Chapter 1
Overview of County Appraisal District
1.1
County History and Demographics
According to The Handbook of Texas, Henderson County was founded in April 1846, and named in honor of James Pinckney Henderson, the first governor of Texas.
Henderson County is located between the Neches and Trinity Rivers in East Texas. Athens, the largest city and the county seat, is about 60 miles southeast of Dallas on U.S. Highway 175. Two lakes are partly in the county: Cedar Creek Reservoir and Lake Palestine.
The 2004 county population, according to the Texas State Data Center, was 73,277, with the city of Athens having 11,297 residents; the city of Tool, 2,275 residents; the city of Malakoff, 2,257 residents; the city of Chandler, 2,099 residents; and the city of Trinidad having 1,091 residents. The county's remaining population resides in a variety of small towns and unincorporated areas.
The county includes the Athens, Brownsboro, Crossroads, Eustace, Malakoff, Trinidad, Murchison and La Poynor ISDs, as well as a portion of the Mabank ISD.
1.2
Appraisal District Organization
and Staffing
Henderson CAD was formed in 1981 and became active in 1982. As of January 2006, Henderson CAD had a total of 23 full-time staff positions, with four supervisory positions. The CAD has one vacant appraiser position. Of current staff, eight positions are full-time appraisers. Exhibit 1 presents the appraisal district's current organization chart.
The CAD contracts with a private vendor for professional appraisal services on mineral, utility and industrial appraisals. The Henderson CAD board of directors has no authority to set values or determine appraisal methods under Property Tax Code Sections 6 and 25.01. The chief appraiser carries out the CAD's legal duties, hires its staff, makes appraisals and operates the appraisal office.
Henderson CAD provides appraisal services for 27 taxing units (Exhibit 2).
Exhibit 2
Henderson CAD Taxing Units
| Name of Taxing Entity |
|---|
| Henderson County |
| Athens Independent School District |
| Brownsboro Independent School District |
| Cross Roads Independent School District |
| Eustace Independent School District |
| Mabank Independent School District |
| Malakoff Independent School District |
| Trinidad Independent School District |
| Murchison Independent School District |
| La Poynor Independent School District |
| City of Brownsboro |
| City of Eustace |
| City of Malakoff |
| City of Trinidad |
| City of Athens |
| City of Enchanted Oakes |
| City of Chandler |
| City of Star Harbor |
| City of Tool |
| City of Log Cabin |
| Henderson County Levee District #3 |
| Trinity Valley Community College District |
| Athens Municipal Water Authority |
| Henderson County Emergency Services District #1 |
| Henderson County Emergency Services District #2 |
| Henderson County Emergency Services District #3 |
| Henderson County Emergency Services District #4 |
Source: Henderson CAD, 2005.
Most appraisal districts contract out some work to private firms. The Henderson CAD appraises all categories of properties in-house, with the exception of mineral, utility and industrial, which it contracts with a private vendor. 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 combining 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 appraisal district parcel counts by categories of properties. It compares the appraisal district's data with the state and group averages. For analytical purposes, PTD groups appraisal districts according to the number of parcels. The Henderson CAD is included with appraisal districts with 75,000 to 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 | Henderson | State Average | Group Average |
|---|---|---|---|
| Estimated Number Locally Appraised Parcels | 90,073 | 49,497 | 102,421 |
| Number Taxing Units | 27 | 15 | 23 |
| Estimated Locally Appraised Parcels per Staff | 3,916 | 2,985 | 3,037 |
Composition by Percentage of Value (Self Report):
| Parcels and Categories | Henderson | State Average | Group Average |
|---|---|---|---|
| Residential Value | 57.9% | 51.3% | 52.0% |
| Non-Residential, Non Mineral | 35.1% | 45.0% | 45.3% |
| Non-Residential, Mineral | 6.9% | 3.7% | 2.7% |
Composition by Locally Appraised Parcel Category (Self Report):
| Parcel Type | Number of Parcels | Percent of Parcels | State Average | Group Average |
|---|---|---|---|---|
| A - Residential | 29,661 | 32.9% | 50.0% | 48.7% |
| B - Multi-Family | 152 | 0.2% | 1.2% | 1.2% |
| C - Vacant Lots | 33,094 | 36.7% | 14.7% | 19.1% |
| D - Agricultural2 | 13,661 | 15.2% | 14.4% | 11.6% |
| E - Farm and Ranch Improvement | 4,706 | 5.2% | 5.1% | 4.2% |
| F1 - Commercial Real | 1,783 | 2.0% | 3.4% | 3.6% |
| L1 - Commercial Personal | 2,755 | 3.1% | 6.8% | 6.9% |
| M1 - Mobile Homes | 2,991 | 3.3% | 2.5% | 2.8% |
| O - Residential Inventory | 1,211 | 1.3% | 1.8% | 1.6% |
| S - Special Inventory | 59 | 0.1% | 0.1% | 0.2% |
| Total | 90,073 | 100.0% | 100.0% | 100.0% |
*Note: Henderson CAD appraises a large number of vacant lots, which consume less time to appraise than many other types of property. The number of vacant lots inflates the parcel per staff; lack of staffing is not an issue in Henderson CAD.
Source: Malakoff and Mabank ISDs 2004 Self Reports, CAD Self Report and Comptroller 2004-05 Appraisal District Operations Report data and Comptroller comparative data for state and group averages from both appraisal and school district self reports and the Comptroller 2004-05 Appraisal District Operations Report data.
Exhibit 4 provides financial and staffing data for the Henderson CAD and how it fares with other appraisal districts throughout the state and with its group.
Exhibit 4
Reported Budget, Staffing and Training Data
Comparison to State and Group Averages
Financial and Staffing Information
| Financial Information | Henderson | State Average | Group Average |
|---|---|---|---|
| 2004 Budget | $1,190,523 | $1,108,158 | $2,105,659 |
| 2004 Surplus | $45,708 | $48,656 | $97,377 |
| 2004 Surplus as Percent of Budget | 3.8% | 4.4% | 4.6% |
| 2005 Budget | $1,207,960 | $1,150,302 | $2,266,100 |
| Percent Change in Budget | 1.5% | 3.8% | 7.6% |
| 2004 Budget per Total Parcel | $9.18 | $9.33 | $17.16 |
| 2004 Budget per PTD Estimated Locally Appraised Parcel | $13.22 | $22.30 | $20.56 |
| Staffing - 2004 Budget | Henderson | State Average | Group Average |
|---|---|---|---|
| Full-time | 23 | 17 | 34 |
| Part-time | 0 | 1 | 1 |
| Supervisory | 4 | 3 | 7 |
| Programmers | 0 | 1 | 12 |
| Supervisory to Staff Ratio | 1:6 | 1:5 | 1:5 |
| Chief Appraiser | Henderson | State Average | Group Average |
|---|---|---|---|
| Performs Appraisals? | No | ||
| 2004 Total Compensation - Actual | $75,000 | $52,557 | $84,476 |
| Appraisers - 2004 Budget | Henderson | State Average | Group Average |
|---|---|---|---|
| Full-time | 8 | 6 | 15 |
| Part-time | 0 | 0 | 0 |
| Salary Range: | |||
| Low | $24,350 | $25,476 | $25,512 |
| High | $47,021 | $38,313 | $54,985 |
| 2004 Training Budget | $2,500 | $9,140 | $16,886 |
| Number Registered with Board of Tax Professional Examiners | 12 | 8 | 16 |
Source: Comptroller 2004-05 Appraisal District Operations Report data.
Exhibit 5 provides operations information for the Henderson CAD, state and group.
Exhibit 5
Reported Operations Data
Comparison to State and Group Averages
Operations Information
| Reappraisal | Henderson | State Average | Group Average |
|---|---|---|---|
| Last Year of Reappraisal | 2004 | Not Applicable | Not Applicable |
| Next Year of Reappraisal | 2005 | Not Applicable | Not Applicable |
| Type of Reappraisal | Other | Not Applicable | Not Applicable |
| Method of Reappraisal: | Combination | Not Applicable | Not Applicable |
| Protests | Henderson | State Average | Group Average |
|---|---|---|---|
| Protests (2004 tax year | 3,145 | 3,164 | 4,242 |
| Protests per Estimated Locally Appraised Parcel | 3.0% | 6.0% | 0.0% |
| Collections | Henderson | State Average | Group Average |
|---|---|---|---|
| Consolidated Collection | No | Not Applicable | Not Applicable |
| Collection Budget | Not Applicable | Not Applicable | Not Applicable |
| Geographic Information System (GIS) | Henderson | State Average | Group Average |
|---|---|---|---|
| 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 | Henderson | State Average | Group Average |
|---|---|---|---|
| Members | 6 | 6 | 6 |
| Tax Assessor Votes? | No | Not Applicable | Not Applicable |
| Elected Members | 1 | 3 | 0 |
Source: Comptroller 2004-05 Appraisal District Operations Report.
Based on this comparison, the Henderson CAD appraised 3,916 parcels per full-time employee. The IAAO Standards state that the ratio of parcels per full-time employees 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 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 Henderson 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 received 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 Henderson CAD answered all 111 questions, providing yes or no responses. A summary of the self-assessment follows.
In responding to the self-assessment questionnaire, the Henderson CAD pointed to certain strengths. Among the identified strengths are a well-managed, conscientious staff and a sophisticated computerized appraisal system.
The CAD also indicated some areas of concern. These included the lack of automated-income data and software tools for analyzing commercial properties.
In Chapter 1, on legal issues and assessment cycles, the district indicated that it understands the legal framework of the Texas property tax system and has adequate resources to perform its duties.
In Chapter 2, on resources and management, the district indicated it engages in formal planning, its office space and funding are sufficient, it runs a well-organized and well-managed operation and its staff is quality-conscious concerning work.
In Chapter 3, on computerization, the district indicated that it has a sophisticated and secure computer system capable of being integrated with other applications, such as geographic information services, and maintains a Web site.
In Chapter 4, on mapping, the district indicated that its mapping system complies with IAAO standards and Comptroller rules, and is part of a geographic information system (GIS).
In Chapter 5, on data collection, the district indicated it did not use hand-held computers for data collection or have a computerized edit program. The district stated it inspects properties at least every four to six years and routinely collects income data on commercial properties.
In Chapter 6, on land valuation, the district indicated that it does not stratify land by zoning, use or location and does not analyze land sales in terms of value per unit. The district stated it makes adjustment to land values based on market analysis.
In Chapter 7, on residential property valuation, the district indicated that its residential cost schedules are market based and it runs sales ratio studies to support values. It also stated that its schedules are fully computerized.
In Chapter 8, on commercial property valuation, the district indicated it employs all three approaches to value and collects local income and expense data on commercial properties. The district stated it does not maintain automated income data or have special software to analyze sales, revenue and expense data.
In Chapter 9, on sales data, ratio studies and stratification, the district indicated that sales are property screened, time adjusted when necessary, and ratio studies are used in planning and determining reappraisal priorities.
In Chapter 10, on personal property assessment, the district indicated it inspects business personal property, delivers rendition forms to property owners and employs the appropriate appraisal method in appraising personal property.
In Chapter 11, on assessment administration, the district indicated appraisal records are updated in a timely manner, and property owners are notified of changes in their appraised values and their right to appeal the changes.
In Chapter 12, on defense of values, the district indicated that it encourages informal resolution of taxpayer protests, has a process for documenting formal appeals and, when necessary, obtains independent appraisal reviews.
In Chapter 13, on public relations, the district indicated it keeps the public informed and its appraisal records accessible.
1.4
Findings of the Property Value Study
The PVS determines the total property value in each school district in the Henderson CAD. With a few notable exceptions, all CADs and PTD are required by law to appraise property at market value, according to Government Code Section 403.302 and Property Tax Code Section 23.01. Agricultural land and timberland are appraised according to productivity value. Market value is the price at which a property would sell under normal conditions, as defined by Property Tax Code Section 1.04(7).
The CAD determines the local tax roll value, or local value, and submits it to PTD in its annual self-report. School districts also complete an annual self-report. PTD staff estimates the total taxable value in a school district, referred to as the state value, by determining market value or by accepting the local appraised value as reported by the school district in each property category. These category values are then added 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 disabled homeowners and those over age 65 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. 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, a conference between PTD staff and CAD representatives or a formal hearing. The Comptroller's general counsel appoints a hearings examiner who holds formal hearings. The hearings examiner is not a PTD employee.
When conducting the property value study, PTD assigns properties to various categories such as residential, commercial and rural property. PTD divides properties into categories so it can appraise like properties together.
In general, a ratio of between 0.95 and 1.05 in any property category makes it more likely that the CAD is appraising property within the margin of error or that it is appraising property at or near market value.
A review of the school districts in the county indicates that Henderson CAD is appraising single-family residences (category A) below market value and qualified acreage (sub-category D1) above market value as determined by PTD.
In the 2004 PVS, Malakoff and Mabank (identified as eligible) school districts fell outside the study's statistical margin of error. Single-family residences (category A) and rural residences (subcategory D2) are the primary reasons that the school districts' values are not within the acceptable range determined by the study.
Eligible School Districts
Malakoff and Mabank were identified as eligible districts with values outside of the confidence interval limit. The confidence interval is a range of school district values the Comptroller has accepted.
Three property categories were tested in Malakoff ISD: (1) Category A, Single-Family Residential; (2) Category C, Vacant Lots or Unimproved Land; and (3) Category D, Rural Real.
A review of Category A properties indicates that the district appraised from as low as 45 percent to a high of 235 percent of market value, with a weighted mean ratio of 0.9200. Category A comprises 77 percent of the district's value and 87 percent of the tested value.
Malakoff formally appealed Category A.
Four property categories were tested in Mabank ISD: (1) Category A, Single-Family Residential; (2) Category D, Rural Real; (3) Category F1, Commercial Real Estate; and (4) L1 Commercial Personal Property.
A review of Category A properties indicates that the district appraised from as low as 43 percent to a high of 242 percent, with a weighted mean ratio of 0.9030. Category A makes up 61 percent of the district's value and 70 percent of the tested value.
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, 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 in an open-market transaction.
The appraisal district is placing a below-market value on Subcategory D2, Rural Residences. A review of the subcategory D2 properties indicates that the district appraised from as low as 23 percent to a high of 280 percent of market value, with a weighted mean ratio of 0.8730. Subcategory D2 makes up 8 percent of the district's value and 9 percent of the tested value.
Mabank formally appealed Category A.
Other School Districts
There are seven other school districts in the Henderson CAD. They are Athens, Brownsboro, Cross Roads, Eustace, Trinidad, Murchison and La Poynor. These seven school districts were within their respective confidence interval limits.
Henderson CAD Summary
In summary, the Henderson CAD overall median ratio is 0.99.
Nevertheless, there are wide ranges within these categories. For example: In Category A, the ratios range from 43 percent to 242 percent, with a median ratio of 98 percent.
In Category D2, the ratios range from 23 percent to 280 percent, with a median ratio of 100 percent.
In Category F1, the ratios range from 69 percent to 199 percent, with a median ratio of 100 percent.
In Category G, the ratios range from 63 percent to 110 percent, with a median ratio of 99 percent.
In Category J, the ratios range from 34 percent to 170 percent, with a median ratio of 96 percent.
In Category L1, the ratios range from 42 percent to 151 percent, with a median ratio of 100 percent.
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 IAAO in Property Appraisal and Assessment Administration, a low COD indicates that appraisals within a category of property are uniform, and a high COD indicates inconsistent appraisal of properties as a percentage of market value. A very low COD, however, could indicate sales chasing, which is the practice of using the sale of a property to trigger a change in appraised value of that property to (or near) the property's selling price. In contrast, the appraised value of unsold property is not changed. The practice of sales chasing may cause invalid findings in ratio studies like the PVS. In addition, in the IAAO's Standard on Ratio Studies, Category A, Single-Family Residential, should generally be 15 or less, and for new and homogeneous areas, 10 or less. For Category C, Vacant Lots, the COD should be 20 or less, and for income-producing properties, the COD should be 20 or less. For other real property and personal property, CODs should reflect the nature of the properties, market conditions and the availability of reliable market indicators.
In Malakoff ISD the coefficient of dispersion (COD) for Category A was 21.93 and for Category C was 33.32 in 2004. This means there was a high degree of variability and a lack of uniformity in appraisals in these in categories. In Mabank ISD, the COD in Category A was 24.61 and 39.49 for Category D3.