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Chapter 2
Findings of the Appraisal Standards Review

This chapter of the report addresses the findings, commendations and recommendations from the appraisal standards review of the Comanche County Appraisal District in five sections:

2.1Board of Directors
2.2Appraisal District Policies, Procedures and Operations
2.3Information Processing Systems
2.4Staffing, Personnel Qualifications and Positions
2.5Generally Accepted Appraisal Practices; Equality and Uniformity of Appraisal Standards

2.1 Board of Directors

The quality of the property tax system depends on the appraisal district's Board of Directors. Individuals serving on the Board of Directors bring to the board knowledge, judgment and expertise in establishing policies and procedures for the district's organization and operation.

The appraisal district was formed in 1981 and became active in 1982. The district Board of Directors consists of six members. Members of the board are listed in Exhibit 4.

Exhibit 4
Board of Directors
Comanche CAD
Board Member Represents Starting Date
Gayle Graham, Chair County, City of Comanche, Comanche ISD, Gustine ISD 1/1/98
Billy Ray Evans County, Comanche ISD, Gustine ISD 1/1/84
Royce Lesley County, Comanche ISD, Gustine ISD, City of DeLeon 1/1/98
Jerry Pyburn County, Comanche ISD, Gustine ISD 1/1/98
Sam Sparger County, Comanche ISD, City of DeLeon, DeLeon ISD, City of Gustine, Gustine ISD 1/1/03
Edith Gay Green County Tax Assessor Collector, Advisory Member 1/1/98
Source: Comanche CAD.

Edith Gay Green is the Comanche Tax Assessor-Collector and is the only elected official serving on the Comanche Board of Directors.

The Board of Directors has the following primary responsibilities:

  • Establish the appraisal district's appraisal office;
  • Adopt the appraisal district's annual operating budget;
  • Contract for necessary services;
  • Hire a chief appraiser;
  • Hire a taxpayer liaison officer (districts in counties having a population of over 125,000);
  • Appoint appraisal review board members; and
  • Make general policy on the appraisal district's operation.

The Board of Directors hires a chief appraiser as the chief operating officer of the district.

The Board of Directors received a written survey about board activities from PTD. Three of the six board members responded. The survey was broken down into board policies and procedures, chief appraiser and staff, property appraisals, appraisal review boards, and budgeting and financial management. The board members generally gave the district and the staff good marks. Members noted the board does not review and update its policies biennially and the board has no required annual training for its members. Board members also noted in the survey that they do not evaluate the chief appraiser, but they disagreed on whether or not the district has a written job description for the chief appraiser.

FINDING
Three members of the board were interviewed. All expressed the desire for addressing and resolving issues of unsatisfactory performance. According to the board chairman, the CAD has $2,750 budgeted for directors to attend conferences and stay abreast of issues and needs, which reflects a proactive attitude toward training. These funds are included in the board of directors' section of the budget. Only two of the Comanche CAD directors returned the board survey, which was mailed to all members for completion to aid in conducting a meaningful Appraisal Standards Review (ASR). All board members indicated the need for more training for board members

In January 2004, Comanche directors attended a joint chapter meeting of Texas Association of Assessing Officers (TAAO) and Texas Association of Appraisal Districts (TAAD) in Hamilton, Texas. The program included a presentation by PTD staff for CAD board member training. Board members indicated the program was helpful. Again in January 2004, at the request of the board of directors of the Nueces County Appraisal District, PTD staff developed and presented a board of directors training session. The session, presented by a member of the division's Technical Assistance section and the Assistant General Counsel assigned to the division, lasted about four hours and was well received by attendees.

The State Board of Tax Professional Examiners has developed a series of courses for appraisers, assessors and collectors. Included in the series is a course entitled "Introduction to the Texas Property Tax System," which might be helpful to board members. TAAD and TAAO also have educational opportunities that might interest board members.

RECOMMENDATION 1
Establish and implement a plan for board member training.

FINDING
Financial audits have been prepared in accordance with Section 6.063 of the Tax Code, and the district did not have any audit findings. The 2001 audit was completed January 24, 2002, but audits for 2002 and 2003 were not completed until June 27, 2003 and June 9, 2004, respectively.

Burl D. Lowery, certified public accountant of Brownwood, Texas, conducted independent audits for the 2002 and 2003 fiscal years. Max Haile, certified public accountant of Gatesville, Texas, conducted an independent audit for 2001. The audits for 2001, 2002 and 2003 have been examined and did not contain any adverse findings. The audits for 2002 and 2003 were not conducted until June of the following years, too late to allow the directors time to address any findings before submission of the proposed budget that must be completed and presented before June 15th of each year as required by Section 6.06 (a) of the Tax Code. Exhibit 5 shows the 2003 and 2004 budgets.

While the audits reviewed did not have any negative findings, if the district had negative findings it would have been unable to budget funds for changing district practices because it receives the reports so late in the following fiscal year.

RECOMMENDATION 2
Complete annual financial audits in a timely manner and establish guidelines addressing and monitoring the findings.

FINDING
The Comanche CAD Personnel Manual provides a job description for the chief appraiser, but there is no provision for annual performance appraisals that address expectations or objectives of the chief appraiser by the board. Both board members responding to the board survey noted that the board does not evaluate the chief appraiser.

Since the chief appraiser serves at the pleasure of the board, it is important for the board to have policies in place to ensure that the chief appraiser is properly conducting the business of the district including implementing the reappraisal plan established by the board and chief appraiser.

Exhibit 5
Comanche CAD Budget Summaries for Fiscal Years 2003 and 2004
Category 2003 2004
Budget Percent
of Total 		Budget Percent
of Total
Employee wages and benefits $204,850 58.38% $211,461 60.25%
Insurance 5,500 1.56 5,166 1.47
Building Expense 4,300 1.23 3,800 1.08
Utilities 14,000 3.99 11,834 3.37
Postal Expense 15,660 4.46 11,457 3.26
Membership and dues 1,500 0.43 1,500 0.43
Copier Expense 1,500 0.43 1,500 0.43
Office Expense 15,500 4.42 15,500 4.42
Education Travel* 7,500 2.14 7,500 2.14
Vehicle Expense** 1,500 0.43 1,500 0.43
Professional Services 4,600 1.31 4,800 1.37
Legal Notices 1,500 0.43 1,500 0.43
Industrial/Minerals/Utility Appraisals 27,000 7.69 27,800 7.92
Information Systems 25,720 7.33 24,940 7.10
Board of Directors 3,750 1.07 2,750 0.78
Appraisal Review Board 3,000 0.85 3,000 0.85
Bank Notes 13,500 3.85 14,985 4.27
TOTAL $350,880 100% $350,993 100%
Source: Comanche CAD.
Notes:
* Education Travel includes registration and travel expenses for training.
** Vehicle expense is for reimbursing staff for mileage.

After the site visit, the chief appraiser's performance was evaluated on April 21, 2005 on a form titled Comanche County Appraisal District Evaluation - Chief Appraiser. The form uses a 10-point scale, ranging from 1 for inadequate level of competency, 5 for average level of competency to 10 for excellent level of competency. The form's instructions say that each board member will receive a copy of the evaluation form and will evaluate the chief appraiser individually. The board chairman then combines the scores to determine a composite board score and gives this to the chief appraiser as the board's evaluation. The form evaluates the chief appraiser on 12 areas: goals and objectives; organization; problem solving; leadership; relationship with board; personnel; duties/responsibilities; business and finance of appraisal district; communication; relationship with community; development; and personal attributes. The form also provides for a summary listing the three strongest areas of the chief appraiser's performance and three areas that need improvement. Each item is scored separately and there is no total score. The strengths and "needs improvement" areas of the evaluation were not filled out on the April evaluation.

In Nueces CAD, for example, the chief appraiser receives an annual performance evaluation on the anniversary date of his/her hire. The Nueces board uses a separate evaluation instrument for the chief appraiser than is used for other district staff. The instrument allows for input from all board members, and affords the chief appraiser an opportunity to address his/her own goals and objectives during the evaluation period. In addition, the evaluation sets up measurable goals and objectives for the next 12 months. Having an objective evaluation system in place ensures that the board and the chief appraiser are in agreement as to what is expected of the chief appraiser, and eliminates performance evaluations that may be subjective and based on emotion rather than actual performance.

A good performance evaluation system outlines the behaviors expected of the chief appraiser and what the board expects the chief appraiser to accomplish each year.

RECOMMENDATION 3
Establish written procedures for annually appraising the chief appraiser's performance and link the district's recently developed evaluation form to the chief appraiser's job description.

2.2
Appraisal District Policies, Procedures and Operations

In organizing and administering an appraisal district the chief appraiser is responsible for hiring, firing and training personnel. the chief appraiser is also charged with ensuring compliance with a wide range of legal requirements and for the maintenance of policies and procedures for effective appraisal district operations. The district is required to comply with Comptroller rules concerning application forms and appraisal records.

The chief appraiser is required by law to prepare and certify an appraisal roll for each taxing unit participating in the district. Certification of the appraisal roll for the 2003 tax year by the district was completed according to the law. Appraisal district documents show July 31, 2003 as the certification date of the appraisal records.

FINDING
The Comanche County Appraisal District does not have well documented policies and procedures to guide the day-to-day operations of the district in areas such as payroll processing, accounting, purchasing and the like.

Instead, long time employees of the district have a series of memos, notes or long-term memory to guide them through the day-to-day processes. Policies adopted by the board are recorded in board minutes, but it is unclear how certain policies are translated into practice in the district, nor is it clear that the chief appraiser or any other employee is responsible for monitoring day-to-day operations to ensure that policy decisions of the board are carried out.

A policy tells a person, department, or group of individuals what they must do, whereas as procedure enumerates how it can be accomplished.

Well-written and organized procedures:

  • implement and assure compliance with board policies as well as documenting the intent of those policies;
  • protect the institutional knowledge of an organization, so that as experienced employees leave, new employees have the benefit of the others' years of experience;
  • provide the basis for training new employees; and
  • offer a tool for evaluating employees based on their adherence to procedures.

In the absence of well documented procedures and policies, the work of the appraisal district may come to an abrupt stop if key personnel leave a position as a result of sudden illness, death or other personal reasons. Other risks occur when whole departments without trained back-ups for critical positions like payroll, and of poor training techniques that show new employees how to perform a task, but not why.

To be effective, policy and procedure manuals need to be updated and kept current at all times. This means setting up a system for regular updates and distribution, as well as periodic reviews to ensure that all old policies are removed when no longer needed.

The Jefferson county appraisal district, recently reviewed by the Comptroller's office, maintains a current and comprehensive policy and procedure manual detailing procedures for payroll, accounting, purchasing, budget, travel, bank reconciliations and related office functions.

RECOMMENDATION 4
The chief appraiser should develop and the Board of Directors should adopt a comprehensive policy and procedures manual for district operations.

2.3
Information Processing Systems

Appraisal districts use information technology to provide detailed records that are easily accessible to staff and the public. Information technology systems allow staff to effectively manage large amounts of data on individual properties and make the appraisal process more efficient.

FINDING
The district appraisal system and mapping system are not integrated. True Automation, Inc. is the current vendor for all of Comanche CAD's appraisal and records management except for mapping software and hardware, which is provided by ESRI, Inc. of San Antonio, Texas. The Software Group, Inc. of Plano, Texas was providing appraisal and records management services to the district until after certification of the appraisal roll on July 31, 2003. Both systems management companies are considered comprehensive providers of appraisal district hardware and software and both appear to compete for significant shares of the appraisal district market, both in Texas as well as other states.

The district's field appraisers print property appraisal cards that they manually update in the field and return to the office to be data entered by a clerk. The district does not use laptop computers for field appraisal work although this is a technology that is currently experiencing increased popularity. The cost-benefit relationship is typically a consideration for small appraisal districts with more restrictive budgets.

There is currently no integration of the GIS mapping system with the appraisal software systems provided by True Automation. Both systems appear to adequately meet the needs of the district at present as separate stand-alone systems but they will soon become antiquated by faster and more efficient GIS mapping systems that are integrated. The district has a data systems administrator that has been employed for 22 years and is knowledgeable and experienced in records management, back up processing, select lists, and ratio studies that are used in appraisal analysis and sales ratio processes. The mapping technician has been employed by the district for 16 years and also has a job description of bookkeeper. The software vendors provide systems support user manuals, telephone and email contracts for rapid response inquiries, and applications.

At a June 16, 2005 board meeting after the site visit, the board voted to approve a proposal for a GIS technology project submitted by True Automation. The chief appraiser said the targeted completion date for the project was the last quarter of 2006. The district did not provide a copy of the proposal, so it was not possible to determine what True Automation had proposed and what the district had adopted. The district also did not furnish a project plan nor a timeline for completing the proposed project.

Computerized deed record updates are the responsibility of a deed clerk who began employment in January 2005. As a new employee, she has limited training and experience. The deeds are typically acquired from the county clerk's office twice monthly and following data entry by the deed clerk, are forwarded to the mapping technician when parcels are divided or combined.

Jefferson CAD has an integrated appraisal system and GIS that allows an integrated approach to mapping and appraisal.

RECOMMENDATION 5
Develop a plan for integrating mapping and appraisal systems.

2.4
Staffing, Personnel Qualifications and Positions

Personnel and human resources management are a critical function of appraisal districts. Successful management of personnel includes efficient recruiting, hiring, classification and compensation, benefit administration, training and development, and performance evaluation. Compliance with equal employment opportunity statutes and other applicable federal and state laws and the establishment of fair and workable policies, procedures and training are important for the recruitment and retention of competent staff.

The Comanche CAD staff is organized as outlined in Exhibit 6.

Exhibit 6
Comanche Central Appraisal District Organization
Position Certification Length of Service Salary
Chief Appraiser RPA, Reg. #62164 23 years(Chief Appraiser since 1998) $39,700
Deed Clerk - 3 months $15,360
Clerk- part-time, 3 days/week(To retire July 2005) - 22 years $20,170
Appraiser/Level III RPA, Reg. #69935 4 years $20,500
Appraiser - vacant - - $24,205
Admin. Assistant - 3 years $18,070
Data System Administrator - 22 years $21,920
GIS Tech/Bookkeeper - 16 years $21,280
Source: Comanche CAD.

Appraisal district staff who appraise property Is required to be Registered Professional Appraisers (RPA) or to be working towards certification as an RPA. Staff members must be certified within five years of their hire date. Interim certifications include Class II and Class III. In addition, RPAs must re-certify five years from the date of first certification and every five years while registered.

FINDING
Comanche CAD is facing an immediate need for additional staff members who are skilled and experienced. The most experienced staff appraiser resigned to accept an appraisal position in an adjacent county for a higher salary. Another employee with 22 years of experience is now working part-time and intends to retire at the end of July 2005.

The 2003-2004 Appraisal District Operations Report lists 15,754 real property parcels appraised by the CAD. The Tax Code requirement for the reappraisal of all real property every three years implies that one appraiser could have the total responsibility of reappraising 5,250 or more real property accounts in addition to business personal property (BPP) and all new improvements for the upcoming year. The chief appraiser's administrative and management responsibilities limit her available time to perform field inspections. The current staff appraiser has just recently received certification as a RPA and has completed the necessary five years experience in the appraisal profession for that certification.

A salary survey was conducted using data from Bosque, Brown, Erath, Hamilton, Mills and Eastland counties and the average appraiser salary reported for those districts was $27,320. Level of experience and other benefits were not considered. This average appraiser salary for the surrounding counties is approximately 13 percent higher than the salary of former appraiser upon the appraiser's resignation and 33 percent above the other appraiser's salary.

The chief appraiser said that the CAD employee salaries were frequently compared with county employees, but these are not comparable positions requiring the level of professional training and experience necessary to appraise real and personal property. The chief appraiser said that the district's plan was to hire an appraiser in August. Subsequent to the site visit, the district does not want to hire and train an inexperienced person or inexperienced appraiser. The chief appraiser said, however, that she and the board felt an experienced appraiser would not relocate to Comanche county at the present appraiser salary. The chief appraiser said she has conducted several interviews for the position and that her plan was to hire and train someone locally, because employees who stay with the district have better rapport with taxpayers. The chief appraiser did not provide any information on who she had interviewed or how the job was advertised.

An employee salary review should be conducted to ensure that Comanche CAD's compensation is competitive with surrounding CADs and any comparisons with county employees compensation should take into account the levels of education, training and experience necessary for CAD personnel.

RECOMMENDATION 6
The chief appraiser and the Board of Directors should immediately initiate steps to employ a field appraiser, preferably with some mass appraisal experience, and conduct a salary comparison using salary data from surrounding county appraisal districts and revise the district's salary schedules to be competitive with those districts.

FINDING
The district does provide written employee performance evaluations of Comanche CAD staff. Written performance evaluations, at a minimum of once each year, provide for the continuing development of district employees as well as establishment of goals and objectives clearly understood by employee and employer.

Property Appraisal and Assessment Administration in Chapter 16, "Administration," states, "Although employees may improve their skills by their own efforts and the help of peers, managers have organizational responsibility for employee development. They use training, education, counseling, and performance reviews to identify talents and help employees grow."

In Nueces CAD, for example, an employee's performance of assigned duties and other job-related criteria provides the basis for an annual employee evaluation (at a minimum). Employees are informed of the criteria on which they will be evaluated. Evaluation and performance appraisal ratings are based on the evaluation instrument and cumulative performance data gathered by supervisors and the chief appraiser throughout the year.

Each employee has at least one evaluative conference annually to discuss the written evaluation and may have as many conferences about performance of duties as the chief appraiser deems necessary. Evaluation records and forms, reports, correspondence and memoranda are placed in each employee's personnel records to document performance. All records that support ratings are maintained for at least two years. Official records are then maintained throughout a person's employment with the district and for two years after an employee ceases to be employed with the district. All employees receive a copy of their annual written evaluation.

RECOMMENDATION 7
Adopt a policy to be incorporated into the Personnel Manual providing for annual written employee performance evaluations for all employees of the appraisal district and develop written procedures for evaluating staff.

2.5
Generally Accepted Appraisal Practicies, Equality and Uniformity of Appraisal Standards

In the appraisal business there are generally three approaches to value - cost, income, and market - that a chief appraiser must consider in determining the market value of property. The chief appraiser must consider all three and use the method most appropriate in appraising a particular property.

FINDING
Comanche CAD has no appraisal documents that address methods and procedures required by USPAP and IAAO, and does not use ratio studies effectively. Review of the ratio studies performed by the district in June 2003, which were performed too late to be incorporated into that year's appraisals, indicated roughly the same results as the PVS. Had the ratio study been performed in a timely manner and the findings properly responded to, it is very likely that Comanche ISD would have been within the confidence interval of the PVS.

Comanche CAD has an appraisal manual that briefly describes the steps and methodology for appraiser field inspections, classing properties on the basis of construction characteristics, estimating and applying depreciation for physical, functional and economic causes, and the applying the principal of consistency to achieve equal and uniform appraisals of property. This information is based on a cost approach and there are no guidelines for consideration of income or market approaches to appraised values.

There is a written reappraisal plan that references Standard 6 of USPAP, stating that three approaches to value have been considered and will be used in property reappraisals and approximately one-third of the properties will be physically inspected and reappraised each year. The district employs a combination of processes for the discovery of new property each year. Those processes include checking permits issued by taxing units, newspaper ads, and Doing Business As (DBA) filings at the office of the county clerk and physical inspections. Sale data is collected by mailing sale information letters to buyers and sellers. The CAD reported that it processed 819 deeds, mailed 1,016 letters and received 486 responses. Copies of ratio studies have been provided but based on print dates, the effectiveness of the ratio studies have been compromised by not producing them prior to beginning the reappraisal and again as the reappraisal work progresses. No written procedures were provided for appraisal of business personal property (BPP). The CAD reported 693 BPP accounts in addition to BPP appraised by Capitol Appraisal Group.

According to IAAO's Property Appraisal and Assessment Administration, a ratio study is a study of the relationship between appraised or assessed values and market values. Indicators of market values may be either sales or independent "expert" appraisals. Of common interest in ratio studies are the level and uniformity of the appraisals or assessments.

The Rusk CAD chief appraiser, for example, runs ratio studies within property classes, by school district and county at least quarterly and more often, if necessary, to determine appraisal performance. Rusk CAD makes reappraisal and value maintenance decisions for certain types of properties or locations based on the ratio study results. Rusk CAD annually completes sales ratio studies on all properties and categories that indicate values below the indicated market are reappraised to insure properties are being appraised at market value.

RECOMMENDATION 8
Produce ratio studies prior to beginning the reappraisal process and at least two additional times prior to locking down computer systems for the printing of appraisal notices.

FINDING
The Comanche CAD lacks comprehensive appraisal manuals. Section 23.12 of the Property Tax Code requires all appraisal districts to have documented policies and procedures. The district has manuals that outline personnel policy for the district and an appraisal manual that provides a measure of standardization for property appraisals. The Appraisal Manual has no index or page numbers in the descriptive part of the manual, making the process of locating information difficult. The appraisal manual contains brief descriptive guides for classing site built residential improvements, manufactured housing, mobile homes and commercial improvements. The bulk of the manual is composed of schedule tables for improvements, depreciation and land calculations. These tables reflect a print date of April 6, 2005 and are believed to have been generated in preparation for an on-site visit on that date in conjunction with the Appraisal Standards Review for 2003. There is no documentation of information that existed in 2003 for appraisals, although the appraisal software vendor was providing table driven computerized calculations of property improvement classes and depreciation. The appraisal software vendor at that time was The Software Group, Inc. of Plano, Texas, a sizable software vendor for numerous government functions and central appraisal districts. The existing appraisal manual is inadequate to address the future needs of Comanche CAD property appraisals at the professional level required by Uniform Standards of Professional Appraisal Practice (USPAP), Standard 6, and by mass appraisal standards outlined by the International Association of Assessing Officers (IAAO). There is no manual for the appraisal of business personal property and the only guidelines are those provided by PTD publications. Agricultural productivity appraisal methodology is based on the PTD manual for the appraisal of agricultural property.

The chief appraiser said she felt appraisers do not need their own individual copies of manuals in an office the size of Comanche CAD. Appraisal consistency and uniformity require that all appraiser are using the same set of procedures to appraise like properties.

The manuals need to include a table of contents, an index and comprehensive descriptions of property appraisal procedures. The procedures described should include identifying the property to be appraised, identifying existing market influences for the location, property inspections for the purpose of appraisal model classification and acquisition of size, age, quality of construction and condition of improvements information. It should also identify and describe procedures and methods of estimating effective age or remaining economic life of the property.

RECOMMENDATION 9
Develop comprehensive appraisal manuals.

FINDING
Comanche CAD has a two-page reappraisal plan document. The second paragraph of that document erroneously references Section 23.18 of the Tax Code as the basis for reappraisal activities. Section 23.18 of the Tax Code deals with the appraisal of property owned by a nonprofit homeowners' organization. Section 25.18 (b) of the Tax Code mandates the periodic reappraisal of all real property in the district at least once every three years. The reappraisal plan is a roadmap for performing the work. It is also a communication tool that shows the Board of Directors how the appraisal district staff plans to accomplish its appraisals, and if the board chooses to require the chief appraiser to submit the plan for approval, the board can direct appraisal activities by amending the plan. Care should also be given to see that the cost for the reappraisal is included in the proposed budget recommendations each year.

The primary function of every appraisal district is to appraise all property equally and uniformly at market value. The chief appraiser and appraisal district staff are responsible for the day-to-day operations of the appraisal district, but the Board of Directors must adequately plan to accomplish these objectives and establish policies that serve as clear directives to the chief appraiser and staff. As representatives of the member taxing units, the Board of Directors is responsible for ensuring that the appraisal district produces an appraisal roll that reflects market value of all taxable property.

According to USPAP Standard 6, a functional reappraisal plan includes the following activities:

  • identifying properties to be appraised;
  • Identifying and updating in the appraisal records the relevant characteristics of each property to be appraised;
  • Defining market areas;
  • Identifying property characteristics that affect property value in each market area;
  • Developing an appraisal model that reflects the relationship among the property characteristics affecting value in each market area;
  • Calibrating the model to determine the contribution of the individual property characteristics affecting value;
  • Applying the conclusions reflected in the model to the characteristics of the properties being appraised, and
  • reviewing the appraisal results.

A thorough reappraisal plan discusses in detail how and when the district plans to perform each of the reappraisal activities. A detailed reappraisal plan, properly executed, will ensure that values in each school district are valid in the annual property value study and thereby minimize the possibility of a school district receiving less than the maximum entitlement of funding from the state. Such a plan would also ensure that taxpayers receive equal and uniform treatment in the assessment of property taxes.

RECOMMENDATION 10
Develop a comprehensive reappraisal plan that follows USPAP standards for reappraisal and references the correct Property Tax Code section.