Chapter 1
Overview of County Appraisal District
1.1
County History and Demographics
According to The Handbook of Texas, the Sixth Texas Legislature established McCulloch County from the Bexar District in 1856 and named it in honor of Benjamin McCulloch. Extensive settlement of McCulloch County began in the 1870s.
Located in the Edwards Plateau of Central Texas, 120 miles northwest of Austin, McCulloch County is the closest county to the geographical center of the state. Coleman and Brown counties, across the Colorado River, border McCulloch to the north. San Saba is east of McCulloch, Concho lies to its west and Mason and Menard counties border McCulloch to the south. Brady, the county seat and largest town, is at the intersection of U.S. highways 87, 190 and 377.
The county comprises 1,071 square miles. Elevations range from 1,350 to 2,000 feet above sea level. The surface of the land varies from rolling to hilly, sloping northward to the Colorado River and southward to the San Saba River. The land is mostly deep black loam soils in the valleys and dark and light sand in the county's high ground.
Farms and ranches dominate the county's land area. Livestock and livestock products, including cattle, sheep, wool, goats and mohair, are the county's primary revenue source. Corn, grain sorghums, barley, wheat, peanuts, cotton, berries, peaches, pecans and other fruits are the primary crops in McCulloch County. Cedar, post oak, live oak, mesquite and pecan trees are also important contributors to the local economy. Mineral resources such as coal, brick clay, sand and gravel are also abundant, with sand production and textile mills being the largest employers in the county.
The January 2006 estimated county population, according to the Texas State Data Center, was 8,134. The major population center of the county is Brady with a population of 5,514. The town of Melvin has a population of 148. The remainder of the population is in the unincorporated areas of the county, including the communities of Lohn and Rochelle.
McCulloch County includes the Brady, Rochelle and Lohn Independent School Districts.
1.2
Appraisal District Organization and Staffing
The state created McCulloch CAD in 1981 and it became active in 1982. As of February 2007, McCulloch CAD had a total of four full-time positions and a part-time staff position. A 9-1-1 assistant also offices with the CAD, but this position is funded by the Concho Valley Council of Governments. The CAD has one real property appraisal position and a business personal property appraisal position. Both appraisers assist with collections and other office duties when needed. For 2006, the real property appraisal position was unfilled and the chief appraiser handled real property appraisals. For 2007, the CAD hired a new field appraiser from Harris CAD. McCulloch CAD has a contract for professional appraisal services.
Exhibit 1 presents McCulloch CAD's current organization.
The McCulloch CAD board of directors has no authority to set values or determine appraisal methods under Property Tax Code Section 6.05. The chief appraiser carries out the appraisal district's legal duties, hires its staff, makes appraisals and operates the appraisal office.
McCulloch CAD provides appraisal services for eight taxing units (Exhibit 2).
Exhibit 2
McCulloch CAD Taxing Units
| Name of Taxing Entity |
|---|
| McCulloch County |
| Brady Independent School District |
| Rochelle Independent School District |
| Lohn Independent School District |
| City of Brady |
| City of Melvin |
| Heart of Texas Memorial Hospital District |
| Hickory Underground Water Conservation District #1 |
Source: McCulloch CAD Appraisal Roll Certifications, 2007.
PTD does not track appraisals performed by external appraisers. PTD uses parcel counts reported in the appraisal district's 2005 self-report and school district self-report.
PTD includes commercial real and personal property parcels in the calculation, since it cannot determine how many parcels the CAD assigns to the in-house staff versus contracted firms. PTD determined the number of parcels appraised in-house by adding the number of parcels reported in Categories A, Single-Family Residential; B, Multifamily Residential; C, Vacant Lots and Tracts; D1, Qualified Agricultural Land; D2, Non-qualified Land; E, Farm and Ranch Improvements; F1, Commercial Real Property; L1, Commercial Personal Property; M1, Mobile Homes; O, Residential Inventory; and S, Special Inventory.
Based on this comparison, McCulloch CAD appraised 3,026 parcels per full-time employee. The IAAO's publication, Property Chapter 16, Elements of Administration, Staffing Patterns and the Effect of Computerization recommends a ratio of 1,500 to 1,700 parcels per full-time employees for a small appraisal district. For a large appraising entity, these numbers typically 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 included here gives the reader some basis for comparison with other appraisal districts with similar parcel counts.
Exhibit 3 contains McCulloch CAD parcel counts by property category. It compares McCulloch CAD's data to the state and group averages. For analytical purposes, PTD groups appraisal districts according to the number of parcels. The McCulloch CAD is included with appraisal districts that have 10,000 - 14,999 parcels.
Exhibit 3
Reported Data on Parcels and Categories versus State and Group Averages
Parcel Size Group (by number of locally appraised parcels)
| Parcels and Categories | McCulloch | State Average | Group Average |
|---|---|---|---|
| Estimated Number Locally Appraised Parcels | 12,105 | 51,112 | 12,388 |
| Number Taxing Units | 8 | 15 | 8 |
| Estimated Locally Appraised Parcels per Staff | 3,026 | 2,971 | 2,468 |
Composition by Percentage of Value (Self-Report)
| Parcels and Categories | McCulloch | State Average | Group Average |
|---|---|---|---|
| Residential Value | 18.1% | 47.4% | 16.3% |
| Non-Residential, Mineral | 0.5% | 4.3% | 33.6% |
| Non-Residential, Non Mineral | 81.4% | 48.3% | 50.0% |
Composition by Locally Appraised Parcel Category (Self-Report)
| Parcels and Categories Parcel Type | McCulloch Number of Parcels | McCulloch Percent of Parcels | State Average | Group Average |
|---|---|---|---|---|
| A - Single-Family Residential | 2,766 | 22.9% | 50.2% | 27.8% |
| B - Multifamily Residential | 35 | 0.3% | 1.2% | 0.3% |
| C - Vacant Lots and Tracts | 1,357 | 11.2% | 14.3% | 14.9% |
| D - Qualified Agricultural Land | 5,070 | 41.9% | 14.3% | 35.2% |
| E - Farm and Ranch Improvements | 1,751 | 14.5% | 5.3% | 12.3% |
| F1 - Commercial Real Property | 376 | 3.1% | 3.5% | 3.4% |
| L1 - Commercial Personal Property | 545 | 4.5% | 6.8% | 3.8% |
| M1 - Mobile Homes | 195 | 1.6% | 2.6% | 2.0% |
| O - Residential Inventory | 0 | 0.0% | 1.8% | 0.3% |
| S - Special Inventory | 10 | 0.1% | 0.1% | 0.1% |
| Total | 12,105 | 100% | 100% | 100% |
Source: Texas Comptroller of Public Accounts, Appraisal District Operations Report (2005 and 2006 Data), September2006 and Appraisal District Self Report of Value, 2005.
Exhibit 4 provides financial and staffing data for the McCulloch CAD and compares them with other appraisal districts in its group and throughout the state.
Exhibit 4
Reported Budget, Staffing and Training Data versus State and Group Averages
Financial Information
| Financial and Staffing Information | McCulloch | State Average | Group Average |
|---|---|---|---|
| 2005 Budget | $216,365 | $1,144,025 | $290,100 |
| 2005 Surplus | $0 | $95,915 | $42,184 |
| 2005 Surplus as a Percent of Budget | 0.0% | 8.4% | 14.5% |
| 2006 Budget | $221,465 | $1,200,084 | $306,184 |
| Percent Change in Budget | 2.4% | 4.9% | 5.5% |
| 2005 Budget per Total Parcel | $17.61 | $21.96 | $22.30 |
| 2005 Budget per PTD Estimated Locally Appraised Parcel | $17.87 | $22.38 | $23.42 |
Staffing - 2005 Budget
| Financial and Staffing Information | McCulloch | State Average | Group Average |
|---|---|---|---|
| Full Time Equivalent (FTE) Employees | 4.0 | 17.2 | 5.0 |
| Supervisory | 2.0 | 3.3 | 1.7 |
| Supervisor to Staff Ratio | 1:2 | 1:6 | 1:3 |
Chief Appraiser
| Financial and Staffing Information | McCulloch | State Average | Group Average |
|---|---|---|---|
| Performs Appraisals? | Yes | ||
| 2005 Compensation (excluding benefits) | $39,000 | $52,766 | $43,446 |
Appraisers - 2005 Budget
| Financial and Staffing Information | McCulloch | State Average | Group Average |
|---|---|---|---|
| Appraiser Full Time Equivalent (FTE) Employees | 1.0 | 6.4 | 1.8 |
|
Salary Range: Low High |
$19,500 $19,500 |
$25,687 $39,505 |
$26,857 $31,004 |
| Training Budget | $4,000 | $9,267 | $5,597 |
| Number Registered with Board of Professional Tax Examiners (BTPE) | 3.0 | 9.1 | 3.5 |
Source: Texas Comptroller of Public Accounts, Appraisal District Operations Report (2005 and 2006 Data), September 2006.
Exhibit 5 provides operations information for the McCulloch CAD, state and group.
Exhibit 5
Reported Data versus State and Group Averages
Reappraisal
| Operations Information | McCulloch | State Average | Group Average |
|---|---|---|---|
| Last Year of Reappraisal | 2004 | N/A | N/A |
| Next Year of Reappraisal | 2007 | N/A | N/A |
| Type of Reappraisal | N/A | N/A | N/A |
Protests
| Operations Information | McCulloch | State Average | Group Average |
|---|---|---|---|
| Protests (2005 tax year) | 23 | 3,435 | 143 |
| Protests per Estimated Locally Appraised Parcel | 0.0 | 0.1 | 0.0 |
Collections
| Operations Information | McCulloch | State Average | Group Average |
|---|---|---|---|
| Consolidated Collection | Yes | N/A | N/A |
| Collection Budget | $4,000 | N/A | N/A |
Geographic Information System (GIS)
| Operations Information | McCulloch | State Average | Group Average |
|---|---|---|---|
| District Has or Plans to Purchase GIS? | No | N/A | N/A |
| Percent GIS Complete | 0.0% | 49.9% | 20.0% |
Source: Texas Comptroller of Public Accounts, Appraisal District Operations Report (2005 and 2006 Data), September 2006.
1.3
Self Evaluation Questionnaire
In preparation for this ASR, PTD asked McCulloch CAD 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 explaining each question and how to answer them. The McCulloch CAD answered 105 of the 111 questions, with most of the responses being yes or no. The guide is an evaluative instrument to help the appraisal district improve performance. The best way to accomplish this is through thorough responses to the questions. Simple yes and no answers do not provide the data necessary to analyze a CAD's effectiveness properly.
A summary of the self-assessment follows.
In responding to the self-assessment, McCulloch CAD pointed to certain strengths. Among the identified strengths are:
- the appraisal district has the size and resources to perform the assessment function effectively and efficiently;
- the appraisal district's computer system is a database management system which allows for easy access and modification of data; and
- the appraisal district maintains a complete set of cadastral maps showing the size, shape and location of each parcel in the jurisdiction.
McCulloch CAD also indicated some areas of concern, including:
- the appraisal district does not engage in formal planning or prepare a formal estimate of required resources;
- the appraisal district does not maintain computerized data on land attributes nor does the CAD have a computerized edit program that checks for consistency;
- comparable sales are not readily available, statistical models are not technically sound and depreciation schedules are not based on market sales analysis;
- the appraisal district is not using ratio studies for planning and determining reappraisal priorities; and
- the appraisal district is not running ratio studies by property groups and subgroups.
In Chapter 1, which discusses legal issues and assessment cycle, the CAD indicated it consults with its attorneys to keep current with legislative proposals and laws. The CAD agreed that the law requires general uniformity in property taxation. The CAD also affirmed it had the size and resources to perform the assessment function effectively and efficiently. The CAD did not answer what measures in the law support a current market value standard.
In Chapter 2, which deals with resources and management, the CAD indicated it does not engage in formal planning or prepare a formal estimate of required resources. The CAD indicated it was satisfied with the budget process, personnel training, management, organization and training.
In Chapter 3, on computerization, the CAD indicated its system meets computer and application software requirements for assessment office operations. A database management system, which allows for easy access and modification of data, is the basis of the system. The CAD noted that each employee in the office has a computer workstation. In addition, all employees have access to two network printers. Daily and monthly backup tapes are stored in a fireproof safe. Office applications software is loaded on all computers, and internet access is limited to the chief appraiser and office manager. The CAD adequately maintains issues of privacy and security, constantly updates the software and replaces hardware when necessary. The appraisal district does not have a Web site or geographic information services (GIS) capabilities.
In Chapter 4, which covers mapping, the CAD indicated it maintains a complete set of cadastral maps showing the size, shape and location of each parcel in the jurisdiction. The CAD assigns all parcels a unique mark that identifies the property on the map. The CAD does not use professionally accepted standards to maintain the maps. It does not note parcel splits and combinations on maps within one month of a deed's recordation. The CAD does not have a computerized mapping system.
In Chapter 5, which covers data collection, the CAD indicated that the computer records contain information on current property use. The CAD physically inspects properties at least every four to six years and conducts a more frequent inspection on remodeled property identified by building permits. A data-coding manual and a training program help maintain residential appraisal cards, and experienced appraisers collect commercial data. The CAD indicated it does not maintain computerized data on land attributes, nor does it have a computerized edit program that checks for consistency. Lastly, the CAD responded that it does not have a program to routinely collect income data on commonly leased property.
In Chapter 6, which covers land valuation, the CAD indicated that it reviews, confirms and maintains land sales in a sales file. It stratifies land by zoning, use or location and adjusts land for positive and negative location factors. The CAD responded that it does not analyze land sales in terms of value per unit and it does not use market-derived tables to make size or depth adjustments. The CAD does not use a GIS in the valuation process, but it develops land values with spreadsheets or statistical software.
In Chapter 7, concerning residential property valuation, the CAD indicated appraisers review and reconcile value estimates before generation of final values. The CAD maintains fully computerized cost schedules, checks them against local building costs and adjusts them when necessary. The CAD responded that comparable sales are not readily available. Statistical models are not technically sound, and the CAD does not base depreciation schedules on market sales analysis.
In Chapter 8, regarding commercial property valuation, the CAD indicated it has defined separate market areas or neighborhoods for business properties. In estimating total depreciation, observed physical condition, economic obsolescence and functional obsolescence is considered. The CAD also responded that it does not employ the three approaches to value in appraising business properties. The CAD makes no comprehensive effort to collect local income and expense information, and the office does not use software tools in analyzing commercial properties.
In Chapter 9, which deals with sales data, ratio studies and stratification, the CAD indicated it properly screens and uses sales in the valuation analyses. The appraisal district has the capability to run ratio studies by user-selected combinations of property characteristics, and the ratio study program can compute standard measures of level and uniformity and confidence intervals. It supplements the ratio study analysis with tests to ensure that it appraises unsold properties similar to sold properties. The appraisal district also responded that it does not use ratio studies for planning and determining reappraisal priorities and it does not run ratio studies by property groups and subgroups.
In Chapter 10, which covers personal property assessment, the CAD indicated it employs all appropriate approaches in valuing personal property. In the cost approach, the CAD maintains separate cost trend and depreciation indexes for each class of personal property. The CAD uses price guides to value used items. However, the CAD indicated it does not use the income approach to value leased equipment. It uses several methods to discover taxable personal property, but real and personal property field inspections are not coordinated for discovery and inspection purposes. The CAD indicated it delivers property declaration forms to the owners of personal property and it conducts follow-ups on non-returns.
In Chapter 11, which deals with assessment administration, the CAD indicated it is following the accepted practices of assessment administration in Comptroller rules and International Association of Assessing Officers (IAAO) standards. However, the CAD noted that it does not update ownership and legal description information within 30 days of a transfer's recordation.
In Chapter 12, regarding defense of values, the CAD indicated it follows the accepted standards of the Comptroller and IAAO Standards.
In Chapter 13, which covers public relations, the CAD indicated that property records can be accessed by parcel identifier, situs address and owner name. The CAD makes available for public distribution the Comptroller's Taxpayer's Rights, Remedies and Responsibilities. However, the CAD responded that it does not have an active public relations program or program of public appearances to keep the public informed of actions that may affect them.
1.4
Findings of the Property Value Study and Summary Worksheets
The PVS determines the total property value in each school district in the McCulloch CAD. With a few notable exceptions, Government Code Section 403.302 and Property Tax Code Section 23.01 requires all CADs and PTD to appraise property at market value. The PVS appraises agricultural land and timberland according to productivity value. In general, market value is the price a property would sell for 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 on 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 state value, by determining market value or by accepting the local appraised value as reported by the school district in each property category 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 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 the CAD is appraising property at or near market value.
Eligible School District
The PVS identified Brady ISD as an eligible district when its local value fell outside of the confidence interval limit determined by the 2005 PVS. Five property categories were tested in Brady ISD: single-family residential; rural real; commercial real; commercial personal; and utilities.
Single-family residences comprised 45.3 percent of the total test values and made up 41.7 percent of the school district's value. A review of the Category A sample ratios in the 2005 PVS indicates the CAD appraised from as low as 53.2 percent to a high of 136.7 percent of market value, with a weighted mean ratio of 0.8997.
Rural real properties made up 23.5 percent of the school district's value, and sample parcels tested with a weighted mean ratio of 0.9256. Rural properties include two subcategories: productivity value of qualifying acres, which is primarily farm and ranch land that qualifies for the special productivity appraisal; and non-qualifying acres and farm and ranch improvements, which are primarily rural homes and land that do not qualify as farm, ranch or timberlands. The differences in value between qualified and non-qualified rural land are wide since qualified land is appraised using a special statutory method to determine the land's productivity value, and non-qualified property is based on what the land would sell for in an open-market transaction.
Subcategory D1 comprised 47.3 percent of the rural real property value in the school district and 12.1 percent of the total test values. Qualified rural properties tested with a ratio of 1.0222. Non-qualified properties made up 52.7 percent of the rural real property value and 13.4 percent of the school district's total test values. The CAD appraised rural homes and non-qualified rural land from as low as 47 percent to a high of 142.8 percent of market value, with a weighted mean ratio of 0.8503.
Commercial real property was 11.4 percent of the school district's value, and tested with a weighted mean ratio of 0.9334. The CAD's external appraiser valued sample commercial real properties from as low as 72 percent to a high of 115.6 percent.
Commercial personal property was 8.6 percent of the school district's value, and tested with a weighted mean ratio of 0.9953. The CAD's external appraiser valued sample commercial real properties from as low as 86.9 percent to a high of 139.2 percent.
Utility properties, which were 6.9 percent of the school district's value, tested with a weighted mean ratio of 1.4407. The CAD's external appraiser valued utility properties from as low as 106.3 percent to a high of 168.5 percent.
McCulloch CAD Summary
In summary, the McCulloch CAD's overall median ratio is 0.96.
For single-family residences, the sample ratios range from 0.53 to 1.92, with a median ratio of 0.96. For non-qualified land, the sample ratios range from 0.47 to 2.16, with a median ratio of 0.95.
Commercial real property sample ratios ranged from 0.69 to 1.29, with a median ratio of 0.98. Commercial personal sampled properties ranged from 0.87 to 1.39, with a median ratio of 1.02.
Utilities showed sample ratios ranging from 1 to 1.68, with a median of 1.08.
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 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 Property Value Study. In addition, in the IAAO's Standard on Ratio Studies, Category A, Single-Family Residences, 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.
The 2005 COD for McCulloch CAD for single-family residential properties was 13.3; for rural real properties, it was 11.2; for commercial real properties, the COD was 11; utilities had a COD of 12; and the COD for commercial personal properties was 9.2.
The 2005 COD for Brady ISD residential properties was 14.1; for rural properties it was 15.31; the COD for commercial real properties was 11.1; and for commercial personal properties, it was 9.3.
These numbers indicate uniformity in appraisal in these categories in the CAD and ISD.