Chapter 1
Overview of County Appraisal District
1.1
County History and Demographics
According to The Handbook of Texas, Navarro County, located in central northeast Texas, was named for Jose Antonio Navarro, a hero of the Texas revolution. The Legislature authorized its creation in 1846.
Neighboring Limestone, Hill, Ellis, Henderson, Anderson and Freestone counties surround Navarro County. Corsicana is the county's largest city with a population of 26,039 residents and serves as the county seat. Corsicana is located 55 miles south of Dallas at the convergence of Interstate Highway 45, U.S. Highway 287 and State Highways 75 and 40.
The 2005 county population, according to the Texas State Data Center, was 47,414. In addition to Corsicana, other communities and their populations include the city of Blooming Grove with 896 residents; the city of Dawson, 869 residents; the city of Frost, 700 residents; the city of Kerens, 1,705 residents; and the city of Rice, 888 residents. The county's remaining population resides in a variety of small cities, towns and unincorporated areas.
The county includes the Blooming Grove, Corsicana, Dawson, Frost, Kerens, Mildred and Rice Independent School Districts (ISDs) and Navarro Junior College.
1.2
Appraisal District Organization and Staffing
Navarro County taxing entities created the CAD in 1981, and it became active in 1982. As of February 2006, Navarro CAD had eight full-time staff positions, two of which were supervisory positions (Exhibit 1).
The chief appraiser supervises three full-time appraisers; a system analyst; a data entry clerk; a mapper; and a receptionist. The 2006 budget contains four part-time positions, but as of June 2006, the CAD had not filled these positions. The CAD contracts with a private vendor for professional appraisal services, including mineral, utility and industrial properties.
Navarro CAD provides appraisal services for 20 taxing units (Exhibit 2).
Exhibit 2
Navarro CAD Taxing Units
| Name of Taxing Entity |
|---|
| Navarro County |
| Blooming Grove Independent School District |
| Corsicana Independent School District |
| Dawson Independent School District |
| Frost Independent School District |
| Kerens Independent School District |
| Mildred Independent School District |
| Rice Independent School District |
| Navarro College District |
| City of Richland |
| City of Barry |
| City of Blooming Grove |
| City of Corsicana |
| City of Dawson |
| City of Emhouse |
| City of Frost |
| City of Goodlow |
| City of Kerens |
| City of Oak Valley |
| City of Rice |
Source: Navarro CAD, February 2006.
Most appraisal districts contract out some work to private firms. Navarro CAD appraises all categories of properties in-house, with the exception of mineral, utility and industrial appraisals, which they contract with a vendor. PTD does not track appraisals performed by external appraisers because contracts with external appraisers generally do not include a parcel count for the number of appraisals the contractor is required to appraise. 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.
PTD includes commercial real and personal property parcels in the calculation, since it cannot determine how many parcels in-house staff appraises versus private firms. PTD calculates the total parcels appraised in-house by summing the total number of parcels reported in categories:
- A, Real Property: Single-Family Residential;
- B, Real Property: Multifamily Residential;
- C, Real Property: Vacant Lots and Tracts;
- D, Real Property: Acreage (D1 and D2);
- F1, Real Property: Commercial;
- L1, Personal Property: Commercial;
- M, Mobile Homes and Other Tangible Personal Property (M1 and M2);
- O, Real Property: Residential Inventory; and
- S, Special Inventory.
For analytical purposes, PTD groups appraisal districts according to the number of parcels. Navarro CAD is included with appraisal districts that have 35,000-49,999 parcels (Exhibit 3).
Exhibit 3
Reported Data on Parcels and Categories
Comparison to State and Group Averages
Parcel Size Group: 35,000 - 45,999
| Parcels and Categories | Navarro | State Average1 | Group Average |
|---|---|---|---|
| Estimated Number Locally Appraised Parcels | 41,747 | 49,497 | 41,134 |
| Number Taxing Units | 19 | 15 | 15 |
| Estimated Locally Appraised Parcels per Staff | 4,639 | 2,985 | 3,478 |
Composition by Percentage of Value (Self-Report):
| Parcels and Categories | Navarro | State Average1 | Group Average |
|---|---|---|---|
| Residential Value | 38.3% | 51.3% | 37.9% |
| Non-Residential, Non Mineral | 61.1% | 45.0% | 54.0% |
| Non-Residential, Mineral | 0.6% | 3.7% | 8.1% |
Composition by Locally Appraised Parcel Category (Self-Report)
| Parcel Type | Number of Navarro Parcels | Percent of Navarro Parcels | Percent of State Parcels | Percent of Group Parcels |
|---|---|---|---|---|
| A - Real Property: Single-Family Residential | 12,040 | 28.8% | 50.0% | 29.9% |
| B - Real Property: Multifamily Residential | 146 | 0.4% | 1.2% | 0.3% |
| C - Real Property: Vacant Lots and Tracts | 7,335 | 17.6% | 14.7% | 22.1% |
| D - Real Property: Acreage | 12,024 | 28.8% | 14.4% | 26.0% |
| E - Real Property: Farm and Ranch Improvements | 5,430 | 13.0% | 5.1% | 9.8% |
| F1 - Real Property: Commercial | 1,307 | 3.1% | 3.4% | 2.8% |
| L1 - Personal Property: Commercial | 1,427 | 3.4% | 6.8% | 4.2% |
| M1 - Mobile Homes and Other Tangible Personal Property | 1,437 | 3.4% | 2.5% | 3.1% |
| O - Real Property: Residential Inventory | 548 | 1.3% | 1.8% | 1.6% |
| S - Special Inventory | 53 | 0.1% | 0.1% | 0.1% |
| Total | 41,747 | 100.0% | 100.0% | 100.0% |
Source: Texas Comptroller of Public Accounts, Appraisal District Operations Report (2004 and 2005 Data), March 2006 and Appraisal District Self-Report of Value, 2004.
Exhibit 4 compares Navarro CAD's staffing and budget to other similar-sized appraisal districts.
Exhibit 4
Reported Staffing and Training Data, Comparison to State and Group Averages
Financial Information
| Financial Information | Navarro | State Average | Group Average |
|---|---|---|---|
| 2004 Budget | $633,815 | $1,108,158 | $690,977 |
| 2004 Surplus | $44,821 | $48,656 | $41,477 |
| 2004 Surplus as Percentage of Budget | 7.1% | 4.4% | 6.0% |
| 2005 Budget | $633,588 | $1,150,302 | $712,193 |
| Percentage Change in Budget | 0.0% | 3.8% | 3.1% |
| 2004 Budget per Total Parcel | $11.71 | $9.33 | $11.94 |
| 2004 Budget per PTD Estimated Locally Appraised Parcel | $15.18 | $22.30 | $16.80 |
Staffing
| Staffing - 2004 Budget | Navarro | State Average | Group Average |
|---|---|---|---|
| Full-Time | 9 | 17 | 12 |
| Part-Time | 0 | 1 | 1 |
| Supervisory | 2 | 3 | 3 |
| Programmers | 2 | 1 | 3 |
| Supervisory to Staff Ratio1 | 1:4.5 | 1:5 | 1:4.5 |
Chief Appraiser
| Chief Appraiser | Navarro | State Average | Group Average |
|---|---|---|---|
| Does Chief Appraiser Perform Appraisals? | Yes | ||
| 2004 Total Compensation - Actual | $49,500 | $52,557 | $58,186 |
Appraisers
| Appraisers - 2004 Budget | Navarro | State Average | Group Average |
|---|---|---|---|
| Full-Time | 4 | 6 | 5 |
| Part-Time | Not reported | 0 | 0 |
| Salary Range: Low | |||
| Salary Range: High | $26,000 | $25,476 | $24,719 |
| 2004 Training Budget | $42,000 | $38,313 | $38,029 |
| Appraisers Registered with Board of Tax Professional Examiners | $5,500 | $9,140 | $8,043 |
Source: Texas Comptroller of Public Accounts, Appraisal District Operations Report (2004 and 2005 Data), March 2006.
Navarro CAD has a much lower occurrence of protests than other similar-sized appraisal districts (Exhibit 5).
Exhibit 5
Reported Operations Data, Comparison to State and Group Averages
Reappraisals
| Operations Information | Navarro | State Average | Group Average |
|---|---|---|---|
| Last Year of Reappraisal | 2004 | Not applicable | Not Applicable |
| Next Year of Reappraisal | Not reported | Not applicable | Not applicable |
| Type of Reappraisal: | Complete | Not applicable | Not applicable |
| Method of Reappraisal: | Combination | Not applicable | Not applicable |
Protests
| Operations Information | Navarro | State Average | Group Average |
|---|---|---|---|
| Protests (2004 tax year) | 187 | 3,164 | 803 |
| Protests per Estimated Locally Appraised Parcel1 | 0.0% | 6.0% | 0.0% |
Collections
| Operations Information | Navarro | State Average | Group Average |
|---|---|---|---|
| Consolidated Collection | Yes | Not applicable | Not applicable |
| Collection Budget | $78,881 | Not applicable | Not applicable |
Geographic Information System (GIS)
| Operations Information | Navarro | State Average | Group Average |
|---|---|---|---|
| Appraisal district has or plans to purchase GIS? | No | Not applicable | Not applicable |
| Percent GIS complete | 80.0% | 77.0% |
Board of Directors - 2004
| Operations Information | Navarro | State Average | Group Average |
|---|---|---|---|
| Members | 6 | 6 | 6 |
| Does the Tax Assessor vote? | No | Not applicable | Not applicable |
| Number of elected members | 2 | 3 | 0 |
Source: Texas Comptroller of Public Accounts, Appraisal District Operations Report (2004 and 2005 Data), March 2006.
Based on this comparison, the Navarro CAD appraised 4,639 parcels per full-time employee. IAAO Property Appraisal and Assessment Administration, Chapter 16, Staffing Patterns 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 any number of considerations other than parcel count. The geographic size of an appraisal district, for instance, may affect 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 purpose of providing this data is 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, PTD asked Navarro 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 that explains each question and how to answer them. PTD asks each appraisal district undergoing an ASR to perform the self-assessment.
The Navarro CAD answered all 111 questions, providing general responses where necessary. In responding to the self-assessment, the appraisal district pointed to certain strengths: among them, a qualified and conscientious staff and an automated appraisal system.
The appraisal district also indicated some areas of concern:
- the need for additional staff;
- additional office space to accommodate new staff; and
- budget constraints.
In Chapter 1, on legal issues and assessment cycles, the CAD indicated that it understands the legal framework of the Texas property tax system. It indicated that the lack of full disclosure of sales undermines the concept of current market value. The CAD feels that it is understaffed.
In Chapter 2, on resources and management, the CAD indicated it engages in formal planning, runs a well-organized and well-managed operation and staff is quality conscious concerning their work. The CAD feels that its current office space and funding are not adequate.
In Chapter 3, on computerization, the CAD indicated that it has a secure computer system that it can integrate with other applications such as geographic information systems (GIS), but it does not use this attribute for GIS due to budget constraints. The CAD has a Web site hosted by its appraisal software vendor.
In Chapter 4, on mapping cycles, the CAD indicated that its mapping system complies with IAAO standards and Comptroller rules, but is not part of a multipurpose GIS.
In Chapter 5, on data collection, the CAD indicated it inspects one-third of its properties each year. The CAD indicated its computer records and appraisal cards contain current property information and that it uses a computerized edit program. The CAD does not use hand-held computers for data collection.
In Chapter 6, on land valuation, the CAD indicated that it does not stratify land by zoning, use or location, due to limited sales information, but does analyze land sales in terms of value per unit. The CAD indicated it makes adjustments to land values based on market analysis and does not use abstraction, allocation or land residual capitalization methods due to limited staff.
In Chapter 7, on residential property valuation, the CAD indicated that its residential cost schedules are market-based, and it runs sales ratio studies to support values. It also indicated that its schedules are fully computerized. The CAD indicated it calculates depreciation on each property individually.
In Chapter 8, on commercial property valuation, the CAD indicated it employs all three approaches to value and attempts to collect local income and expense data on commercial properties, although the data is limited. The CAD indicated its contract appraisal firm maintains automated income data on large commercial accounts to analyze sales, revenues and expenses. The CAD does not employ software tools to analyze commercial properties due to budget constraints.
In Chapter 9, on sales data, ratio studies and stratification, the CAD indicated that it properly screens sales, adjusts for time when necessary and uses ratio studies in planning and determining reappraisal priorities.
In Chapter 10, on personal property assessment, the CAD indicated it inspects business personal property, delivers rendition forms to property owners and employs the appropriate appraisal method in appraising personal property. The CAD uses Marshall & Swift's trend and depreciation indexes for personal property valuation and does not use price guides to value items sold frequently.
In Chapter 11, on assessment administration, the CAD indicated that it updates appraisal records in a timely manner and notifies property owners of changes in their appraised values and their right to appeal the changes.
In Chapter 12, on defense of values, the CAD indicated that it encourages informal resolution of taxpayer protests, it has a process for documenting formal appeals and it has not had to obtain independent reviews of complex appraisals.
In Chapter 13, on public relations, the CAD indicated it has an open-door policy and keeps the public informed and its appraisal records accessible.
1.4
Findings of the Property Value Study
The Property Value Study (PVS) determines the total property value in each school district in the Navarro Central Appraisal District (CAD). With a few notable exceptions, Government Code Section 403.302 and Property Tax Code Section 23.01 requires all CADs and the Property Tax Division (PTD) to appraise property at market value. Productivity value is the basis used to appraise agricultural land and timberland. "Market value" is the price at which a property would transfer for cash or its equivalent under prevailing market conditions if:
- exposed for sale in the open market with a reasonable time for the seller to find a purchaser;
- both the seller and the purchaser know of all the uses and purposes to which the property is adapted, how it can be used and the enforceable restrictions on its use; and
- both the seller and purchaser seek to maximize their gains and neither is in a position to take advantage of the exigencies of the other.
Local tax roll value, or local value, is determined by the county appraisal district and submitted to PTD by the CAD and each school district on their annual self-reports. 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 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 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 informal administrative hearings process. School districts may protest the findings of the final PVS in district court. The administrative hearings process requires that the protester 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, who is appointed by the Comptroller's General Counsel and reports directly to the Comptroller, holds formal hearings. The hearings examiner is not an employee of PTD.
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 that it can appraise like properties together.
Corsicana ISD appealed properties in the study findings of the preliminary PVS but its appeal was unsuccessful and it became an eligible school district in July 2005. The appeal failed because its value was not within the confidence interval.
A review of the school districts in the county indicates that Navarro CAD is not consistently appraising single-family residences or rural residences. The CAD is not appraising commercial real estate and commercial personal property at market value as determined by PTD. The CAD is incorrectly determining values for Farm & Ranch Qualified acreage properties in all of the ISDs due to inaccurately valuing Dry Cropland acreage, Native Pastureland and Improved Pastureland acreage. The overall weighted mean ratio for rural properties in the CAD is 1.11. This ranges from a low of 1.0828 in Dawson to a high of 1.1461 in Corsicana.
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 valued using a special statutory formula.
In the 2004, PVS both Corsicana and Mildred ISDs fell outside the study's statistical margin of error. The PVS determined Mildred ISD's taxable value to be invalid but certified local value. Category D, with a weighted mean ratio of 1.1859, contributed to the invalid finding in Mildred ISD. Subcategory D1 had a weighted mean ratio of 1.1418 while D2 had a weighted mean ratio of 1.1909.
Corsicana ISD (identified as eligible) did not consistently test at market value in Single-Family Residential (Category A), Commercial Real Property (Category F1) and Commercial Personal Property (Category L1). These categories are the reasons that Corsicana's values are not within the acceptable range determined by the PVS.
Mildred ISD fell outside the Comptroller's confidence interval because the CAD inaccurately valued Category A and Subcategory D2 properties in the PVS. The weighted mean ratio for Category A in Mildred was 1.0817. Category A represented 29 percent of the value in Mildred ISD. The weighted mean ratio for Subcategory D2 in Mildred was 1.1909. Subcategory D2 represented 15 percent of the value in Mildred ISD.
In general, a ratio indicates the percentage of market value at which a CAD appraises a property or group properties. A ratio between 0.95 and 1.05 in any property category means that the appraisal district is appraising that property category within 5 percent of its market value according to the PVS.
Eligible School District
The PVS certified Corsicana as an eligible school district with values outside of the confidence interval limit. The confidence interval is a range of values that the Comptroller statistically determines as acceptable. In general, a ratio of between 0.95 and 1.05 in any property category makes it more likely that CAD appraising property within the margin of error, or that it is appraising property at or near market value.
There were five property categories tested in Corsicana ISD: Category A; Category F1; Category L1; Category D; and Category J.
Category A sampled properties tested with a weighted mean ratio of 0.9433 and comprises 37 percent of the school district's value and 50-51 percent of the tested value.
A review of Category F1 properties indicates that the CAD appraised sampled properties from as low as 70 percent to a high of 129 percent of market value with a weighted mean ratio of 0.8714. Category F1 makes up 14 percent of the ISD's value and almost 19 percent of the tested value.
A review of Category L1 sampled properties indicates that the CAD appraised from as low as 30 percent to a high of 129 percent of market value with a weighted mean ratio of 0.8359. Category L1 makes up 9 percent of the ISD's value and almost 12 percent of the tested value.
Corsicana formally appealed Category D2 (rural residences).
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 the CAD is appraising properties at inconsistent percentages of market value.
In addition, according to IAAO in the Standard on Ratio Studies, Category A properties should generally be 15.0 or less and for new and homogeneous areas, 10.0 or less. For Category C properties, 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 2004 COD for Navarro CAD Category A was 13.02; Category C was 14.55; Category D was 27.03; Category F1 was 11.89; Category G was 11.58; Category J was 7.69; and Category L1 was 18.06.
Navarro CAD Summary
In summary, the Navarro overall CAD median ratio is 0.98. Nevertheless, there are wide ranges within these categories. For example:
- In Category A the ratios for sampled properties range from 0.43 to 2.29 with a median ratio of 0.97. Sixty-one percent of sampled properties were within 10 percent of the median, and 88.8 percent were within 25 percent of the median.
- Category C sampled properties ratios range from 0.58 to 1.68 with a median ratio of 1.00. Some 46.8 percent of sampled properties were within 10 percent of the median, and 80.6 percent were within 25 percent of the median.
- Category D sampled properties ratios range from 0.19 to 6.64 with a median ratio of 0.98. Some 42.7 percent of sampled properties were within 10 percent of the median, and 72.0 percent were within 25 percent of the median.
- Category F1 sampled properties ratios range from 0.70 to 1.29 with a median ratio of 0.89. Fifty percent of sampled properties were within 10 percent of the median, and 96.2 percent were within 25 percent of the median.
- Category G sampled properties ratios range from 0.55 to 1.10 with a median of 1.01. Seventy percent of sampled properties were within 10 percent of the median, and 80.0 percent were within 25 percent of the median.
- Category J sampled properties ratios range from 0.61 to 1.80 with a median of 0.99. Some 83.9 percent of sampled properties were within 10 percent of the median, and 88.8 percent were within 25 percent of the median. And,
- Category L1 sampled properties ratios range from 0.30 to 1.29 with a median of 0.95. Fifty-two percent of sampled properties were within 10 percent of the median, and 76.0 percent were within 25 percent of the median.