If you think you understand your appraisal notice, maybe it hasn't been explained to you
By HUDSON OLD
Journal Publisher
Anyone believing he understands the reasoning employed to determine property value by considering information provided on his tax notice from the Titus County Appraisal District (TCAD) hasn't had it sufficiently explained. Others are curious about economic factors driving the soaring, multi-million dollar rise of local property values.
Take homeowners.
To the untrained mind, the 10 percent annual cap on residence appraisal increases seemingly defined as "market value" by subsection (b)(1) of section 23.23 of the property tax code could appear to limit appraisal increases to 10 percent annually.
It took the better part of an hour, but when, at last, TCAD's patient chief appraiser led me to understand that the words "market value" used in subsection (b)(1) of the tax code bear no relation to market value as used in determining market value for tax appraisal purposes, all rang clear.
Thank goodness.
Otherwise, every home in Titus County might have been appraised without regard for the tax code.
Imagine.
The statutory 10 percent limit sets no limit on market value determined by TCAD's professional staff, Chief Appraiser Katrina Perry explained. (See Appraisal Revelation 1)
"The act of appraising is limited only by the proven market value of similar properties," she said. (See Appraisal Revelation 1-A)
This becomes clear with an understanding of the difference in the term "appraised value" used as a noun in section 23.23 and the gerund form of the word "appraise," used to describe the act of "appraising" as carried out by TCAD staff.
Though "appraised value" and "market value" may be the same, they don't have to be, Mrs. Perry said. Thus is the professional appraiser's reckoning of market value liberated from the tax code's "Limitation on Appraised Value of Residence Homestead."
See?
Don't feel badly if, at first, this logic seems fuzzy.
The finer points of such mind-bending nuance may be difficult to understand, but years of training make it possible.
In addition to training through the Texas Association of Appraisal Districts and the Texas Association of Assessing officers, Mrs. Perry has more than 25 years of tax office experience.
Since the dawn of the age (1981) in which the Peeveto Bill consolidated the multiple appraisals once performed by multiple property taxing entities (See Appraisal Revelation 1-B), Mrs. Perry has risen to the top of the game.
Today, appraisals once performed by locally-elected officials are directed by board-appointed chief appraisers in each of the state's 254 counties.
"In separating appraisers from local elections, the idea was to take the politics out of the process," Mrs. Perry said. (See Appraisal Revelation 1-C)
The upward spiral of residential values reflected in this year's appraisals triggered response from many homeowners.
TCAD personnel are eager to assist taxpayers perplexed by the intricacies of the many concepts employed by professional appraisers.(See Appraisal Revelation 1-D)
The "taxpayer protest" (See Appraisal Revelation 1-F+) is but one means through which this is achieved.
As explained by Mrs. Perry, such protests are a win-win proposition for both appraiser and appraised.
"The potential for making appraisal errors is greater in 'mass appraisal' work of the kind done by appraisal districts," Mrs. Perry said. "We rely on people to come in and let us know when we've made mistakes." (See Appraisal Revelation 1-E)
For taxpayer convenience, appraisal notices are sent months ahead of tax bills, again serving a dual purpose. Not only are home-owning tax payers reminded to fit annual property tax bills into the family budget; time is also provided for citizens eager to serve as helpful protesters.
The successful protester will need to understand more about the appraisal process to make the most of this opportunity.
Within TCAD's board-approved policies and guidelines exits a labyrinth of criteria by which the professional appraising process is guided. For example, Mr. / Ms. Homeowner, your dwelling falls into one of 15 classes. (See Appraisal Revelation 1-F.)
A listing of criteria by which homes are classified will be provided for ten cents per page by the TCAD, located at 112 North Riddle Avenue.
While being sure to request disclosure of criteria dividing main classifications into sub classifications, the informed home owner should understand that these criteria serve only as "guidelines" subject to the discretion of the professional appraiser.
To avoid bogging this overview with unnecessary discussion, let's skip the part of the appraisal process by which cost per square foot of residential property is shaped by additional factors.
But as long as I've brought them up, the additional factors include a scoring system related to these terms: 1) Physical, 2) Economic, 3) Function, 4) Completion and 5) Area. (See Appraisal Revelation 1-G.)
A further understanding of logic applied to these factors may be found in Property Assessment Valuation, 2nd edition, copyright 1996 by the International Association of Assessing Officers, Chicago, Illinois. It is approved for use by the Universal Standards of Professional Appraisal Practices, Mrs. Perry said.
While tedious, such intimate knowledge of detail ranging from structural condition to "external factors" is vital in determining scores expressed as percentages applicable across the five factor range.
Significantly, this information is not included on the notice mailed to taxpayers. This, and other important information is found on the appraisal "card," the working form used by professional appraisers.
No doubt, the absence of information such as square footage, applied values and notes of improvements computed directly into home value makes tax notices an easier read. But because these are the exact areas in which errors may occur when using "mass appraisal" techniques, the protest process helping appraisers correct their mistakes is dependent on informed taxpayers.
This is but a brief look at the challenges (See Appraisal Revelation 1-H) facing our professional appraisers, whose work supports the American vision of local government providing us with essential services and public education.
That said, perhaps no nobler words express the need of TCAD than our chief appraiser's call for taxpayer help in fairly and accurately performing this vital work.
Appraisal revelations. For ease of reading, we left the tedious detail out of the story above. We put it in this one.
Appraisal Revelation 1
Geezerplex to Austin -- do you read me?
When legislators of the Lone Star state gather again, they'll have opportunity to revise tax code language, bringing it in line with local application of statutes limiting the increase in residential appraisals. No doubt legislators' attempt was sincere when they established a residential property tax "cap value," but more succinct language would be useful. As an expert in her field, Titus County Chief Appraiser Katrina Perry explains that the 10 percent cap applies not to "market value," as referenced in the tax code, but to "taxable value." Taxable value, she said, is the value of a residence after all applicable exemptions are applied. Taxing entities then tax homes on whichever is less -- the appraised "market value" as determined by TCAD, or the "cap value," as determined by the computer program that this year established erroneous cap values for some local residents. (See Texas tax party, page 4)
Appraisal Revelation 1-A.
Check those comp sales!
Beyond construction cost factors, appraisers use "comparable sales" in reckoning property values. When discussing property value with your tax appraiser, be sure to ask for any comparable sales used in appraising your property.
Appraisal Revelation 1-B
Appraisal districts lessen political pressure on appraisers
In olden times, voters disagreeing with the manner in which local property tax appraisers did their work could vote them out of office. To remain in good stead with a majority of voters, many appraisers would let thousands of homes remain on tax rolls at out-of-date values. On the other hand, appraisers tended to keep business and industry values better updated. The result was disproportionate tax bills with homeowners not bearing their fair share of the burden, explained TCAD Chief Appraiser Katrina Perry.
The creation of central appraisal districts also consolidated appraisal functions previously duplicated by multiple taxing entities. Today, TCAD provides property appraisals for the cities of Mt. Pleasant, Winfield and Talco, schools at Mt. Pleasant, Harts Bluff, Chapel Hill and Winfield, Titus Regional Medical Center and Northeast Texas Community College. Appraisal values for that portion of the Daingerfield school district located in southeastern Titus County are provided that school district.
Appraisal Revelation 1-C
Appointed chief appraisers insulated from ballot box
Chief appraisers are appointed by the appraisal district board. Removing the process one step further from the ballot box, the appraisal board is "elected" by trustees serving local taxing entities (See Appraisal Revelation 1-B.) The vote is weighted to reflect the percentage of the total local tax levy collected by each taxing entity.
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While TCAD's appraisal work serves 10 tax districts, because Mt. Pleasant ISD tax receipts account for more than half of all local property tax collected, the school district gets enough votes to put almost three of the five members on TCAD's board.
"The school district gets 2,852 of the 5,000 ballots allotted," Mrs. Perry said.
Based on tax levies, the voting power of other taxing entities ranges from Daingerfield ISD's 787 votes to the city of Winfield's single ballot.
Appraisal Revelation 1-D
Appraisers see themselves as servants
Visible to both employees and patrons, this posting on the bulletin board in the lobby of the TCAD reflects the high ideal of public service.
Appraisal Revelation 1-E
Many appraisal errors are easily rectified
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TCAD appraisers initially identified the foundation structure pictured here as a concrete slab, one of the criteria for classifying a home as an F-4 (See Appraisal Revelation 1-F.) This example of the type of error that can occur in the process of making "mass appraisals" was corrected after the property owner agreed that perhaps the professional appraiser should return for a more thorough inspection. Imagine the surprise when what first appeared to the appraiser to be a continuous slab of concrete turned out to be a brick pier! The resulting re-classification as an F-3 reduced the appraised value in keeping with TCAD schedules. In this example of a tax protester's assistance in determining a more accurate value, it was discovered that the initial appraisal had also applied an erroneous square footage which, when corrected, further reduced the market value!
Appraisal Revelation 1-F
All-important classifications determine square foot value
For TCAD purposes, the cost per square foot of a residence is determined by one of 15 classifications assigned to a dwelling. As an example, frame houses are divided into classifications denoted as F1 through F7. Additionally, within a given class, TCAD has created other classifications denoted by a "plus" sign. An F3+, for example, is a cut above your standard F-3 and thus assigned a higher value per square foot. Excluding mobile homes, other dwellings are divided into eight other classifications. This is a critical area of appraising as square foot values applied range from $10.92 to $114. Each classification defines criteria such as foundation, floor structure, interior finish, heating, plumbing, insulation, size and more. It should be remembered that, while these criteria are specific, they serve only as guidelines employed by TCAD. Worth noting, TCAD studies result in periodic square foot price adjustments. This year, for example, F-4 dwellings saw an across-the-board increase of 25 percent (See narrative to understand why this doesn't conflict with the 10 percent statutory limit.) At the same time, ironically, mass appraisal techniques determined that many homes previously judged to be F3's more closely fit standards within the F4 classification, making the 25 percent increase automatic for those homes as well!
Appraisal Revelation 1-F+
Protest process embraces the American system
As explained by the chief appraiser, TCAD welcomes citizens wishing to help trained appraisers arrive at accurate values of taxable property. The concerned citizen may appear at the district office to visit with a professional appraiser - but be ready to wait as taxpayers eager to help in this vital work are flocking to the office! Should taxpayer and appraiser be unable to reach agreement, a formal protest may be filed with the Appraisal Review Board (ARB). Not to be confused with the Appraisal Board, the review board is comprised of citizens appointed by the Appraisal Board to hear taxpayer protests. Should the taxpayer disagree with the ARB's decision, appeal may be made to district court.
Appraisal Revelation 1-G
Sure it's a nice place, but what about the leaking roof?
Beyond classification, (See Appraisal Revelation 1-E) the appraised value of a home may be impacted by factors such as its physical condition. A structure judged to be about half as good as it was when it was new, for example, would be have a value of .5 (½) applied to the square foot value assigned by its classification. "Completion" is another straight forward category - a structure only half finished would also be scored .5. The professional appraiser is also trained to make judgements concerning more convoluted calls about function and economy. "Area," as explained by Mrs. Perry, refers to the quality of the neighborhood.
Appraisal Revelation 1-H
Special Appraisals demand economic savvy
While much has been said about the skill of tax professionals in determining property values, duties of appraisers go beyond the ability to determine property values. As explained by the state comptroller's office in the January, 2005 publication "Taxpayers' Rights, Remedies and Responsibilities" agriculture land may be valued on its ability to produce crops, timber or livestock. However, if land so appraised is converted to non-agricultural use, the landowner is assessed a "rollback" tax which is the difference between what was paid under ag use and what would have been paid if the property had been appraised at its higher market value for the previous five years. Additionally, the owner will pay 7 percent interest. To avoid payment of interest, the land owner need only determine five years ahead of time what use the property will have five years hence.