Overview of County Appraisal District
County History and Demographics
Rains County is located in northeast Texas. The center of the county is about 65 miles east of Dallas and about 120 miles west of Texarkana. The county is bordered is by Hunt, Hopkins, Wood and Van Zandt Counties. The Sabine River forms the southern boundary of the county and part of the county's western boundary.
Rains County covers about 259 square miles. Based on the total square miles, the county is among the ten smallest in Texas and only three other counties have fewer square miles. In addition, about ten percent of the county is under water. Lake Fork (reservoir) in the eastern part of the county, Lake Tawakoni in the northwest and the Sabine River are major features of the county's geography.
Archeological evidence places natives of the Caddo culture in the Rains County area around 800 A. D. Other archaeological evidence indicates the Tawakonis and Yscanis moved into the area in the eighteenth century. The first settlers of European decent arrived in the 1840s and established Hooker's Mill in what is now the northwestern part of the county.
Up to 1870 most of what is now Rains County was part of Wood County but when the county was established that year the Legislature also took land from Hunt and Hopkins Counties to form the county. Emory, which was previously named Springville, was selected as the county seat and remains the county seat today.
Rains County was a center of the agrarian populist movement in the early twentieth century. County residents founded the Farmers Educational and Cooperative Union in 1902. By 1905 the union had gone national and became know as the Farmers Union. Though the union's headquarters were in Rains County, by 1914 membership in the union was estimated to be in the hundreds of thousands.
The county population was 8,099 in 1920 and may have been more than 10,000 by 1925 but with the onset of the Great Depression, it began to decline and by 1940 it had fallen to 7,334. World War II may also have taken a toll on the county's population as it is speculated that people moved out of the county to work in the war industries. By 1950 population had fallen to 4,266.
The main agricultural activity shifted from farming to livestock in the period between 1930 and 1950 and the population decline continued as the 1960 population dropped to 2,993.
The decade of the 1960s, however, was a turning point in the county's history because of the completion of Lake Tawakoni. The total area of the lake―though not all in Rains County―was about 20 percent of the total square miles in Rains County. During the decade of the 60's, the Army Corps of Engineers recognized a need for Sabine River flood control and the potential for water recreation and subsequently began construction of Lake Fork Reservoir in 1970 and by 1980 when it was completed, the county population was 4,839. The lakes' influences did not end in 1980. The 2000 census showed a county population of 9,139 and, while many new residents settled in the areas near the lakes, about ten percent of the total population was employed in non-farm activities.
Emory remains the largest city in the county; its 2000 population was about 1,200. Point and East Tawokoni, the other two main cities in the county each had populations of about 900.
There are two member school districts in the appraisal district: Rains Independent School District (ISD) and Miller Grove Independent School District. Rains Independent School District encompasses most of the county but the school district only has one campus and all grades are located at this location. Miller Grove Independent School District has very little property in Rains County but the school decided to have Rains CAD appraise its property in Rains County. Most of Miller Grove ISD's property is in Hopkins County and the ISD uses Hopkins CAD to appraise its property there.
Appraisal District Organization and Staffing
The appraisal district was established in 1980 and produced its first appraisal roll for the member taxing units in 1982 when State law required all appraisal districts to become active. The appraisal district has 7.5 employees. The district contracts with the Capitol Appraisal Group, Incorporated (CAG) for professional appraisal services for mineral, utility, and industrial properties. The appraisal district contracts with the Software Group of Plano, to provide its computer operating system
Exhibit 1 outlines the appraisal district organization.
Rains County Appraisal District Organization
Board of Directors Paul Foley, Chair Catalina Kerr, Secretary Dan Sheffield Gordon Krantz Bob Russell
Source: Rains CAD.
The staff appraisers and GIS Mapper report directly to the chief appraiser. The appraisal staff consists of 2.5 appraisers but the chief appraiser also performs appraisals. The other staff are assigned to tax collections. Rains CAD serves as a consolidated tax collections office and collects taxes for all seven of its member taxing units. Three staff are assigned to this function: two collectors and the CAD's administrative assistant who acts as supervisor to the collectors. The collectors also serve as receptionists for the appraisal district and provide most of the taxpayer assistance. In addition, one of the collector/receptionists coordinates the property transaction verification process.
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 appraisal district is responsible for appraising 13,985 real, mineral, and personal property parcels within the boundaries of the appraisal district. This includes 2,773 mineral property accounts, 412 business personal property parcels and 10,800 real property parcels.
The appraisal district contracts with the Capitol Appraisal Group, Incorporated (CAG) for professional appraisal services. CAG appraisal services include appraising utility, mineral, and industrial property.
The district provides appraisal services for 7 taxing units: Rains County, Rains Independent School District, Miller Grove Independent School District, the City of East Tawakoni, the City of Emory, the City of Point, and Rains County Emergency Services District. Rains CAD appraises only the portion of Miller Grove Independent School District in Rains County as the school district also belongs to the Hopkins County Appraisal District, which appraises the school's property in Hopkins County. Rains CAD appraised about four percent ($3.1 million out of $73.7 million) of Miller Grove's total value for 2004.
Exhibit 2 presents the types of properties appraised by Rains CAD in tax year 2003 and 2004. In-house staff handles all property categories except Category G (minerals), Category J (utilities), and Category F2/L2 (industrial - real/personal), which are appraised by CAG.
Rains CAD Property by Category Summary with Assigned Responsibility
Tax Year 2003 and 2004
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 Ag-use and Farm/Ranch Land w/Improvements. In-house staff Category F1 Commercial Real In-house staff Category L1 Commercial Personal In-house staff Category G Minerals Contracted Appraisal Group Category J Utilities Contracted Appraisal Group Category F2 Industrial Real Contracted Appraisal Group Category L2 Industrial Personal Contracted Appraisal Group Source: Rains County Appraisal District, October 2004.
Most appraisal districts contract out some of its appraisal responsibilities to appraisal firms. Appraisal district contracts with external appraisers routinely do not include a parcel count for the number of appraisals an external appraisal company will perform but in assessing the staff to parcel count ratio in each appraisal district, PTD uses parcel counts reported in the district's 2003 self report and the independent school districts self reports to calculate the parcels per appraisal district staff. The 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 taxed based on market value; E, improvements on rural land; F1, commercial real property; L1 commercial personal property; M1, mobile homes; O, residential inventory; and S, special inventory, all as shown in Exhibit 3.
PTD estimates that the Rains CAD staff is responsible for appraising about 15,788 parcels. The International Association of Assessing Officers (IAAO) Standards state that small taxing usually have from 1,500 to 1,700 parcels per staff member and that large taxing usually have from 3,000 to 3,500 parcels per staff member with an average of 2,500 parcels per staff member.
Some comparable appraisal districts to Rains in size are Comanche, Lee, and Lampasas. The number of parcels per staff member in Rains CAD is 2,255; the number of parcels per staff member in Comanche CAD is 1,644; the number in Lee CAD is 1,295; and the number in Lampasas is 2,017. Of course workloads in appraisal districts may vary, sometimes drastically, due to any number of considerations other than parcel count. Geography or the size of an appraisal district may have a significant impact on the time required to work all parcels. The types of properties may also have an impact. More complex commercial and sometimes even residential properties may require more appraisal staff. The data given here is meant to give the reader at least some comparison to other appraisal districts with similar parcel counts and compared to the IAAO standard.
Exhibit 3 includes reported data concerning Rains CAD and the state and CAD group averages.
Reported Data on Parcels, Categories Staffing, Training and Operations
Comparison to State and Group Averages
General Information Rains State Avg. Group Avg. Parcel Size Group (by number of locally appraised parcels) 15,000 - 19,999 Estimated # Locally Appraised Parcels 15,788 55,463 17,647 # Taxing Units 7 15 9 Locally Appraised Parcels to Staff 2,255 3,404 3,021 2003 Composition by Percentage of Value (Self Report): Residential Value 51.5% 52.6% 26.8% Non-Residential, Non Mineral 41.9% 43.6% 58.7% Non-Residential, Mineral 6.5% 3.7% 14.5% 2003 Composition by Account Category Type (Operations Survey): Real Property 10,858 (a) 45,804 17,054 Mineral Property 2,776 13,536 8,362 Business Personal Property 444 4,689 935 Individual Personal Property 0 1,342 457 Total Accounts 14,078 65,372 26,809 2003 Composition by Locally Appraised Parcel Category (Estimated from Self Report): Parcel Type # Parcels % of Parcels A 5,289 33.5% 44.1% 29.6% B 5 0.0% 1.0% 0.3% C 2,615 16.6% 13.1% 18.7% D 3,693 23.4% 24.7% 30.3% E 2,932 18.6% 4.5% 10.5% F1 282 1.8% 3.1% 3.3% L1 398 2.5% 5.7% 4.1% M1 377 2.4% 2.2% 2.5% O 189 1.2% 1.4% 0.6% S 8 0.1% 0.1% 0.0% Total 15,788 100.0% 100.0% 100.0% Financial and Staffing Information (Operations Survey) Rains State Avg. Group Avg. 2003 Budget $341,701 $1,079,695 $379,748 2003 Surplus $0 $71,620 $26,419 2003 Surplus as % of Budget 0.0% 6.6% 7.0% 2004 Budget $366,912 $1,104,961 $390,830 % Change in Budget 6.9% $0 2.9% 2004 Budget per Total Local Parcel $23.24 $19.92 $22.15 Staffing Full Time 7 18 7 Part Time 1 2 2 Supervisory 2 3 2 Programmers * 2 1 Supervisory to Staff Ratio 1:4 1:5 1:4 Chief Appraiser Performs Appraisals? Yes 2004 Total Compensation $40,880 $53,564 $44,059 Appraisers Full - Time 2 8 2 Part - Time * 0 2 Salary Range: Low $16,640 $24,504 $23,317 High $18,720 $37,521 $31,236 Training Budget $5,000 $8,832 $5,994 # Registered with BTPE (1) 4 9 4 Types of BTPE Certification: RPA (2) RTA (3) RTC (4) All 1 0 2 0 Operations Information (Operations Survey) Rains State Avg. Group Avg. Reappraisal Last Year of Reappraisal 2003  :  :  : Next Year of Reappraisal 2006  :  :  : Type of Appraisal: Complete  :  :  : Method of Appraisal: Combination  :  :  : Protests 400  : 3,131 159 Protests per Parcel 2.3%  : 4.7% 0.6% Consolidated Collection Yes  :  :  : Collection Budget $47,269  :  :  : Geographic Information System (GIS)? Yes  :  :  : Percent GIS Complete 10%  : 80% 69% Board of Directors Members 5 6 6 Tax Assessor Votes? * Elected Members 0 3 2 Note: An asterisk (*) is shown where data was not reported.
Source: Rains 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. (a) originally reported as 14,078.
Self Evaluation Questionnaire
In preparing for the Appraisal Standards Review, the Property Tax Division requested that Rains CAD complete the International Association of Assessing Officer's Self Evaluation Guide and questionnaire. This instrument allows an appraisal district to assess their compliance with acceptable procedures, standards and organization. PTD sent each appraisal district with an eligible school district an electronic version of the questions and the complete International Association of Assessing Officers (IAAO) evaluation guide, which includes 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.
The PTD provided the IAAO self-assessment guide along with the questionnaire. In the guide's introduction, it statedThe guide is designed for use by individuals who want to evaluate their own procedures and who are seeking to either continually improve or to evaluate their procedures against what is believed to be a standard of best practices in assessment administration.
The Comptroller provided the questionnaire and the guide to Rains CAD to allow it to perform a self assessment of its operations to help it recognize areas where it is doing a good job and areas where it needs to improve. While the district answered the questions, the responses were not particularly useful in establishing how well the district was performing its appraisal obligations as the district did not elaborate enough for the reviewer to draw many conclusions. A theme that consistently appeared throughout the appraisal district's responses and confirmed during the ASR was a lack of market analysis. The district could not produce ratio studies for years prior to the 2005 tax year and there was no evidence that any type of stratification of properties to identify and delineate markets had been performed prior to the 2005 tax year.
Chapter 1: Setting, Legal Framework,
Value Standard and Assessment Cycle.
The district responses indicate that it relies on seminars and conferences to keep informed about legal requirements and matters that impact the tax appraiser profession. In addition, the appraisal district responded that it relies on its legal advisors and its software contractor to provide regular operating system updates to help ensure its data processing systems produce information that is consistent with changes in law and Comptroller mandates.
The appraisal district had significant staff turnover beginning in the 2003 tax year. The district noted that the turnover in the staff and that the resulting inexperience of the appraisal staff has impacted overall appraisal efficiency and effectiveness.
Chapter 2: Resources and Management
The district's replies indicate overall satisfaction with the current level of resources and the staff's commitment to produce quality results. Again, replies in this chapter restate the issue of staff turnover and inexperience as a management issue impacting human resources.
Chapter 3: Computerization
The questions in Chapter 3 indicate satisfaction with automated resources, including the software package. The district did note that its geographic information system is currently not a part of the main appraisal system although the ASR revealed the staff is continuing to work on completing the GIS and integrating it with the appraisal system.
Chapter 4: Mapping
The district's responses to the questions in this chapter confirm the district is still building its map system. Maps are available and are computerized but the chief said all the parcel boundaries have not been verified according to deed records nor is the map system integrated with the appraisal system. The cartographer is working to complete the verification process for properties in the City of Emory.
Chapter 5: Data Collection
The district chose not to respond to several of the questions from this chapter. Answers to similar questions about data collection and analysis from other chapters do, however, show the district uses the generally accepted methods for collecting data about its markets. During the ASR the chief appraiser explained that the district sends sales verification letters based on deed filings and uses the multiple listing service to identify other transactions. In addition, the district researches building permits and water and sewer connections as another method of discovery.
The chief appraiser said the district intends to do annual physical inspections of property although the response to question # 3 implies the last physical inspections were for the 2004 reappraisal that the district began in 2003.
Chapters 6: Land Evaluation
The district answered that land valuation schedules have not been changed in several years. Additionally, the questions about analyzing the local market for land were unanswered and indicate the district did not use generally accepted market analysis techniques.
The ratio for rural land in the 2003 taxable value study was .8470 indicating appraised values for land were well below their market values. The chief appraiser was literally working on updating the land valuation schedules during the fieldwork for the ASR. She stressed that when she arrived to take the job, she could not find the schedules that previously had been used to appraise land.
Chapter 7: Residential Property Valuation
The responses concerning the evaluation of residential property are consistent with the responses to the questions about land evaluation. The appraisal district's mass appraisal process is consistent with the generally accepted process but local market analysis is minimal. During the ASR the chief appraiser said the appraisal problem in the county was so overwhelming that her first priority has been to make sure the appraisal district had appraisal schedules to apply in its mass appraisal system.
Chapter 8: Commercial Property Valuation
The appraisal district does not use the income approach to appraise commercial property. The district's responses indicate that it uses cost data and adjusts it to the local market. This process is consistent with generally accepted procedures. The district's failure to answer the last question in this section, which asks about software for analyzing commercial properties, is consistent with responses or lack thereof, about market analysis in the two previous chapters.
Chapter 9: Sales Data, Ratio Studies, and Stratification
The appraisal district's answers indicate the district uses generally accepted procedures in preparing its ratio studies. Though there were no ratio studies from previous tax years available, during the ASR fieldwork the chief appraiser said the district will perform ratio studies in finalizing the land schedules, which will be used to develop 2005 values.
Chapter 10: Personal Property Assessment
The answers in this section indicate the appraisal district uses generally accepted procedures to appraise personal property. The chief appraiser responded that the district is attempting to physically inspect all personal property parcels but due to the limitations caused by an inexperienced staff, it has been difficult to accomplish this objective.
Chapter 11: Assessment Administration
The district's responses indicate its procedures for processing data to update property record cards is consistent with the procedures appraisal districts use. The responses also indicate compliance with Comptroller Rules and State law.
Chapter 12: Defense of Values
The district's answers describe an effective system for disposing of taxpayer protests. The appraisal district also noted that it displays its hearing procedures at the location of appraisal review hearings in addition to including the hearing procedures in hearing notifications it sends to the taxpayers.
Chapter 13: Public Relations
The district's responses indicate it complies with the public access (to appraisal records and data) requirements. The responses do not, however, describe an active or on-going public relations program.
Findings of the Property Value Study and Summary Worksheets
The purpose of the Property Value Study (PVS) is to determine the total taxable value in each school district in the state. Accordingly, the PVS determined the total property value in Rains ISD. 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, which is considered market value based on usage. 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 property must be advertised on the market for a reasonable time and the parties to the sale are not related.
CADs and the Property Tax Division (PTD) in its annual PVS, are required by law to appraise property at market value. Agricultural land and timberland that meet legal requirements are appraised according to their productivity value. Market value, in short, is the price for which a property would transfer from a willing seller to a willing buyer. In order for a transaction to meet the legal definition of a market transaction, both parties must know the uses and purposes of the property and those for which it can be used; the property must be on the market for a reasonable time; and the parties to the sale cannot be related or in a position to take advantage of the other's circumstance.
Local tax roll value, or local value , is determined by the county appraisal district and submitted to the PTD on the annual report of property value. The PTD staff estimates the total taxable value in every a school district. This estimate is referred to as state value, and is determined independently. Alternatively, the PTD may accept the local appraised value if it determines that the local value is valid. Taxable value represents the market value less state-mandated homestead exemptions, disabled veterans' exemptions, value limitations, reinvestment zones, freeport exemptions and the value lost to the school tax ceiling for homeowners over age 65 or disabled and other state-mandated exemptions.
PTD issues preliminary and final PVS findings each year. School districts and county appraisal districts may protest the findings of the preliminary PVS through an administrative hearings process with the Comptroller. School districts may sue over final findings of the 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 hearings examiners who are appointed by the Comptroller's General Counsel. Hearings examiners report directly to the Comptroller and are not PTD employees.
When conducting the PVS, the PTD assigns properties to various categories, such as residential, commercial and rural land and improvements. Properties are stratified into categories so that similar properties can be analyzed based on the markets for those types properties. Of the two school districts that belong to Rains CAD, only Rains ISD was determined to be an eligible district based on the 2003 taxable value study. In Miller Grove ISD the PTD only estimated a value for land appraised based on its productivity value. The PTD found a ratio of 100 percent for the property in Miller Grove ISD in Rains County. Overall, PTD found the local value to be valid for the entire school district.
Rains ISD protested the preliminary findings of the 2003 PVS. The district protested Category A (single family residences), Category D/E (rural land and improvements on rural land) and Category F1 (commercial real property). PTD staff reviewed the protest filings and recommended changes that affected the market value estimates for each of the protested categories. All of the recommended changes were in Rains ISD's favor and the ratios of each protested category increased. The Category A ratio increased from .7813 to .8076; the Category D/E ratio increased from .8323 to .8470; and the Category F1 ratio increased from .8685 to .9085. Even with these changes, the PVS clearly shows that single family residences, rural land and commercial real property were under appraised in Rains CAD in 2003. The effect of the under appraisals on the results of the PVS is underscored by the fact that Categories A and D/E accounted for about seventy-one percent of the total value in the school district.
Three of the four categories― Category A-single family residences; Category D-rural land and improvements on that land; and Category F1-commercial real property were under appraised according to the PTD's 2003 PVS. The fourth category that the PTD studied: Category G-minerals was over appraised.
The local value for categories of properties included in the PTD's 2003 PVS was $287,233,581. The state market value estimate for the same categories was $337,138,523. For the local reported value to be considered valid, it needed to be within plus or minus 5 percent of the state value. The PTD's margin of error in the Rains ISD taxable value study was five percent. This five percent margin of error produced a confidence interval, that is, the range of values with an equal statistical chance of being correct between $318,532,266 and $355,744,780 (see Appendix 14). The local value fell $31,298,685 below the lowest value in the range of values considered valid.
Category D consists of two sub categories D1: land taxed based on its productivity and D2: land taxed based on its market value plus the improvements on rural land accounted for thirty percent of the total value in the school district. Category A was forty-one percent of the total value in the school district and, while the PVS showed that Categories A, D and F1 were all under appraised in 2003, Category A was under appraised the most. The difference between the PTD value estimate and the local value was $33,642,657. It was the under appraisal in Category A that most heavily influenced the PTD's invalid value finding.
For a statistical explanation of why the district was selected as eligible, see Appendix 18.