Chapter 1
Overview of County Appraisal District1.1
County History and DemographicsAccording to the Handbook of Texas, Wharton County was formed in 1846 from parts of Matagorda, Jackson and Colorado counties.
Wharton County is in southeast Texas on the coastal bend and is bounded by Matagorda, Colorado and Jackson counties and the San Bernard River, which forms the northeastern border and the Fort Bend county line. Wharton, the county's second largest town and the county seat, is located in the central part of the county on Highway 59.
Livestock and livestock products along with rice production account for the majority of the county's agricultural income. The county is divided primarily between prairie and timberland.
The population of the county for 2003, according to the County Information Project, was 41,144 residents, with the City of El Campo having 10,842 residents, and the City of Wharton having 9,337 residents. The balance of the county population lives in smaller cities and towns and the rural areas. The county comprises 1,036 square miles, mainly of grassy plains, though a dense forest belt crosses the northwest part.
The county includes the Boling Independent School District, East Bernard Independent School District, El Campo Independent School District, Wharton Independent School District, and Louise Independent School District.
1.2
Appraisal District Organization and StaffingThe appraisal district was formed in 1981 and became active in 1982. Wharton CAD has a total of nine full-time staff with two supervisory positions. Three of the positions are full-time appraisers. The district contracts with Capital Appraisal Group (CAG) for professional appraisal services on minerals, utilities and industrial appraisals.
Exhibit 1 outlines the district's organization.
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 district provides appraisal services for 18 taxing units: Wharton County; Boling Independent School District, East Bernard Independent School District, El Campo Independent School District, Wharton Independent School District, and Louise Independent School District; City of Wharton, City of El Campo and City of East Bernard; Isaacson Municipal Utility District and Hungerford Municipal Utility District; Louise Water District (aka: Wharton County Water Control Improvement District #1); Coastal Bend Groundwater Conservation District; West Wharton County Hospital District (HD); Wharton County Junior College District; Wharton County Water Control & Improvement District (WCID) #2 (aka: East Bernard Water District); Boling Municipal Water District (MWD); and Wharton County Emergency Services District (ESD) #1.
Exhibit 2 presents the types of properties appraised by Wharton CAD in tax year 2003. In-house staff handles all property categories except Category G (minerals), Category J (utilities), and part of Category F2/L2 (industrial - real/personal), which are appraised by CAG.
Exhibit 2
Wharton 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 w/Impr. 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 & Contracted Appraisal Firm Category L2 Industrial Personal Contracted Appraisal Firm Source: Wharton County Appraisal District, 2005. Most appraisal districts contract out some appraisals 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 districts' 2003 self report and the county's independent school districts 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 Wharton State Avg. Group Avg. Parcel Size Group
(by number of locally appraised parcels)35,000 - 49,999 Estimated # Locally Appraised Parcels 36,173 55,463 41,470 # Taxing Units 18 15 15 Locally Appraised Parcels to Staff 4,019 3,404 3,558 2003 Composition by Percentage
of Value (Self Report):Wharton State Avg. Group Avg. Residential Value 31.2% 52.6% 39.1% Non-Residential, Non Mineral 55.7% 43.6% 54.3% Non-Residential, Mineral 13.1% 3.7% 6.6% 2003 Composition by Account Category Type (Operations Survey): Real Property 29,947 45,804 37,582 Mineral Property 16,764 13,536 12,159 Business Personal Property 3,295 4,689 1,922 Individual Personal Property 0 1,342 1,166 Total Accounts 50,006 65,372 52,829 2003 Composition by Locally Appraised Parcel Category (Estimated from Self Report): Wharton State Avg. Group Avg. Parcel Type # Parcels % of Parcels A 12,140 33.6% 44.1% 30.2% B 101 0.3% 1.0% 0.3% C 3,769 10.4% 13.1% 22.9% D 12,309 34.0% 24.7% 25.2% E 3,638 10.1% 4.5% 9.8% F1 1,447 4.0% 3.1% 2.8% L1 1,813 5.0% 5.7% 4.0% M1 852 2.4% 2.2% 3.0% O 78 0.2% 1.4% 1.6% S 26 0.1% 0.1% 0.1% Total 36,173 100.0% 100.0% 100.0% PTD estimated that Wharton CAD staff are responsible for appraising about 36,173 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 Wharton are Walker, Coryell, and Pecos. The number of parcels per staff member for Wharton CAD was 4,019. Walker CAD was 2,302, Coryell CAD was 6,335 and Pecos was 4,391. 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 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)Wharton State Avg. Group Avg. 2003 Budget $633,369 $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 $633,369 $1,104,961 $656,877 % Change in Budget 0.0% $0 4.4% 2004 Budget per Total Local Parcel $17.51 $19.92 $15.84 Staffing Full Time 9 18 12 Part Time * 2 1 Supervisory 2 3 3 Programmers * 2 2 Supervisory to Staff Ratio 1:5 1:5 1:4 Chief Appraiser Performs Appraisals? Yes 2004 Total Compensation $61,062 $53,564 $55,687 Appraisers Full - Time 3 8 4 Part - Time * 0 1 Salary Range: Low $30,222 $24,504 $22,896 High $37,073 $37,521 $36,455 Training Budget $1,500 $8,832 $7,153 # Registered with BTPE (1) 4 9 6 Types of BTPE Certification: RPA (2) RTA (3) RTC (4) All 4 1 0 0 Reappraisal Last Year of Reappraisal 2002 Next Year of Reappraisal 2005 Type of Appraisal: Cyclical Method of Appraisal: Combination Protests 425 3,131 709 Protests per Parcel 0.8% 4.7% 1.2% Consolidated Collection No Collection Budget $0 Geographic Information System (GIS)? Yes Percent GIS Complete 100% 80% 65% Board of Directors Members 9 6 6 Tax Assessor Votes? No Elected Members 7 3 2 Note: An asterisk (*) is shown where data was not reported.
Source: Wharton CAD 2003 Self Report and ISDs 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 Professional Tax 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, Wharton CAD was requested 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.
Wharton CAD answered 110 out of 110 questions, almost exclusively with an affirmative, one word answer.
In Chapter 1, on legal issues and assessment cycles, the district noted it felt it had sufficient staffing and resources to perform its job.
In Chapter 2, on resource management, the district felt it does long-range planning.
In Chapter 3, on computerization, and Chapter 4, mapping, the district noted it had a workstation for each staff member and it has a geographic information system.
In Chapter 5, data collection, the district's computer records contain information on current property use and highest and best use.
In Land Evaluation, Chapter 6, the district does not have a procedure for adjusting land values for shape or corner location. In Chapters 7, 8 and 9, on residential property valuation, commercial property valuation and sales data, respectively, the district answered yes to every question, meaning it collects and analyzes sales, conducts ratio studies, uses statistical models and has computerized cost schedules.
In Chapter 10, on personal property assessment, the district does not use the income approach to value leased equipment.
In Chapter 11, on assessment administration, the district felt it updates ownership information within 30 days of an ownership change. The district noted in Chapter 12, defense of values, that owners are encouraged to discuss their appraisal prior to filing a formal protest.
In public relations, Chapter 13, the district noted it has an active public relations program.
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 Wharton CAD. Count appraisal districts and the PTD are required by law to appraise most 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 studied together.
Wharton CAD did not appeal the findings of the preliminary study. Boling ISD protested its self report and was granted all its requested changes. The changes were insufficient and Boling ISD was designated an eligible school district in July 2004.
A review of the school districts in the county indicates that Wharton CAD is inconsistently appraising the single-family residences, rural residences, and farm and ranch properties as determined by the PTD. In the 2003 PVS, Boling school district fell outside the study's statistical margin of error. Single-family residences (category A) and rural real property (category D) are the primary reasons that the school's values are not within the acceptable range determined by the study.
There are three property categories tested in Boling ISD: (1) category A, Single-Family Residences, making up 34.3 percent of the district's value with a weighted mean ratio of .9336; (2) category D, Rural Real, making up 24.9 percent of the district's value with a weighted mean ratio of .9474; and (3) category J, Utilities, making up 8.9 percent of the district's value with a weighted mean ratio of .9824. In general, a ratio of between .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.
Boling ISD's category A makes up 50.9 percent of the tested value. The appraisal district is placing a value on the category A Single-Family Residences below market value. A review of the category A properties indicates that the district appraised from a low of 63 percent to a high of 124 percent of market value with a weighted mean ratio of .9336. Category D, Rural Real makes up 38.9 percent of the tested value and also tested below market value by a weighted mean ratio of .9474. 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 lands productivity value and D2 is based on what the land would sell for in an open market transaction. Boling ISD's subcategory D1 consists of 38.7 percent of category D's value and 15 percent of the tested value. D1 tested with a weighted mean ratio of .9429. Subcategory D2, however, makes up 61.3 percent of category D's value and 23.8 percent of the school district's total tested value. The district appraised rural homes from a low of 75 percent to a high of 139 percent of market value with a weighted mean ratio of .9502. Overall, this indicates that the residences in the rural areas are also being under-assessed. Category J, Utilities is 8.9 percent of the district's value and tested near market value with a weighted mean ratio of .9824. Therefore, primarily the low ratio in category A drops the district outside the margin of error causing the school district to be identified as eligible.
Besides Boling ISD, the other school districts in the county are East Bernard, El Campo, Wharton and Louise ISDs.
East Bernard ISD is within the confidence interval limit. Category A makes up 32 percent of the district's value, and 39.9 percent of the tested value. The appraisal district is placing a value on the category A single-family residences below market value. A review of the category A properties indicates that the district appraised from a low of 68 percent to a high of 126 percent of market value with a weighted mean ratio of .9565. Category D, Rural Real makes up 22.3 percent of the district's value, and 29.3 percent of the tested value. Category D is appraised above market value with a weighted mean ratio of 1.0728. East Bernard ISD's subcategory D1 consists of 53.9 percent of category D's value and 15.8 percent of the tested value. D1 tested with a weighted mean ratio of 1.1267. Subcategory D2, makes up 46.1 percent of category D's value and 13.5 percent of the school district's total tested value. The district appraised rural homes from a low of 61 percent to a high of 175 percent of market value with a weighted mean ratio of 1.0160. Category F1, Commercial Real properties are 4.2 percent of the district's value and tested below market value with a weighted mean ratio of .8968. Category G, Mineral properties are 13.4 percent of the district's value and tested near market value with a weighted mean ratio of .9867. Category J, Utilities is 6.8 percent of the district's value and tested near market value with a weighted mean ratio of 1.0055.
El Campo ISD is within the confidence interval limit. Category A makes up 34.2 percent of the district's value, and 37.8 percent of the tested value. The appraisal district is placing a value on the category A single-family residences below market value. A review of the category A properties indicates that the district appraised from a low of 61 percent to a high of 172 percent of market value with a weighted mean ratio of .9476. Category D, Rural Real makes up 15 percent of the district's value, and 17.5 percent of the tested value. Category D is appraised above market value by a weighted mean ratio of 1.0371. El Campo ISD's subcategory D1 consists of 56.2 percent of category D's value and 9.8 percent of the tested value. D1 tested with a weighted mean ratio of 1.0640. Subcategory D2, makes up 43.8 percent of category D's value and 7.7 percent of the school district's total tested value. D2 tested near market value. The district appraised rural homes from a low of 61 percent to a high of 178 percent of market value with a weighted mean ratio of 1.0045. Category F1, Commercial Real properties are 7.3 percent of the district's value and tested below market value with a weighted mean ratio of .9091. Category G, Mineral properties are 21.7 percent of the district's value and tested near market value with a weighted mean ratio of .9827. Category J, Utilities is 6.3 percent of the district's value and tested near market value with a weighted mean ratio of 1.0142. Category L1, Commercial Personal is 5.9 percent of the district's value and tested below market value with a weighted mean ratio of .9642.
Wharton ISD is within the confidence interval limit. Category A makes up 34.4 percent of the district's value, and 48.6 percent of the tested value. The appraisal district is placing a value on the category A single-family residences near market value. A review of the category A properties indicates that the district appraised from a low of 70 percent to a high of 615 percent of market value with a weighted mean ratio of .9982. Category D, Rural Real, makes up 9.6 percent of the district's value, and 14.3 percent of the tested value. Category D is appraised near market value by a weighted mean ratio of 1.0022. Wharton ISD's subcategory D1 consists of 47.3 percent of category D's value and 6.8 percent of the tested value. D1 tested with a weighted mean ratio of 1.0084. Subcategory D2, makes up 52.7 percent of category D's value and 7.5 percent of the school district's total tested value. The district appraised rural homes from a low of 51 percent to a high of 139 percent of market value with a weighted mean ratio of .9966. Category F1, Commercial Real properties are 9.3 percent of the district's value and tested below market value with a weighted mean ratio of .9405. Category G, Mineral properties are 8.3 percent of the district's value and tested below market value with a weighted mean ratio of .9835. Category J, Utilities is 5.8 percent of the district's value and tested below market value with a weighted mean ratio of .9767. Category L1, Commercial Personal is 3.5 percent of the district's value and tested above market value and within the margin of error with a weighted mean ratio of 1.0235.
Louise ISD is within the confidence interval limit. Category A makes up 18.8 percent of the district's value, and 21.8 percent of the tested value. The appraisal district is placing a value on the category A single-family residences below market value. A review of the category A properties indicates that the district appraised from a low of 77 percent to a high of 129 percent of market value with a weighted mean ratio of .9786. Category D, Rural Real makes up 31.1 percent of the district's value, and 37.9 percent of the tested value. Category D is appraised above market value and within the margin of error by a weighted mean ratio of 1.0359. Louise ISD's subcategory D1 consists of 59.2 percent of category D's value and 22.4 percent of the tested value. D1 tested with a weighted mean ratio of 1.0443. Subcategory D2, makes up 40.8 percent of category D's value and 15.5 percent of the school district's total tested value. D2 tested above market value and within the margin of error limit. The district appraised rural homes from a low of 76 percent to a high of 174 percent of market value with a weighted mean ratio of 1.0240. Category G, Mineral properties are 24.6 percent of the district's value and tested near market value with a weighted mean ratio of .9898. Category J, Utilities is 7.3 percent of the district's value and tested near market value and with a weighted mean ratio of 1.0284. Category L1, Commercial Personal is 5.2 percent of the district's value and tested below market value with a weighted mean ratio of .9784.
In summary, the Wharton CAD needs to focus its energies on category A valuation of single-family residences. All tested categories in Boling ISD are appraised below market value. Wharton CAD is inconsistently appraising single-family residences from as low as 61 percent to 615 percent of market value. Wharton CAD is also inconsistently appraising rural residences (category D2) from as low as 51 percent to 178 percent of market value. The farm and ranch land (category D1) is also inconsistently assessed between 94 percent and almost 113 percent of market value.
For a statistical explanation of why the district was selected as eligible, see Appendix 18.
