Chapter 1
Overview of County Appraisal District1.1
County History and DemographicsAccording to the Handbook of Texas, Harrison County was formed in 1839 from part of Shelby County and was organized in 1842.
Harrison County is in northeastern Texas along the Louisiana border, surrounded by Panola and Rusk counties on the south, Upshur County on the east, Marion County on the north, and Louisiana on the west. Marshal, the county's largest town and the county seat, is in the central part of the county at the intersection of Interstate Highway 20 and State highways 59 and 80 and is 152 miles east of Dallas and thirty-nine miles west of Shreveport. Harrison County was named for Jonas Harrison, a Texas revolutionary leader.
The population of the county for 2003, according to the County Information Project, was 62,708 residents, with the City of Waskom having 2,104 residents, and the City of Marshal having 23,939 residents. The balance of the county population lives in smaller cities and towns and the rural areas. The county comprises 915 square miles, mainly of grassy plains, although a dense forest belt crosses the county as well.
According to the County Information Project, the median per capita income is $22,806, and 16.4 percent of the population lives at or below the poverty level.
The county includes the Karnack Independent School District, Marshall Independent School District, Waskom Independent School District, Hallsville Independent School District, Harleton Independent School District, and Elysian Fields Independent School District.
1.2
Appraisal District Organization and StaffingThe appraisal district was formed in 1981 and became active in 1982. Harrison CAD has a total of 17 full time staff, with three supervisory positions. Seven of the positions are full time appraisers. The board of directors hires a chief appraiser as the chief operating officer of the district. The board also sets the district's budget and appoints the appraisal review board members. The district contracts with Appraisal Records Service (ARS) for professional appraisal services on mineral and industrial appraisals.
In Harrison, the board includes the county assessor/collector as an ex-officio member and the collector/assessors office is part of the county appraisal district. Five staff members work in assessment and collections.
Exhibit 1 outlines the district's organization.
Scope of Office
The Board of Directors has no authority to set values or appraisal methods, which are the responsibility of the chief appraiser and, in the case of values, if appealed, the appraisal review board. The chief appraiser carries out the appraisal district's legal duties, hires the staff, makes the appraisals and operates the appraisal office.
The appraisal district is responsible for appraising 151,184 parcels of real, mineral and personal properties located within the boundaries of the district. This includes 98,570 mineral property accounts and 2,913 parcels of business personal property and 49,701 parcels of real property.
The district provides appraisal services for thirteen taxing units, Harrison County, Karnack Independent School District, Marshall Independent School District, Waskom Independent School District, Hallsville Independent School District, Harleton Independent School District, City of Hallsville, Elysian Fields Independent School District, City of Waskom, City of Marshall, Harrison County Emergency Services District #1, Harrison CAD Emergency Services District #2, and Harrison County Emergency Services District #4.
Exhibit 2 presents the types of properties appraised by Harrison 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 ARS. The contract for appraisal services calls for payments by the appraisal district each quarter. The chief appraiser receives the bill and is responsible for insuring the services are provided. The chief appraiser makes issues the check and the check is cosigned by the chairman of the board of directors.
Exhibit 2
Harrison CAD Property by Category Summary with Assigned Responsibility
Tax Year 2003
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: Harrison CAD Appraisal District. 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 independent school district self reports to estimate 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 below.
Exhibit 3
Reported Data On Parcels, Categories Staffing, Training And Operations
Comparison to State and Group Averages
General Information Harrison State Avg. Group Avg. Parcel Size Group (by number of locally appraised parcels) 50,000 - 74,999 Estimated # Locally Appraised Parcels 54,947 55,463 60,639 # Taxing Units 13 15 15 Locally Appraised Parcels to Staff 3,232 3,404 3,061 2003 Composition by Percentage
of Value (Self Report):Harrison State Avg Group Avg. Residential Value 31.2% 52.6% 49.8% Non-Residential, Non Mineral 58.1% 43.6% 46.6% Non-Residential, Mineral 10.7% 3.7% 3.6% 2003 Composition by Account Category Type (Operations Survey): Real Property 49,701 45,804 54,655 Mineral Property 98,570 13,536 24,213 Business Personal Property 2,913 4,689 3,715 Individual Personal Property 0 1,342 1,291 Total Accounts 151,184 65,372 83,874 2003 Composition by Locally Appraised Parcel Category (Estimated from Self Report): Harrison State Avg Group Avg. Parcel Type # Parcels % of Parcels A 20,269 36.9% 44.1% 42.4% B 298 0.5% 1.0% 1.1% C 9,632 17.5% 13.1% 17.0% D 14,377 26.2% 24.7% 18.2% E 2,035 3.7% 4.5% 7.3% F1 1,549 2.8% 3.1% 3.6% L1 2,564 4.7% 5.7% 5.3% M1 3,785 6.9% 2.2% 3.8% O 377 0.7% 1.4% 1.2% S 61 0.1% 0.1% 0.1% Total 54,947 100.0% 100.0% 100.0% PTD estimated that Harrison CAD staff are responsible for appraising about 54,947 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 Harrison are Hood, Orange and Starr. The number of parcels per staff member for Harrison CAD was 3,232. Hood CAD's parcels to staff was 2,809, Orange CAD was 3,399 and Starr was 3,225. 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.
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 (cont.)
Financial and Staffing
Information (Operations Survey)Harrison State Avg. Group Avg. 2003 Budget $1,082,250 $1,079,695 $1,091,303 2003 Surplus $0 $71,620 $60,399 2003 Surplus as % of Budget 0.0% 6.6% 5.5% 2004 Budget $1,082,250 $1,104,961 $1,138,380 % Change in Budget 0.0% $0 4.3% 2004 Budget per Total Parcel $19.70 $17.41 $14.22 Staffing Full Time 17 18 20 Part Time * 2 2 Supervisory 3 3 4 Programmers * 2 1 Supervisory to Staff Ratio 1:6 1:5 1:5 Chief Appraiser Performs Appraisals? Yes 2004 Total Compensation $75,173 $53,564 $69,633 Appraisers Full - Time 7 8 7 Part - Time * 0 2 Salary Range: Low $24,150 $24,504 $27,191 High $41,500 $37,521 $46,557 Training Budget $4,150 $8,832 $9,554 # Registered with BTPE (1) 10 9 11 Types of BTPE Certification: RPA (2) RTA (3) RTC (4) All 10 0 0 3 Reappraisal Last Year of Reappraisal 2003 Next Year of Reappraisal 2004 Type of Appraisal: Complete Method of Appraisal: Combination Protests 27 3,131 1,761 Protests per Parcel 0.0% 4.7% 2.2% Consolidated Collection Yes Collection Budget $206,900 Geographic Information System (GIS)? Yes Percent GIS Complete 63% 80% 90% Board of Directors Members 6 6 6 Tax Assessor Votes? Yes Elected Members 4 3 2 Note: An asterisk (*) is shown where data was not reported.
Source: Harrison 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.1.3
Self Evaluation QuestionnaireIn preparation for the Appraisal Standards Review, Harrison CAD was requested to 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 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 IAAO self-assessment questionnaire was provided with the IAAO self assessment guide. In the guide's introduction, it stated
The 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 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.
Chapter 1: Setting, Legal Framework, Value Standard and Assessment Cycle.
The district's answers in this chapter indicated to the reviewer that the district understands some of the legal framework, value standard and assessment cycles required of the appraisal district. According to the answers to the questions on how the office keeps current with legislative proposals, laws, and court decisions the district uses current copies of the Tax Code, Laws and Comptroller rules along with court decisions and Attorney General Opinions. The second question on uniformity was answered with a yes. The district did not answer question number three on the measures in the law that support the current market standard and what matters undercut the standard which shows some need to review the law and current standards. Question number four on size and resources was answered with a yes.
Chapter 2: Resources and Management
The district's answers to chapter 2 are all yes with the exception of question number four; however they do indicate that the district is satisfied with the budget process, personnel training, management, organization, training and current skill level of the staff. Question number five on adequate funding was not answered.
Chapter 3: Computerization
The answers to Chapter 3 were all answered with a yes and only gave an indication that the district was satisfied with the current system.
Chapter 4: Mapping
The answers to all questions in chapter 4 were answered with a yes, which indicates to the reviewer that the district is satisfied with the current mapping system.
Chapter 5: Data Collection
The answers in chapter 5 show that the district knows what data is required by Comptroller rules, state law, and appraisal standards. They are stating that they collect and use the data in the assessment process.
Chapter 6: Land Evaluation
The answers to questions 3, 4, 9, and 11 were not answered at all and all the other questions were answered with a yes. The indication was that the district was unsure how to answer the question regarding this process.
Chapter 7: Residential Property Valuation
The answers to the questions in chapter 7 were all answered with a yes indicating that the district knows what needs to be done in the appraisal process for residential properties.
Chapter 8: Commercial Property Valuation
No answers to questions 2, 5, and 10, in chapter 8 were given which indicates that the district is unsure of the process. All the other questions were answered with a yes and reflect that the district believes it follows some of the accepted standards and the published requirements of data collection and appraisal reflected in Texas statutes, appraisal standards and Comptroller rules.
Chapter 9: Sales Data, Ratio Studies, and Stratification
The answers to chapter 9 indicate the district follows some of the accepted procedures for gathering sales data and doing ratio studies using stratification, however the questions that were left unanswered also indicate that the district may not be following the accepted procedures.
Chapter 10: Personal Property Assessment
The answers in chapter 10 are all answered yes except for question number 10 on using the income approach on leased equipment. The answers indicate to the reviewer that the district follows the accepted procedures for discovery, and appraisal of personal property with the exception of leased personal property.
Chapter 11: Assessment Administration
The district answered all questions with a yes in this chapter indicating that the district believes it is following the accepted practices of assessment administration in the Comptroller rules and the International Association of Assessing Officers standards.
Chapter 12: Defense of Values
Chapter 12 answers on defense of values were confusing as the first answer was a no and should have been a yes. The remaining questions were all answered with a yes indicating the district follows the accepted standards of the Comptroller, and International Association of Assessing Officers standards.
Chapter 13: Public Relations
The answers in chapter 13 were one no and the rest yes indicating that the district believes it has an effective 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 Texas. With a few notable exceptions, all County Appraisal Districts (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 CAD 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, productivity 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 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. 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, and reporting directly to the Comptroller. The hearings examiner is not an employee of the PTD.
When conducting the PVS, PTD assigns properties to various categories, such as residential, commercial and rural property. Properties are divided into categories so that similar properties are assessed together.
Harrison CAD did not protest the preliminary findings for any Independent School District (ISD). None of the school districts protested the findings of the preliminary study. The district did not request a formal hearing and the results became final in June 2004.
A review of the school districts in the county indicates that Harrison CAD typically appraises single-family residences and rural residences below the market value determined by the PTD. In the 2003 PVS Waskom, Hallsville, Harleton, and Elysian Fields ISD's values fell outside the study's statistical margin of error. Single-Family Residences (category A), and Non-Qualifying Acres and Farm and Ranch Improvements (D2) appears to be the primary reason that the school's values are not within the acceptable range determined by the PVS.
The other school districts within Harrison County are Karnack and Marshall ISDs and both received valid findings.
There are four property categories tested in Waskom ISD: (1) category A, Single-Family Residences, making up 24.6 percent of the district's value with a weighted mean ratio of 0.9259; (2) category D, Rural Real, making up 6.6 percent of the district's value with a weighted mean ratio of 0.9533; (3) category G, Minerals, making up 35.2 percent of the district's value with a weighted mean ratio of 0.9644; and (4) category J, Utilities, making up 6.5 percent of the district's value with a weighted mean ratio of .9859. 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.
Waskom ISD's category A, Single-Family Residences, makes up 37 percent of the tested value and received a weighted mean ratio of 0.9259. Because this category contains almost 25 percent of the total property value in this district, the low ratio in the category A helped to drop the district outside the margin of error causing the school district to be identified as eligible. The primary concern for this school district should be the single-family residences that are in the value range of about $15,000 to $50,000 as they were assessed at only 76 percent of the market value.
There are four property categories tested in Hallsville ISD: (1) category A, Single-Family Residences, making up 21.8 percent of the district's value with a weighted mean ratio of 0.954; (2) category D, Rural Real, making up 3.8 percent of the district's value with a weighted mean ratio of 0.6204; (3) category G, Minerals, making up 2.7 percent of the district's value with a weighted mean ratio of 0.998; and (4) category L1, Commercial Personal, making up 2.2 percent of the district's value with a weighted mean ratio of .9851.
Hallsville ISD's rural land and improvement values (category D) are appraised below market value, and is 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 as 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. Hallsville's subcategory D1 makes up 16.5 percent of category D's value and 2 percent of the tested value. D1 received a weighted mean ratio of 0.9395. Subcategory D2, however, makes up 83.5 percent of category D's value and 11 percent of the school district's total tested value. D2 received a weighted mean ratio of 0.5814. The appraisal district valued these properties from 19.95 to 104.6 percent of their adjusted selling price (market value). The low ratio in the D2 subcategory helped to drop the district outside the margin of error causing the school district to be identified as eligible.
There are three property categories tested in Harleton ISD: (1) category A, Single-Family Residences, making up 33 percent of the district's value with a weighted mean ratio of 0.9553; (2) category D, Rural Real, making up 20.6 percent of the district's value with a weighted mean ratio of 0.8895; and (3) category G, Minerals, making up 24.2 percent of the district's value with a weighted mean ratio of 0.9985.
Harleton ISD's rural land and improvement values (category D) is appraised below market value, and is the primary reason that the school's values are not within the acceptable range determined by the study. Harleton's subcategory D1 makes up 36 percent of category D's value and 10 percent of the tested value. D1 received a weighted mean ratio of 1.3207. Subcategory D2, however, makes up 64 percent of category D's value and 17 percent of the school district's total tested value. D2 received a weighted mean ratio of 0.7517. The appraisal district valued these properties from 51 to 118 percent of their adjusted selling price (market value). The low ratio in the D2 subcategory helped to drop the district outside the margin of error causing the school district to be identified as eligible.
Three of the four tested categories in Elysian Fields ISD contributed to an invalid finding: (1) category A, Single-Family Residences, making up 31.2 percent of the district's value with a weighted mean ratio of 0.8922; (2) category D, Rural Real, making up 19.2 percent of the district's value with a weighted mean ratio of 0.9347; and (3) category J, Utilities, making up 6.2 percent of the district's value with a weighted mean ratio of 0.9023. Only category G, Minerals, making up 34.4 percent of the district's value with a weighted mean ratio of 1.0026 was valid.
Elysian Fields ISD's category A, Single-Family Residences, makes up 37 percent of the tested value and received a weighted mean ratio of 0.8922. Because this category contains almost 31 percent of the total property value in this district, the low ratio in the category A contributed to dropping the district outside the margin of error and causing the school district to be identified as eligible. The primary concerns for this category of single-family residences are in the properties valued below $110,000 as they were assessed below market value.
Elysian Fields ISD's rural land and improvement values (category D) are appraised below market value. This is a contributing factor in the school's values not being within an acceptable range as determined by the study. Elysian Fields subcategory D1 makes up 40.2 percent of category D's value and 9 percent of the tested value. D1 received a weighted mean ratio of .8366. Subcategory D2, however, makes up 59.8 percent of category D's value and 14 percent of the school district's total tested value. D2 received a weighted mean ratio of 1.0145. The low ratio in the D1 subcategory helped to drop the district outside the margin of error causing the school district to be identified as eligible.
Elysian Fields ISD's utility values (category J) are also appraised below market value. Yet, due to the low value in the category, it is not a major factor in contributing to the school's values not being within an acceptable range as determined by the study. 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. Elysian Fields category J makes up 7 percent of the tested value. Category J received a weighted mean ratio of .9023 and is only 6 percent of the school district's value.
There are three property categories tested in Karnack ISD: (1) category A, Single-Family Residences; (2) category D, Rural Real; and (3) category G, Minerals. All three tested categories fell within the margin of error.
While Marshall ISD's findings were valid, two categories are being under appraised and below the margin of error. Rural land and improvement values (category D) are appraised below market value. Marshall's subcategory D1 makes up 28.1 percent of category D's value and 2 percent of the tested value. D1 received a weighted mean ratio of .9267. Subcategory D2, however, makes up 71.9 percent of category D's value and 5 percent of the school district's total tested value. D2 received a weighted mean ratio of .8296. The weighted mean ratio for category D was .8547. The other category below the margin of error is category F1, Commercial Real, which received a weighted mean ratio of .9023 and is 9 percent of the school district's total tested value.
In summary, the Harrison CAD needs to focus its energies on category A residences and, subcategory D2, valuation of rural homes and land. This reinforces the study's findings that primarily homes throughout the county are being assessed below market value. The appraisal district needs to review their appraisal procedures and methodology in category A, and the portion of category D that is not qualified for special agricultural use appraisal (D2) to determine why it is consistently under appraising these properties.
For a statistical explanation of why the district was selected as eligible, see Appendix 24.
