.

24. 2016 PVS Sample Size
120,000 Total Samples

25. 2016 Breakdown of Samples
81,500 Sales
38,500 Appraisals

26. Breakdown by Category CAT A – 85,000 Samples CAT B – 2,150 Samples
CAT C – 3,750 Samples
CAT D2 – Samples
CAT E – 7,650 Samples
CAT F – 9,000 Samples
CAT G – 6,250 Samples
CAT J – 1,300 Samples
CAT L – 4,700 Samples

27. Training & Market Research
PVS Calendar
March – July
PVS appeals
April - January
Conduct PVS
February
Training & Market Research
March – May: All field staff working on appeals from the previous PVS.
May 1: Target date for most field appraisers to begin the current PVS.
June: All field appraisers should be on current PVS.

28. Property Value Study Workflow

29. Property Value Study Workflow

30. PVS Appeal Cycle

31. PVS Appeal Cycle

32. PVS Sales Time Frame IAAO Ratio Study Recommendations:
At least 12 month period
Balanced time frame covering assessment date
Blind testing

33. IAAO Section 4.1

34. IAAO Appendix A4
The sales reviewer should take the position that all sales are candidates as valid sales for the ratio study unless sufficient and compelling information can be documented to show otherwise. If sales are excluded without substantiation, the study may appear to be subjective.

35. IAAO Value Outliers
When the weighted mean is used for indirect equalization, a method that identifies high-value influential sales is recommended.
IAAO
5.2.1 Value Outliers
When the weighted mean is used for indirect equalization,
a method that identifies high-value influential sales
is recommended.

36. Field Appraiser’s Manual Procedure 4.1 Task 2
Confirm and verify all outliers identified by the report and document why the sample parcels were either left in the PVS or excluded.
Field Appraiser’s Manual. Procedure 4.1 Task 2.
Confirm and verify all outliers identified by the report and document why the sample parcels were either left in the PVS or excluded.

37. 2017 PVS STANDARD TIME FRAME
July 1st 2016 to June 30th 2017

38. 2017 PVS Extended Time Frame
May 1st to August 31st 2017

39. IAAO Section 9
Oversight agencies must ensure that sold and unsold parcels are appraised at the same level.

40. Sales Chasing Test IAAO recommends 1 of 4 Tests
Comparison of average unit values (psf)
Split Sample – Before & after assessment
Comparison of distribution of ratios
Comparison of average value changes

41. PTAD First Test 5 Ranges Comparison of expected distribution of ratios
Minimum of 30 sales per ISD
30% or more in any range = fail
5 Ranges
.98 to 1.02
.97 to 1.01
.96 to 1.00
.95 to .99
.94 to .98

42. PTAD Second Test Comparison of average value changes
Conducted by PTAD - DSAT team
Combine EARS & EPTS data
3% variance = fail
CAD has two weeks to appeal results
Possible data errors
Properties misclassified in wrong category
Partial complete coded incorrectly

43. Margin of Error PVS target Margin of error 5% margin of error
½ confidence interval
In the PVS, we target a 5% margin of error. The margin of error is ½ the confidence interval.

44. A. Size of the population
In order to reach a 5% margin of error, what is the most important factor?
A. Size of the population
B. Median level of the sample
C. Weighted mean level of the sample
D. The variability of the sample

45. A. Size of the population
In order to reach a 5% margin of error, what is the most important factor?
A. Size of the population
B. Median level of the sample
C. Weighted mean level of the sample
D. The variability of the sample

46. IAAO Section 3.2.2

47. Field Appraisers Manual - Appendix 1 Statutorily Imposed Value Constraints
The Tax Code requires local appraisal of certain property using statutorily prescribed methods of appraisal that produce constrained values that are less than market value.

48. ARB
Subtitle F
Capped Homestead
4. Arbitration

49. Valid/Invalid Valid = local value within 5% of PVS value
Invalid = local value not within 5% of PVS value
Invalid ISD =
School district could receive less funding than planned

50. Grace Period Requirements
School districts
Two year grace period
Local value accepted even if invalid
Four conditions:
district values are invalid in the current study
district values were valid in the two preceding studies
district local value is above 90 percent of the lower threshold of the margin of error
compliance with MAP study
All four conditions must be met for eligibility.

51. 2015 PVS Results Invalid School Districts – 111
Appraisal Districts – 52
1st Year Grace Period – 56 ISD’s
2nd Year Grace Period – 14 ISD’s
State Value – 26 ISD’s
State Lower than Local – 15 ISD’s

52. 2016 PVS Results Invalid School districts - 131
Appraisal Districts – 69
1st Year Grace Period – 56 ISD’s
2nd Year Grace Period – 11 ISD’s
State Value – 56 ISD’s
State Lower than Local - 8 ISD’s

53. Who requests the PVS data?

54. Taxpayers
School Districts
Legislature

55. Residential Inventory Levels
Texas Trends
Crude Oil per barrel
Residential Inventory Levels

56. Crude Oil Per Barrel

57. 2014 Residential Inventory Levels
Austin = 1.8 months
Houston = 2.5 months
Dallas = 3.0 months
Midland = 3.1 months
San Antonio = 4 months
Amarillo = 4 months
Waco = 5.3 months
El Paso = 7.7 months
Texarkana = 12 months
Brownsville/Harlingen = 13.8 months

58. 2017 Residential Inventory Levels
Dallas = 1.8 months
Austin = 2.1 months
Waco = 2.6 months
San Antonio = 3 months
Amarillo = 3.2 months
Midland = 3.4 months
Houston = 3.5 months
El Paso = 5.5 months
Brownsville / Harlingen = 9.9 months
Texarkana = 14 months

59. Contact Information
Phone: (512)