Chapter 1
Overview of County Appraisal District
1.1
County History and Demographics
According to The Handbook of Texas, Grayson County was founded in 1846 and named for Peter W. Grayson, attorney general of the Republic of Texas.
Grayson County is located in north central Texas and bordered by Fannin County on the east, Cooke County on the west, Denton and Collin counties to the south and the Red River and Oklahoma on the north. Sherman, the county seat, is located at the intersection of U.S. Highways 82 and 7,565 miles north of Dallas.
The northern portion of Grayson County drains into Lake Texoma and the Red River and consists of acidic soils of the Post Oak Belt, with loamy or sandy surfaces. The southern area drains into tributaries of the Trinity River and is made up of blackland soils and post oak, bois d'arc, elm and walnut trees, as well as various types of grasses.
The 2004 county population, according to the Texas State Data Center, was 115,862, with the city of Denison having 23,300 residents; the city of Howe having 2,673 residents; the city of Pottsboro having 2,024 residents; the city of Sherman having 36,512 residents; the city of Van Alstyne having 2,580 residents; the city of Whitesboro having 3,837 residents; and the city of Whitewright having 1,738 residents. The county's remaining population resides in a variety of small towns and unincorporated areas.
The county includes the Bells, Collinsville, Denison, Howe, Sherman, Tioga, Van Alstyne, Whitesboro, Whitewright, Pottsboro, Sadler-Southmayd, Gunter and Tom Bean independent school districts. Austin College in Sherman and Grayson County Junior College serve county residents.
1.2
Appraisal District Organization and Staffing
Grayson CAD was formed in 1981 and became active in 1982. As of March 2006, it has a total of 28 full-time staff positions, with seven supervisory positions. Twelve positions are full-time appraisers. The CAD contracts with Pritchard & Abbott, Inc. (P&A) for professional appraisal services on mineral and utility properties (categories G and J) and with Capitol Appraisal Group, Inc. (CAG) for professional appraisal services on selected industrial properties (categories F2 and L2). The majority of industrial appraisals are performed in-house.
Exhibit 1 presents the appraisal district's current organization chart.
Exhibit 1 presents the appraisal district's current organization chart. The board of directors oversees the chief appraiser with the taxpayer liaison officer also reporting to the board of directors. Three directors report to the chief appraiser: director of customer service, director of administration and director of appraisal. Grayson CAD is made up of the following personnel:
Chief Appraiser
Taxpayer Liaison Officer
Director of Customer Service
Taxpayer Information Services (6 employees)
Information and assistance
Exemptions and Agricultural
Records Maintenance
Mapping Services (3 employees)
Transaction Reviews
Map Maintenance
Director of Administration
Data Management
Hardware and Software
Facility and Equipment Maintenance
Data Entry Team (2 employees)
ARB Coordination
Director of Appraisal
Real Estate Appraisal (8 employees)
Residential and Land
Commercial and Industrial
Business and Personal Property Appraisal (3 employees)
Mineral and Utilities
The Grayson CAD board of directors has no authority to set values or appraisal methods. The chief appraiser carries out the CAD's legal duties, hires its staff, makes appraisals and operates the appraisal office.
Grayson CAD provides appraisal services for 29 taxing units (Exhibit 2).
Exhibit 2
Grayson CAD Taxing Units
| Name of Taxing Entity |
|---|
| Grayson County |
| Bells Independent School District |
| Collinsville Independent School District |
| Denison Independent School District |
| Howe Independent School District |
| Sherman Independent School District |
| Tioga Independent School District |
| Van Alstyne Independent School District |
| Whitesboro Independent School District |
| Whitewright Independent School District |
| Pottsboro Independent School District |
| Sadler-Southmayd Independent School District |
| Gunter Independent School District |
| Tom Bean Independent School District |
| City of Bells |
| City of Collinsville |
| City of Gunter |
| City of Howe |
| City of Pottsboro |
| City of Tioga |
| City of Tom Bean |
| City of Van Alstyne |
| City of Whitesboro |
| City of Whitewright |
| City of Denison |
| City of Sherman |
| City of Southmayd |
| Grayson County Junior College District |
| Choctaw Watershed District |
Source: Grayson CAD, March 2006.
Most appraisal districts contract out some work to private firms. The Grayson CAD appraises all categories of properties in-house with the exception of minerals and utilities, which they contract with P&A. The CAD also contracts with CAG for selected industrial appraisals. PTD does not track appraisals performed by external appraisers. Contracts with external appraisers generally do not include a parcel count for the number of appraisals to be performed. In assessing the staff-to-parcel count ratio in each appraisal district, PTD uses parcel counts reported in the appraisal district's 2004 self-report and the independent school district self-reports to calculate parcels per appraisal district staff.
PTD includes commercial real and personal property parcels in the calculation, since it cannot determine how many
parcels are assigned to in-house staff versus private firms. 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.
Exhibit 3 contains data concerning Grayson CAD parcel counts by categories of properties. It compares the CAD's data to the state and group averages. For analytical purposes, PTD groups appraisal districts according to the number of parcels. The Grayson CAD is included with appraisal districts with 75,000 - 149,999 parcels.
Exhibit 3
Reported Data on Parcels and Categories
Comparison to State and Group Averages
Parcel Size Group (by number of locally appraised parcels):75,000 - 149,9991
| Parcels and Categories | Grayson | State Average1 | Group Average1 |
|---|---|---|---|
| Estimated Number Locally Appraised Parcels | 87,492 | 49,497 | 102,421 |
| Number Taxing Units | 29 | 15 | 23 |
| Estimated Locally Appraised Parcels per Staff1 | 3,125 | 2,985 | 3,037 |
Composition by Percentage of Value (Self Report):
| Parcels and Categories | Grayson | State Average1 | Group Average1 |
|---|---|---|---|
| Residential Value | 47.7% | 51.3% | 52.0% |
| Non-Residential, Non-Mineral | 50.4% | 45.0% | 45.3% |
| Non-Residential, Mineral | 1.9% | 3.7% | 2.7% |
Composition by Locally Appraised Parcel Category (Self Report):
|
Parcels and Categories
Parcel Type |
Grayson Number of Parcels |
Grayson Percent of Parcels |
State Average1 | Group Average1 |
|---|---|---|---|---|
| A - Residential | 39,608 | 45.3% | 50.0% | 48.7% |
| B - Multi-Family | 759 | 0.9% | 1.2% | 1.2% |
| C - Vacant Lots | 11,123 | 12.7% | 14.7% | 19.1% |
| D - Agricultural2 | 16,865 | 19.3% | 14.4% | 11.6% |
| E - Farm and Ranch Improvement | 6,873 | 7.9% | 5.1% | 4.2% |
| F1 - Commercial Real | 2,858 | 3.3% | 3.4% | 3.6% |
| L1 - Commercial Personal | 5,459 | 6.2% | 6.8% | 6.9% |
| M1 - Mobile Homes | 2,467 | 2.8% | 2.5% | 2.8% |
| O - Residential Inventory | 1,353 | 1.5% | 1.8% | 1.6% |
| S - Special Inventory | 127 | 0.1% | 0.1% | 0.2% |
| Total3 | 87,492 | 100.0% | 100.0% | 100.0% |
1Calculated by the Property Tax Division.
2Sum of data reported in ISD Self Reports of Value in the County Appraisal District.
3 Totals may not add to 100.0%, due to rounding.
Source: Texas Comptroller of Public Accounts, Appraisal District Operations Report (2004 and 2005 Data), March 2006 and Appraisal District Self Report of Value, 2004.
Exhibit 4 provides financial and staffing data for the Grayson CAD and how it fares with other appraisal districts throughout the state and in its group.
Exhibit 4
Reported Budget, Staffing and Training Data Comparison to State and Group Averages
| Financial Information Comparison | Grayson | State Average1 | Group Average1 |
|---|---|---|---|
| 2004 Budget | $1,684,550 | $1,108,158 | $2,105,659 |
| 2004 Surplus | $25,000 | $48,656 | $97,377 |
| 2004 Surplus as Percent of Budget1 | 1.5% | 4.4% | 4.6% |
| 2005 Budget | $1,741,940 | $1,150,302 | $2,266,100 |
| Percent Change in Budget1 | 3.4% | 3.8% | 7.6% |
| 2004 Budget per Total Parcel1 | $20.89 | $9.33 | $17.16 |
| 2004 Budget per PTD Estimated Locally Appraised Parcel1 | $19.25 | $22.30 | $20.56 |
Staffing Comparison - General
| Staffing - 2004 Budget | Grayson | State Average1 | Group Average1 |
|---|---|---|---|
| Full Time | 28 | 17 | 34 |
| Part Time | 0 | 1 | 1 |
| Supervisory | 7 | 3 | 7 |
| Programmers | 0 | 1 | 12 |
| Supervisory to Staff Ratio1 | 1:4 | 1:5 | 1:5 |
Staffing Comparison - Chief Appraiser
| Chief Appraiser - performs appraisals | Grayson | State Average1 | Group Average1 |
|---|---|---|---|
| 2004 Total Compensation - Actual | $73,460 | $52,557 | $84,476 |
Staffing Comparison - Appraisers
| Appraisers - 2004 Budget | Grayson | State Average1 | Group Average1 |
|---|---|---|---|
| Full - Time | 12 | 6 | 15 |
| Part - Time | 0 | 0 | 0 |
| Salary Range: Low | $25,400 | $25,476 | $25,512 |
| Salary Range: High | $49,900 | $38,313 | $54,985 |
| 2004 Training Budget | $11,000 | $9,140 | $16,886 |
| Number Registered with Board of Tax Professional Examiners | 15 | 8 | 16 |
1 Calculated by the Property Tax Division.
Source: Appraisal District Operations Report (2004 and 2005 Data), March 2006.
In Exhibit 5 operations information is provided for the Grayson CAD, state and group.
Exhibit 5
Reported Data
Operations Information Comparison to State and Group Averages
| Reappraisal | Grayson | State Average1 | Group Average1 |
|---|---|---|---|
| Last Year of Reappraisal | 2004 | Not applicable | Not applicable |
| Next Year of Reappraisal | Not applicable | Not applicable | Not applicable |
| Type of Reappraisal: | Cyclical | Not applicable | Not applicable |
| Method of Reappraisal: | In-House | Not applicable | Not applicable |
| Protests | Grayson | State Average1 | Group Average1 |
|---|---|---|---|
| Protests (2004 tax year) | 3,100 | 3,164 | 4,242 |
| Protests per Estimated Locally Appraised Parcel1 | 4.0% | 6.0% | 0.0% |
| Collections | Grayson | State Average1 | Group Average1 |
|---|---|---|---|
| Consolidated Collection | No | Not applicable | Not applicable |
| Collection Budget | Not applicable | Not applicable | Not applicable |
| Geographic Information System (GIS) | Grayson | State Average1 | Group Average1 |
|---|---|---|---|
| District Has or Plans to Purchase GIS? | Yes | Not applicable | Not applicable |
| Percent GIS Complete | 100.0% | 80.0% | 74.0% |
| Board of Directors - 2004 | Grayson | State Average1 | Group Average1 |
|---|---|---|---|
| Members | 6 | 6 | 6 |
| Tax Assessor Votes? | No | Not applicable | Not applicable |
| Elected Members | 3 | 3 | 0 |
1 Calculated by the Property Tax Division.
Source: Texas Comptroller of Public Accounts, Appraisal District Operations Report (2004 and 2005 Data), March 2006.
Based on this comparison, the Grayson CAD appraised 3,134 parcels per full-time employee. The IAAO Standards say that the ratio of parcels per full-time employee for a small appraisal district is between 1,500 and 1,700. For a large appraising entity these numbers are between 3,000 and 3,500.
Workloads in appraisal districts can vary due to any number of considerations other than parcel count. The geographic size of an appraisal district, for instance, may have an impact on the time required to work all parcels, as can the types of properties involved. Complex commercial and some residential properties may require more staff work to appraise. The data given here is meant only to give the reader some basis for comparison with other appraisal districts with similar parcel counts.
1.3
Self Evaluation Questionnaire
In preparation for this ASR, the Grayson CAD was asked to complete the IAAO's Self Evaluation Questionnaire, which asks the appraisal district to assess its compliance with acceptable procedures, standards and organization. Each appraisal district receives an electronic version of the questionnaire and an IAAO manual that explains each question and how to answer them. PTD asks each appraisal district undergoing an ASR to perform the self-assessment.
The Grayson CAD answered all 111 questions, providing concise responses where necessary.
In responding to the self-assessment, the appraisal district pointed to certain strengths. Among the identified strengths are:
- proactive board of directors;
- qualified and dedicated staff; and
- state of the art computer technology.
Grayson CAD also indicated some areas of concern. These included physically inspecting all property and collecting income data on commercial property.
In Chapter 1, on legal issues and assessment cycles, the CAD indicated that it understands the legal framework, value standard and assessment cycles required of the CAD. The chief appraiser is active in several professional organizations, including the Texas Association of Appraisal Districts and Texas Metro Appraisal Districts, and shares pertinent information with staff. Management attends a variety of seminars each year to stay current with proposed laws and court decisions. The Internet is used to access current data on property tax issues. The CAD indicated laws that tend to favor the property owner, such as Sections 41.43 and 42.29 of the Tax Code, undercut the standard of market value. The CAD indicated it has adequate size, resources, and fiscal capacity to perform effectively and efficiently.
In Chapter 2, on resources and management, the CAD indicated that it engages in formal planning through preparation of the annual budget and monthly board meetings, has adequate funding, has sufficient office space and is well organized and well managed. The district staff is quality conscious concerning their work. Grayson CAD stated that it routinely conducts surveys of other appraisal districts to ensure that its salaries and benefits are competitive.
In Chapter 3, on computerization, the CAD indicated its current computer system is sufficient to meet the CAD's needs. The system provides for multiyear processing, includes adequate mechanisms for data security and integrity, and is integrated with the CAD's GIS system. The CAD indicated its appraisal system can manage photos, document imagery and maintain a Web site.
In Chapter 4, on mapping, the CAD indicated that district maps comply with IAAO standards and Comptroller Rules. Grayson CAD maps are computerized and parcel splits/combinations are recorded in a timely manner. The CAD stated having a GIS system has been very beneficial to the CAD and the public.
In Chapter 5, on data collection, the CAD indicated that it knows what data is required by Comptroller Rules, state law, and appraisal standards. The CAD stated it collects and uses all relevant data in the assessment process and currently is on a six-year inspection plan for physically inspecting all properties. The CAD stated it uses computerized edit checks to minimize errors, routinely collects income data on commercial property, and uses one hand held computer, with hopes of acquiring others, for collecting field data.
In Chapter 6, on land evaluation, the CAD indicated that it understands the land evaluation process using market data as its primary source. The CAD bases land value on use and location and adjusts values based on the market. The CAD uses GIS to identify market areas and mass update land values.
In Chapter 7, on residential property valuation, the CAD indicated that it uses extensive sales data and market analysis in the appraisal process for residential properties. The CAD's building schedules are "cost based and market calibrated," cost schedules are fully computerized, and depreciation tables are adjusted for local properties. Ratio studies are routinely performed as part of the evaluation process.
In Chapter 8, on commercial property valuation, the CAD indicated that it uses the income approach, the sales comparison approach, and the cost approach when appraising commercial property, using whichever is the most appropriate for the subject. The CAD collects income and expense information from local fee appraisers. Property owners, however, are reluctant to share information that may affect property values, but the CAD stated it does collect income and expense data during the appeals process. The property's total condition is considered when calculating depreciation. Automated value estimates are reviewed by senior appraisers or management.
In Chapter 9, on sales data, ratio studies, and stratification, the CAD indicated that it follows the accepted procedures for gathering sales data and can generate ratio studies at will, stratifying by property characteristics and computing numerous statistical measures. The CAD stated its ratio study software has graphics capabilities and unsold properties are tested for appraisal uniformity.
In Chapter 10, on personal property assessment, the CAD indicated that it follows the accepted procedures for discovery and appraisal of personal property, using the cost approach. The CAD uses a variety of discovery methods and cost guides. Renditions are mailed annually to all business owners and the CAD assesses a penalty for those who fail to render.
In Chapter 11, on assessment administration, the CAD indicated it believes that it is following the accepted practices of assessment administration in the Comptroller Rules and IAAO standards. Eligibility for exemptions and other tax relief is verified, properties are properly coded by jurisdiction and tax rate, and notifications of appraised values and taxpayers' rights to appeal are followed.
In Chapter 12, on defense of values, the CAD indicated that the appraisal review board process encourages communication between taxpayers and the CAD. Informal hearings between appraisal staff and appellants are required before a formal hearing and the CAD contracts with an outside appraisal firm to appraise complex properties.
In Chapter 13, on public relations, the CAD indicated that it believes it has an effective public relations program. Comptroller publications, mail outs, public appearances, in-house public information terminals, and the CAD's Web site provide taxpayers with information about their rights and responsibilities. The chief appraiser has written question and answer articles for the local newspaper.
1.4
Findings of the Property Value Study
The PVS determines the total property value in each school district in the Grayson CAD. With a few notable exceptions, all CADs and 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, and the property must be on the market for a reasonable time.
Local tax roll value, or local value, is determined by the CAD and submitted to PTD on its annual self-report. 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 in the CAD 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 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 CADs 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.
Collinsville and Tom Bean ISDs formally appealed the findings of the preliminary study. Both school districts were unable to get into the confidence interval and were certified eligible districts in July 2005. In the 2004 PVS, both school districts fell outside the study's statistical margin of error.
A review of the school districts in the county indicates that Grayson CAD is appraising rural residences and commercial real estate below market value as determined by PTD. In the 2004 PVS, Collinsville and Tom Bean (identified as eligible) school districts fell outside the study's statistical margin of error. Rural residences (subcategory D2) are the primary reason that the school districts' values are not within the acceptable range determined by the study.
In general, a ratio indicates the percentage of market value at which a property or group of properties is being appraised. A ratio of between 0.95 and 1.05 in any property category means that the appraisal district is appraising property category within five percent of its market value according to the PVS.
Eligible School Districts
Collinsville and Tom Bean were identified as eligible school districts with values outside of the confidence interval limit. The confidence interval is a range of school district values which the Comptroller has accepted.
There were two property categories tested in Collinsville ISD: (1) Category A, Single-Family Residential; and (2) Category D, Rural Real.
Category D represents rural properties and contains two subcategories: D1 and D2. Subcategory D1, productivity value of qualifying acres, is farm and ranch land that qualifies for the special productivity appraisal. Subcategory D2, non-qualified acres and farm and ranch improvements, is primarily rural homes and land that does not qualify for the special open space or timberland valuations.
A review of subcategory D2 sample properties indicates that the CAD appraised from as low as 40 percent to a high of 296 percent of market value with a weighted mean ratio of .8419. Subcategory D2 makes up 20 percent of the district's value and 25-26 percent of the tested value.
Collinsville formally appealed Category A and sub-category D2.
There were two property categories tested in Tom Bean ISD: (1) Category A, Single-Family Residences; and (2) Category D, Rural Real.
A review of subcategory D2 sample properties indicates that the CAD appraised from as low as 52 percent to a high of 149 percent of market value with a weighted mean ratio of .9044. Subcategory D2 makes up 20 percent of the district's value and 24-25 percent of the tested value.
Tom Bean formally appealed Category A and sub-category D2.
Other School Districts
Grayson CAD includes 11 other school districts: Bells, Denison, Howe, Sherman, Tioga, Van Alstyne, Whitesboro, Whitewright, Pottsboro, Sadler-Southmayd and Gunter ISDs. These school districts were within their respective confidence interval limits.
However, in six of these ISDs the PVS findings suggest inconsistent appraisals in rural residences. Specifically, in Bells the D2 weighted mean ratio was 1.0856 and in Denison the weighted mean ratio was 1.1562. The weighted mean ratio in D2 for Howe, Tioga, Pottsboro, and Sadler-Southmayd was .9252, .8678, .8801 and .8453, respectively.
The PVS revealed that the CAD is inconsistently appraising commercial real properties in Denison, Whitesboro and Whitewright with weighted mean ratios of .9380, .9386 and .9397 respectively.
Grayson CAD Summary
Grayson CAD's median ratio is .99.
Nevertheless, there are wide ranges within these categories. For example: In Category A the sample ratios range from .41 to 2.66 with a median ratio of .99.
In Category B the sample ratios range from .62 to 1.15 with a median ratio of 1.00.
In Category C the sample ratios range from .62 to 1.46 with a median ratio of 1.01.
In Category D2 the sample ratios range from .20 to 3.47 with a median ratio of 1.00.
In Category F1 the sample ratios range from .60 to 1.51 with a median ratio of .99.
In Category G the sample ratios range from .87 to 1.77 with a median ratio of 1.02.
In Category J the sample ratios range from .32 to of 1.41 with a median ratio of 1.01.
And, in Category L1 the sample ratios range from .62 to 1.60 with a median ratio of .99.
While the CAD has a median ratio of .99 for all categories, only 67.19 percent of the PVS sample ratios were within 10 percent of the median.
Coefficient of Dispersion
The coefficient of dispersion (COD), the primary measure of appraisal uniformity, measures the average percentage by which individual ratios vary from the median ratio. According to the IAAO's Property Appraisal and Assessment Administration, a low COD indicates that appraisals within a category of property are uniform and a high COD indicates that a CAD is appraising properties at inconsistent percentages of market value. Also, according to the IAAO's Standard on Ratio Studies, Category D, other real property and personal property, CODs should generally be 20 or less and should reflect the nature of the properties, market conditions and the availability of reliable market indicators. The 2004 COD for Collinsville ISD Category D, other real property and personal property, was 29.76. This indicates a lack of appraisal uniformity in this category.