Chapter 1
Overview of County Appraisal District1.1
County History and DemographicsAccording to the Handbook of Texas, Erath County was formed in 1856 from parts of Bosque and Coryell counties.
Erath County is located in north central Texas and is surrounded by Hamilton and Bosque Counties on the south, on the west by Comanche and Eastland counties, on the east by Somervell and Hood counties, and on the north by Palo Pinto County. Stephenville, the county's largest town and the county seat, is in the center of the county eighty miles southwest of Dallas. Erath County was named for George B. Erath, one of the original surveyors of the area.
The county is divided into two distinct regions. The Western Cross Timbers, dominated by such hardwoods as post oak and a soil surface of sandy and red clay, crosses the northwestern two thirds of the county. The Grand Prairie, with dark limy soils, originally covered with little bluestem but now dotted with live oak groves crosses the southeastern one-third.
The population of the county for 2003, according to the County Information Project, was 33,370 residents, with the City of Stephenville having 15,216 residents, the City of Dublin having 3,672 residents, and the balance of the county population living in smaller cities, towns and the rural areas. The county comprises 1,090 square miles.
The county seat, Stephenville, is located at the intersection of U. S. Highways 67 and 281, and 377. The city became the county seat in 1856.
1.2
Appraisal District Organization and StaffingThe appraisal district was formed in 1981 and became active in 1982. Erath CAD has a total of 11 full time staff with three supervisory positions. Five of the positions are full time appraisers. The district contracts with Pritchard and Abbott, Inc. for professional appraisal services on utilities, minerals and industrial appraisals.
Scope of Office
The Board of Directors has no authority to set values or appraisal methods. The chief appraiser carries out the appraisal district's legal duties, hires the staff, makes the appraisals and operates the appraisal office.
The district provides appraisal services for eleven taxing units: Erath County, Three-Way Independent School District (ISD), Dublin ISD, Stephenville ISD, Bluff Dale ISD, Huckabay ISD, Lingleville ISD, and the Morgan Mill Independent School District, City of Dublin, City of Stephenville, and the Middle Trinity Water District.
Exhibit 2 presents the types of properties appraised by Erath CAD in tax year 2003. In-house staff handles all property categories except Category G (minerals), Category J (utilities), and part of Category F2/L2 (industrial - real/personal), which is appraised by P&A.
Exhibit 2
Erath CAD Property by Category Summary with Assigned Responsibility
Property Category Account Type Description Responsible for Appraisal Category A Residential In-house staff Category B Multi-Family In-house staff Category C Vacant Lots In-house staff Category D/E Farm/Ranch Land w/Impr. In-house staff Category F1 Commercial Real In-house staff Category L1 Commercial Personal In-house staff Category G Minerals Contracted Appraisal Firm Category J Utilities Contracted Appraisal Firm Category F2 Industrial Real In-house & Contracted Appraisal Firm Category L2 Industrial Personal Contracted Appraisal Firm Source: Erath CAD. Most appraisal districts contract out some appraisals to appraisal firms. PTD does not track parcel counts appraised by external appraisers in appraisal districts. Appraisal district contracts with external appraisers routinely do not include a parcel count for the number of appraisals an external appraisal company will perform. In assessing the staff to parcel count ratio in each appraisal district, PTD uses parcel counts reported in the district's 2003 self report and the county's independent school district self reports to calculate the parcels per appraisal district staff. PTD does include all of the commercial real and personal property parcels in the calculation, since PTD is unable to determine exactly how many parcels are assigned to in-house staff versus a contract appraisal firm. The total parcels appraised in-house are calculated by summing the total number of parcels reported in Categories: A, Single Family Residential; B, Multifamily Residential; C, Vacant Lots; D, Rural Land; E, Rural Improvements; F1, Commercial Property; L1, Personal Property; M1, Mobile Homes; O, Residential Inventory; and S, Special Inventory, as shown in Exhibit 3.
Exhibit 3
Reported Data on Parcels, Categories Staffing, Training and Operations
Comparison to State and Group Averages
General Information Erath State Avg. Group Avg. Parcel Size Group (by number of locally appraised parcels) 35,000 - 49,999 Estimated # Locally Appraised Parcels 43,467 55,463 41,470 # Taxing Units 11 15 15 Locally Appraised Parcels to Staff 3,952 3,404 3,558 2003 Composition by Percentage
of Value (Self Report):Erath State Avg. Group Avg. Residential Value 35.2% 52.6% 39.1% Non-Residential, Non Mineral 64.2% 43.6% 54.3% Non-Residential, Mineral 0.5% 3.7% 6.6% 2003 Composition by Account Category Type (Operations Survey): Real Property 27,216 45,804 37,582 Mineral Property 2,472 13,536 12,159 Business Personal Property 1,910 4,689 1,922 Individual Personal Property 0 1,342 1,166 Total Accounts 31,598 65,372 52,829 2003 Composition by Locally Appraised Parcel Category (Estimated from Self Report): Erath State Avg. Group Avg. Parcel Type # Parcels % of Parcels A 14,586 33.6% 44.1% 30.2% B 351 0.8% 1.0% 0.3% C 3,478 8.0% 13.1% 22.9% D 8,901 20.5% 24.7% 25.2% E 9,391 21.6% 4.5% 9.8% F1 2,744 6.3% 3.1% 2.8% L1 1,673 3.8% 5.7% 4.0% M1 1,814 4.2% 2.2% 3.0% O 495 1.1% 1.4% 1.6% S 34 0.1% 0.1% 0.1% Total 43,467 100.0% 100.0% 100.0% PTD estimated that Erath CAD staff is responsible for appraising about 43,467 parcels. The International Association of Assessing Officer (IAAO) Standards state that small taxing units run from 1,500 to 1,700 parcels per staff member and large taxing units run from 3,000 to 3,500 parcels per staff member with an average of 2,500.
Comparable districts in size to Erath are Trinity, Tyler, Jim Wells and Chambers. The number of parcels per staff member for Erath CAD was 3,952. Trinity CAD was 4,644, Tyler CAD was 3,268, Jim Wells CAD was 1,781 and Chambers CAD was 2,766. Of course, workloads in appraisal districts may vary due to any number of considerations other than parcel count. Geography, or the size of an appraisal, district may have a significant impact on the time required to work all parcels. The types of properties may also have an impact. More complex commercial and residential properties may require more staff to appraise. The data given here is meant to give the reader at least some comparison to other appraisal districts with similar parcel counts and the standards determined by IAAO.
Exhibit 3 includes reported data concerning CAD and state and group averages.
Exhibit 3
Reported Data on Parcels, Categories Staffing, Training and Operations
Comparison to State and Group Averages (continued)
Financial and Staffing
Information (Operations Survey)Erath State Avg. Group Avg. 2003 Budget $633,000 $1,079,695 $629,090 2003 Surplus $0 $71,620 $17,334 2003 Surplus as % of Budget 0.0% 6.6% 2.8% 2004 Budget $654,450 $1,104,961 $656,877 % Change in Budget 3.3% $0 4.4% 2004 Budget per Total Local Parcel $15.06 $19.92 $15.84 Staffing Full Time 11 18 12 Part Time * 2 1 Supervisory 3 3 3 Programmers * 2 2 Supervisory to Staff Ratio 1:4 1:5 1:4 Chief Appraiser Performs Appraisals? No 2004 Total Compensation $73,000 $53,564 $55,687 Appraisers Full - Time 5 8 4 Part - Time * 0 1 Salary Range: Low $25,000 $24,504 $22,896 High $36,000 $37,521 $36,455 Training Budget $6 $8,832 $7,153 # Registered with BTPE (1) 3 9 6 Types of BTPE Certification: RPA (2) RTA (3) RTC (4) All 0 0 0 * Operations Information
(Operations Survey)Erath State Avg. Group Avg. Reappraisal Last Year of Reappraisal 2003 Next Year of Reappraisal 2004 Type of Appraisal: Complete Method of Appraisal: Combination Protests 467 3,131 709 Protests per Parcel 1.5% 4.7% 1.2% Consolidated Collection No Collection Budget $0 Geographic Information System (GIS)? Yes Percent GIS Complete 35% 80% 65% Board of Directors Members 6 6 6 Tax Assessor Votes? Yes Elected Members 1 3 2 Note: An asterisk (*) is shown where data was not reported.
Source: Erath CAD's and county ISDs 2003 Self Reports and Comptroller 2003-2004 Appraisal District Operations Report and Comptroller comparative data for state and group averages from district self reports and the Appraisal District Operations Report.
Notes: (1) BTPE - Board of Tax Professional Examiners. (2) RPA - Registered Professional Appraiser. (3) RTA - Registered Texas Assessor-Collector. (4) RTC - Registered Texas Collector.1.3
Self Evaluation QuestionnaireIn preparation for the Appraisal Standards Review, Erath CAD was requested to complete the IAAO's Self Evaluation Questionnaire. This instrument allows an appraisal district to assess its compliance with acceptable procedures, standards and organization. Each district receives an electronic version of the questionnaire and the complete IAAO manual explaining each question with information on how to answer each question. Each district undergoing an appraisal standards review is requested to perform the self assessment, with the goal of assisting the district in determining how well it is performing.
Erath County answered 110 out of 110 questions. The district gave concise responses to each question rather than providing a simple yes or no answer. The majority of the responses were in the affirmative, with 29 negative and zero not applicable responses. The district's answers are included in Appendix 15.
In Chapter 1, on legal issues and assessment cycles, the district noted it felt that it has adequate staff to perform its duties.
In Chapter 2, on resource management, the district noted that it felt its office funding is sufficient, it runs a well organized and well managed operation, and the district stated its staff are quality conscious concerning their work.
Chapter 3, on computerization, and Chapter 4, mapping, the district noted it provides web access to the public and that the district's maps are integrated with its appraisal system.
In Chapter 5, data collection, the district noted it did not use hand held computers for data collection. The district noted it routinely collects income data and they use a three-year appraisal plan.
In Land Evaluation, Chapter 6, the district noted that land sales are analyzed in terms of value per unit and the per unit values are plotted on their maps. In Chapters 7, 8, and 9, on residential property valuation, commercial property valuation, and sales data, respectively, the district noted its cost schedules are fully computerized and that its depreciation schedules are based on sales analysis. The district noted it uses Marshall and Swift to assist the district in assessing commercial properties.
In Chapter 10, on personal property assessment, the district noted it inspects business personal property.
In Chapter 11, on assessment administration, the district noted it updates ownership and legal description information within 30 days of a deed transfer. The district noted in Chapter 12, defense of values, that it obtained independent reviews when assessing difficult and complex properties.
In public relations, Chapter 13, the district noted it does have an active public relations program.
1.4
Findings of the Property Value Study and Summary WorksheetsThe Property Value Study (PVS) determines the total property value in each school district in the Erath County Appraisal District (CAD). With a few notable exceptions, all CADs and the Property Tax Division (PTD) are required by law to appraise property at market value. Agricultural land and timberland are appraised according to productivity value. Market value, in short, is the price that a property would transfer from a willing seller to a willing buyer. For it to be a market transaction, neither party may be under duress to buy or sell, the sale must be on the market for a reasonable time and the parties to the sale are not related.
Local tax roll value, or local value, is determined by the county appraisal district and submitted to PTD on its annual self-report. The PTD staff estimates the total taxable value in a school district, referred to as state value, by determining market value or by accepting the local appraised value in each property category (see Exhibit 2) in the district and then adding these category values for an overall school district value. PTD then deducts state-mandated homestead exemptions, disabled veterans' exemptions, value limitations, reinvestment zones, freeport exemptions, the loss between market value and productivity value appraisal of qualified agricultural lands, the school tax ceiling for homeowners over age 65 or disabled and other state-mandated exemptions.
PTD issues a preliminary and final PVS each year. School districts and county appraisal districts may protest the findings of the preliminary PVS through an administrative hearings process with the Comptroller, and school districts may protest the findings of the final PVS in district court. The administrative hearings process requires the protester to file a written protest with supporting documentation within 40 days of the issuance of the preliminary PVS. PTD may amend the findings of the preliminary PVS based on the submission of the written protest, an informal hearing or a formal hearing. Formal hearings are held by a hearings examiner, appointed by the Comptroller's General Counsel, and reporting directly to the Comptroller. The hearings examiner is not an employee of PTD.
When conducting the property value study, PTD assigns properties to various categories, such as residential, commercial and rural property. Properties are divided into categories so that like properties are assessed together.
Erath CAD did not appeal the findings of the preliminary study. Three-Way ISD, Dublin ISD, Stephenville ISD, Huckabay ISD and Morgan Mill ISD did not appeal the findings of the preliminary study. Bluff Dale ISD protested Categories C and D2/E; however Bluff Dale ISD did not go to a formal hearing. Lingleville ISD protested Categories A, D2/E and J. and went to a formal hearing in May 2004. Despite changes resulting from the protest, the Lingleville school district was unable to get into the confidence interval and was certified an eligible district in July 2004.
A review of the school districts in the county indicates that Erath CAD is consistently appraising the farm and ranch land that qualifies for the special productivity appraisal above its productivity value as determined by the PTD. Erath CAD is also inconsistently appraising rural residences as determined by the PTD. In the 2003 PVS, Lingleville school district fell outside the study's statistical margin of error. The category of Rural Real property is the primary reason that the school's values are not within the acceptable range determined by the study.
There are three property categories tested in Lingleville ISD: (1) category A, Single-Family Residences, making up 6 percent of the school district's value with a weighted mean ratio of 0.9746; (2) category D, Rural Real, making up 74.6 percent of the school district's value with a weighted mean ratio of 0.8370; and (3) category J, Utilities, making up 12.5 percent of the school district's value with a weighted mean ratio of 0.9208. According to the PVS, generally a ratio of between 0.95 and 1.05 in any property category makes it more likely that the appraisal district is appraising property at or near market value. Due to the number of properties sampled, and the large range in ratios, the margin of error has increased from the generally accepted 5 percent to about 13 percent for Lingleville ISD.
Lingleville ISD is outside the confidence interval limit. Lingleville ISD category A makes up 6.7 percent of the tested value. The appraisal district is placing a value on the category A, Single-Family Residences, somewhat below market value with a weighted mean ratio of 0.9746. Category D, Rural Real, makes up 87.4 percent of the tested value and is below market value with a weighted mean ratio of 0.8370. Category D, Rural Properties, 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 land and rural homes that do not qualify for farming or ranching or timberlands. The differences in value between qualified and non-qualified rural land is often wide since D1 land is appraised using a special statutory method to determine the lands productivity value and D2 is based on what the land would sell for in an open market transaction. Lingleville ISD subcategory D1 consists of 24.5 percent of category D's value and 21.4 percent of the tested value. D1 tested primarily in improved pastureland appraisals with a weighted mean ratio of 1.1196. Subcategory D2, however, makes up 75.5 percent of category D's value and 66 percent of the school district's total tested value. D2 tested below the PTD determined value with a weighted mean ratio of 0.7737. The appraisal district valued the rural residence properties from as low as 54 percent to a high of 110 percent of market value. Category J, Utility property is 12.5 percent of the school district's value and tested below market value with a weighted mean ratio of 0.9208.
Besides Lingleville ISD, the other school districts in the county are Three-Way, Dublin, Stephenville, Bluff Dale, Huckabay, and Morgan Mill ISDs.
Three-Way ISD is within the confidence interval limit. Due to the number of properties sampled and the large range in ratios, the margin of error is increased from the generally accepted 5 percent to about 8 percent for this school district. Category D is the only tested category within this school district. Category D, Rural Real makes up 88 percent of the school district's value and tested below market value with a weighted mean ratio of 0.9379. Three-Way ISD's subcategory D1 consists of 20.1 percent of category D's value and 20.1 percent of the tested value. D1 tested primarily in the improved pastureland appraisal with a weighted mean ratio of 1.1165. Subcategory D2, however, makes up 79.9 percent of category D's value and 79.9 percent of the school district's total tested value. D2 tested below market value with a weighted mean ratio of 0.9017. The appraisal district valued the rural residence properties from as low as 40 percent to a high of 122 percent of market value.
Dublin ISD is also within the confidence interval limit. Due to the number of properties sampled and the large range in ratios, the margin of error is increased from the generally accepted 5 percent to about 10 percent for this school district. Dublin ISD's category A makes up 29.6 percent of the tested value. The appraisal district is placing a value on category A, Single-Family Residences, close to market value with a weighted mean ratio of 1.0190. Category D, Rural Real, makes up 46.9 percent of the district's value and tested with a weighted mean ratio of 1.0482. Dublin ISD's subcategory D1 consists of 19.7 percent of category D's value and 11 percent of the tested value. D1 tested primarily in the improved pastureland appraisal with a weighted mean ratio of 1.1387. Subcategory D2 makes up 80.3 percent of category D's value and 44.9 percent of the school district's total tested value. D2 tested with a weighted mean ratio of 1.0282. The appraisal district valued the rural residence properties from as low as 19 percent to a high of 157 percent of market value. Category F1, Commercial Real property is 6.7 percent of the school district's value and tested below market value with a weighted mean ratio of 0.8852. Category L1, Commercial Personal property is 6.2 percent of the school district's value and tested slightly above market value with a weighted mean ratio of 1.0312.
Stephenville ISD is within the confidence interval limit. Stephenville ISD category A makes up 47.6 percent of the tested value. The appraisal district is placing a value on the category A single-family residences slightly above market value with a weighted mean ratio of 1.0109. Category D, Rural Real makes up 15.5 percent of the school district's value and tested above market value with a weighted mean ratio of 1.0686. Stephenville ISD's subcategory D1 consists of 10.2 percent of category D's value and 2.1 percent of the tested value. D1 tested primarily in the improved pastureland appraisal with a weighted mean ratio of 1.1452. Subcategory D2 makes up 89.8 percent of category D's value and 18.8 percent of the school district's total tested value. D2 tested above market value with a weighted mean ratio of 1.0605. The appraisal district valued the rural residence properties from as low as 66 percent to a high of 153 percent of market value. Category F1, Commercial Real property is 16.4 percent of the school district's value and tested below market value with a weighted mean ratio of 0.9430. Category L1, Commercial Personal property is 8.1 percent of the school district's value and tested slightly above market value with a weighted mean ratio of 1.0137.
Bluff Dale ISD is within the confidence interval limit. Bluff Dale ISD category A makes up 14.1 percent of the tested value. The appraisal district is placing a value on the category A single-family residences somewhat below market value with a weighted mean ratio of 0.9780. Category C, Vacant Lots is 37.1 percent of the district's value and tested above market value with a weighted mean ratio of 1.0503. Category D, Rural Real, makes up 27.5 percent of the district's value and tested with a weighted mean ratio of 1.0102. Bluff Dale ISD subcategory D1 consists of 20.6 percent of category D's value and 7.9 percent of the tested value. D1 tested primarily in the improved pastureland appraisal with a weighted mean ratio of 1.0641. Subcategory D2 makes up 79.4 percent of category D's value and 30.5 percent of the school district's total tested value. D2 tested very near market value with a weighted mean ratio of 0.9970. The appraisal district valued the rural residence properties from as low as 50 percent to a high of 167 percent of market value.
Huckabay ISD is within the confidence interval limit. Due to the number of properties sampled and the large range in ratios, the margin of error is increased from the generally accepted 5 percent to about 7 percent for this school district. Huckabay ISD category A makes up 7.4 percent of the tested value. The appraisal district is placing a value on the category A single-family residences below market value with a weighted mean ratio of 0.8331. Category D, Rural Real, makes up 66.1 percent of the district's value and tested above market value with a weighted mean ratio of 1.0240. Huckabay ISD's subcategory D1 consists of 23.9 percent of category D's value and 18.8 percent of the tested value. PTD tested primarily improved pastureland in the D1 category resulting in a weighted mean ratio of 1.0819. Subcategory D2 makes up 76.1 percent of category D's value and 60 percent of the school district's total tested value. D2 tested with a weighted mean ratio of 1.0071. The appraisal district valued the rural residence properties from as low as 68 percent to a high of 120 percent of market value. Category G, Minerals property is 5.7 percent of the school district's value and tested below market value with a weighted mean ratio of 0.9401. Category J, Utilities property is 14.9 percent of the school district's value and tested below market value with a weighted mean ratio of 0.9122.
Morgan Mill ISD is within the confidence interval limit. Due to the number of properties sampled and the large range in ratios, the margin of error is increased from the generally accepted 5 percent to nearly 13.66 percent for this school district. Morgan Mill ISD's category A makes up 11.2 percent of the tested value. The appraisal district is placing a value on the category A single-family residences below market value with a weighted mean ratio of 0.9528. Category D, Rural Real, makes up 64 percent of the district's value and tested above market value with a weighted mean ratio of 1.1673. Morgan Mill ISD's subcategory D1 consists of 17.2 percent of category D's value and 12.3 percent of the tested value. PTD tested improved pastureland in the D1 category, with a weighted mean ratio of 1.0995. Subcategory D2 makes up 82.8 percent of category D's value and 59.3 percent of the school district's total tested value. D2 tested above market value with a weighted mean ratio of 1.1824. The appraisal district valued the rural residence properties from as low as 24 percent to a high of 150 percent of market value. Category G, Minerals property is 15.4 percent of the district's value and tested near market value with a weighted mean ratio of 1.0074.
In summary, the Erath CAD is inconsistently valuing rural residence properties (category D2) from as low as 19 percent to a high of 167 percent of market value. Of particular concern is subcategory D2, valuation of rural residences that represents about 24 percent of the district's value, as well as the productivity value of qualifying acres that represents about 5 percent of the district's value.
For a statistical explanation of why the district was selected as eligible, see Appendix 18.
