Fort Worth has always been home to rugged individualists with a pioneering spirit. Established in the mid-19th century as an Army outpost along the Trinity River, it stockyards became a welcome stop for rough and rowdy cowboys driving cattle along the Chisholm Trail and earning a section of the city a distinctive nickname: “Hell’s Half Acre.” Nearly 170 years later, the eclectic city still embraces its cowboy roots, although it’s now a bona fide cultural center known for a trio of world-class art museums, the international Van Cliburn Piano Competition, the Horned Frogs of Texas Christian University, and a robust business climate that has inspired Lockheed Martin, American Airlines, Pier 1 Imports, Bell Helicopter, BNSF Railway and other multinational corporations to make Fort Worth their home base. It’s prosperity, growing job market and great quality of life have made it one of the hottest real estate markets in the nation. In 2016, the Dallas-Fort Worth metropolitan area registered a blistering 11 percent growth with homes values totaling $456.9 billion—a figure roughly on par with the national gross domestic product of Poland.
All this growth keeps Jeff Law on his toes. Not long ago, the executive director and chief appraiser for Tarrant Appraisal District, and his colleagues decided to make the transformational leap and replace the district’s 30-year-old COBOL system—an enormous undertaking that might seem daunting if Law wasn’t cut from the same cloth as the rugged individualists who’ve helped Fort Worth evolve into the city it is today. Plus, Law knows how to keep stress at bay: He and his wife herd cattle. “People ask me all the time, ‘Why in the world do you do that?’ I tell them it’s cheaper than paying for therapy.” We catch up with Law on the eve of the SYNERGY Aumentum User Groups Conference in Fort Worth.
Tarrant Appraisal District is responsible for appraising properties for 73 jurisdictions and taxing units. What do those include?
Our taxing units include Tarrant County, several cities, several school districts, a hospital district that covers Tarrant County, a junior college district, the Tarrant Regional Water District, and a couple of districts called municipal utility districts. All in all, we have 1.7 million accounts.
What is the approximate market value of those 1.7 million accounts?
In 2016, the total market value was $198 billion—that’s with a “B”. I expect that number to be over $200 billion for 2017. Unofficially, my preliminary numbers so far show we’re at $219 billion.
With such growth, how are you balancing the need for more public services with tax payer concerns about rising costs?
The appraisal district doesn’t deal with the demand for public services. When the Texas legislature set up our state appraisal districts, they really tried to remove that responsibility from the assessor. I deal strictly with determining market value. Anything that has to do with the demand for public services are issues that rest on the shoulders of our elected officials. From time to time, I do have to deal with concerns about rising property tax bills. Some property owners may not feel the market is as robust as it is, and will challenge our opinions regarding the value of their property. When they do, we just have to show them the data we’ve collected to support those values. We work very hard to try to resolve any differences of opinion between us and property owners. If the property owner goes on to a more formal process of filing a protest with the appraisal review board, then we have a formal hearing.
What volume of notices and appeals does your district handle?
This year we sent out appraisal notices to all of our residential, commercial and personal property accounts—which totaled about 700,000 notices. Once property owners get those notices in the mail, some of them will file a protest. Last year, we received 106,000 protests out of 1.6 million accounts. This year we have topped 105,000 protests out of 1.7 million accounts. Of the 105,000 we’ve received so far, we’ve already resolved and closed 52,000 protests. We are in a much better position this year than we were last year.
Is the district’s volume a reflection of all the growth in the real estate market?
Not entirely. We have seen some growth in the real estate market, however most of the increases from 1.6 million to 1.7 million have been generated by mineral accounts related to the Barnett Shale. The energy companies use horizontal drilling to extract the natural gas, so they will drill vertically down one side of the well, but then they also drill horizontally under a big housing subdivision. Every single property owner in that subdivision could have six accounts. You may have a subdivision with 2,000 properties, but it’s possible that there may be 12,000 accounts for one drill site. So, these mineral accounts grow exponentially.
What is driving real estate demand in your market?
When the recession hit the United States back in 2008 and 2009, Texas saw a slowdown in new start-up housing communities—especially in this area. Developers weren’t building new subdivisions, and a lot of them went out of business. When the economy rebounded, we had this huge demand for housing, but we haven’t had new subdivisions coming on line so the demand for existing homes is really pushing our growth in value. There is a short supply of existing homes and a growing demand due to people moving to this area—and that’s driving up home prices.
What are some of the biggest challenges you face while determining accurate values in such a dynamic market?
The biggest challenge we face is the collection of information. Texas is not a full disclosure state when it comes to sales affirmation. No one is mandated to provide us with that information, so the collection of sales information, cost data, and income data remains one of our largest challenges.
TAD recently updated its valuation system—replacing a 30-year-old system COBOL system with Aumentum. What were some of the limitations of the old system?
We had some programmers who were retiring, and finding replacements who understood the COBOL programming language was very difficult. When we did find COBOL programmers, they were individuals who’d retired from another job. I’m not sure they even teach COBOL programming any more. We also hired an outside consultant to give us advice about whether we should stick with our existing system, develop a new system in-house, or look for a third-party software provider. They confirmed COBOL is on its way out, and said we would find ourselves in a really bad place when we couldn’t find individuals to replace our programmers once they retired.
Are you receiving any traction from your new system that wouldn’t have been possible with your old system?
With the old COBOL system, it could take several weeks to get some reports. Now we can actually run reports on-demand. I can run totals reports much more quickly, as well. Things like that are much improved over our old system. We can map update certain elements regarding appraisal adjustments more quickly, and we now have the ability to integrate outside third-party cost databases directly into this system rather than having to build all that cost information in the old system. We are still working with Thomson Reuters to finalize the software, but I believe that once we get some of those things tuned in properly the new system will be able to do things that the old system couldn’t do.
Do you have any advice for any other jurisdictions preparing for this type of massive migration to a new system?
Understand that it’s not something you’re going to be able to do in six months. You literally need to plan several years in advance—allow some sufficient time. Entities also need to make sure they understand what their requirements are before beginning. Understand your job requirements and what you need the system to do, not so much what you want the system to do. Understand that an off-the-shelf product will do certain things, and that may require you to change some of your business practices to fit with the way the system operates. You have to make a decision: Do we want to change our business practices to the way system works, or do we want to have the system changed to accommodate the way we work? Anyone going through a migration like this should know up front what they are willing to change, and what they aren’t willing to change. It’s not going to be easy. There will be a lot of pain points along the way.
If SYNERGY attendees have some extra time, what do you recommend they see in Fort Worth?
North of downtown, you can see the historic Fort Worth Stockyards where cowboys literally drove thousands and thousands of cattle. For those who like to dance and engage in an adult beverage, Billy Bob’s—touted as one of the largest honky tonks in the world—is also in the Stockyards. Texas Motor Speedway is just north of downtown, and we have some nice art museums—the Kimbell Art Museum, the Fort Worth Modern Art Museum, and the Amon Carter Museum of American Art. Of course, we have a lot of good barbecue restaurants.
Where can you get the best steak in town?
There are a couple of good places. Del Frisco’s and Ruth Chris are both located downtown, and Cattleman’s is in the Stockyards. The Silver Fox Steak House over on University just north of the Fort Worth Zoo is good, too.