Chapter 1
Overview of County Appraisal District1.1
County History and DemographicsUpshur County is located in northeastern Texas. According to the Handbook of Texas, Gilmer, the seat of government, is near the center of the county, twenty-three miles northwest of Longview. The county was named for Abel Packer Upshur, the secretary of state under President John Tyler. Upshur County encompasses 587 square miles of land that slopes gradually from northwest to southeast, with altitudes that range from 225 to 685 feet above sea level. It is in the Piney Woods vegetation region and is covered by grasslands; loblolly, shortleaf, longleaf, and slash pines; and hardwoods such as oak, hickory, and maple. Generally sandy, acidic, light-colored surface soils cover deep reddish, mottled subsoils. Upshur County straddles both of the major drainage systems of Texas. The northern portion drains into the Mississippi River via Little and Big Cypress creeks, while the waters of the southern portions flow to the Gulf of Mexico by means of the Sabine River, which forms the southwestern border of the county.
The population of the county for 2003, according to the U.S. Census Bureau, was 36,959 residents. The median age of Upshur residents in 2000 was 37.7 years. The median per capita income was $16,358, and 14.9 percent of the population lives at or below the poverty level.
According to the Gilmer Historical Facts, the area was first settled in 1835 and became Upshur County twelve years later.
The county includes the Big Sandy Independent School District, Gilmer Independent School District, Ore City Independent School District, Union Hill Independent School District, Harmony Independent School District, New Diana Independent School District, and Union Grove Independent School District.
1.2
Appraisal District Organization and StaffingThe appraisal district was formed in 1981 and became active in 1982. The district has a Board of Directors (board) consisting of five members. The Board of Directors hires the chief appraiser who is the chief operating officer of the district. The staff of the district consists of a deputy chief appraiser, four appraisal positions, a cartographer and mapping technician, a mineral maintenance position, public relations coordinator, a filing clerk, office assistant and receptionist. The board hires the chief appraiser, sets the budget and appoints the appraisal review board members.
Exhibit 1 outlines the appraisal district organization and staffing.
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.
Appraisal district staff appraises residential, commercial and personal property. The appraisal district contracts with Capitol Appraisal Group, Inc. (CAG) for professional appraisal services. CAG's services include the valuation of mineral, utility and industrial properties. The CAD is responsible for appraising all the taxable property in Upshur County.
The district provides appraisal services for thirteen taxing units, including Upshur County, Big Sandy Independent School District, Gilmer Independent School District, Ore City Independent School District, Union Hill Independent School District, Harmony Independent School District, New Diana Independent School District, Union Grove Independent School District, City of Gilmer, City of Big Sandy, City of Ore City, City of East Mountain, and Upshur County Rural Fire District #1.
Exhibit 2
Upshur CAD Property by Category Summary with Assigned Responsibility
Property Category Account Type Description Responsible for Appraisal Category A Residential In-house staff Category B Multi-Family In-house staff Category C Vacant Lots In-house staff Category D/E Farm/Ranch Land with Improvements In-house staff Category F1 Commercial Real In-house staff Category L1 Commercial Personal In-house staff Category G Minerals Contracted Appraisal Firm Category J Utilities Contracted Appraisal Firm Category F2 Industrial Real In-house and Contracted Appraisal Firm Category L2 Industrial Personal Contracted Appraisal Firm Source: Upshur County Appraisal District, September 2004. Exhibit 2 presents the types of properties appraised by Upshur CAD in tax year 2003. In-house staff handle all property categories except Category G (minerals), Category J (utilities), and part of Category F2/L2 (industrial ― real/personal), which is appraised by CAG.
Most appraisal districts contract out some appraisal to contract appraisal firms. PTD does not track parcel counts appraised by external appraisers in appraisal districts. Appraisal district contracts with external appraisers routinely do not include a parcel count for the number of appraisals an external appraisal company will perform. In assessing the staff to parcel count ratio in each appraisal district, PTD uses parcel counts reported in the district's 2003 self report and the county's independent school district self reports to calculate the parcels per appraisal district staff. PTD does include all of the commercial real and personal property parcels in the calculation, since PTD is unable to determine exactly how many parcels are assigned to in-house staff versus a contract appraisal firm. The total parcels appraised in-house are calculated by summing the total number of parcels reported in Categories: A, single family residential; B, multifamily residential; C, vacant lots; D, rural land; E, rural improvements; F1, commercial property; L1, personal property; M1, mobile homes; O, residential inventory; and S, special inventory, as shown in Exhibit 3.
Exhibit 3
Reported Data On Parcels, Categories Staffing, Training And Operations
Comparison to State and Group Averages
General Information Upshur State Avg. Group Avg. Parcel Size Group (by number of locally appraised parcels) 35,000 - 49,000 Estimated # Locally Appraised Parcels 39,719 55,463 41,470 # Taxing Units 13 15 15 Locally Appraised Parcels to Staff 3,611 3,404 3,558 2003 Composition by Percentage
of Value (Self Report):Upshur State Avg. Group Avg. Residential Value 43.4% 52.6% 39.1% Non-Residential, Non Mineral 34.9% 43.6% 54.3% Non-Residential, Mineral 21.7% 3.7% 6.6% 2003 Composition by Account Category Type (Operations Survey): Real Property 32,953 45,804 37,582 Mineral Property 104,026 13,536 12,159 Business Personal Property 1,717 4,689 1,922 Individual Personal Property 0 1,342 1,166 Total Accounts 138,696 65,372 52,829 2003 Composition by Locally Appraised Parcel Category (Estimated from Self Report): Upshur State Avg. Group Avg. Parcel Type # Parcels % of Parcels A 11,298 28.4% 44.1% 30.2% B 98 0.2% 1.0% 0.3% C 4,757 12.0% 13.1% 22.9% D 13,521 34.0% 24.7% 25.2% E 5,994 15.1% 4.5% 9.8% F1 1,121 2.8% 3.1% 2.8% L1 1,608 4.0% 5.7% 4.0% M1 1,283 3.2% 2.2% 3.0% O 0 0.0% 1.4% 1.6% S 39 0.1% 0.1% 0.1% Total 39,719 100.0% 100.0% 100.0% PTD estimated that Upshur CAD staff is responsible for appraising about 138,696 parcels. The International Association of Assessing Officer (IAAO) Standards state that small taxing units run from 1,500 to 1,700 parcels per staff member and large taxing units run from 3,000 to 3,500 parcels per staff member with an average of 2,500.
Districts comparable in size to Upshur are Cooke, Bandera, Leon and Lamar. The number of parcels per staff member for Upshur CAD was 3,611. Cooke CAD was 2,318, Bandera CAD was 5,082 Leon CAD was 6,035 and Lamar CAD was 4,970. Of course, workloads in appraisal districts may vary 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 sometime even residential properties may require more staff to appraise. The data given here is meant to give the reader at least some comparison to other appraisal districts with similar parcel counts and the standards determined by IAAO.
Exhibit 3 includes reported data concerning CAD and state and group averages.
Exhibit 3
Reported Data On Parcels, Categories Staffing, Training and Operations
Comparison to State and Group Averages (continued)
Financial and Staffing
Information (Operations Survey)Upshur State Avg. Group Avg. 2003 Budget $536,135 $1,079,695 $629,090 2003 Surplus $0 $71,620 $17,334 2003 Surplus as % of Budget 0.0% 6.6% 2.8% 2004 Budget $565,535 $1,104,961 $656,877 % Change in Budget 5.2% $0 4.4% 2004 Budget per Total Local Parcel $14.24 $19.92 $15.84 Staffing Full Time 11 18 12 Part Time * 2 1 Supervisory 1 3 3 Programmers * 2 2 Supervisory to Staff Ratio 1:11 1:5 1:4 Chief Appraiser Performs Appraisals? Yes 2004 Total Compensation $48,600 $53,564 $55,687 Appraisers Full - Time 4 8 4 Part - Time * 0 1 Salary Range: Low $22,800 $24,504 $22,896 High $35,400 $37,521 $36,455 Training Budget $3,885 $8,832 $7,153 # Registered with BTPE (1) 5 9 6 Types of BTPE Certification: RPA (2) RTA (3) RTC (4) All 4 1 1 0 Operations Information
(Operations Survey)Upshur State Avg. Group Avg. Reappraisal Last Year of Reappraisal 2003 Next Year of Reappraisal 2004 Type of Appraisal: Complete Method of Appraisal: Combination Protests 190 3,131 709 Protests per Parcel 0.1% 4.7% 1.2% Consolidated Collection No Collection Budget $0 Geographic Information System (GIS)? * Percent GIS Complete * 80% 65% Board of Directors Members 5 6 6 Tax Assessor Votes? No Elected Members 2 3 2 Note: An asterisk (*) is shown where data was not reported.
Source: Upshur CAD's self report and ISDs 2003 Self Reports 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 Tax Professional Examiners. (2) RPA - Registered Professional Appraiser. (3) RTA - Registered Tax Assessor-Collector. (4) RTC - Registered Texas Collector.1.3
Self Evaluation QuestionnaireIn preparation for the Appraisal Standards Review, Upshur CAD was asked to complete the IAAO's Self Evaluation Questionnaire. This instrument allows an appraisal district to assess its compliance with acceptable procedures, standards and organization. Each district receives an electronic version of the questionnaire and the complete IAAO manual explaining each question with information on how to answer each question. Each district undergoing an appraisal standards review is requested to perform the self assessment, with the goal of assisting the district in determining how well it is performing.
Upshur County answered 106 out of 110 questions with no response to 4 questions. The district gave mostly simple "yes" or "no" answers to each question rather than providing concise responses with explanations. About 80 percent of the responses were affirmative, with 15 percent negative and less than 5 percent accounted for no response. The district's answers are included in Appendix 15.
In Chapter 1, on legal issues and assessment cycles, the district noted that it keeps current with legislative proposals, laws and court decisions through subscriptions to the TAAD, TAN and Comptroller's Statement newsletters and its law firm's legislative updates and newsletters. While no response was provided to the question about what laws and matters support and undercut a current market value standard, the survey responder noted that Upshur CAD does not have the right number of employees to perform the assessment function effectively and efficiently but does have the necessary size, resources and fiscal capacity.
In Chapter 2, on resource management, the district affirmed it has adequate resources and a well managed staff that has is quality conscious and the right skills and resources to carry out assessment functions.
In Chapter 3 on computerization, and Chapter 4, on mapping, the district noted it does not offer public web access and its computer system does not provide geographic information services capabilities. However, the district has at least one computer workstation for each appropriate staff member. For mapping, the district noted it does not have computerized maps, geographic coordinates are not displayed on cadastral maps and the office's maps and records are not part of a multipurpose GIS or LIS. Upshur CAD does assign a unique identifier to each parcel and maintains an up-to-date, complete set of cadastral maps showing the size, shape and location of each parcel.
In Chapter 5, data collection, the district noted it has programs and processes for routinely collecting and maintaining more than the minimum required data using experienced staff. However, the district does not use a hand held computer for field data collection.
In land evaluation, Chapter 6, the district reviews, confirms and maintains land sales and keeps these records in a sales file with land use stratified by zoning or use and location. Upshur CAD also affirmed it does not analyze land sales on a per unit basis or plot the per unit values on maps. Methods such as abstraction, allocation and land residual capitalization are not used to derive standard unit values. However, the cost-of-development method is applied for large undeveloped land tracks and spreadsheets or statistical software is used to help develop land values.
In Chapters 7, 8, and 9, on residential property valuation, commercial property valuation, and sales data, respectively, the district noted it uses sales comparisons, sales ratios and statistical models along with cost and depreciation schedules based on current data to value residential properties. While the district uses three approaches to valuing commercial properties, it does not employ software tools or maintain automated income or sales data to analyze parameters or build market models. Upshur CAD conducts timely ratio studies and uses the results in planning and determining reappraisal priorities. The district's ratio study software offers graphics capabilities and computes standard measures of level and uniformity in confidence intervals. The district did not respond to whether it supplements ratio study analysis with tests to ensure unsold properties have been appraised similarly to properties that have been sold.
In Chapter 10 on personal property assessment, the district noted it employs several methods to discover taxable property, including delivering forms to owners, following up on forms not returned by owners and physically inspecting businesses to ensure complete and accurate reporting. Upshur CAD does not use the income approach to value leased equipment.
In Chapter 11 on assessment administration, the district affirmed it updates ownership and legal information within 30 days of receipt, verifies eligibility for exemptions and other property tax relief and produces computerized property rolls with notice to taxpayers timely. The district noted in Chapter 12, defense of values, that it encourages informal discussions of concerns and complaints prior to a formal appeal; formal appeals are tracked to completion, including record updates. Upshur CAD did not respond as to whether an independent review is obtained from another appraiser as part of its formal appeal defense when valuation is difficult and considerable value is at issue.
In public relations, Chapter 13, the district noted it is required to submit information to a regulatory body for approval, and has an active program of public appearances in lieu of a public relations program but does not use automated mapping or GIS for easy public access to information.
1.4
Findings of the Property Value Study and Summary WorksheetsThe Property Value Study (PVS) determines the total property value in each school district in the Upshur CAD. With a few notable exceptions, all CADs and the Property Tax Division (PTD) are required by law to appraise property at market value. Agricultural land and timberland are appraised according to productivity value. Market value, in short, is the price that a property would transfer from a willing seller to a willing buyer. For it to be a market transaction, neither party may be under duress to buy or sell, the sale must be on the market for a reasonable time and the parties to the sale may not be related.
Local tax roll value, or local value, is determined by the county appraisal district and submitted to PTD on its annual self-report. The PTD staff estimates the total taxable value in a school district, referred to as state value, by determining market value or by accepting the local appraised value in each property category (see Exhibit 2) in the district and then adding these category values for an overall school district value. PTD then deducts state-mandated homestead exemptions, disabled veterans' exemptions, value limitations, reinvestment zones, freeport exemptions, the loss between market value and productivity value appraisal of qualified agricultural lands, the school tax ceiling for homeowners over age 65 or disabled and other state-mandated exemptions.
PTD issues a preliminary and final PVS each year. School districts and county appraisal districts may protest the findings of the preliminary PVS through an administrative hearings process with the Comptroller, and school districts may protest the findings of the final PVS in district court. The administrative hearings process requires the protester to file a written protest with supporting documentation within 40 days of the issuance of the preliminary PVS. The PTD may amend the findings of the preliminary PVS based on the submission of the written protest, an informal hearing or a formal hearing. Formal hearings are held by a hearings examiner, appointed by the Comptroller's General Counsel, and reporting directly to the Comptroller. The hearings examiner is not an employee of the PTD.
When conducting the property value study, PTD assigns properties to various categories, such as residential, commercial and rural property. Properties are divided into categories so that like properties are assessed together.
Upshur CAD appealed the findings of the preliminary study. The appraisal district represented New Diana ISD in the petition. New Diana ISD and Upshur CAD protested property category A, Single Family Residences. In category A, the district requested and received changes on the local modifier used to develop the market value of manufactured housing properties in New Diana. The district also requested changes in the depreciation methodology the PTD employed. The district went to a formal hearing in May 2004 requesting further changes in the local modifier applied and the depreciation used.
Despite the changes, the New Diana school district was unable to move into the confidence interval and was certified an eligible district in June 2004.
A review of the school districts in the county indicates that Upshur CAD is consistently appraising the single-family residence properties and rural residence properties below market value, as determined by the PTD. In the 2003 PVS, New Diana school district fell outside the study's statistical margin of error. Single-family residences (category A) and rural residences (category D2) are the primary reasons that the school's values are not within the acceptable range determined by the study. Other school districts in the county are Big Sandy, Gilmer, Ore City, Union Hill, Harmony, and Union Grove ISDs.
In general, a ratio of between 0.95 and 1.05 in any property category makes it more likely that the district is appraising property within the margin of error, or that it is appraising property at or near market value, according to the PVS.
Eligible School District
New Diana ISD was identified as an eligible district with value outside the confidence interval limit. There are two property categories tested in New Diana ISD: (1) category A, Single-Family Residences, making up 39.9 percent of the district's value with a weighted mean ratio of 0.9311; and (2) category D, Rural Real, making up 46 percent of the district's value with a weighted mean ratio of 0.9511.
New Diana ISD category A makes up 45.2 percent of the tested value. The appraisal district is placing a value on the category A single-family residences below market value with a weighted mean ratio of 0.9311. Category D, Rural Real makes up 54.8 percent of the tested value and is slightly below market value with a weighted mean ratio of 0.9511. Category D represents rural properties and contains two subcategories: D1 and D2. Subcategory D1, Productivity Value of Qualifying Acres, is primarily farm and ranch land that qualifies for the special productivity appraisal. Subcategory D2, Non-Qualifying Acres and Farm and Ranch Improvements, is primarily rural homes and land that does not qualify for farming or ranching or timberlands. The differences in value between qualified and non-qualified rural land are often wide since D1 land is appraised using a special statutory method to determine the land's productivity value and D2 is based on what the land would sell for in an open market transaction. New Diana ISD subcategory D1 consists of 5.9 percent of the tested value. D1 tested with a weighted mean ratio of 1.4246. Subcategory D2 makes up 48.9 percent of the school district's total tested value. D2 tested below market value with a weighted mean ratio of 0.9145.
Other School Districts
Big Sandy ISD is just within the confidence interval limit. Big Sandy ISD category A makes up 33.9 percent of the tested value. The appraisal district is placing a value on the category A single-family residences below market value with a weighted mean ratio of 0.9182. Category D, Rural Real makes up 42.4 percent of the tested value and is above market value with a weighted mean ratio of 1.0276. Big Sandy ISD subcategory D1 consists of 7 percent of the tested value. D1 tested with a weighted mean ratio of 1.2482. Subcategory D2 makes up 35.4 percent of the school district's total tested value. D2 tested near market value with a weighted mean ratio of 0.9929. Category F1, Commercial Real properties are 7.6 percent of the district's value and tested below market value with a weighted mean ratio of 0.9245. Category G, Mineral properties are 5.7 percent of the district's value and tested below market value with a weighted mean ratio of 0.9801. Category J, Utility properties are 9.7 percent of the district's value and tested below market value with a weighted mean ratio of 0.9760. Category L1, Commercial Personal properties are 6 percent of the district's value and tested below market value with a weighted mean ratio of 0.8490.
Gilmer ISD is within the confidence interval limit. Gilmer ISD category A makes up 32.5 percent of the tested value. The appraisal district is placing a value on the category A single-family residences below market value with a weighted mean ratio of 0.9427. Category D, Rural Real makes up 27.4 percent of the tested value and is below market value with a weighted mean ratio of 0.9300. Gilmer ISD subcategory D1 consists of 3.3 percent of the tested value. D1 tested with a weighted mean ratio of 1.3433. Subcategory D2 makes up 24.1 percent of the school district's total tested value. D2 tested below market value with a weighted mean ratio of 0.8922. Category F1, Commercial Real properties are 6.8 percent of the district's value and tested below market value with a weighted mean ratio of 0.8662. Category G, Mineral properties are 26.6 percent of the district's value and tested above market value with a weighted mean ratio of 1.0266.
Ore City ISD is within the confidence interval limit. Ore City ISD category A makes up 44.3 percent of the tested value. The appraisal district is placing a value on the category A single-family residences below market value with a weighted mean ratio of 0.9725. Category D, Rural Real makes up 36.9 percent of the tested value and is below market value with a weighted mean ratio of 0.9848. Ore City ISD subcategory D1 consists of 6.3 percent of the tested value. D1 tested with a weighted mean ratio of 1.5632. Subcategory D2, however, makes up 30.6 percent of the school district's total tested value. D2 tested below market value with a weighted mean ratio of 0.9154. Category F1, Commercial Real properties are 5.7 percent of the district's value and tested below market value with a weighted mean ratio of 0.8717. Category G, Mineral properties are 9.9 percent of the district's value and tested near market value with a weighted mean ratio of 1.0058.
Union Hill ISD is just within the confidence interval limit. Union Hill ISD category A makes up 18.8 percent of the tested value. The appraisal district is placing a value on the category A single-family residences below market value with a weighted mean ratio of 0.9037. Category D, Rural Real makes up 43.8 percent of the tested value and is below market value with a weighted mean ratio of 0.9108. Union Hill ISD subcategory D1 consists of 6.9 percent of the tested value. D1 with a weighted mean ratio of 1.2827. Subcategory D2 makes up 36.9 percent of the school district's total tested value. D2 tested below market value with a weighted mean ratio of 0.8638. Category G, Mineral properties are 34.1 percent of the district's value and tested above market value with a weighted mean ratio of 1.0325.
Harmony ISD is within the confidence interval limit. Harmony ISD category A makes up 56.4 percent of the tested value. The appraisal district is placing a value on the category A single-family residences below market value with a weighted mean ratio of 0.9438. Category D, Rural Real makes up 24.3 percent of the tested value and is below market value with a weighted mean ratio of 0.9795. Harmony ISD subcategory D1 consists of 3.6 percent of the tested value. D1 tested with a weighted mean ratio of 1.3898. Subcategory D2 makes up 20.7 percent of the school district's total tested value. D2 tested below market value with a weighted mean ratio of 0.9313. Category G, Mineral properties are 17 percent of the district's value and tested near market value with a weighted mean ratio of 0.9958.
Union Grove ISD is within the confidence interval limit. Union Grove ISD category A makes up 27.1 percent of the tested value. The appraisal district is placing a value on the category A single-family residences below market value with a weighted mean ratio of 0.9240. Category D, Rural Real makes up 18.4 percent of the tested value and is below market value with a weighted mean ratio of 0.9794. Union Grove ISD subcategory D1 consists of 1 percent of the tested value. D1 tested with a weighted mean ratio of 1.2093. Subcategory D2 makes up 17.4 percent of the school district's total tested value. D2 tested below market value with a weighted mean ratio of 0.9692. Category G, Mineral properties are 50.1 percent of the district's value and tested at market value with a weighted mean ratio of 1.0000.
In summary, the Upshur CAD is consistently under assessing the Single-Family residences (category A) that represents about 34 percent of the district's value. Although the productivity value of qualifying acres (subcategory D1) only represents about 3 percent of the value within Upshur CAD, the farm and ranch properties within its jurisdiction are consistently over assessed. Upshur CAD is also consistently under assessing rural residence properties (category D2) that represents about 23 percent of the district's value. Therefore, primarily the appraisal district needs to review its appraisal procedures and methodology for single-family residences (category A) and the portion of category D that is not qualified for special agricultural use appraisal (D2) to determine why it is consistently under appraising these properties.
For a statistical explanation of why the district was selected as eligible, see Appendix 18.
