Appraisal Standards Review
Duval County Appraisal District Follow-Up Report
August 2007
Introduction
In July 2004, the Comptroller’s Property Tax Division (PTD) identified San Diego Independent School District (ISD), located in Duval County, as one of 54 school districts in the state meeting the criteria that initiate an appraisal standards review (ASR) of its county appraisal district (CAD).
In December 2005, PTD released results of its ASR of the Duval County Appraisal District. The report made 12 recommendations to improve Duval CAD’s appraisal practices and operations. ASRs are intended to 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 Duval CAD’s 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, the challenges facing Duval CAD included reappraising consistently and regularly and establishing and documenting procedures.
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 judge(s) must 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, under Government Code Section 403.302, that the taxable value of each school district for which the appraisal district appraises property is the local value for the school district. 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, or intends to correct, remedy or improve the deficiencies identified in the ASR. The CAD demonstrates remedial action by having implemented or nearly completed most of the recommendations by the first-year anniversary of the report. The Comptroller recognizes that, for a CAD with limited resources, some ASR recommendations will take more than a year to implement. As long as the CAD is working to implement the recommendations, the Comptroller continues to work with the CAD to achieve full compliance. CADs that have completed all recommendations by the one-year anniversary will not require further monitoring.
In December 2006, PTD reviewed the progress made by Duval CAD in implementing the recommendations found in the original report. The review team documented the completion of all of the recommendations.
PTD sent the CAD’s board members surveys soliciting their views and comments on the ASR. Two of the board’s five members responded to the survey. Both board members agreed the ASR contained information useful to the appraisal district. They also felt certain recommendations were cost-effective. Both board members also agreed the board has been supportive of the ASR’s recommendations; the chief appraiser regularly brought recommendations to the board for its consideration; and the board and chief appraiser worked together to accomplish the recommendations. The most significant recommendation contained in the ASR, according to both board members, was for implementing a Geographic Information System (GIS) mapping system. Each board member said the most difficult decision faced because of the ASR was budgeting the funds needed to implement the recommendations.
PTD believes Duval CAD’s efforts to date meet the state’s legal requirements in all 12 recommendations, and no further action is necessary. The following pages outline the specific steps the CAD has implemented.
History and Significant Events
Duval CAD became the subject of an ASR because PTD found San Diego ISD’s property values invalid, and the school district was eligible for the grace period provided in Government Code Section 403.3011. Within San Diego ISD, property values in Category D, Rural Real Property, and Category F1, Commercial Real, fell outside the state’s acceptable value range.
Results of the 2004 Property Value Study continued to show poor appraisal performance by the CAD, particularly in determining productivity values. Three of the CAD’s four school districts received invalid findings in 2004. Freer ISD was the only school district to receive a valid finding, while Benavides ISD, San Diego ISD and Ramirez CSD received invalid findings.
In 2005, the CAD increased the productivity value of native pastureland, the predominant land category in the county. As a result, Benavides, San Diego and Freer ISDs received valid findings in the 2005 PVS. The CAD did not change the productivity value of dry cropland, primarily found in the Ramirez Common School District, and Ramirez received an invalid finding in 2005. On the 2006 Preliminary PVS, Benavides, San Diego and Freer ISDs’ local values were outside the margin of error. The 2006 Preliminary PVS results for the three school districts in Category G, Oil, Gas and Minerals, tested with weighted mean ratios of 0.8165, 0.9401 and 0.8233 respectively.
The results of the 2005 PVS indicate Duval CAD made progress toward improving its appraisal practices. During the past year, the CAD has made progress toward implementing the ASR recommendations. After successfully appealing invalid findings in three school districts, all four Duval CAD school districts tested with valid local value on the 2006 PVS.
What Remains to Be Done
The Appendix lists the recommendations identified in the original report, with a summary of actions to date. The CAD has substantially completed all 12 recommendations.
Appendix
Duval 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 of directors for adoption to include the benefits for each employee and a detailed list of each capital expenditure. |
Complete |
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On July 11, 2006, the chief appraiser presented the CAD’s 2007 proposed budget to the board of directors for adoption. The budget included the salary and benefits for each position and an explanation of capital expenditures. The board adopted the budget on July 11, 2006. |
| 2 |
Develop a procedure for creating, managing and monitoring contracts, put deliverables and due dates in all future contracts and tie payments to all deliverables. |
Complete |
On Nov. 1, 2005, the board approved a two-year contract for professional appraisal services that contains due dates for deliverables, a list of properties to be appraised, monitoring provisions and a funding out/non-appropriation clause. In December 2006, the chief appraiser developed a procedure for creating, managing and monitoring contracts. The procedure is contained in the Duval County Appraisal District Standard Operating Procedures Manual. The procedure calls for competitive bidding of all contracts over $25,000, but bids are not required for certain professional services defined in Government Code Section 2254.002. Contracts are required to comply with IAAO’s Standard on Contracting for Assessment Services and shall include detailed work descriptions (property lists), dates for deliverables and monitoring provisions. The chief appraiser is responsible for monitoring contacts, and the CAD has sole authority to withhold funds if it deems progress is not being made or deliverables have not been received by specified due dates. |
2.2 Appraisal District Policies, Procedures and Operations
| Rec. # | Recommendation | Implementation Status | If Not Complete, Projected Completion Date | Description of Actions Taken to Date |
|---|---|---|---|---|
| 3 |
Develop a comprehensive policy and procedures manual for district operations. |
Complete |
During the period January – December 2006 the chief appraiser and assistant chief appraiser developed the Duval County Appraisal District Standard Operating Procedures Manual. The manual contains procedures for:
The assistant chief appraiser maintains a source copy of the manual and is responsible for keeping the manual updated by making sure all pages in the manual reflect current procedures. |
|
| 4 |
Audit all district forms and immediately begin using all updated Comptroller forms or develop local forms that comply with statutory requirements. |
Complete |
One of the features of the CAD’s automated appraisal system is the ability to print forms and applications adopted by the Comptroller’s office. The computer link accesses the most current forms available from the Comptroller’s website. Certain taxpayer information can be automatically printed to all forms. At the time of PTD’s follow-up visit, all forms applicable to the 2006 tax year were reviewed and found to be in compliance with statutory requirements. In addition, the CAD keeps blank copies of current forms and applications in its files. CAD staff access the Comptroller’s Web site to ensure that the most recent forms are in use. A review of CAD forms and applications found them to be in compliance. The chief appraiser indicated the CAD has always used correct forms, and the forms cited in the ASR were not being used and should have been destroyed. |
2.3 Information Processing Systems
| Rec. # | Recommendation | Implementation Status | If Not Complete, Projected Completion Date | Description of Actions Taken to Date |
|---|---|---|---|---|
| 5 |
Implement a complete automated mapping system and integrate the mapping and appraisal systems and acquire the proper hardware for all staff. |
Complete |
In October 2006, the CAD contracted with an information technology vendor for an automated mapping system that will be integrated with the CAD’s automated appraisal system. During November and December 2006, the CAD submitted copies of paper maps to the vendor to be digitized into a parcel-based map. The vendor estimates the parcel-based map will be completed by July 31, 2007 or, if not, the vendor will draft a letter to the CAD stating the actual progress at that time. Once complete, CAD staff will be able to access maps by logging onto the mapping system or via a link within the automated appraisal system. The mapping server will be housed at the vendor’s headquarters. The chief appraiser indicated the CAD will send the vendor new deeds and other mapping changes on a regular basis to update the computerized mapping system. According to April 2007 board minutes, the chief appraiser gave a quarterly update to the board of the progress of the mapping project. While the Comptroller accepts these actions as constituting compliance with the recommendation, the CAD should continue to require a written report from the contractor if the July 31, 2007 deadline is not met. |
2.4 Staffing, Personnel Qualifications and Positions
| Rec. # | Recommendation | Implementation Status | If Not Complete, Projected Completion Date | Description of Actions Taken to Date |
|---|---|---|---|---|
| 6 |
Update the personnel policy manual. |
Complete |
The chief appraiser contacted the CAD’s attorney in May 2006 in response to this recommendation. The chief appraiser indicated he corresponded with the attorney in October 2006, but the attorney had not reviewed the personnel manual. A certified copy of the minutes from the April 2007 board meeting show that, in response to the recommendation, the personnel policies were revised by the CAD’s attorney. A motion to approve the personnel policies was carried by the board members. |
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| 7 |
Evaluate staff in writing according to district policy. |
Complete |
In January 2006, the chief appraiser formally evaluated all CAD staff. The chief appraiser formally evaluated all staff again in June 2006 and indicated he plans to evaluate staff at least annually. He indicated the personnel manual will be revised to show when performance evaluations will occur (See Recommendation 6). Staff received copies of their evaluations and originals were placed in each employee’s personnel file. |
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 |
|---|---|---|---|---|
| 8 |
Annually calculate productivity values for land designated for agricultural use as required by Property Tax Code Section 23.41 and Section 23.51. |
Complete |
|
In April 2005, using historical cash lease data from the previous five years, the CAD calculated productivity values for land used for agricultural use as required by the Tax Code. The chief appraiser indicated that obtaining lease information from property owners was difficult. The CAD had limited data for the past five years, but performed the required calculations. Native pasture comprises 73 percent of all land designated for agricultural use in Duval County. Improved pasture comprises 22 percent, while dry cropland comprises 5 percent. Dry cropland is found almost exclusively in the Ramirez Common School District, which extends into Jim Wells County. The 2005 calculations for productivity values showed an increase in value for native pasture from $28 per acre used in 2004 to $59. Calculations for improved pasture and dry cropland showed no change in values. The 2005 PVS showed the CAD’s efforts were successful. The CAD’s category ratio for productivity values increased from 70.75 percent in 2004 to 96.81 percent in 2005. San Diego, Freer and Benavides ISDs received valid findings in 2005. Ramirez CSD had a ratio of .8392 in Subcategory D1, however, and the school district received an invalid finding in 2005. In April 2006, the CAD performed the productivity value calculations for native and improved pasture, with results showing no change in value from 2005. Because dry cropland is found primarily in the Ramirez CSD (which overlaps into Jim Wells County), the chief appraiser contacted Jim Wells CAD for lease information and its productivity calculations for dry cropland. Jim Wells CAD used a cash lease price of $175 per acre for dry cropland in Ramirez CSD. Using cash lease information from Jim Wells CAD, Duval CAD calculated dry cropland values and used $175 per acre for dry cropland productivity values in 2006. |
| 9 |
Draft and adopt a comprehensive reappraisal plan. |
Complete |
On Oct. 3, 2006, the board adopted the Duval County Appraisal District Reappraisal Plan for Tax Years 2007 & 2008. Tax Code Section 6.05(i) requires board approval, however, no later than Sept. 15 of each even-numbered year. The plan follows the format endorsed by the Texas Association of Appraisal Districts and includes the following:
A copy of the CAD’s reappraisal plan is included in the recently developed appraisal manual. |
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| 10 |
Develop an appraisal procedures manual that includes typical Duval County properties and comprehensive instructions on how to perform an appraisal. |
Complete |
In November 2006, the chief appraiser and assistant chief appraiser completed an appraisal procedures manual. The manual contains six sections: Reappraisal Plan, Residential, Commercial, Personal Property, Land Valuation and Sales. The Reappraisal section contains the CAD’s 2007 and 2008 reappraisal plan approved by the board on Oct. 3, 2006. The Residential section contains classifications and photos for appraisers to use when appraising residential property, as well as current building cost schedules and instructions on how to enter appraisal data into the automated appraisal system. The Commercial section contains commercial building cost schedules. The chief appraiser stated the staff appraisers use the schedules in conjunction with commercial property descriptions found in Marshall and Swift’s Commercial Valuation Guide. Commercial Real Property (Category F1) comprises 1 percent of the CAD’s total appraised value. The Personal Property section contains personal property appraisal schedules developed locally, as well as schedules developed by Marshall & Swift. It also contains a personal property depreciation table and instructions on how to enter personal property appraisal data into the automated appraisal system. The Land Valuation Section contains current land schedules; an explanation of how land is valued; a general soil map of Duval County, with explanations of various soil types found there; and instructions for entering land appraisals into the automated appraisal system. Also included are an explanation of how productivity values are calculated and a list of current productivity values. The Sales section describes the CAD’s procedures for gathering and analyzing sales information (see Recommendation 12). Each appraiser received a copy of the comprehensive appraisal manual. |
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| 11 |
Use ratio studies to make effective reappraisal decisions and use the results in the appraisal process. |
Complete |
From March to April 2005, CAD appraisers performed ratio studies to determine areas requiring appraisal maintenance for 2005 appraisals. Studies were performed within each school district and countywide. Results of the ratio studies indicated market values of Subcategory D2, Non-Qualified Acres and Rural Improvements, needed to be adjusted countywide. Insufficient numbers of sales in other property categories yielded inconclusive ratio study results. Results of the 2005 PVS showed market values of the property categories tested were in an acceptable appraisal range, with the exception of Category F1, Commercial Real, in San Diego ISD. Using the results of the ratio studies in Category D, the CAD increased the market values of rural land. Because of the CAD’s reappraisal efforts in Category D, San Diego and Benavides ISDs received valid findings in the 2005 PVS. Rural land in Ramirez CSD, however, was inaccurately appraised at 91 percent of market value, as indicated by 2005 PVS results. In April 2006, the CAD performed ratio studies to determine levels of appraisal and perform appraisal maintenance. |
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| 12 |
Establish written procedures for gathering and analyzing sales. |
Complete |
From June to November 2006, the chief appraiser and assistant chief appraiser established written procedures for gathering and analyzing sales. Because Duval County does not have a multiple listing real estate service, the CAD relies on taxpayers for sales information. Procedures for gathering sales include:
Procedures for sales analysis include:
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