MASS APPRAISAL REPORT FOR 2014 APPRAISAL YEAR FOR THE ELLIS APPRAISAL DISTRICT By Kathy A. Rodrigue, R.P.A. Chief Appraiser Table of Contents Introduction 3 Summary of Properties Appraised 4 General Assumptions and Limiting Conditions 6 Market Value 7 Overview of Types of Properties Appraised 8 Highest and Best Use Analysis 11 Market Analysis 12 Data Collection and Validation 13 Valuation Analysis 14 Cost Approach to Value 15 Income Approach to Value 18 Sales Comparison (Market) Approach to Value 20 Statistical Analysis 20 Ratio Study Standards 22 Individual Value Review Procedures 23 Performance Tests 25 Certification 26 Appendices A-EAD Market Area Description and Adjustment Info 27 B-EAD Classing Information 31 C-EAD Improvement and Land Cost Schedules 45 D-EAD Depreciation Tables 89 2 INTRODUCTION The purpose of this mass appraisal report is to aid property owners, taxing entities, and the public we serve to better understand the methods and techniques utilized by the Ellis Appraisal District (EAD) in the valuation and revaluation of property within Ellis County. This report is written in compliance with Standard 6 of the Uniform Standards of Professional Appraisal Practice and the Texas Property Tax Code. Taxing jurisdictions that participate in the district must use the appraisals as the basis for imposition of property taxes. The State of Texas allocates state funds to school districts based upon the district’s appraisals, as tested and modified by the Property Tax Assistance Division, State Comptroller of Public Accounts. The 2014 mass appraisal results in an estimate of the market value of all property within the district’s boundaries. Where required by law to appraise property at a value other than market value, the district also estimates value on said requirement. These situations are described where applicable later in this report. The Chief Appraiser is the chief administrative and executive officer of the appraisal district. The Chief Appraiser employs and directs the district’s staff, oversees all aspects of the appraisal districts operations and performs either directly or through the district staff a variety of operations. The Chief Appraiser’s responsibilities are as follows: 1. Discover, list and appraise property 2. Determine exemption and special use valuation requests 3. Organize periodic reappraisals 4. Notify taxpayers, taxing units and the public about matters that affect property values The EAD staff is budgeted for 24 positions and currently consists of the Chief Appraiser, Deputy Chief Appraiser, Property Owner Assistance Manager, eight Staff Appraisers, and eight Support Positions. All property in the district is appraised by the EAD staff with the exception of minerals and pipelines, which are appraised by Capitol Appraisal Group. Significant mass appraisal assistance was provided by Capitol Appraisal Group as well as John Ostendorf, Deputy Chief Appraiser, Greg Armstrong, Mark Jones, Patrick Lantrip, Cari McCall, Billie Jo McClelland, and Darla Sorrells, zone appraisers. It is the goal of EAD staff to provide the best possible service to the property owners and taxing entities. The EAD staff promotes and adheres to the professional standards and ethics as set forth by the Texas Department of Licensing and Regulation and the Texas Association of Appraisal Districts. 3 SUMMARY OF PROPERTIES APPRAISED EAD is an Appraisal District formed by the Texas Legislature in 1979 and is charged with the appraisal of all taxable property within the 41 taxing entities within the district’s boundaries. Currently these taxing entities are as follows: Ellis County Avalon ISD Ellis County Lateral Road Ennis ISD City of Bardwell Ferris ISD City of Cedar Hill Frost ISD City of Ennis Italy ISD City of Ferris Maypearl ISD City of Garrett Midlothian ISD City of Glenn Heights Milford ISD City of Grand Prairie Palmer ISD City of Italy Red Oak ISD City of Mansfield Waxahachie ISD City of Maypearl Ellis County ES District #1 City of Midlothian Ellis County ES District #2 City of Milford Ellis County ES District #3 City of Oak Leaf Ellis County ES District #4 City of Ovilla Ellis County ES District #5 City of Palmer Ellis County ES District #6 City of Pecan Hill Ellis County ES District #7 City of Red Oak Ellis County ES District #8 City of Venus Ellis County ES District #9 City of Waxahachie 4 The 2013 certified tax roll for the Ellis Appraisal District consisted of 78,439 parcels. The breakdown of these parcels was as follows: Single Family Residential 46,304 Multi Family Residential 836 Mobile Homes 3,915 Vacant Lots 8,406 Vacant Acreage 9,078 Commercial 2,503 Minerals 1,093 Utilities 690 Personal Property 3,355 Exempt Property 2,259 The property rights appraised were fee simple interests, with the exception of leasehold interests in property exempt to the holder of the property’s title. The latter are appraised under a statutory formula described in Sec. 25.07, Texas Property Tax Code. The description and identification of each property appraised is included in the appraisal records submitted to the Ellis Appraisal Review Board each year. Supporting information relied on for this report, such as individual property records, sales ratio reports, market studies, modeling documentation, appraisal manuals and procedures, regulations and statutes is voluminous and is generally kept in an electronic format and is available to the general public at the appraisal district or its website, except where protected by statute by confidentiality regulations. 5 GENERAL ASSUMPTIONS AND LIMITING CONDITIONS The appraised value estimates provided by the district are subject to the following conditions: The appraisals were prepared exclusively for ad valorem tax purposes. The property characteristic data upon which the appraisals are based is assumed to be correct. Physical inspections and/or inspections via imagery of the property appraised were performed as staff resources and time allowed. Validation of sales transactions occurred through questionnaires to buyer and seller, telephone survey and field review. In the absence of such confirmation, residential sales data obtained from vendors was considered reliable.  No responsibility is assumed for the legal description or for matters including legal or title considerations. Title to any property is assumed to be good and marketable, unless otherwise stated.  All property is appraised as if free and clear of any or all liens or encumbrances, unless otherwise stated. All taxes are assumed to be current.  All property is appraised as though under responsible, adequately capitalized ownership and competent property management.  All engineering is assumed to be correct. Any plot plans and/or illustrative material contained with the appraisal records are included only to assist in visualizing the property.  It is assumed that there is full compliance with all applicable federal, state and local environmental regulations and laws unless noncompliance is stated, defined and considered in this mass appraisal report.  It is assumed that all applicable zoning and use regulations and restrictions have been complied with unless a nonconformity has been stated, defined and considered in this mass appraisal report.  It is assumed that all required licenses, certificates of occupancy, consents or other legislative or administrative authority from any local, state or national government or private entity or organization have been or can be obtained or renewed for any use on which the value estimate contained in this report is based.  It is assumed that the utilization of the land and improvements of the properties described are within the boundaries or property lines, and that there are no encroachments or trespasses unless noted on the appraisal record. Unless otherwise stated in this report or noted on the appraisal record, the appraiser is not aware of the existence of hazardous substances or other environmental conditions. The value estimates are predicated on the assumption that there is no such condition on or in the property or in such proximity thereto that it would cause a loss in value. No responsibility is assumed for any such conditions, or for any expertise or engineering knowledge required to discover them. Texas is a non-disclosure state in which buyers and sellers are not required to report sales transactions to the ad valorem property appraiser. EAD uses great diligence in 6 attempting to acquire sales data, but is limited in its ability to gather sales data by the current legislative scheme. EFFECTIVE DATE OF APPRAISAL AND DATE OF THE REPORT With the exception of certain inventories for which the property owner has elected a valuation date of September 1, 2013, all appraisals are as of January 1, 2014. To receive the September 1 appraisal date, the property owner must have filed an application by July 31, 2013. The date of this report is April 1, 2014. DEFINITION OF MARKET VALUE Except as otherwise provided by the Texas Property Tax Code (hereafter “Tax Code”), all taxable property is appraised at its “market value” as of January 1. Under the tax code, “market value” means the price at which a property would transfer for cash or its equivalent under prevailing market conditions if:  exposed for sale in the open market with a reasonable time for the seller to find a purchaser;  both the seller and the buyer know of all the uses and purposes to which the property is adapted and for which it is capable of being used and of the enforceable restrictions on its use, and;  both the seller and buyer seek to maximize their gains and neither is in a position to take advantage of the exigencies of the other. The Tax Code defines special appraisal provisions for the valuation of several different categories of property. Specially appraised property is taxed on a basis other than market value as defined above. These categories include residential homestead property (Sec. 23.23, Tax Code), agricultural and timber property (Chapter 23, Subchapters C and D, Tax Code), real and personal property inventory (Sec. 23.12, Tax Code), certain types of dealer inventory (Sec. 23.121, 23.124, 23.1241 and 23.127), and nominal (Sec. 23.18) or restricted use properties (Sec. 23.83). The EAD Appraisal Manual contains detailed information on the appraisal of specially appraised property and is incorporated herein by reference. AREA ANALYSIS EAD appraises all properties within the physical boundaries of Ellis County. Ellis County is located in North Central Texas and is bordered to the north by Dallas County, to the east by Kaufman County, to the south by Navarro and Hill Counties, to the west by Johnson and Tarrant Counties. Ellis County is in transition from a rural county with an agricultural based economy to a county with a growing population and a balanced agribusiness and commercial/industrial tax base. Ellis County is currently one of the fastest growing counties in the state. 7 Waxahachie, the largest town and county seat, is on Interstate 35E thirty miles south of Dallas. Midlothian is the second largest city in Ellis County and is located on Highway 67 and Highway 287 about 25 miles south of Dallas and 10 miles northwest of Waxahachie. Ellis County has three cement plants and a steel plant located in Midlothian. Power plants have been built in Midlothian and Ennis. The Midlothian community is also home to a Railport and Tax Increment Reinvestment Zone housing distribution centers for Toys R Us and Target. Owens Corning, Rock-Tenn, and Cardinal IG are a few of the varied manufacturing plants located in the Waxahachie community. The Ennis community has a thriving industrial park with industries like Sterilite Corporation, CVS Pharmacy, JTEKT, and Lowes Distribution and a number of industries including Elk Roofing, Schirm USA, and Tamko. The proximity to Dallas and the Metroplex has a large impact on the values of properties within the county. OVERVIEW OF TYPES OF PROPERTIES APPRAISED There are four major categories of property appraised by EAD. These categories are: Real Property: Residential, Multi-family, Commercial, Vacant residential lots, Vacant commercial lots, Vacant rural land and improvements on rural land. Personal Property: Business personal property and Industrial personal properties. Utilities: Telephone companies, Power companies, Gas companies and Cable companies. Minerals: Oil and Gas The Property Tax Assistance Division of the State Comptroller’s office requires properties to be identified by using a standard identification code. The codes currently used by EAD are as follows: A1 Real residential single family A2 Real residential mobile home B1 Real residential multi-family 10+ units B2 Real residential duplexes 1-10 units C1 Vacant residential lots in a city C2 Vacant commercial lots D1 Acreage farm and ranch land 8 D2 Farm/ranch improvements on qualified open-space land E1 Farm/ranch house with limited acreage E2 Farm/ranch mobile home with limited acreage E3 Farm/ranch improvement only E4 Imps on acreage other than residential EL Rural land not qualified for open-space appraisal F1 Real commercial F2 Real industrial G1 Producing oil & gas G2 Non-producing oil & gas G3 Producing coal/lignite G4 Non producing coal/lignite G5 Producing sulfur G6 Non-producing sulfur G7 Service wells G8 Producing clay J1 Water systems J2 Gas distribution systems J3 Electric companies J4 Telephone companies J5 Railroads J6 Pipelines J61 Pipelines – other personal J7 Cable TV systems 9 J8 Compressors & pump stations J9 Railroad rolling stock L1 Business personal property L2 Industrial personal property L1E Leased equipment L1V Leased vehicles M1 Mobile homes improvement only O Residential inventory improvements S1 Motor vehicle inventory S2 Manufactured housing inventory S3 Heavy equipment inventory S4 Vessel & outboard motor inventory X Exempt property 10