Overview of County Appraisal District
County History and Demographics
Anderson County was formed in 1846 out of land that was in Houston County. The county is located in East Texas in the region between the Trinity and Neches Rivers. The county covers 1,077 square miles of the Texas Claypan area and the East Texas Timberlands. The county topography is primarily moderate rolling hills with flat overflow land along the rivers that run through the county.
The City of Palestine, which is located near the center of the county and is the county seat, is the largest city in the county. According to the Handbook of Texas, Palestine is located 108 miles southeast of Dallas, 90 miles east of Waco and 153 miles north of Houston. U. S. Highways 287, 79, and 84 are the major transportation arteries through the county.
Anderson County's economy is based on agriculture and mineral production. The county ranks 22nd (of 43 counties) in commercial timber production. Timber in the county is mixed even though pine is the most heavily harvested. Varieties of hardwoods include red oak, post oak, white oak, pecan, walnut, hickory, elm, and ash. Anderson CAD reported approximately 175,000 acres in timber production in 2004.
Even though the county is located in the east Texas piney woods, cattle production is a significant part of the agricultural economy. In 2004 the appraisal district reported more than 338,000 acres of pastureland―almost half of the total acres in the county. Timber production and cattle remain the foundation of agricultural activity in the county.
The overall population trend in Anderson County has been a steady increase. In the 90 years beginning in 1850 through 1940, the population grew from 2,884 to 37,092. The railroad industry and agriculture, particularly cotton production, were major influences for the population growth during that period. Although the population decreased by nearly 10,000 persons between 1940 and 1970, the population took off again in the 1970s and by 1980 the county's population was 46,400. The population grew only slightly in the 1980s and the 1990 population was 48,024. Due to growth in retail and wholesale trade, the establishment of state correctional facilities in the county, and growth in mineral production, the county experienced another growth spurt in the decade of the 1990s. The 2003 census estimate showed the county population to be 54,790. Palestine remains the largest city in the county and according to the 2003 census estimate; its population is 17,808 or about one-third of the county's total population.
Appraisal District Organization and Staffing
The appraisal district was established in 1980 and produced its first appraisal roll for the member taxing units in 1982 when State law required all appraisal districts to become active. The appraisal district has 13 employees; all but two of the staff perform appraisals or appraisal support functions. The district contracts with the Capitol Appraisal Group, Incorporated for professional appraisal services for mineral, utility, and industrial appraisals. The appraisal district contracts with the Software Group of Plano, Texas to provide its computer operating system that includes appraisal system and property characteristics, exemptions, and special use records system.
Exhibit 1 outlines the appraisal district organization.
Anderson County Appraisal District Organization
Board of Directors Paul Barnett, Chair Mike Dear Carol Bayless, Secretary Jon Greg Jeffery Gunnels Carl House Clydell Klein Terri Garvey, County TAC Larry Thomas Eugene Brooks Dyna Tutt
Source: Anderson CAD.
Note: Additional information concerning board members can be found in Exhibit 4.
The chief appraiser is the chief executive officer of the appraisal district. He is responsible for all of the district's operations. He hires and trains the appraisal staff and completes the staff evaluations. The assistant chief appraiser supervises the non-appraisal staff at the appraisal district. The assistant chief appraiser is responsible for all appraisal district operations when the chief appraiser is absent. The Senior Appraiser assists the chief appraiser in training and supervising the appraisal staff. The Senior Appraiser assumes responsibility for the district's operations when both the chief appraiser and Assistant Chief Appraiser are absent.
Scope of Office
The appraisal district is governed by a board of directors who are chosen by the member taxing units. The board of directors has no authority to set values. The chief appraiser carries out the appraisal district's legal duties, hires the staff, makes the appraisals and operates the appraisal office.
Anderson CAD is responsible for appraising 58,435 real, mineral, and personal property parcels within the boundaries of the appraisal district. This includes 18,348 mineral property accounts, 2,433 business personal property parcels and 430 individual personal property accounts.
Anderson CAD contracts with the professional valuation firm, Capitol Appraisal Group, Incorporated (CAG) for professional appraisal services. Under the contract CAG appraises mineral and some industrial property. The Software Group (TSG) provides and maintains the computer operating systems for the appraisal district. The Software Group systems are designed for Texas appraisal districts. They facilitate information processing for exemptions, special use appraisals, sales and market data analysis including ratio studies, and processing property data to complete mass appraisals.
The district provides appraisal services for 15 taxing units: Anderson County, Cayuga Independent School District, Elkhart Independent School District, Frankston Independent School District, Neches Independent School District, Palestine Independent School District, Westwood Independent School District, Slocum Independent School District, City of Elkhart, City of Frankston, City of Palestine and Trinity Valley Community College District, Trinity Valley College-Palestine #2, Trinity Valley College-La Poynor #3, and Trinity Valley College-Frankston #1.
Exhibit 2 presents the types of properties appraised by Anderson CAD in tax year 2003. The in-house staff handle all property categories except Category G (minerals), Category J (utilities), and Category F2/L2 (industrial - real/personal), which are appraised by CAG.
Anderson CAD Property by Category Summary with Assigned Responsibility
Tax Year 2003
Property Category Account Type
Category A Residential In-house staff Category B Multi-Family In-house staff Category C Vacant Lots In-house staff Category D/E Ag-use and Farm/Ranch Land w/Improvements. 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 Contracted Appraisal Firm Category L2 Industrial Personal Contracted Appraisal Firm Source: Anderson County Appraisal District, October 2004.
Most appraisal districts contract out some of its appraisal to contract 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 appraisal district self report, Comptroller form 50-105, County-Report on Property Value, to calculate the parcels per appraisal district staff. The calculation does not include rural real land, since the majority of these properties are appraised by using a productivity schedule rather than an appraisal by parcel. 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 below.
PTD estimated that Anderson CAD staff are responsible for appraising about 26,981 parcels. The International Association of Assessing Officers (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 Anderson are Aransas, Upshur and Medina. The number of parcels per staff member for Anderson CAD was 1,927. Aransas CAD was 3,670, Upshur CAD was 2,382 and Medina was 2,750. Of course workloads in appraisal districts may vary, sometimes drastically, 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 sometime even 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 Anderson CAD and state and group averages.
Reported Data on Parcels, Categories Staffing, Training and Operations
Comparison to State and Group Averages
General Information Anderson State
Parcel Size Group (by number of locally appraised parcels) 35,000 - 49,000 Estimated # Locally Appraised Parcels 44,988 55,463 41,470 # Taxing Units 12 15 15 Locally Appraised Parcels to Staff 3,213 3,404 3,558 2003 Composition by Percentage of Value (Self Report): Residential Value 35.6% 52.6% 39.1% Non-Residential, Non Mineral 58.2% 43.6% 54.3% Non-Residential, Mineral 6.2% 3.7% 6.6% 2003 Composition by Account Category Type (Operations Survey): Real Property 37,224 45,804 37,582 Mineral Property 18,348 13,536 12,159 Business Personal Property 2,433 4,689 1,922 Individual Personal Property 430 1,342 1,166 Total Accounts 58,435 65,372 52,829 2003 Composition by Locally Appraised Parcel Category (Estimated from Self Report): Parcel Type # Parcels % of Parcels A 12,329 27.4% 44.1% 30.2% B 125 0.3% 1.0% 0.3% C 3,603 8.0% 13.1% 22.9% D 18,007 40.0% 24.7% 25.2% E 5,848 13.0% 4.5% 9.8% F1 1,235 2.7% 3.1% 2.8% L1 2,051 4.6% 5.7% 4.0% M1 1,682 3.7% 2.2% 3.0% O 46 0.1% 1.4% 1.6% S 62 0.1% 0.1% 0.1% Total 44,988 100.0% 100.0% 100.0% Financial and Staffing Information
2003 Budget $790,556 $1,079,695 $629,090 2003 Surplus $60,000 $71,620 $17,334 2003 Surplus as % of Budget 7.6% 6.6% 2.8% 2004 Budget $776,134 $1,104,961 $656,877 % Change in Budget -1.9% $0 4.4% 2004 Budget per Total Local Parcel $17.25 $19.92 $15.84 Staffing Full Time 14 18 12 Part Time * 2 1 Supervisory 2 3 3 Programmers * 2 2 Supervisory to Staff Ratio 1:7 1:5 1:4 Chief Appraiser Performs Appraisals? Yes 2004 Total Compensation $55,735 $53,564 $55,687 Appraisers Full - Time 6 8 4 Part - Time * 0 1 Salary Range: Low $19,120 $24,504 $22,896 High $34,855 $37,521 $36,455 Training Budget $14,200 $8,832 $7,153 # Registered with BTPE (1) 9 9 6 Types of BTPE Certification: RPA (2) RTA (3) RTC (4) All 7 2 0 0 Operations Information (Operations Survey) Anderson State
Reappraisal Last Year of Reappraisal 2002 Next Year of Reappraisal 2005 Type of Appraisal: Complete Method of Appraisal: Combination Protests 361 3,131 709 Protests per Parcel 0.6% 4.7% 1.2% Consolidated Collection No Collection Budget $0 Geographic Information System (GIS)? Yes Percent GIS Complete 85% 80% 65% Board of Directors Members 11 6 6 Tax Assessor Votes? No Elected Members 8 3 2
Note: An asterisk (*) is shown where data was not reported.
Source: Anderson CAD 2003 Self Report 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 Professional Tax Examiners. (2) RPA - Registered Professional Appraiser. (3) RTA - Registered Tax Assessor-Collector. (4) RTC - Registered Texas Collector.
Self Evaluation Questionnaire
In preparing for the Appraisal Standards Review, the Property Tax Division requested that Anderson CAD complete the IAAO's Self Evaluation Questionnaire. This instrument allows an appraisal district to assess their compliance with acceptable procedures, standards and organization. Each district subject to an ASR 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.
The PTD provided the IAAO self-assessment guide along with the questionnaire. In the guide's introduction, it statedThe guide is designed for use by individuals who want to evaluate their own procedures and who are seeking to either continually improve or to evaluate their procedures against what is believed to be a standard of best practices in assessment administration.
The Comptroller provided the questionnaire and the guide to the appraisal district to allow it to perform a self assessment of its operations and help it recognize areas where it is doing a good job and areas where it needs to improve. While the district answered the questions, the responses were otherwise not particularly useful in establishing how well the district was performing its appraisal obligations as the district did not elaborate enough for the reviewer to draw many conclusions.
Chapters 1 and 2 of the questionnaire ask the appraisal district to respond to its environment relative to the legal framework of tax appraisals in the state and the district's available resources and management. The district responded affirmatively to all of the questions in these chapters except # 3 in Chapter 1, which asks for a response about matters that undercut the market value standard. While the district did not answer this question, during the ASR the chief appraiser indicated that the lack of some type of mandatory disclosure was a hindrance to their achieving market value. Additionally, the district indicated they "Could use a director of appraisal" to assist in performing its functions efficiently and effectively. In interviews the chief appraiser said if he had this position on staff the person would be responsible for performing market analyses and appraisal (schedule) modeling.
Chapter 3 requests responses to a variety of questions about computerization and its role in the office. The district responded affirmatively to all of the questions in this chapter. Their answers indicate satisfaction with the hardware and that the district uses the computer as a tool to perform administrative and appraisal tasks.
Chapter 4 addresses the mapping. The appraisal district responded that it has a geographic information system (GIS), but indicated on the questionnaire that the system is not yet complete. When the system is complete, it will be a significant aid for appraisers. The district responded on the questionnaire that one element currently lacking in the system is information about the influence on value due to location and property characteristics. One of the local weaknesses in the appraisal district's procedures involves its analysis of the local market. The physical representations of properties combined with data that describes their characteristics as part of a GIS could be a significant tool in identifying value influences on local markets. If market influences can be identified and quantified, the appraisal district will improve its ability to appraise each property at market value according to its characteristics.
Several chapters in the questionnaire ask questions about the appraisal district's data collection activities and appraisal valuation process. Chapter 5 asks for responses to data collection practices and Chapters 6, 7, 8 and 9 ask for responses about appraisal related practices and ratio studies and stratification. Two of the district's responses in Chapter 5 indicate the appraisal district does not incorporate useful land attribute information in its database. Chapter 6, the land evaluation chapter, confirms this as the district indicated that it does not stratify land nor plot its values on maps. The district also answered "no" to a similar question in Chapter 9, the ratio study and stratification section, about residential property when they responded that they do not stratify market or sub-areas. The appraisal district's ratio study system has the ability to produce ratio results by various sub groups on demand but the chief appraiser indicated most of their ratio studies are conducted at the school district or subdivision level.
Data collection and analysis are essential elements in the mass appraisal process. Values are based on models that can predict an accurate value for all properties similar to the model. Collecting and interpreting data properly as apart of analyzing the local market is a key element in being able to appraise equitably and at market value.
The ASR confirmed a trend inherent in the responses noted above. The CAD's responses about not collecting and maintaining property attributes and not stratifying property imply a weakness in the appraisal district's ability to thoroughly analyze its markets and identify factors that influence value. Although the 2003 taxable value study generally indicated overall satisfactory ratios for most property types in the school districts, the ratio for rural land was low. The district's responses to the questions about data collection and stratification give some background as to why the rural land ratio in Elkhart School District, the only eligible school in the county, was low.
The district's responses to the questions in Chapters 11, 12 and 13 describe the appraisal district's efforts to allow ease of access to information. In addition these responses describe the district's efforts to provide accurate appraisal information for taxing units and taxpayers
Findings of the Property Value Study and Summary Worksheets
The Property Value Study (PVS) determines the total property value in each school district in Texas. County appraisal districts 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, both parties must know the uses and purposes of the property and those for which it can be used; the property must be on the market for a reasonable time; and the parties to the sale are not related and neither is in a position to take advantage of the other's circumstance.
Local tax roll value, or local value, is determined by the county appraisal district and submitted to PTD on its annual report of property value. The PTD staff independently estimate the total taxable value in a school district, referred to as state value, by determining market value or by accepting the local appraised value. PTD then deducts state-mandated homestead exemptions, disabled veterans' exemptions, value limitations, reinvestment zones, freeport exemptions, the school tax ceiling for homeowners over age 65 or disabled and other state-mandated exemptions.
PTD issues preliminary and final PVS findings 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 sue over the PVS final findings 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. The 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. The hearings examiners report directly to the Comptroller and are not employees of the PTD.
Of the seven school districts in the Anderson CAD, only Elkhart Independent School District (ISD) was determined to be an eligible district based on the 2003 PVS.
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.
Anderson CAD protested the preliminary findings for Elkhart ISD. They protested Category A (single family residences), Category J (utility property) and Category D/E (rural land and improvements on rural land). PTD staff recommended changes that affected the market value estimates for each of the protested categories. All of the recommended changes were in Elkhart ISD's favor. The final ratios for all of the protested categories increased, but the Category D/E ratio remained below 100 percent at 0.8762.
A review of the school districts in the county indicates that Anderson County Appraisal District typically appraises all property categories at or just below the market value determined by the PTD. In the 2003 PVS Elkhart ISD's values fell outside the study's statistical margin of error. Rural land and improvement values (Category D) appear to be the primary reason that the school's values are not within the acceptable range determined by the study. Category D represents rural properties 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 for farming or ranching or timberlands. The differences in value between qualified and non-qualified rural land are 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.
There were three property categories tested in Elkhart; (1) category A, Single-Family Residences, making up 29.4 percent of the districts value with a weighted mean ratio of 0.9628, (2) category D, Rural Real, making up 47.3 percent of the districts value with a weighted mean ratio of 0.9071, and (3) category J, Utilities, making up 7.2 percent of the districts value with a weighted mean ratio of 0.9819. In general, a ratio of between 0.95 and 1.05 in any property category makes it more likely that the district is appraising property within the margin of error, or that it is appraising property at or near market value, according to the PVS.
Elkhart's subcategory D1 makes up 14.2 percent of category D's value and 9 percent of the tested value. Subcategory D2, however, makes up 85.8 percent of category D's value and 54 percent of the school district's total tested value. D2 received a weighted mean ratio of 0.8762. Because this category contains almost 50 percent of the total property value in this district, the low ratio in the D2 subcategory dropped the district outside the margin of error and caused the school district to be identified as eligible.
A review of all the school districts in Anderson County shows that there are inconsistencies mainly with the D2, Non-Qualifying, property values. The appraisal district is placing a value on the D2, Non-Qualifying, properties below their adjusted selling price (market value) in five of the seven districts in the county. Only in Neches ISD and Westwood ISD was D2 property being appraised at or near market value.
Besides Elkhart ISD, the other school districts in the county are Cayuga ISD, Frankston ISD, Palestine ISD, Westwood ISD, Slocum ISD, and Neches ISD.
Cayuga school district's D2 Non-Qualifying properties make up 83.2 percent of the total category D rural property value in the school district. This is 41 percent of all of the school district's value that the PTD tested. The average sample ratio for the D2 Non-Qualifying properties in the school district is .941. There is also a large range in sample ratios for the D2 Non-Qualifying properties in the school district. The appraisal district valued these properties from .5429 to 1.6457 percent of their adjusted selling price (market value).
Frankston ISD's category D2 makes up 87.8 percent of category D's value and 22 percent of the total tested value in the school. The D2 ratio of .8827 indicates that the school district's ability to stay within the margin of error may be difficult in the future.
Palestine ISD's category D1 has a ratio of 1.3057, but only makes up 2 percent of the tested value while category D2 makes up 90.6 percent of category D's value and 19 percent of the tested value with a weighted mean ratio of .9213.
Westwood ISD's category D1 tested at a ratio of 1.3201, making up 2 percent of the tested value. In comparison, Westwood's category D2 makes up 89.7 percent of the total category D's value and 19 percent of the total tested value. The school district's weighted mean ratio for its non-qualifying properties was .9565, just barely above the 0.95 threshold that compliments the study's 5 percent margin of error.
For a statistical explanation of why the district was selected as eligible, see Appendix 18.