Appraisal Standards Review
Bosque County Appraisal District Follow-Up Report
July 2007
Introduction
In July 2004, the Comptroller’s Property Tax Division (PTD) identified Iredell Independent School District (ISD), Kopperl ISD and Valley Mills ISD, all located in Bosque County, as three of 54 school districts in the state meeting the criteria that initiate an appraisal standards review (ASR) of the county appraisal district that serves them. In July 2005, PTD released the results of its ASR of the Bosque County Appraisal District (Bosque CAD).
ASRs determine why the Comptroller’s property value study (PVS) found local values invalid and recommend changes in operations and management to improve appraisal practices. The Bosque CAD review evaluated five functional areas: the board of directors; appraisal district policies, procedures and operations; information processing systems; staffing, personnel qualifications and positions; and generally accepted appraisal practices.
At the time of the review, Bosque CAD faced challenges with integrating the CAD’s appraisal software and geographic information system (GIS), adopting a detailed reappraisal plan and documenting procedures and appraisal methods.
Texas Property Tax Code Section 5.102(d) requires that, if the appraisal district fails to comply with the recommendations in the report and the Comptroller finds that the board of directors of the appraisal district failed to take remedial action before the first anniversary of the date the report was issued, the Comptroller shall notify the judge of each district court in the county for which the appraisal district is established. The judge(s) appoints a five-member board of conservators to implement the recommendations. The board of conservators shall exercise supervision and control over the operations of the appraisal district until the Comptroller determines that each school district for which the appraisal district appraises property has the same taxable value as the local value for the school district in the same year. The appraisal district bears the costs related to the supervision and control of the appraisal district by the board of conservators.
For the one-year follow-up report, an appraisal district complies with statute if it takes remedial action to implement the recommendations in the ASR. Remedial action means the CAD has corrected, remedied or improved the deficiencies identified in the ASR or intends to do so. A CAD demonstrates remedial action by having implemented or nearly completed most of the recommendations by the first-year anniversary of the report’s release. The Comptroller recognizes that some ASR recommendations will take more than a year to implement for a CAD with limited resources. As long as the CAD works to implement the recommendations, the Comptroller continues to work with the CAD to achieve full compliance. A CAD that completes all recommendations by the one-year anniversary meets its statutory obligations and will not require further monitoring.
In this follow-up report, PTD assesses Bosque CAD’s progress toward implementing the original report’s recommendations. While some of Bosque CAD’s responses to the ASR’s recommendations could use additional refinement, PTD found that Bosque CAD implemented all eight recommendations.
PTD sent the CAD’s board members surveys soliciting their views and comments on the ASR. One board member responded and agreed that the ASR contained suggestions useful to the CAD and that the board supported the recommendations. The board member said the review provided focus and direction for the CAD. The board and administration are working together to implement the recommendations and have made significant progress.
PTD believes that Bosque CAD’s efforts meet the state’s requirements.
History and Significant Events
Bosque CAD received an ASR because the PVS found the property values for Iredell ISD, Kopperl ISD and Valley Mills ISD invalid; the school districts became eligible for a grace period provided in Government Code Section 403.3011.
In the 2003 PVS, Valley Mills, Iredell, and Kopperl ISDs’ local values fell outside the study’s statistical margin of error. Subcategory D2, rural homes and land that does not qualify as farms, ranches or timberlands was the primary reason the school districts’ values were not within the acceptable range determined by the study. Neither the CAD nor any of the school districts protested the 2003 study.
All three of the eligible school districts also had invalid local values in the 2004 PVS. In addition, Walnut Springs ISD had invalid local value for the 2004 PVS.
In the 2005 PVS, however, all eight of the county’s ISDs received local value. The 2006 Preliminary PVS again found local value in all eight of Bosque CAD’s school districts to be valid. These results are an indication that the CAD has addressed the issues involved in the school districts’ 2003 PVS results.
What Remains to Be Done
The Appendix lists the eight recommendations identified in the original report, with a summary of actions to date. The Comptroller recognizes the CAD’s work during the last year in completing and complying with all eight recommendations
Appendix
Bosque County Appraisal District Appraisal Standards Review Implementation Status
2.1 Board of Directors
| Rec. # | Recommendation | Implementation Status | If Not Complete, Projected Completion Date | Description of Actions Taken to Date |
|---|---|---|---|---|
| 1 | Expand the detail of the budget presented to the board for adoption to include the benefits for each position and a list of each proposed capital expenditure with sufficient detail to allow comprehensive decision making by the CAD board and taxing units. |
Complete |
|
The 2006 CAD budget adopted by the board on Aug. 18, 2005, provided more detail, including budget items for salaries and employee benefits with a listing of positions and salary amounts. The 2006 budget also included a separate category for employee benefits that listed benefits and corresponding expenditures. The 2006 budget included a comments section and for the “Employee Benefits” category, it indicated that “each employee received for benefits: medical/life insurance; retirement in lieu of Social Security.” However, the 2006 budget did not include dollar amounts for each benefit per position. The 2007 proposed budget included a “Budget Memos” section. Within this section, the “Employee Benefits” category named benefits per item code with each item code corresponding to a staff position. Thus, the 2007 budget named benefits per position. The budget did not list the corresponding dollar amounts for each benefit. The CAD provided a budget that details proposed capital expenditures and made progress toward including employee benefits in the budget. While the Comptroller accepts these actions as compliance with the recommendation, the CAD should amend its current budget to include the dollar amounts for the benefits for each position. All future budgets should also include this information. |
| 2 |
Develop a job description and an objective set of evaluation measures for the chief appraiser position and establish an annual evaluation process based on objective measures. |
Complete |
The CAD provided PTD a job description for the chief appraiser that includes the statutory duties of the chief appraiser and duties assigned by the board. The CAD also provided evaluation measures that rate the chief appraiser on 11 items, including keeping the board informed; presenting financial information in a complete and understandable format; and working well with the public and taxing units. The evaluation instrument rates the chief appraiser’s performance from “strongly disagree” to “strongly agree.” The evaluation also includes space for additional comments and the signatures of the board members. On March 16, 2006, the board approved an annual evaluation of the chief appraiser, but it did not set a date to do so. The chief appraiser indicated the board had not evaluated her, but she said she would recommend that the board formally evaluate the office each December. Minutes of the March 1, 2007 board meeting reflect that all members evaluated the chief appraiser. The CAD furnished PTD copies of each board member’s individual evaluation sheet. |
|
| 3 |
Revise the appraisal services contract to reflect the guidelines in the IAAO Standard on Contracting for Assessment Services. |
Complete |
The chief appraiser sent the firm under contract to do its appraisal services a copy of this finding and an attorney representing the firm developed the updated appraisal services contract. On Jan. 12, 2006, the CAD’s board approved the revised “Contract for Professional Appraisal Services, Mineral-Industrial- Utility-Personal Property, Tax Years 2006-2007.” The contract includes a list of the companies to be appraised in 2006. The contract also states that in “each year prior to starting the new tax year, we have reviewed the list for additions and deletions with you.” The contract also contains provisions tying delivery of services to payments. For example, the contract states that the CAD should pay “$3,750 in May 2006 after completion of 2006 appraisals and mailing Notices of Appraised Value.” The chief appraiser said the contracted firm provides a preliminary roll and copies of appraisal notices to the CAD by the end of May. The chief appraiser indicated that she and the business personal property appraiser were responsible for monitoring the contract. The business personal property appraiser monitors changes to accounts appraised by the firm by maintaining a file of relevant property changes. The chief appraiser works with the firm to coordinate the dates the appraiser will be in the field, the delivery of services and the scheduling of the Appraisal Review Board (ARB) hearings. |
2.2 Appraisal District Policies, Procedures and Operations
| Rec. # | Recommendation | Implementation Status | If Not Complete, Projected Completion Date | Description of Actions Taken to Date |
|---|---|---|---|---|
| 4 |
Develop a written policy and procedures manual for CAD operations that consolidates existing memos and policies and adds and expands where necessary. |
Complete |
|
On July 1, 2005, using manuals from other CADs, Bosque CAD completed an operations manual. To reflect local policies and procedures, the chief appraiser modified and added information to the manuals from the other CADs. The Bosque CAD manual includes procedures for:
The CAD updates the manual each December. Each CAD department has a copy of the manual and the CAD provides new employees a folder containing specific sections of the manual used in the training process. While the CAD has complied with the recommendation by developing an operations manual, the manual could use additional procedures for purchasing of capital equipment, preparing the budget and managing petty cash and credit cards. The CAD should also consider updating the manual to document which staff member is responsible for each function, especially those involving financial transactions. Part of the manual still includes information from one of the other CADs. The CAD should perform a thorough review of the manual and remove any references to other CADs. |
| Rec. # | Recommendation | Implementation Status | If Not Complete, Projected Completion Date | Description of Actions Taken to Date |
|---|---|---|---|---|
| 5 | Develop an implementation plan and timeline and complete the integration of the CAD’s appraisal software and geographic information systems. | Complete |
The CAD developed an implementation plan and timeline for the integration of the GIS and the appraisal system:
Each completed map displays property boundaries, the owner’s name, account number, acreage and deed volume/page. As each map is completed, it copied to a compact disc and employees have this information on their computers. On May 1, 2006, the CAD hired a new mapping/GIS system operator. The CAD is also considering hiring a part-time employee to facilitate mapping. The chief appraiser estimated that the integration of the GIS and appraisal data would be complete in 2009. When the mapping project is completed, the CAD will integrate the systems. The CAD provided a plan and timeline for completing the mapping project and a date for the integration. |
2.4 Staffing, Personnel Qualifications and Positions
The report did not contain recommendations for this section.
2.5 Generally Accepted Appraisal Practices; Equality and Uniformity of Appraisal Standard
| Rec. # | Recommendation | Implementation Status | If Not Complete, Projected Completion Date | Description of Actions Taken to Date |
|---|---|---|---|---|
| 6 |
Adopt a detailed reappraisal plan that, at a minimum, includes the steps in the reappraisal process, explains exactly how and when the steps will be executed, incorporates recent additions to appraisal policies and explains how sufficient resources will be allocated to follow the plan |
Complete |
|
On April 27, 2006, the board held a public hearing and adopted the 2007-2008 Reappraisal Plan for Bosque CAD. The chief appraiser said she used parts of the another CAD’s reappraisal plan to develop the reappraisal plan for Bosque CAD. Major sections of the CAD’s 26-page reappraisal plan include:
The CAD follows a three-year reappraisal schedule in which it performs appraisals for about a third of the county each year. Page 2 of the reappraisal plan provides the following schedule:
The reappraisal plan also states “field inspections will be targeted for completion by March 15 of each year and data entry work completed by April 15 of each year.” The chief appraiser developed a comprehensive reappraisal plan in which she plans, directs and controls business support related to human resources, budget, finance, records management, fixed assets and postal services. Each year, the chief appraiser will re-evaluate the office staff and budget resources for meeting the CAD’s reappraisal duties within the statutory requirements of the Tax Code. The CAD delivered a copy of the reappraisal plan to the Comptroller on Aug. 29, 2006. |
| 7 |
Prepare and issue to each appraiser detailed appraisal procedures manuals that provide local procedures and practices for each type of property the staff appraises and tie these local procedures to the existing Marshall & Swift procedures. |
Complete |
The CAD maintains appraisal manuals in four separate books for easier transport. Book I contains expanded detail on the appraisal of residential, mobile home, commercial properties and land. Book II is the appraisal manual for residential improvements and mobile homes. Book III is the appraisal manual for commercial property, and Book IV contains the manual and guidelines for land appraisals. Before the ASR, the policies and procedures contained in these manuals consisted of information from Marshall & Swift, the Comptroller’s Property Classification Guide and some locally developed policies and procedures, including:
The chief appraiser developed the Appraisal Procedures Manual Book I (expanded detail) to address the findings in this recommendation. The chief appraiser included contents used by other CADs, the International Association of Assessing Officers (IAAO) and Marshall & Swift. Major sections of this manual include:
By developing the Appraisal Procedures Manual Book I (expanded detail), the CAD meets this recommendation. The CAD, however, should review the manual’s appraisal procedures for language from other appraisal districts. For example, the reappraisal schedule and data entry deadlines in the manual are not consistent with local policy. A thorough review of the manual would ensure the manual’s policies and procedures are consistent. In addition, the CAD should evaluate challenges to local appraisal processes and incorporate procedures that address them into the manual. Examples might include the appraisal of lakefront property, analysis of sales and development of modifiers for Category D2, Rural Real or Non-Qualified Land. |
|
| 8 |
Establish written procedures for gathering, recording and analyzing sales. |
Complete |
In 2006, the chief appraiser updated the “Procedures for Gathering, Recording and Analyzing Sales Information.” The updated procedures include a section on local sales analysis. This section explains the difficulty in gathering and analyzing sales in rural areas. It helps the CAD overcome limited sales in these areas by expanding the time for gathering sales and combining rural areas into “neighborhoods.” The chief appraiser also added brief statements on appraising lakefront property and for conducting arms-length transactions. |