Chapter 1
Overview of County Appraisal District
1.1
County History and Demographics
According to The Handbook of Texas, Mills County was founded in 1877 and named for John T. Mills.
Mills County is located in central Texas and bordered by Comanche County to the north, Hamilton County to the east, San Saba and Lampasas counties to the south and Brown to the north. Goldthwaite, the county seat, is located at the intersection of U.S. Highways 183 and 84, 110 miles northwest of Austin.
The Colorado River serves as Mills County's western boundary. The Cowhouse Mountains, covered by cedars and white rocks, extend from southeast to northwest with their highest elevation being San Saba Peak at 1,712 feet. Flowing north to south across the western section of Mills County is Pecan Bayou. Soils consist of alluvial, black waxy, sandy and loam with live oak, post oak, cottonwood, shinnery and pecan trees.
The estimated county population on Jan. 1, 2005, according to the Texas State Data Center, was 5,100, with the city of Goldthwaite having 1,752 residents and the city of Mullin having 171 residents. The county's remaining population resides in unincorporated areas.
The county includes the Goldthwaite, Mullin, Priddy and Star Independent School Districts.
1.2
Appraisal District Organization and Staffing
Mills CAD, formed in 1981, became active in 1982. As of August 2006, Mills CAD has four full-time staff positions. There are no part-time positions, and the chief appraiser is the CAD's only supervisor. Two positions are full-time appraisers – the chief appraiser and deputy chief appraiser. Mills CAD has a contract with a professional appraisal services firm. The company appraises minerals, utilities and industrial property in the CAD.
Exhibit 1 presents Mills CAD's current organization chart.
The Mills CAD board of directors has no authority to set values or determine appraisal methods under Property Tax Code Section 6.05(a). The chief appraiser carries out the appraisal district's legal duties, hires its staff, makes appraisals and operates the appraisal office.
Mills CAD provides appraisal services for six taxing units (Exhibit 2).
Exhibit 2
Mills CAD Taxing Units
| Mills CAD Taxing Units |
|---|
| Mills County |
| Goldthwaite ISD |
| Mullin ISD |
| Priddy ISD |
| Star ISD |
| City of Mullin |
Source: Mills CAD, August 2006.
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-reports.
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.
Exhibit 3 contains Mills CAD parcel counts by property category. It compares Mills CAD's data to the state and group averages. For analytical purposes, PTD groups appraisal districts according to the number of parcels. The Mills CAD is included with appraisal districts that have 5,000-9,999 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 | Mills | State Average | Group Average |
|---|---|---|---|
| Estimated Number Locally Appraised Parcels | 9,847 | 51,112 | 7,195 |
| Number Taxing Units | 6 | 15 | 7 |
| Estimated Local Parcels per Staff | 2,462 | 2,971 | 2,261 |
Composition by Percentage of Value (Self Report)
| Parcels and Categories | Mills | State Average | Group Average |
|---|---|---|---|
| Residential Value | 16.9% | 47.4% | 11.4% |
| Non-Residential, Non-Mineral | 0.0% | 4.3% | 36.2% |
| Non-Residential, Mineral | 83.1% | 48.3% | 52.4% |
Composition by Locally Appraised Parcel Category (Self Report)
| Parcels and Categories Parcel Type | Mills Number of Parcels | Mills Percent of Parcels | State Average | Group Average |
|---|---|---|---|---|
| A - Residential | 1,237 | 12.6% | 50.2% | 24.0% |
| B - Multi-Family | 5 | 0.1% | 1.2% | 0.2% |
| C - Vacant Lots | 183 | 1.9% | 14.3% | 11.0% |
| D - Agricultural | 4,625 | 47.0% | 14.3% | 42.6% |
| E - Farm and Ranch Improvement | 3,126 | 31.7% | 5.3% | 12.4% |
| F1 - Commercial Real | 238 | 2.4% | 3.5% | 3.7% |
| L1 - Commercial Personal | 307 | 3.1% | 6.8% | 4.1% |
| M1 - Mobile Homes | 84 | 0.9% | 2.6% | 1.7% |
| O - Residential Inventory | 35 | 0.4% | 1.8% | 0.2% |
| S - Special Inventory | 7 | 0.1% | 0.1% | 0.0% |
| Total | 9,847 | 100.0% | 100.0% | 100.0% |
State and group averages calculated by the Property Tax Division.
Sum of data reported in ISD Self Reports of Value in the County Appraisal District.
Totals may not add to 100% due to rounding.
Source: Texas Comptroller of Public Accounts, Appraisal District Operations Report (2005 and 2006 Data), September 2006 and Appraisal District Self Report of Value, 2005.
Exhibit 4 provides financial and staffing data for the Mills 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 | Mills | State Average | Group Average |
|---|---|---|---|
| 2005 Budget | $123,486 | $1,144,025 | $165,597 |
| 2005 Surplus | $10,738 | $95,915 | $15,776 |
| 2005 Surplus as a Percent of Budget | 8.7% | 8.4% | 9.5% |
| 2006 Budget | $139,880 | $1,200,084 | $170,755 |
| Percent Change in Budget | 13.3% | 4.9% | 3.1% |
| 2005 Budget per Total Parcel | $12.42 | $21.96 | $20.92 |
| 2005 Budget per PTD Estimated Locally Appraised Parcel | $12.54 | $22.38 | $23.02 |
Staffing - 2005 Budget
| Financial and Staffing Information | Mills | State Average | Group Average |
|---|---|---|---|
| Full-Time Equivalent (FTE) Employees | 4.0 | 17.2 | 3.2 |
| Supervisory | 2.0 | 3.3 | 1.2 |
| Supervisor to Staff Ratio | 1:2 | 1:6 | 1:3 |
Chief Appraiser
| Financial and Staffing Information | Mills | State Average | Group Average |
|---|---|---|---|
| Performs Appraisals? | Yes | Not applicable | Not Applicable |
| 2005 Compensation (excluding benefits) | $34,425 | $52,766 | $35,013 |
Appraisers - 2005 Budget
| Financial and Staffing Information | Mills | State Average | Group Average |
|---|---|---|---|
| Appraiser Full-Time Equivalent (FTE) Employees | 1.0 | 6.4 | 1.0 |
| Salary Range Low | $25,000 | $25,687 | $24,130 |
| Salary Range High | $25,000 | $39,505 | $27,288 |
| Training Budget | $4,300 | $9,267 | $3,613 |
| Number Registered with Board of Professional Tax Examiners (BTPE) | 4.0 | 9.1 | 2.5 |
State and group averages calculated by the Property Tax Division.
Source: Texas Comptroller of Public Accounts, Appraisal District Operations Report 2005 and 2006 Data, September 2006.
Exhibit 5 provides operations information for the Mills CAD, state and group.
Exhibit 5
Reported Data Versus State and Group Averages
Reappraisal
| Operations Information | Mills |
|---|---|
| Last Year of Reappraisal | 2005 |
| Next Year of Reappraisal | 2008 |
| Type of Reappraisal | N/A |
Protests
| Operations Information | Mills | State Average | Group Average |
|---|---|---|---|
| Protests (2005 tax year) | 32 | 3,435 | 66 |
| Protests per Estimated Locally Appraised Parcel | 0.0 | 0.1 | 0.0 |
Collections
| Operations Information | Mills |
|---|---|
| Consolidated Collection | Yes |
| Collection Budget | $7 |
Geographic Information System (GIS)
| Operations Information | Mills | State Average | Group Average |
|---|---|---|---|
| District Has or Plans to Purchase GIS? | No | Not Applicable | Not Applicable |
| Percent GIS Complete | 0.0% | 49.9% | 26.1% |
State and group averages calculated by the Property Tax Division.
Source: Texas Comptroller of Public Accounts, Appraisal District Operations Report (2005 and 2006 Data), September 2006.
Based on this comparison, the Mills CAD appraised 2,462 parcels per full-time employee. According to IAAO in Property Appraisal and Assessment Administration, Chapter 16, Elements of Administration, Staffing Patterns and the Effect of Computers, the ratio of parcels per full-time employees for a small appraisal district should be between 1,500 and 1,700. For a large appraising entity, these numbers should be between 3,000 and 3,500.
Workloads in appraisal districts can vary due to any number of considerations other than parcel count. The geographic size of an appraisal district, for instance, may have an impact on the time required to work all parcels, as can the types of properties involved. Complex commercial and some residential properties may require more staff work to appraise. The data given here are meant only to provide the reader with some basis for comparison to other appraisal districts with similar parcel counts.
1.3
Self Evaluation Questionnaire
In preparation for this ASR, the Mills 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 explaining each question and how to answer them.
The Mills CAD answered all of the 111 questions, providing specific and clear concise responses where necessary. A summary of the self-assessment follows.
In responding to the self-assessment, Mills CAD pointed to certain strengths. Among the identified strengths are a knowledgeable, quality-conscious and customer-oriented staff and an advanced automated appraisal system.
Mills CAD also indicated some areas of concern, including limited sources of sales data and lack of a geographic information system.
Chapter 1 discusses legal issues and assessment cycles, and the CAD indicated that it understands the required legal framework, value standard and assessment cycles. The CAD advised that it keeps current with Legislative proposals, laws and court decisions by maintaining memberships in professional organizations, attending seminars and receiving legal updates from the CAD's law firm. The CAD referenced the Texas Constitution and Property Tax Code as requirements for general uniformity in property taxation. Various provisions of the Tax Code, including ratio studies and periodic reappraisals, were cited as measures supporting the current market value standard, and limitations on the appraised value of residential homesteads as matters which undercut the standard. Question number four on size and resources was answered by stating CAD staff is quality-conscious and customer service oriented.
In Chapter 2, which deals with resources and management, the CAD indicated that it engages in formal planning, has adequate funding, runs a well-organized and well-managed operation and the appraisal district staff is quality-conscious concerning its work. The CAD indicated it is researching new office space because it has to vacate its current location. Question 4 on budgeting methods was answered by responding that performance-based budgeting is most commonly used. Question 7 asked if salaries and benefits were competitive, and the CAD replied that, when compared to other appraisal districts of similar size, its salaries and benefits are comparable.
In Chapter 3, on computerization, the CAD indicated its computer system is sufficient to meet the CAD's needs. The CAD responded that its computer system has integration capabilities, maintains data security and integrity, generates audit trails, provides query/reporting tools, supports multiyear processing and has the ability to manage document and photo imagery. The CAD also advised that it has a Web site.
In Chapter 4, which covers mapping, the CAD indicated that district maps comply with IAAO standards and Comptroller Rules. Mills CAD indicated every effort is made to update maps in a timely manner and all parcels are uniquely identified. The CAD's maps are not computerized or part of a multipurpose geographic information system (GIS).
In Chapter 5, which covers data collection, the CAD indicated that it knows what data is required by Comptroller Rules, state law and appraisal standards. The CAD noted that neither the county nor cities require building permits, and appraisers rely on annual physical inspections to discover new properties. It uses all relevant data in the assessment process, but the income approach is not used in commercial appraisals. The CAD operates on a three year reappraisal cycle. Mills CAD also advised it does not use hand-held computers for field data collection, but its computer system has the ability to interface with hand-held devices.
In Chapter 6, which covers land valuation, the CAD indicated that it understands the land valuation process using market data as its primary source. Abstraction is the most commonly used method it uses in developed areas and large tracts are devoted to agricultural use, rather than development.
In Chapter 7, concerning residential property valuation, the CAD indicated that it uses available sales data and market analysis in the appraisal process for residential properties. Depreciation schedules are based on sales analysis.
In Chapter 8, regarding commercial property valuation, the CAD indicated market information on local commercial properties is very limited and not used in the appraisal process. The CAD uses the cost approach when appraising commercial properties and considers physical condition, economic obsolescence and functional obsolescence when estimating total depreciation.
In Chapter 9, which deals with sales data, ratio studies and stratification, the CAD indicated that it follows the accepted procedures for gathering sales data and can generate ratio studies at will for planning and determining reappraisals. The ratio study software has graphic capabilities and maintains the market value of a property at the time of its sale.
In Chapter 10, which covers personal property assessment, the CAD indicated that it follows the accepted procedures for discovery and appraisal of personal property. Annually, the CAD mails personal property renditions to each business owner and follows up on non-returns. It uses rendered values and compares like properties for uniformity. The income approach is not used to value leased equipment due to lack of available data.
In Chapter 11, which deals with assessment administration, the CAD indicated it believes that it is following the accepted practices of assessment administration in the Comptroller Rules and IAAO standards. Appraisal notices are sent to all property owners each year regardless of the amount of change in appraised value and all appraisal notices contain publications informing taxpayers of their right to protest.
In Chapter 12, regarding defense of values, the CAD indicated that the appraisal review board process encourages communication between taxpayers and the CAD. Informal hearings between appraisal staff and appellants are encouraged before a formal hearing and the CAD has a process for tracking appeals.
In Chapter 13, which covers public relations, the CAD indicated it believes it has an effective public relations program. A variety of published tax related notices, news releases, public appearances and the Mills CAD's Web site provide taxpayers with information about their property values, rights and responsibilities.
1.4
Findings of the Property Value Study and Summary Worksheets
The PVS determines the total property value in each school district in the Mills CAD. With a few notable exceptions, Section 403.302, Government Code, and Section 23.01, Tax Code, require all CADs and PTD to appraise property at market value. Agricultural land and timberland are appraised according to productivity value. Market value is the price for which a property would sell under normal conditions, as defined by Section 1.04(7), Tax Code.
The CAD determines the local tax roll value, or local value, and submits it to PTD in its annual self-report. PTD staff estimates the total taxable value in a school district, referred to as state value, by determining market value or by accepting the local appraised value in each property category (see Exhibit 2) in the school district, 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 with a disability 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 a conference between PTD staff and CAD representatives or a formal administrative hearing. School districts may protest the findings through a hearing in district court.
The administrative hearings process requires the protester to file a written protest with supporting documentation within 40 days of the issuance of the preliminary PVS. PTD may amend the findings of the preliminary PVS based on the submission of the written protest, an informal hearing or a formal hearing. A hearings examiner appointed by the Comptroller's general counsel 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. It divides properties into categories so it can appraise like properties together.
In general, a ratio indicates the percentage of market value at which a property or group of properties is appraised. A ratio between 0.95 and 1.05 in any property category means that the appraisal district is appraising property within 5 percent of its market value, according to the PVS.
Eligible School Districts
Goldthwaite ISD was identified as an eligible school district with values outside the confidence interval limit. The confidence interval is a range of school district values which the Comptroller has accepted.
Four (4) property categories were tested in Goldthwaite ISD:
(1) Category A, single-family residences;
(2) Category D, rural real;
(3) Category F1, commercial real properties; and
(4) Category J, utility properties.
Mills CAD is placing below market value on the ISD's Category A, single-family residences. A review of Category A properties indicates the CAD appraised from as low as 56 percent to a high of 124 percent of market value, with a weighted mean ratio of 0.9154. Category A, single-family residences, make up 33 percent of the ISD's reported value and 38 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 as farming, ranching or timberland
The CAD is placing below statutory productivity value on the ISD's sub-category D1, qualified acreage. A review of sub-category D1 indicates the CAD under appraised native pastureland. Sub-category D1 makes up 10 percent of the ISD reported value and 12 percent of the tested value. This sub-category had a weighted mean ratio of 0.9441.
The CAD is placing below market value on the ISD's sub-category D2. Sub-category D2 makes up 30 percent of the ISD's reported value and 35 percent of the tested value. This sub-category had a weighted mean ratio of 0.8940.
The CAD is placing below market value on the ISD's Category F1, commercial real properties. A review of Category F1 properties indicates that the CAD appraised from 40 percent to 118 percent of market value, with a weighted mean ratio of 0.7690. Category F1 makes up 9 percent of the ISD's value and 10 percent of the tested value.
The CAD is placing market value on the ISD's Category J, utilities. A review of Category J properties indicates the CAD appraised from 97 percent to 120 percent of market value, with a weighted mean ratio of 0.9906. Category J makes up 9 percent of the ISD's value and 4 percent of the tested value.
Goldthwaite ISD appealed the self-reported values but did not appeal any specific category tested in the Property Value Study.
Mills CAD Summary
In summary, the Mills CAD's overall median ratio is 0.99.
- in Category A, Single-Family Residential, the sample ratios range from 0.56 to 1.59, with a median ratio of 0.98;
- in Category D2, Non-qualified Land, the sample ratios range from 0.54 to 1.83, with a median ratio of 1.05;
- in Category F1, Commercial Real Property, the sample ratios range from 0.40 to 1.18, with a median ratio of 0.78;
- in Category J, Utilities, the sample ratios range from 0.97 to 1.20, with a median ratio of 1.00.
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 properties are being appraised at inconsistent percentages of market value. Also, according to IAAO in the Standard on Ratio Studies, Category A, Single- Family Residences, should generally be 15 or less, and for new and fairly 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 Mills CAD Category A was 14.94; Category D2 was 16.88; Category F1 was 17.14; and Category J was 4.36.
The 2005 COD for Goldthwaite ISD Category A was 11.87; Category D2 was 18.49; Category F1 was 17.86; and Category J was 4.80.
These numbers would generally indicate uniformity in appraisal in these categories in the CAD and ISD.