When you get your tax bill in the mail this year and you owe another 10 percent, that doesn’t mean that Joe Don Bobbitt and his colleagues have given themselves another raise. That’s not how this works at all.
Bobbitt is the assistant chief appraiser for the McLennan County Appraisal District, the entity that determines how much each piece of property in the county is worth. But the appraisal district’s budget doesn’t fluctuate depending on whether property values go up or down. And a taxing entity like a school district, for example, can’t tell Bobbitt that it needs more money and the appraisers need to bump up the valuations a little more.
Bobbitt, a Tyler native, helps oversee a staff of 20 or so appraisers. He graduated with a degree in agricultural science from Texas A&M University and then served in the military before joining the appraisal district. He and his wife, Stephanie, a hotel sales manager, are parents to their 3-year-old son, Sam.
Bobbitt and Wacoan writer Kevin Tankersley sat down to talk about homestead exemptions, properties that are listed for sale at prices way above their appraised values, and whether the “Magnolia effect” is actually a thing.
WACOAN: How long have you been here at the appraisal district?
Bobbitt: Since 2011.
WACOAN: Assistant chief appraiser. How long have you had that title?
Bobbitt: Since January 2016.
WACOAN: Where were you before here?
Bobbitt: I was in the Army. I was a captain at Fort Hood, [for] about five years. I’m from Tyler. I got stationed in Fort Hood, and then we bought a house in McGregor when we lived at Fort Hood. And then I just stayed.
WACOAN: What makes your job interesting?
Bobbitt: I guess it’s the complexity of it. And then trying to come up with the correct value even though, you know, there’s never really a correct value that anybody can agree on, but it’s just everything that’s involved I find interesting. It’s extremely complex. We just do one little piece of it, and then there’s everybody else that’s involved — the comptroller, the taxing entities, the [Texas Education Agency] gets a little bit involved when it comes to school funding.
WACOAN: Explain what the appraisal district does.
Bobbitt: Our goal is to appraise every property in the county at 100 percent of market value. We administer exemptions that are allowed by law. A lot of what we do is protest-related, when people disagree with us, and a lot of it’s just trying to figure out where the reality lies.
There’s 120,000 parcels, roughly, in the county, and there’s only 41 staff. Every three years we have to inspect each property, but we can inspect it through aerial photography or physical inspection. There’s a myriad of ways that we can inspect them. But the goal is to look at everything at least once every three years.
We typically change the values based on sales every year, based on what the market’s doing. Like right now, the market’s moving quite a bit. If we waited three years to change our values, you might see a huge increase. You might see a 30 percent increase in your rate or your taxes. And so we try to avoid that by trying to keep up with the trends.
WACOAN: So instead of 30 percent three years down the road, you get increases of 10, 10 and 10 for three years.
Bobbitt: Yeah. Or if it’s a homestead, the law caps it at 10 percent per year. If it’s not a homestead, if it’s a rental or a commercial business, there’s no cap. So if the market’s moving 20 percent a year, then that’s just what it is. That can be quite a burden on taxpayers, and we realize that. We’re not trying to be difficult with people. It’s just kind of the nature of the job.
Some people assume that the more we go up, the more of a raise we get or the more budget we get. It doesn’t really benefit us in any way. The only thing we’re trying to do is be plus or minus 5 percent overall on the average for all the properties. The comptroller looks at that. They come in and evaluate us.
If we’re outside of 5 percent, then the schools start to lose funding. And that’s the major driver that we’re trying to avoid. We don’t want the schools to lose money from the state. We want to be accurate as much as possible.
WACOAN: So the market kind of drives valuations. How do you figure out what the market is? If, like you said, if the market is moving at 20 percent, then rates are going to go up for commercial and rental 20 percent. How do you determine the market’s moving at 20 percent?
Bobbitt: Essentially what we’re looking at is what things are selling for versus what we have them appraised at. When things sell, we compare what they sold for versus what we had them appraised at in the previous year. And we take the median. We take an entire range of properties and then we take whatever that median appraisal-to-sell ratio is. And if we’re off 5 percent across 10 or 15 properties, then that entire neighborhood may move 5 or 10 percent. And so those five or six sales may influence 500 or 600 properties. It’s just a way of gauging how far off we are.
WACOAN: I’ve seen properties for sale where the asking price is way more than the appraised value. How does that work?
Bobbitt: Well, there’s a bit of gamesmanship to appraisal. The [Texas] legislature in the ’90s created a deal called equal and uniform [taxation]. And so a lot of people, what they can do is come in and argue that they’re not being treated equally compared to other properties.
They’re supposed to make adjustments for differences in size and quality and use to make them more comparable. But usually what ends up happening, people that get paid to represent taxpayers; they come in and they get paid on a contingency basis, so whatever they can get their [client’s] value cut by, they get a percent of the tax savings. So they don’t really care what market is or what reality is. They just want to get the biggest paycheck.
Right now, most of our protests, especially commercially, they’re not arguing the market value’s off, they’re arguing that they’re not being treated equally with somebody else. So they go through and they cherry-pick these five or six other properties that are kind of like theirs, and they argue why theirs should be appraised at a lower value and that would make theirs more equal with these five other properties.
And it kind of creates a slippery slope where whoever’s appraised at the highest, they argue that they should be at the middle. And then once that happens, that lowers the middle. And then whoever’s now at the highest comes in and argues that they should be at the middle and everybody can’t be at the middle. It just slowly winds the value down.
The big commercial properties, they have the budgets and the attorneys and everybody on staff, they can actually spend the money to sue us and basically bring us back to the table and argue a value down or get the court to lower it. And they will get basically a lower value that’s not reflective of the actual market value. And in some of that, basically the bigger the value is, the more bang for the buck you can get out of that.
If you’re a homeowner, it doesn’t make sense to go out and pay an attorney a couple of hundred dollars an hour to try to get your taxes lower because you’re only going to save maybe a thousand dollars if you’re lucky. But if you’re talking a million-dollar tax bill, they can spend a lot of money on attorneys and come in and refine their argument and take market completely out of it. It’s supposed to be a market, but let’s just look over here at equity and get the value lowered.
WACOAN: How can an average homeowner protest an appraisal?
Bobbitt: When we send out the appraisal notices, on the back of it is the protest form.
They can just fill that out and mail it back to us, and then we’ll get them set up. We do informal meetings. We’ll bring people in and try to talk to them and resolve it before they go to an actual hearing. If we can’t come to an agreement or if we don’t have time, then they just go to the hearing and the taxpayer will present their case to an appraiser and three taxpayers. And then the appraisal district will present our case as far as how we came up with this number. And then the board will weigh the evidence and decide, ‘OK. Their case has some merit. This case has some merit,’ and they’ll come up with a value usually someplace in between.
You can also protest online. We have on our website — in April, it’ll turn back on — you can file a protest electronically. It takes about 10 minutes to file it. And then we’ll work on getting you scheduled and set up to come in and talk to us. Once you file an online protest, we’ll basically load all of our evidence onto that website. That way you can go and look at it, usually two days before the hearing.
WACOAN: The protest is heard by one of your appraisers and three taxpayers?
Bobbitt: The [appraisal review board]. There are 14 members on the review board, and they meet in groups of three. So there will be four rooms of three people, and they will basically decide the case.
Once they come to a decision, the next day they review all the cases they heard the previous day. And if there’s no issues, then they go and approve all of them and it becomes final. Once that happens, we’ll mail you a letter with the determination of the board. You have 45 days to file arbitration if you don’t like what the ARB put it at, and you have 60 days to file a lawsuit. But you can’t do both. You have to do one or the other.
Typically, homeowners do arbitration because it’s usually around $450. If you start getting commercial properties or things over a million dollars, it can [cost] up to $700 or $1,000. As it gets higher in complexity, the value goes up.
We only have two lawsuits currently from homeowners that I’m aware of, and I believe both of those are attorneys themselves. Most of the time homeowners don’t do that unless it’s an extremely high-value house. Filing a protest is free. Everybody’s entitled to that, and then if they don’t like that, they can still go to arbitration and have another chance at it.
WACOAN: Who hears the arbitration?
Bobbitt: The current law [says] they have to pick arbitrary that’s in the county. Currently there’s only one arbitrator in the county, Ross Russell. He’s an attorney downtown. If he’s not available, then the comptroller picks randomly out of their database for the next arbitrator. That was just changed the last legislative session. Before that, you had a database that you could pick from. And if the taxpayer and the appraisal district agreed on an arbitrator, then that was the one that got scheduled. But at the last session they restricted it to your county. That way the person’s theoretically more familiar with the market.
WACOAN: Let’s go back to inspections for a minute. You said you try to inspect every property every three years and you can inspect by aerial photograph or in person.
WACOAN: Let’s say the exterior of somebody’s house hasn’t changed, but they’ve done a lot or work inside.
Bobbitt: It’s difficult. What we do is called mass appraisal. For a residence, we don’t have the right to demand access into your house. So if your house [is] the Taj Mahal inside and a little shanty on the outside, then we’re probably going to be way off. It’s hard for us to tell. We assume that the outside is an indicator of the interior. Most of the time, if you maintain your yard and everything looks nice on the exterior of the house, then the inside matches.
We get permits from the city and the entities and the county, so we do get some information as far as if someone pulled a permit. If they’re doing a remodel, then we will go back out and revisit the property. But if you’re outside of a city, the only permits that we really get are septic. So if you remodel an entire 1950s house out [in the county], then we’ll never know until you start adding on structures, and we’ll pick that up.
WACOAN: If you see a permit from the city that someone is doing work and you revisit the property, do you just drive by and look? Do you get out of your car and walk up to the house?
Bobbitt: We may go up and knock on the door and visit with the owner if they’re there. We’re usually out from 8 [a.m.] to 5 [p.m.] during the day, and a lot of owners are at their jobs. We may just do a drive-by and see if there’s anything external being done to the house, and if it’s all internal, we’ll never know.
From the permit, based on the cost and what’s in the permit, we may have an idea that they’re repainting, remodeling, adding granite, whatever. So we may adjust the condition of the house. We may have it as average condition, and we may bump it to excellent or good just because they’re fixing the place back up.
WACOAN: If somebody does want to protest the valuation, what would they need to bring with them?
Bobbitt: What we prefer to see, if they have sales in their area that they’re aware of, they can bring us that. And then we’ll look at it because it may be a sale that we don’t have. We send out surveys, but we don’t get much response from the surveys, but if they can bring us actual sales in their area that are from the last year or so, then we can look at that and incorporate it into our analysis.
The other thing people usually bring us will be pictures of damage to their house or deferred maintenance. They’ll bring cost estimates for things that need to be repaired, usually like roofing or cracked slabs, that kind of stuff. We can make adjustments for that pretty easy. That’s usually what people bring in, the issues with their house that they would have to fix if they were going to sell it.
WACOAN: So if there are issues with the house, a roof or cracked slab, their house wouldn’t be worth as much because it’s got something that needs to be done.
Bobbitt: We assume as an average condition, so if the outside of your house is brick and it looks nice, but the inside, all the sheet rock is cracked up and it’s having some troubles or issues, or the bathroom is from 1930, they can bring us that type of stuff and we can make some adjustments in the system.
WACOAN: You said homeowners can bring sales for their area. I know that Realtors have access to all the comps. Can just anyone have access to those?
Bobbitt: No. Realtors hold that stuff pretty tight to their vest. Some Realtors will give a CMA, a comparative market analysis, and they’ll say here’s things that are sold or listed and this is what they’re valued at, and your house is similar, so your house should be in this ballpark. Sometimes people will bring that in.
Typically the appraisers won’t put a lot of weight on a CMA. The ARB may. A lot of the ARB members are Realtors or retired Realtors, so they may put a little more emphasis on it than what we do. We want to see the actual sale and when it sold and the terms of the sale. We want to see a little more information on it besides just this is somebody else’s opinion of value.
WACOAN: What kind of training does someone have to go through to become an appraiser?
Bobbitt: It takes three to five years of experience to become a licensed appraiser. There’s 11 different classes that you have to take that are about a week long. All of this is regulated by TDLR, Texas Department of Licensing and Registration, and then the comptroller’s office. Between the two of them, they ensure we get our education accomplished.
And fee appraisers, like if you want to buy a house, fee appraisers are licensed through the Texas Appraiser Licensing and Certification Board, so they’re licensed through a separate entity. We’re licensed through TDLR because we do mass. We don’t do individual appraisals. But it takes, most people take four to five years to get it accomplished.
WACOAN: What drew you to the appraisal business?
Bobbitt: Actually, a family friend. [One] of my close friends from back in Tyler, his whole family is in this business. When I got out of the Army, I was looking for something to do, and they kept bugging me about applying to different [county appraisal districts]. I didn’t at the time want to move back to Smith County, so I came down here and applied.
WACOAN: As a captain in the Army, what were your duties?
Bobbitt: Heavy artillery most of the time. More recently I was the battalion logistics officer. I handled all the supplies and the needs for the battalion. Prior to that, I was executive officer for a firing battery. I was just a lieutenant when I was an executive officer. There was a captain that was over me at the company level. Then when I was promoted I moved to a battalion level.
WACOAN: With logistics, it sounds like that was very detailed.
Bobbitt: It is.
WACOAN: It seems like that would translate well to this job.
Bobbitt: It does. A lot of math, because artillery is, you have X amount of bullets, and if you’re shooting so many, then you need so many to come in to replace them. A lot of it is tracking what you’re using, how long you can sustain yourself, and then food, fuel, water.
WACOAN: What did you study in college?
Bobbitt: Ag science. So I’m supposed to be an ag teacher by trade.
WACOAN: Why didn’t you go into the ag field?
Bobbitt: Well, I signed a contract so I had to go in the Army [after college]. The Army paid for school. When I got out of the Army, I looked at being a teacher, and the only ag positions that were open were more than an hour away. I was just looking for something else to do, and I then got into this.
WACOAN: You’ve been here since 2011.
Bobbitt: Yes, sir.
WACOAN: So is the ‘Magnolia effect’ a thing?
Bobbitt: I would have to assume that it is. It’s hard to quantify because real estate in the state has been picking up. We’ve just been picking up more than other areas, like in the other counties around us. So I’d have to assume that it does have an impact. Once you get outside of more of the downtown Waco, I don’t know how much of an impact it’s having, like in McGregor or the outskirts. But I would say it is making an impact.
We do get quite a few phone calls from people from California, [and] wherever else, especially when the show was still going on. We were getting a lot of phone calls from people asking about properties and looking to buy one. Then we had to tell them, you know, we’re not a Realtor or broker, so you can look at our website, but other than that, we can’t tell you much.
They are basically just interested in buying property here just to get into all the fad. That’s slowed down. It’s hard to quantify how much. I know [the Gaineses] get a lot of the blame for the market going up. [Taxpayers] either blame us or them, or both.
WACOAN: So all the appraisal district is responsible for is looking at the market and responding to that?
Bobbitt: Yes. We’re usually a year behind, or close. In April, we’re going to come out with our 2019 appraisal notices. So we’re looking at January 1, 2019, and that’s all we’re really concerned about: what would it sell for on January 1, theoretically.
There’s a lot that goes into it because some people will buy their house on either side of that date and want us to come in and adjust it, and most of the time we will. We can adjust, especially if they paid more for it than what we had it appraised for. But, yeah, our only function is to appraise it for tax purposes.
We’re trying to get the value on everything fairly, and what we’re actually doing is determining your portion of the tax compared to your neighbor’s portion. We don’t set the overall taxes or anything else. We’re just saying out of all the taxes that are going to be due to all the entities, this is your little slice of the pie.
WACOAN: The appraisal district doesn’t decide how it’s broken up between the city and county and other entities. You just come up with that number and then all the taxing entities figure out their pieces.
Bobbitt: Yes, because once we come up with our numbers at the end of April, we have to send the entities are our preliminary totals. Basically this is our estimate of where we think we’ll be come July.
WACOAN: That will be a big number.
Bobbitt: It will be like $25 billion for the county. We’ll send the county their totals and say, ‘OK, we believe that the number will be $25 billion for you.’ And then out of all of that, after exemptions and everything else, then there might be $18 billion that’s available to be taxed. The county will then look at their budget and determine, OK, for this year, based on what everybody is saying that the citizens want, different departments, what they need, then we need $5 million, or whatever, to operate the county for the year.’ So they’d take their budget divided by our number and come up with the tax rate.
WACOAN: An entity can’t look at that final number and say to you, ‘That needs to be higher,’ and send you back out to re-evaluate.
Bobbitt: Some people will assume this, like Waco calls and says, ‘We need more money.’ And then we go back out and say, ‘There you go. There’s 10 more percent.’
WACOAN: That doesn’t happen.
Bobbitt: No. The only time I ever talk to entities is when I send them our budget, because they’re the ones that pay our budget. I send them a copy of our budget. I send them a copy of our reappraisal plan. Then once the totals come out, we basically answer a bunch of questions as far as why it changed from one year to the next and that way they can wrap their head around their budget and what money they’re actually going to get.
WACOAN: What’s the hardest part of your job?
Bobbitt: For most people, it’s you deal with a lot of upset people. And you have compassion for them, but there’s not a lot we can do about it a lot of times. There’s no exemption for, I’m a senior citizen, I don’t have any more money. You can get an exemption for being over 65 and it’ll freeze your school tax. But there’s nothing for, I’m hitting hard times, I need a break for a year, or whatever else. There’s nothing that allows us to do that.
When [the explosion in] West happened, people came down and they had serious problems going on, and you feel for them, but you’re limited in what you can do. The legislature actually allowed us to reevaluate West after the explosion. And so we had our January 1 number, and then we had our April 13 number, a prorated amount based on that disaster. That gave them a tax break for most entities. But that was allowed by the legislature. Otherwise our hands would’ve been tied.
That’s the hardest thing, when you feel for somebody, but you can’t do anything to help them besides tell them, ‘Well, go to the ARB, and maybe they’ll do something.’
WACOAN: Then what is the best part of your job?
Bobbitt: I just enjoy messing with the numbers. I spend a lot of time in the database, and it’s like a puzzle, trying to solve the puzzle to get it as accurate as possible and find mistakes we’ve made and try to get those out before we send our notice to everybody.
WACOAN: Is there anything else I need to know that I haven’t asked?
Bobbitt: The frequently asked questions on our website goes over some of the basics.
Some people will get confused by improvement. The appraisal notice is laid out by law, like what it says and how it says and where it’s put.
WACOAN: The appraisal notice we get in the mail?
Bobbitt: Yes, sir. And it’ll say improvement value. And a lot of people will see their house value and say, ‘I haven’t done that much improvement to my land.’ It’s not [referring to] improvement from the previous year. They consider an improvement is improvement to the dirt. So anything you build is an improvement to the land. So it’s a nomenclature.
WACOAN: How many protests do you think you get a year?
Bobbitt: Of everybody that showed up talking about a property, we talked about 18,000 properties total, which was higher than normal. The actual hearings, the formal hearings, normally we have about 3,000 actual hearings that the ARB hears, and we had about 6,000 heard last year. And all that takes place between May 15 and July 18. We’ve got a very narrow window that all this has taken place. We have to have 95 percent of our value certified by the ARB before we can send our values to the entities, and that’s by July 24, July 25. That’s so the entities can set their budgets and set their tax rates and all that process and still get to the tax office by October.
WACOAN: So you aren’t operating in a vacuum. What you do affects everything down the line.
WACOAN: You kind of mentioned this earlier, but if a property owner’s taxes go up 10 percent, a business goes up 25 percent, that additional money is not going to the appraisal district. Is that a misconception, that all of that money is going to the appraisal district and you’re getting rich?
Bobbitt: We’re basically prohibited by law to get compensated based on our numbers. The entities aren’t really allowed to tell us to go up or down on values, and we don’t get a kickback for raising the values. Our budget is set. In May, I’ll present our 2020 budget to our board of directors, then in September we’ll give it to the entities for approval, but our budget is done a year in advance, essentially, to the actual tax year that we’re even looking at.
WACOAN: So your budget will stay the same regardless if appraisals go up or down.
Bobbitt: Yes. We changed our budget. It had gone up $100,000 a year. The biggest thing that we changed in our budget was we did a homestead audit. We hired a law firm to come in and look at all of our exemptions and to see if there were any erroneous ones, and they found 500 to 700 or so. A lot of it was either people that had multiple homesteads that shouldn’t have. You can’t have two in the county. Some people have one in Houston, they have one here. They may have their homestead in the wife’s name in Houston. They may have the husband’s name up here, and they’re not allowed to do that.
WACOAN: What would qualify as an agricultural exemption?
Bobbitt: The most common, you have to have 3 [animal units]. Each animal unit is 1,000 pounds, so you have to have 3,000 pounds of critters out there. It can be, you know, three cows, 21 goats, 18 lambs or something like that. And then there’s a whole bunch of chickens, but you basically have to have 3,000 pounds of animal.
They can’t be your pet cows. You have to be raising them, breeding them, doing something with them and selling the livestock at livestock auction or whatever. You have to be producing something that somebody is going to consume, and it needs to be somebody other than yourself.
The ag manual from the comptroller talks about victory gardens. If you’re just growing your own little garden, [or have] your five or six pigs out there or whatever, and you’re just growing and consuming your own, you’re not really producing anything for anybody else. You have to be productive in some manner.
Hay is fairly common, and I think it’s like 20,000 pounds of hay you have to be able to produce a year. Horses typically do not qualify. Most of the time, they’re recreational or they’re rodeo. If it’s an actual ranch horse, you typically are going to qualify anyways because you have a ranch.
WACOAN: What’s the biggest exemption that gets abused?
Bobbitt: Probably the homestead.
WACOAN: Explain what the homestead exemption is.
Bobbitt: There’s some confusion because there’s a homestead with IRS that protects you from creditors — like from your credit card company or whatever — from coming and taking your house and 200 acres, and that’s just a generic homestead. But with us, the homestead is, you have up to 20 acres that you designate, and a house, as, ‘This is my home, this is where I live and the primary purpose of this land is for raising a family and doing whatever.’ What that allows is a $25,000 exemption from the school value and maybe 20 percent from the county. But you get a tax break.