Overview of County Appraisal District
County History and Demographics
According to the Handbook of Texas, Mason County was formed in 1858 and was formed from parts of the original Bexar County.
Mason County is in central Texas surrounded by Gillespie, Llano, San Saba, McCulloch, Menard and Kimble counties. Mason County was named for Fort Mason, established in 1851.
Livestock and livestock products account for the majority of agricultural income. Mineral resources include granitic quartz, feldspar, iron, lead, manganese and topaz.
The population of the county for 2003, according to the County Information Project, was 3,777 residents. The county comprises 935 square miles of usually rolling to steep terrain covered with grasses, scrub brush, creosote bush, cacti, and hardwoods such as live oak, mesquite and Ashe juniper.
According to the County Information Project, the median per capita income is $30,418, and 17.5 percent of the population lives at or below the poverty level.
Mason, the county's largest town is also the county seat.
The county has one school district: Mason Independent School District.
Appraisal District Organization and Staffing
The appraisal district was formed in 1981 and became active in 1982. Mason CAD has a total of four full time staff with one supervisory position. The district contracts with Pritchard & Abbott in 2005 and 2006 for professional appraisal services on mineral and industrial appraisals.
Exhibit 1 outlines the Mason CAD organization.
Scope of Office
The Board of Directors has no authority to set values or appraisal methods. The chief appraiser carries out the appraisal district's legal duties, hires the staff, makes the appraisals and operates the appraisal office.
The district provides appraisal services for four taxing units: Mason County, Mason Independent School District, City of Mason, and Hickory Underground Water Conservation District #1.
Exhibit 2 presents the types of properties appraised by Mason CAD in tax year 2003. In-house staff handles all property categories except Category F2/L2 (industrial - real/personal), which is appraised by P&A.
Mason 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 Contracted Appraisal Firm Category L2 Industrial Personal Contracted Appraisal Firm Source: Mason County Appraisal District, March, 2005.
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.
Reported Data On Parcels, Categories Staffing, Training And Operations
Comparison to State and Group Averages
General Information Mason State Avg. Group Avg. Parcel Size Group (by number of locally appraised parcels) 10,000 - 14,999 Estimated # Locally Appraised Parcels 10,872 55,463 12,441 # Taxing Units 4 15 7 Locally Appraised Parcels to Staff 2,718 3,404 2,615 2003 Composition by Percentage
of Value (Self Report):
Mason State Avg. Group Avg. Residential Value 14.8% 52.6% 17.7% Non-Residential, Non Mineral 85.2% 43.6% 54.8% Non-Residential, Mineral 0.0% 3.7% 27.5% 2003 Composition by Account
Category Type (Operations Survey):
Real Property 10,401 45,804 13,246 Mineral Property 0 13,536 13,245 Business Personal Property 297 4,689 649 Individual Personal Property 736 1,342 312 Total Accounts 11,434 65,372 27,451 2003 Composition by Locally Appraised Parcel Category (Estimated from Self Report): Mason State Avg. Group Avg. Parcel Type # Parcels % of Parcels A 1,033 9.5% 44.1% 26.1% B 1 0.0% 1.0% 0.3% C 551 5.1% 13.1% 15.3% D 6,610 60.8% 24.7% 36.1% E 2,129 19.6% 4.5% 12.5% F1 221 2.0% 3.1% 3.4% L1 283 2.6% 5.7% 3.7% M1 42 0.4% 2.2% 1.9% O 0 0.0% 1.4% 0.3% S 2 0.0% 0.1% 0.5% Total 10,872 100.0% 100.0% 100.0%
PTD estimated that Mason CAD staff are responsible for appraising about 10,872 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 Mason are Archer and McCulloch. The number of parcels per staff member for Mason CAD was 2,718; Archer CAD was 3,434 and McCulloch was 2,991. Of course workloads in appraisal districts may vary, sometimes drastically, due to any number of considerations other than parcel count.
Exhibit 3 includes reported data concerning CAD and state and group averages.
Reported Data On Parcels, Categories Staffing, Training And Operations
Comparison to State and Group Averages (continued)
Financial and Staffing
Information (Operations Survey)
Mason State Avg. Group Avg. 2003 Budget $165,503 $1,079,695 $273,141 2003 Surplus $40,000 $71,620 $15,867 2003 Surplus as % of Budget 24.2% 6.6% 5.8% 2004 Budget $172,505 $1,104,961 $281,073 % Change in Budget 4.1% $0 2.9% 2004 Budget per Total Parcel $15.87 $17.41 $10.94 Staffing Full Time 4 18 5 Part Time * 2 1 Supervisory 1 3 2 Programmers * 2 1 Supervisory to Staff Ratio 1:4 1:5 1:3 Chief Appraiser Performs Appraisals? Yes 2004 Total Compensation $31,500 $53,564 $44,270 Appraisers Full - Time 1 8 2 Part - Time 1 0 1 Salary Range: Low $17,275 $24,504 $24,638 High $17,275 $37,521 $28,640 Training Budget $13,000 $8,832 $4,153 # Registered with BTPE (1) 2 9 4 Types of BTPE Certification: RPA (2) RTA (3) RTC (4) All 0 0 0 0 Reappraisal Last Year of Reappraisal 2003 Next Year of Reappraisal 2004 Type of Appraisal: Cyclical Method of Appraisal: In House Protests 12 3,131 113 Protests per Parcel 0.1% 4.7% 0.4% Consolidated Collection Yes Collection Budget $17,648 Geographic Information System (GIS)? Yes Percent GIS Complete * 80% 84% Board of Directors Members 5 6 6 Tax Assessor Votes? * Elected Members 2 3 3 Note: An asterisk (*) is shown where data was not reported.
Source: Mason 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 preparation for the Appraisal Standards Review, Mason 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 question 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.
Mason County answered 108 out of 110 questions, mostly in the affirmative were appropriate. The district elaborated on some, but not all answers.
In Chapter 1, on legal issues and assessment cycles, the district noted that it attends seminars, conferences and workshops, as well as subscribing to TAAO and TAAD publications, to try and stay current on laws and legislation effecting appraisal issues. The district felt they did not have adequate resources to perform their duties, however, they noted that "we are trying." The chief appraiser also said felt they were making progress despite their inexperience.
In Chapter 2, on resource management, the district noted its office funding is insufficient, that the office has had management problems in the past that the current management is trying to overcome and that the district does not engage in any formal planning.
Chapter 3, on computerization, and Chapter 4, mapping, the district answered all but two questions in the affirmative, but noted it does not have a website for the public to access. The district noted it was having trouble with its maps and problems with updating them in a timely manner.
In Chapter 5, data collection, the district noted it did not use hand held computers for data collection. The district noted it has no experienced commercial property appraisers and it has no program for collecting data on apartment buildings, retail stores, office buildings or other commonly leased property. The chief appraiser noted that the county does not have apartment buildings that are not government subsidized and that the county's retail stores and office buildings are largely operator owned.
Land Evaluation, Chapter 6, the district noted it does not have a geographic information system and it is not linked to its appraisal system. In Chapters 7, 8, and 9, on residential property valuation, commercial property valuation, and sales data, respectively, sales ratios are not analyzed and its depreciation schedules are not based on sales analysis. The district does little in regards to setting values for business property and uses no specialized software to help it value commercial property. The district noted it does not use ratio studies in planning for reappraisal.
In Chapter 10, on personal property assessment, the district noted it uses several methods to identify personal property such as state vehicle registration, federal income tax returns, newspapers, Internet, the chamber of commerce, personal information and renditions.
In Chapter 11, on assessment administration, the district noted that while it does not send notices to property owners concerning the reason for changes in value, the district does publish articles in the local paper when broad changes to value are made. The district noted in Chapter 12, defense of values, that taxpayers are encouraged to talk to district staff about complaints prior to going to a formal appeal.
In public relations, Chapter 13, the district answered affirmatively to all the questions and stated it had an active public relations program, but informal.
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. With a few notable exceptions, all CADs and the Property Tax Division (PTD) are required by law to appraise property at market value. Agricultural land and timberland are appraised according to productivity value. Market value, in short, is the price that a property would transfer from a willing seller to a willing buyer. For it to be a market transaction, neither party may be under duress to buy or sell, the sale must be on the market for a reasonable time and the parties to the sale are not related.
Local tax roll value, or local value, is determined by the county appraisal district and submitted to PTD on its annual self-report. The PTD staff estimates the total taxable value in a school district, referred to as state value, by determining market value or by accepting the local appraised value in each property category (see Exhibit 2) in the district and then adding these category values for an overall school district value. PTD then deducts state-mandated homestead exemptions, disabled veterans' exemptions, value limitations, reinvestment zones, freeport exemptions, the loss between market value and productivity value appraisal of qualified agricultural lands, the school tax ceiling for homeowners over age 65 or disabled and other state-mandated exemptions.
PTD issues a preliminary and final PVS each year. School districts and county appraisal districts may protest the findings of the preliminary PVS through an administrative hearings process with the Comptroller, and school districts may protest the findings of the final PVS in district court. The administrative hearings process requires the protester to file a written protest with supporting documentation within 40 days of the issuance of the preliminary PVS. 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 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.
Mason ISD hired Steve Kyzar and Associates to protest the findings of the PVS. The district protested through the written informal hearings process. Staff made an initial determination on the protest and the district requested an additional review. Staff recommendations and revised recommendations were issued. The district did not go to a formal hearing.
In Mason ISD, Mason CAD ultimately reported the local value for property categories in Mason to PTD as $151,113,747. The state value was calculated as $177,945,646. For the local reported value to be correct, it needed to be within plus or minus 5 percent of the state test value. That range was between $167,897,197 and $199,426,657 (see Appendix 14). The local test value was $152,494,228. The local value fell a little more than $16,783,450 below the lower range, establishing the local value as invalid. This finding and the fact that Mason ISD had local value in the 2001 and 2002 Property Value Studies, established Mason ISD as an eligible school.
A review of the one school district in the county indicates that Mason County Appraisal District typically appraises single-family residences, rural residences, and commercial real estate below the market value determined by the Property Tax Division (PTD). In the 2003 Property Value Study (PVS) Mason Independent School District's values fell outside the study's statistical margin of error. Category A and category D2, primarily single-family residences and rural homes, appears to be the primary reason that the school's values are not within the acceptable range determined by the study.
There are three property categories tested in Mason ISD: (1) category A, Single-Family Residences, making up 25 percent of the districts value with a weighted mean ratio of .9000; (2) category D, Rural Real, making up 54.2 percent of the districts value with a weighted mean ratio of .8717; and (3) category F1, Commercial Real, making up only 6.6 percent of the districts value with a weighted mean ratio of .9311. In general, a ratio of between .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.
Mason ISD's category A, Single-Family Residences, makes up 28 percent of the tested value and received a weighted mean ratio of .9000. Because this category contains about 25 percent of the total property value in this district, the low ratio in the A category contributes to dropping the district outside the margin of error and caused the school district to be identified as eligible.
Mason ISD's rural land and improvement values (Category D) is also 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 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. Mason ISD's subcategory D1 makes up 37.5 percent of category D's value and 24 percent of the tested value. D1 received a weighted mean ratio of 1.0393. Subcategory D2, however, makes up 62.5 percent of category D's value and 40 percent of the school district's total tested value. D2 received a weighted mean ratio of .7946. This indicates that the residences in the rural areas are also being under appraised.
Mason ISD's category F1, Commercial Real, is also below market value, but is not a primary reason for the school district to get an invalid value finding. Category F1 makes up only 8 percent of the tested value, and received a weighted mean ratio of .9311.
In summary, the Mason County Appraisal District needs to focus its energies on its valuation of category A, single-family residences, and category D2, rural homes. The Non-Qualifying Acres and Farm and Ranch Improvements D2, primarily rural homes, tested well below market value. 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.
In reviewing the study information, the chief appraiser noted, "these appraised values were a problem that I inherited. The problem was not that values were typically low; it was that values had not been updated in several years and the market was growing fast. I would also like to point out that after one full year as chief appraiser Mason ISD did get local value for 2004 and the ratio was 100 percent."
For a statistical explanation of why the district was selected as eligible, see Appendix 18.