What Is Coefficient of Dispersion
Coefficient of Dispersion (COD) is a statistical measure that calculates how uniformly a jurisdiction assessed properties relative to their actual market value. It quantifies the spread or variation in assessment ratios across comparable properties in a given area.
The formula divides the mean absolute deviation of assessment ratios by the median assessment ratio, then multiplies by 100 to express the result as a percentage. A lower COD indicates more uniform assessment across the market. A higher COD signals inconsistency, which can form the basis for a successful appeal.
Practical Standards and Thresholds
Most assessment appeals boards and appraisal professionals recognize these benchmarks:
- COD of 10 to 15 percent indicates excellent uniformity in assessment practices
- COD of 15 to 20 percent shows acceptable but imperfect uniformity
- COD above 20 percent suggests significant assessment inequality that warrants investigation
- COD above 25 percent often provides strong evidence of systematic undervaluation or overvaluation within a class of property
State tax boards and assessment standards organizations, including the International Association of Assessing Officers (IAAO), frequently reference these thresholds when evaluating whether a jurisdiction is meeting legal uniformity requirements.
Using COD in Your Appeal
When challenging an assessment before your local board of review, a high COD becomes evidence that your property may have been assessed inconsistently with similar properties. Here's how it applies:
- Comparable Sales Analysis: Pull recent arm's length sales of properties comparable to yours. Calculate the assessment ratio for each (assessed value divided by sale price). If your property's ratio falls well above the median ratio for comparable properties, the COD supports your claim of overvaluation.
- Class Consistency: COD calculations are most effective when applied within your property class (residential, commercial, industrial). A single-family home's assessment should be evaluated against other single-family homes in the same neighborhood or district, not against commercial properties.
- Evidence for Hearings: Present your COD analysis alongside appraisal reports and comparable sales data. Assessors must justify why your property deviates from the uniform standard. A high COD shifts the burden of explanation to the assessor.
Common Questions
- Can I calculate COD myself for my appeal? Yes, but you need recent comparable sales within your property class and the assessed values for those properties. Many county assessor offices publish assessment data online. An appraisal professional or tax consultant can verify your calculations and present them credibly at a board hearing.
- What if my assessor claims my property's high assessment reflects recent renovations? Valid upgrades may justify a higher assessment, but COD still applies. If comparable properties with similar renovations show lower assessment ratios, inconsistency remains. Present your comparable sales with adjustment analysis to show the assessor failed to apply uniform methodology.
- Does COD apply to my exemption claim? COD measures assessment uniformity, not exemption eligibility. However, if your property qualifies for an exemption, assessors must apply it uniformly. COD can reveal whether some properties receive exemptions while similarly situated properties do not.
Related Concepts
- Uniformity - The legal principle requiring all properties to be assessed at the same percentage of market value
- Assessment Ratio - The relationship between assessed value and market value, the core metric within COD calculations