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Appraisal Standards Review
Hamilton County Appraisal District Follow-Up Report
October 2007

Introduction

In July 2004, the Cranfills Gap Independent School District (ISD), located partially in Hamilton County, was identified as one of 54 school districts in the state meeting the criteria that initiate an appraisal standards review (ASR) of the county appraisal district (CAD) that serves it.

In January 2006, PTD released results of its ASR of the Hamilton CAD. The report made eight recommendations to improve Hamilton CAD’s appraisal practices and operations. ASRs determine why the Comptroller’s property value study (PVS) found local values invalid and recommends changes in operations and management to improve appraisal practices. The Hamilton 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.

At the time of the review, Hamilton CAD faced a number of challenges including:

• improving the management of office operations;
• documenting procedures; and
• enhancing reappraisal tools and appraisal methods.

Property Tax Code Section 5.102 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 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 district by the board on 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 that the CAD has corrected, remedied or improved the deficiencies identified in the ASR or intends to do so. The CAD demonstrates remedial action generally by having implemented or nearly completed most of the recommendations by the first-year anniversary of the report. The Comptroller recognizes some ASR recommendations 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. CADs that have completed all recommendations by the one-year anniversary will not require further monitoring.

PTD reviewed documentation submitted by Hamilton CAD in January 2007 and conducted a follow-up on-site visit to assess its progress in implementing the report recommendations. The review team documented that six of PTD’s eight recommendations have been completed. The CAD has made significant progress on the two other recommendations.

PTD sent the CAD’s board members surveys soliciting their views and comments on the ASR. Two of the five board members responded, indicating CAD operations had improved since the release of the review and the CAD had made significant progress in implementing the Comptroller’s recommendations. One member cited the recommendation for written policies and procedures as the most significant contained in the report, while the second board member cited the recommendation for a formal evaluation of the chief appraiser as most significant. These members indicated cutting the cost of operations and the difficulties in properly appraising all property as the two biggest challenges the CAD currently faces.

PTD will continue to monitor Hamilton CAD’s progress. This report outlines the steps the CAD still must take to complete implementation of the recommendations.

History and Significant Events

PTD performed the ASR review of Hamilton CAD because the 2003 PVS found that the local property values of Cranfills Gap ISD were invalid and the school district was eligible for the “grace period” provided in Government Code Section 403.3011. Within Cranfills Gap ISD, the only property category tested was Category D, Rural Real, making up 91.3 percent of the school district’s value, with a weighted mean ratio of 0.8793.

The CAD’s reappraisal efforts in 2006 produced positive results, as all three of the CAD’s school districts received local value in the final 2006 PVS.

What Remains to Be Done

The Appendix lists the ASR’s eight recommendations, with a summary of remedial actions taken to date. The Comptroller acknowledges the work Hamilton CAD has performed over the last year and encourages it to remain on task to implement all recommendations. The chief appraiser stated the CAD has worked hard to implement the recommendations, especially with regard to the operations manual and the development of employee evaluation forms and processes. The chief appraiser indicated a lack of time and board decisions regarding timing and the approval of actions taken to date had affected his ability to address some of the recommendations. Further action is required to fully address the two remaining recommendations.

Recommendation 2: Develop board procedures to evaluate the chief appraiser, insert a line for the chief appraiser’s signature on the evaluation tool and use the newly developed tool to evaluate the chief appraiser annually.

The chief appraiser has worked with the board to develop an evaluation form based on a sample document provided by another CAD. The form includes a line for the chief appraiser’s signature. This form and an abbreviated procedure were added to the Hamilton CAD personnel manual that the board approved in February 2006. The procedure states that the chief appraiser is to be evaluated on a yearly basis, with the timing of the evaluation left to the discretion of the board. No evaluation was conducted in 2006, according to the chief appraiser. The chief appraiser stated the board plans to conduct the evaluation as part of the 2008 budget process.

To complete this recommendation, the board should perform an annual evaluation of the chief appraiser using the new form. The CAD should mail a copy of the completed evaluation to PTD no later than Dec. 31, 2007.

Recommendation 8: Develop and implement effective appraisal maintenance programs based on ratio studies to identify and correct market value deviations.

The CAD requested help from a software vendor to develop a program that would allow it to run ratio studies based on sales files maintained by the software. According to the chief appraiser, the software vendor has developed this program. CAD employees are entering data and the system is expected to be fully operational by December 2007. Manual ratio studies have not been performed.

To implement this recommendation, the chief appraiser should deliver a copy of the written procedures for the appraisal maintenance program and a representative sample of ratio studies (three to five) to PTD no later than Dec. 31, 2007.

Exhibit 1
Reappraisal Frequency Comparison

Sources: Chief appraiser interview on Feb. 6, 2007; 2007–08 Hamilton CAD Reappraisal Plan; and Hamilton CAD Operations Manual, completed in January 2007.

Appendix
Hamilton County Appraisal District Appraisal Standards Review Implementation Status

2.1 Board of Directors

2.2 Appraisal District Policies, Procedures and Operations

2.3 Information Processing Systems

The report had no findings or recommendations in this section.

2.4 Staffing, Personnel

2.5 Generally Accepted Appraisal Practices; Equality and Uniformity of Appraisal Standards

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