Appraisal Standards Review
Harrison County Appraisal District Appraisal Standards Review Follow-Up Report
June 2007
Introduction
In July 2004, the Comptroller’s Property Tax Division (PTD) identified Waskom Independent School District (ISD), Hallsville ISD, Harleton ISD and Elysian Fields ISD, located in Harrison County, Texas, as four of 54 school districts in the state meeting the criteria that initiate an appraisal standards review (ASR) of its county appraisal district (CAD).
In September 2005, PTD released results of its ASR of the Harrison County Appraisal District. The report made six recommendations to improve Harrison 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 Harrison 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 Harrison CAD included documenting procedures and appraisal methods and improving appraisal methodology.
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 Section 403.302 of the Government Code, 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 shall bear 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 that the CAD has corrected, or intends to correct, remedy or improve the deficiencies identified in the ASR. Remedial action is generally demonstrated by having implemented or nearly completed most of the recommendations by the first-year anniversary of the report. The Comptroller recognizes that some recommendations can require more than a year to implement for a CAD with limited resources. 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 have met their statutory obligations and will not require further monitoring.
In September 2006, PTD reviewed Harrison CAD’s progress in implementing the recommendations in the original report. Harrison CAD has fully implemented all recommendations.
PTD sent the CAD’s board members surveys soliciting their views and comments on the ASR. None of the board members responded.
History and Significant Events
PTD performed the ASR review of Harrison CAD because the 2003 Property Value Study found the local values of four of the six CAD school districts (Waskom, Hallsville, Harleton and Elysian Fields ISD’s) invalid, and the school districts were eligible for the grace period provided in Section 403.3011 of the Government Code. Within Waskom ISD, sample property ratios in Category A, Single-Family Residential, tested with a weighted mean of .9259. Within Hallsville ISD, sample property ratios in Subcategory D2, Non-Qualified Land, tested with a weighted mean of .7517. Within Harleton ISD, sample property ratios in Subcategory D2, Non-Qualified Land, tested with a weighted mean of .6204. Within Elysian Fields ISD, two property categories that were tested demonstrated need for further monitoring: sample property ratios in Category A, Single-Family Residential, tested with a weighted mean ratio of .8922, and within Category D, Rural Real, Subcategory D1, or Qualified Land, tested with a ratio of .8366.
Although the Comptroller released the ASR in September 2005, Harrison CAD took steps in March 2005 to implement one of the ASR’s recommendations. In 2006 the chief appraiser and assistant chief appraiser addressed all of the remaining recommendations in the ASR, including the development of a written plan for completing the CAD’s geographic information systems (GIS) mapping and integration with the appraisal software used by Harrison CAD.
Harrison CAD’s reappraisal efforts in 2004 and 2005 produced positive results, and the local values for all six school districts were within the confidence interval on the final PVS. On the preliminary 2006 PVS, the local value of one school district in Harrison CAD fell outside the confidence interval. Upon appeal, however, the PVS found its taxable value to be valid, and local value was certified.
What Remains To Be Done
Appendix lists the six recommendations identified in the ASR, with a summary of the actions taken to date. The Comptroller acknowledges the work that Harrison CAD has performed over the last year. The CAD has documented its policies and procedures, improved its appraisal practices and substantially completed all six of the recommendations. No further action is required.
Appendix
Harrison 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 position with sufficient detail to allow comprehensive decision making by the CAD board and taxing units. | Complete |
The 2007 budget included the benefits for each CAD position. However, the travel allowances listed for the chief appraiser, assistant chief appraiser and appraiser positions were not correct because they reflected the monthly travel allowance of $600 for each position instead of the annual amount of $7,200. Monthly amounts for health insurance, long-term disability and short-term disability were listed for each employee. A corrected listing was taken to the board on October 20, 2006, at the regular meeting. |
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| 2 | Revise the professional appraisal services contract to include dates when the appraisal firm will perform its services and deliver its appraisals to the district; include a list of all property that the appraisal firm is responsible for appraising; have a board member sign any future contracts, according to board policy; and include contract monitoring provisions to ensure that high-quality, timely work is performed before payment is made. | Complete |
The CAD updated the professional services contract to reflect the changes identified in the ASR’s recommendation. The recommendation contained four separate parts. The CAD has changed its contract to include three of the four recommended elements: dates for performance of services; listing of property to be appraised; and board member signature on the contract. The recommendation’s fourth part is not addressed in the contract, but it is performed as part of the CAD’s normal monitoring activities before contract payments are made. These activities include: daily telephone contact with the professional services firm; appearances by the firm, as requested by the CAD, for hearings and protests; attendance by the CAD appraiser at 85-90 percent of all field inspections performed by the firm; and proofing and reconciling all information before it is added to the database. |
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 | Organize the policy and procedures manual, review it for current content and update it to reflect district goals and operations. | Complete |
The assistant chief appraiser developed a new written policy and procedures manual that addresses all tax code requirements and operating policies for the CAD. For example, the manual includes appraisal procedures for field inspections and other areas such as information technology system backups and the role of the board. The chief appraiser read, reviewed and approved the manual. The chief appraiser presented the manual to the board during the regular board meeting on September 13, 2006, where it was approved unanimously. |
2.3 Information Processing Systems
| Rec. # | Recommendation | Implementation Status | If Not Complete, Projected Completion Date | Description of Actions Taken to Date |
|---|---|---|---|---|
| 4 | Develop a plan and systematically replace the old computer system and move the data to the newly installed system and integrate the new system with the current mapping system. | Complete |
In 2002, the CAD implemented a new appraisal system. The company that developed and supported this system was sold, and its customers were encouraged to implement another system offered by the successor company. After trying to use the system, the CAD went back to the original owners and converted to their new system in fall 2004. This is the system currently in place and the one that the CAD plans on using for the future. Integration with GIS software was never a part of either system, but is an option with the current software. In March 2005, the CAD began a multiple-year process using an outside consultant to prepare maps for integration with the appraisal system. At the same time, the CAD reduced the internal mapping staff to one position. The CAD developed a plan for updating maps on a school district-by-school district basis that builds upon the mapping work initially performed in-house. At the time of the on-site visit in September 2006, the firm had completed mapping Karnack ISD, which was in the process of being loaded on the new mapping software installed in May 2006. This software describes digital map parcel data in shapefile format. The files become part of the information in the current appraisal system. The CAD provided a copy of the plan to PTD. The chief appraiser estimated that, when the Karnack ISD maps were added in November 2006, approximately 35-40 percent of the CAD’s parcel maps would be integrated with the appraisal system software. The chief appraiser estimates that all GIS maps will be developed and entered by 2009. |
Section 2.4 Staffing, Personnel Qualifications and Positions.
The report had no findings or recommendations in 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 |
|---|---|---|---|---|
| 5 | Use ratio studies to make effective reappraisal decisions and use the results in the appraisal process. | Complete |
The chief appraiser indicated that he continually uses ratio studies to make decisions and has done so in the past. According to the chief appraiser, the invalid findings in 2003 for four school districts were not based on the lack of ratio studies, but on a decision by the chief appraiser and the board not to use the information because they expected property values to fall in the next year. Since then, the chief appraiser has relied on the information in his studies and has received local value for all six school districts. The chief appraiser provided copies of recent ratio studies to the review team. |
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| 6 | 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. | Complete |
The chief appraiser developed a reappraisal plan over the course of three and a half months in 2006. The chief appraiser stated that he attended classes and used the format developed by another CAD as a model for Harrison’s new reappraisal plan. The newly developed reappraisal plan is an expanded version of the plan used by the CAD for a number of years. The chief appraiser gave a presentation to discuss the 2007 reappraisal plan with the board on January 19, 2006. The board formally approved the plan on April 23, 2006. The new reappraisal plan incorporates the required steps in the process, including identifying properties to be appraised, defining market areas and identifying property characteristics that affect property value in each market area. The plan identifies the resources allocated to follow the plan and explains how and when the steps will be executed. A public meeting to present the reappraisal plan was conducted on September 13, 2006. All taxing units were invited. The board formally approved the reappraisal plan at the regular board meeting following the public hearing. The CAD sent copies of the approved reappraisal plan to its taxing entities in September 2006. |