Appraisal Standards Review
Collingsworth County Appraisal District Follow-Up Report
August 2007
Introduction
In July 2004, Hedley Independent School District (ISD) in Collingsworth County, was identified as one of 54 school districts in the state meeting the criteria that initiate an Appraisal Standards Review (ASR) of its county appraisal district. In August 2005, the Comptroller’s Property Tax Division (PTD) released the results of the ASR of Collingsworth County Appraisal District (Collingsworth CAD).
The report made seven recommendations to improve Collingsworth CAD’s appraisal practices and operations. ASRs are intended to determine why the Comptroller’s Property Value Study (PVS) found local values invalid and to recommend changes in operations and management that would improve appraisal practices. The Collingsworth CAD review evaluated five functional areas: board of directors; appraisal district policies, procedures and operations; information processing systems; staffing, personnel qualifications and positions; and generally accepted appraisal practices, equality and uniformity of appraisal standards.
At the time of the review, the challenges facing Collingsworth CAD included documenting procedures and appraisal manuals and planning reappraisals.
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 must notify the judge of each district court in the county for which the appraisal district is established. The judges appoint a five-member board of conservators to implement the recommendations. The board of conservators exercises supervision and control over the operations of the appraisal district until the Comptroller determines that the taxable value of each school district for which the appraisal district appraises property is the same taxable value as the local value for the school district. The appraisal district shall bear the costs related to the supervision and control of the district by the board of conservators.
For the one-year follow-up report, an appraisal district complies with the 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 as so. Remedial action generally is demonstrated by having implemented or nearly completed most of the recommendations by the first year anniversary of the release of the report. The Comptroller recognizes that some ASR recommendations will require more than a year to implement. Some ASRs include more recommendations than a CAD with limited resources can implement within a year. As long as the CAD is working to implement the recommendations, the Comptroller will continue to work with the CAD to achieve full compliance. CADs that have completed all recommendations by the one-year anniversary have met their statutory obligations and will not require additional monitoring.
The PTD team returned to Collingsworth CAD in August 2006 to assess its progress in implementing the ASR recommendations. While the review team documented progress toward implementing some of the recommendations, further work is needed to complete all of the recommendations in a timely manner.
PTD sent the CAD’s board members surveys soliciting their views and comments on the ASR. One board member responded, agreeing that the ASR had been useful, and the CAD had made significant progress toward implementing the recommendations. The board member stated the need for a job description for the chief appraiser was the ASR’s most significant recommendation.
PTD recognizes the work that the Collingsworth CAD has implemented, but will continue to monitor the CAD’s progress. Specific steps remaining to be taken are outlined in this report.
History and Significant Events
Collingsworth CAD received an ASR because PTD found Hedley ISD’s property values to be invalid. The school district was eligible for the grace period as provided for in Government Code Section 403.3011. In Hedley ISD, property values in Category D, Rural Real Property, were found to fall outside the state’s acceptable value range. Specifically, subcategory D1 (productivity value of qualifying acres) was found to be appraised incorrectly.
Reappraisal efforts taken by the CAD in 2004 and 2005 produced positive results, with Hedley ISD receiving valid local values in the final 2004 and 2005 PVS. Wellington ISD, however, received an invalid finding in the 2005 PVS. The CAD appealed this result for Wellington ISD, but the appeal was unsuccessful. In the 2006 preliminary PVS, all school districts in Collingsworth CAD were found to have valid taxable values, and local values were certified.
What Remains to Be Done
The Appendix lists the seven recommendations identified in the ASR and summarizes the CAD’s actions to date. The Comptroller acknowledges the work the CAD has performed over the last year and encourages it to remain on task to implement all recommendations. According to the chief appraiser, time and limited staff have been major issues preventing the completion of each recommendation within the past year.
The CAD has completed four of the recommendations. Two are in progress with documented progress towards full implementation. The remaining recommendation lacks documentation demonstrating how the CAD plans to implement it.
Recommendation 1: Revise the professional appraisal services contract to include delivery dates and develop a contract monitoring process and include it in future contracts.
The CAD and the board have not implemented this recommendation. Collingsworth CAD has two separate contracts for professional appraisal services. One contract is for the appraisal of all real property in the county for the years 2006 through 2008 and the other is for the appraisal of minerals, utilities, and associated personal property for the years 2006 and 2007. The contracts do not comply with the International Association of Assessing Officers (IAAO) Standard on Contracting. Specifically, they do not contain dates for when appraisals are to be completed and delivered to the CAD, or provisions for monitoring the contractor’s performance.
PTD released its ASR in August 2005. On Sept. 8, 2005, the CAD board approved a three-year reappraisal contract for all real property for the years 2006 through 2008 and a two-year contract for the appraisal of minerals, utilities and personal property for 2006 and 2007. The appraisal firm contract does not contain dates for deliverables or monitoring provisions, as required by IAAO. The chief appraiser said the contracts were already drafted when the ASR was released. It should be noted, however, that the draft report included this recommendation and was provided to the CAD one month before the final release of the ASR.
The board chose not to amend the contracts because the appraisal firm had never failed to deliver appraisals in a timely manner. According to the chief appraiser, she monitors the contracts by entering the entire field data submitted by the appraisal firm into the appraisal system and reviews and approves each invoice received from the vendor. The appraisal firm mailed 2006 appraisal notices on May 15, 2006, in compliance with Tax Code Section 25.19.
The chief appraiser has stated that the new contract for minerals appraisal will be signed in September 2007, while the contract for all other appraisals will be signed in September 2008. According to the chief appraiser, the new contracts will include delivery dates and a contract monitoring process. New copies of the contracts should be sent to PTD as they are signed, in September 2007 and 2008.
Recommendation 2: Develop a written policy and procedures manual for district operations. This recommendation remains in progress and the CAD has taken significant steps toward its completion.
On July 13, 2006, the board approved a procedures manual developed by the chief appraiser.
The manual contains a tax calendar and procedures for current and delinquent tax collections, accounts payable, payroll, bank deposits and reconciliations, as well as brief discussions of the budget process and the updating of property records.
With the exception of business personal property, the CAD uses contractors to perform its appraisals. Procedures for monitoring contracts are not included in the manual developed by the chief appraiser, but they should be since the CAD contracts for the majority of its appraisal work.
The chief appraiser has also developed a personnel manual and presented it to the board members for their approval on Feb. 8, 2007. The manual contains information on employee leave, conduct and benefits. It does not address annual employee performance evaluations.
The chief appraiser is the CAD’s only full-time employee. The CAD uses seasonal, part-time help for data entry. The chief appraiser has indicated she intends to retire after 2008. Current and future staff would greatly benefit from written policies and procedures. Knowing how the district performs its varied tasks also will be of benefit to taxpayers and taxing entities.
To complete this recommendation, the CAD should develop policies and procedures for all district operations. These documents, together with the two manuals already developed, should form the basis for a comprehensive district policies and procedures manual. The CAD should submit a copy of the completed manual to PTD no later than December 2007.
Recommendation 5: Adopt a detailed reappraisal plan that, at a minimum, includes the vital steps in the process, explains exactly how and when the steps will be executed and explains how sufficient resources will be allocated to follow the plan.
This recommendation remains in progress. In July 2006, using a model published by the Texas Association of Appraisal Districts, the chief appraiser and contract appraiser developed a written reappraisal plan for Collingsworth CAD. The plan calls for the reappraisal of all property in the CAD over a three-year period beginning in 2006. The chief appraiser is reviewing the plan for accuracy and compliance with the Tax Code and the Uniform Standards of Professional Appraisal Practice (USPAP). She said a public hearing on the plan will be held and the board will consider its adoption at its regular meeting.
The plan established a two-fold approach: a three-year reappraisal cycle and annual ratio study reports. The three-year cycle divides the county into three areas with an area being reappraised each year, beginning with Area One. Area One is described as all property within the city of Wellington. Area Two consists of all abstracts (rural land) within the county and that portion of Wellington ISD in Childress County. Area Three is all commercial property located within the CAD.
According to the reappraisal plan, annual ratio study reports will be used to determine areas or categories of properties that must be reappraised within the current year, based on sales. The CAD, however, has no procedures for gathering or analyzing sales data, and the reappraisal plan does not indicate where or how sales used for the ratio study should be obtained. The plan also does not explain how ratio studies will be used to identify problem areas that need to be re-inspected due to low or high sales ratios or high coefficients of dispersion.
The chief appraiser said Area 1 was actually reappraised in 2006, according to guidelines set forth in the proposed reappraisal plan. In addition, rural land tables were increased by about 30 percent, and agricultural productivity values were increased. In the 2004 PVS, all of the CAD’s schools received local value. In the 2005 PVS, Wellington ISD received an invalid finding and was ruled an eligible district.
The current plan does not indicate the number and types of parcels that will be appraised; how these properties will be appraised; whether the properties will be physically inspected or reappraised using alternative methods; or how the appraisal results will be reviewed.
The reappraisal plan contains a schedule of events to be completed in various months of the reappraisal year and generic descriptions of how the CAD will accomplish the 10 steps of a reappraisal, as described by the IAAO.
Since a new reappraisal plan is required every two years, the CAD should add its development to its annual list of activities. The plan should include procedures to ensure that all contract appraisers adhere to the reappraisal plan.
To complete this recommendation, the chief appraiser must ensure that the plan complies with Tax Code Sections 6.05 and 25.18 and USPAP Standards Rule 6-2(g). A revised reappraisal plan should be completed and sent to PTD by December 2007.
Appendix
Collingsworth 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 | Revise the professional appraisal services contract to include delivery dates and develop a contract monitoring process and include it in future contracts. |
Not Implemented |
September 2007 for mineral contracts; September 2008 for all other appraisal contracts |
According to the chief appraiser, PTD made the recommendation after the CAD had entered into new contracts with its appraisal firm. |
2.2 Appraisal District Policies, Procedures and Operations
| Rec. # | Recommendation | Implementation Status | If Not Complete, Projected Completion Date | Description of Actions Taken to Date |
|---|---|---|---|---|
| 2 |
Develop a written policy and procedures manual for district operations. |
In Progress | December 2007 |
The chief appraiser is the CAD’s only full-time employee. The district hires seasonal, part-time office help. The chief appraiser developed a written policy and procedures manual for district operations and the board approved the manual, on July 13, 2006. The CAD’s policies on employment are discussed in a separate document, Collingsworth County Appraisal District Personnel Rules and Regulations. |
2.3 Information Processing Systems
| Rec. # | Recommendation | Implementation Status | If Not Complete, Projected Completion Date | Description of Actions Taken to Date |
|---|---|---|---|---|
| 3 |
Evaluate integrating the district's appraisal system with its computerized mapping system and develop a plan and timeline for integrating the systems. |
Complete |
The CAD investigated the cost of integrating its appraisal and mapping systems, and according to the chief appraiser, the CAD cannot afford to do so at this time. The CAD will hire a second chief appraiser in 2008 who will train for a year with the current chief appraiser. The CAD has drawn up a timeline and plans to revisit the subject of integrating the systems again in January 2009. |
2.4 Staffing, Personnel Qualifications and Positions
| Rec. # | Recommendation | Implementation Status | If Not Complete, Projected Completion Date | Description of Actions Taken to Date |
|---|---|---|---|---|
| 4 |
Develop a job description and objective set of evaluation measures for the chief appraiser position and establish an annual evaluation process based on objective measures. |
Complete |
The chief appraiser, board chairman and board secretary developed a written job description and evaluation process for the chief appraiser's position. The chief appraiser will be evaluated at the December board meeting each year. |
2.5 Generally Accepted Appraisal Practices; Equality and Uniformity of Appraisal Standards
| Rec. # | Recommendation | Implementation Status | If Not Complete, Projected Completion Date | Description of Actions Taken to Date |
|---|---|---|---|---|
| 5 |
Adopt a detailed reappraisal plan that, at a minimum, includes the vital steps in the process, explains exactly how and when the steps will be executed and explains how sufficient resources will be allocated to follow the plan. |
In Progress |
December 2007 |
In July 2006, the chief appraiser, with assistance from the district’s contract appraiser, developed a three-year appraisal plan that was presented to the board for review and approval. A public hearing on the proposed plan was held before board adoption. In the 2004 PVS, all of the CAD’s schools received local value. In the 2005 PVS, Wellington ISD received an invalid finding and was ruled an eligible district. |
| 6 |
Establish written procedures for gathering and analyzing sales and develop appraisal manuals for all property categories. |
Complete |
The chief appraiser developed written sales data collection procedures. Additionally, the CAD’s Appraisal Manual: Guidelines for Mass Appraisal contains a section describing how sales should be used to calculate economic condition factors that identify market areas and adjust appraisal schedules. The manual contains current building schedules for residential properties as well as classification guidelines and photos of residences typical within a class of property. The manual also has classification descriptions for commercial property and mobile homes and descriptions and guidelines for agricultural productivity valuations. According to the chief appraiser, Collingsworth CAD updates the manual annually. According to the contract appraiser, detailed manuals for all properties it appraised by the firm are available at its office, and most of the information is kept in electronic format. |
|
| 7 |
Physically inspect all business personal property accounts each year and develop an independent verification and valuation of the business personal property. |
Complete |
In January 2006, the chief appraiser began the process of physically inspecting all business personal property accounts. The chief appraiser developed written procedures for appraising business personal property, though they do not describe the inspection process or the valuation procedures. |