Appraisal Standards Review
Jack County Appraisal District Follow-Up Report
May 2007
Introduction
In July 2004, the Perrin-Whitt Consolidated Independent School District (CISD) 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 that serves them. In August 2005, the Comptrollers Property Tax Division (PTD) released the results of the ASR for Jack County Appraisal District (CAD).
The report made nine recommendations to improve Jack CADs appraisal practices and operations. ASRs are intended to determine why the local value was deemed invalid and to recommend changes in operations and management that would improve appraisal practices. The Jack CAD review evaluated five functional areas: board of directors (governance and management); appraisal district policies, procedures and operations (assessment administration); information processing systems (information processing and data collection); staffing, personnel qualifications and positions (resources and management); and generally accepted appraisal practices.
At the time of the review, challenges facing Jack CAD included a lack of adequate market research of land sales to identify market influences, the absence of stratifying similar properties according to similar characteristics; and the lack of a documented reappraisal plan.
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 must 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 is considered in compliance with the 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. 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 recommendations included in ASRs 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 complete 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 review team returned to Jack CAD in July 2006 to assess its progress in implementing the report recommendations. Although significant work remains, the review team found evidence that Jack CAD has made some progress. The CAD has implemented six of the nine recommendations; one is in progress and two have yet to be addressed.
PTD sent the CADs board members surveys soliciting their views and comments on the ASR. One board member responded that he agreed with all of the survey questions, with no additional comments. Since the initial onsite visit, the chief appraiser reports that the boards roster has changed significantly and that the existing board members are only somewhat familiar with the findings in the initial ASR. Of the eight members noted in the 2004 ASR, only three are returning board members as of July 2006.
PTD believes that Jack CADs efforts to date have met the states legal requirements. PTD will continue to monitor its progress toward full implementation. Specific steps that remain to be taken are outlined below.
History
A review of the school districts in the county indicates that Jack CAD is appraising the rural properties inconsistently. In the 2003 PVS, Perrin-Whitt CISD fell outside the studys statistical margin of error. Category D2, Non-Qualifying Acres and Farm and Ranch Improvements, is the primary reason that the schools values are not within the acceptable range determined by the study.
Category D represents rural properties and contains two subcategories, D1 and D2. Subcategory D1, Productivity Value of Qualifying Acres, is primarily farm and ranch land that qualifies for the special productivity appraisal. Subcategory D2, Non-Qualifying Acres and Farm and Ranch Improvements, is primarily rural homes and land that do not qualify for farming or ranching or timberlands.
All three school districts in Jack CAD received valid findings in the 2004 and 2005 PVS. However, the preliminary 2006 PVS results indicate that Perrin-Whitt CISD is invalid. Jack CAD may appeal the preliminary results of the 2006 PVS.
What Remains to Be Done
Appendix A lists the nine recommendations identified in the original report, with a summary of actions to date. The Comptroller recognizes the CADs efforts in completing six of the nine recommendations and urges it to fully implement the remaining three.
The six completed recommendations will help ensure that the CADs policies and procedures guide its everyday operations, so that any future management or staffing changes occur in a streamlined manner.
The recommendations remaining in progress (Recommendation 1) or not addressed (Recommendations 3 and 8) require the following efforts:
Recommendation 1: Expand the budget document that is distributed to taxing units to include the benefits and costs for each position and a list of each proposed capital expenditure.
The 2006 and 2007 budgets reflect the breakdown of salaries and benefits by position as required by the Tax Code.
A review of the budgets show a line item for capital expenditures of $1,000. The chief appraiser stated this category reflects the cost of items that will be needed in the future. Historically, this categorically served as a reserve type of category. The budgeted amount of $1,000 will be moved to contingencies when the 2008 budget is prepared.
The budget for 2007 was formally adopted at the July 18, 2006, meeting. The chief appraiser did not amend the 2007 budget but stated that the 2008 budget will incorporate the second part of the recommendation, so that capital expenditures if any will be specified.
Recommendation 3: Develop and adopt a comprehensive policy and procedures manual for appraisal district operations.
In response to this recommendation, the chief appraiser provided a document titled 2006 Jack County Appraisal District Uniform Standards of Professional Appraisal Practice. According to the chief appraiser, this document is updated annually; however, it focuses more on the appraisal of real estate rather than the day-to-day operations of the organization and does not include items such as payroll processing, accounting and purchasing procedures.
The chief appraiser recognizes the need for an operations-type manual and stated that this will be addressed after certification of the tax roll, with a projected completion date of August 2007. When complete, the manual should be sent to the Comptroller no later than August 31, 2007.
Recommendation 8: Implement a plan to annually inspect all personal property parcels.
The chief appraiser stated that the personal property appraiser inspects approximately 75 percent to 80 percent of all personal property accounts, and that personal property accounts have increased by approximately one-third. A printout of those accounts from 2001 to 2006 showed only a 9 percent increase. No evidence was provided to substantiating a one-third increase.
A plan to physically inspect all personal property accounts is essential to ensure that all property is clearly identified. In addition, the quantity and condition of personal property at any location regularly changes. The inspection process further helps ensure appraisal equity and equal taxation.
The chief appraiser stated that the CAD is busy at this time of year and this recommendation will be incorporated into the CADs activities in January 2008.
Appendix A
Jack 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 budget document that is distributed to taxing units to include the benefits and costs for each position and a list of each proposed capital expenditure. | In Progress | May 2007 |
The 2007 budget submitted to the taxing entities on May 16, 2006, and approved by the board on July 28, 2006, revealed a detailed allocation for salary and benefits of each position but did not include a list of capital expenditures for 2007. Instead, a reserve expense estimate was made and placed in the “capital expenditures” category. The chief appraiser stated that she will amend the budget for 2008 and will move the line item labeled “capital expenditures” to “contingencies.” No expense allowance allocation for capital expenditure will be made unless specifically identified. |
| 2 | Revise the appraisal services contract to reflect the guidelines in the IAAO Standard on Contracting for Assessment Services. | Complete |
The contract between the CAD and Pritchard & Abbott, Inc. for the appraisal of minerals, utilities, and industries was updated to include key terms and deliverables. The updated contract was executed on June 16, 2006. |
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 and adopt a comprehensive policy and procedures manual for appraisal district operations. | Not Implemented | August 2007 |
The chief appraiser provided a 26-page document created after the initial onsite visit. This document, Jack County Appraisal District Uniform Standards of Professional Appraisal Practice, provides an overview of the CAD, the scope of an appraisal, the valuation process, mass appraisal model development, land valuation and other methodologies for valuing property. None of the operations areas discussed in the 2003 ASR findings are mentioned in the document, including documentation for policies for payroll processing, accounting and purchasing. |
2.3 Information Processing Systems
| Rec. # | Recommendation | Implementation Status | If Not Complete, Projected Completion Date | Description of Actions Taken to Date |
|---|---|---|---|---|
| 4 | Develop an implementation plan and timeline to complete the integration of the district’s appraisal and geographic information systems. | Complete |
The integration process was completed shortly after the release of the 2003 ASR. The chief appraiser and personal property appraiser/mapper reported that the mapping system is about 90 percent complete, as it is a continuous, ongoing process. The chief appraiser estimated that it will take at least five years to complete the mapping system. At the onsite visit, the mapper demonstrated the capabilities of the existing mapping system, including printing tax cards, printing maps from information in the appraisal system and plotting sales on maps (based on specific descriptions suggested by the review team). While the CAD did not develop an implementation plan or a timeline, the recommendation is essentially already complete as the appraisal system and the geographic information system (GIS) are fully integrated on one computer. |
2.4 Staffing, Personnel Qualifications and Positions
| Rec. # | Recommendation | Implementation Status | If Not Complete, Projected Completion Date | Description of Actions Taken to Date |
|---|---|---|---|---|
| 5 | Expand the district’s personnel manual to address current employment and federal laws. | Complete |
In May 2006, the chief appraiser updated an existing employee manual to address the Family Medical Leave Act, Americans with Disabilities Act, Equal Employment Opportunity and ethics. The issues of conflict of interest and office security were addressed in a second update in January 2007. |
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 |
|---|---|---|---|---|
| 6 | Use only current appraisal schedules or trend and depreciation tables to verify renditions and appraise personal property accounts. | Complete |
The personal property appraiser provided documentation from Marshall Valuation Service demonstrating information from the most recent update (March 2006), relating to costs and life expectancy guidelines for personal property. The pages reviewed show the most current date for the updates, and those dates match information provided by Marshall & Swift during a telephone call for confirmation. The chief appraiser developed specific guidelines for personal property appraisal during the first half of 2006. The five-page document presents guidelines that address the information required on each personal property account; a requirement of an onsite inspection; procedures for appraising industrial and mineral properties; special inventory; and the process to follow for closed businesses. A review of five randomly selected personal property accounts demonstrated that the CAD is accurately appraising the accounts in accordance with the guidelines set forth by Marshall Valuation Service and the manual created by the CAD. |
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| 7 | Develop a detailed reappraisal plan that, at a minimum, includes the essential steps in the process, explains exactly how and when the steps will be executed, outlines training and explains how sufficient resources will be allocated to follow the plan. | Complete |
The CAD filed its reappraisal plan with the Comptroller’s office. A review of the reappraisal plan revealed that it is in compliance with Sections 6.05 and 25.18 of the Tax Code and IAAO Standards. |
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| 8 | Implement a plan to annually inspect all personal property parcels. | Not Implemented | January 2008 |
The chief appraiser stated that 75 to 80 percent of all personal property accounts have been inspected in the past two years. It was also reported there has been a one-third (or 33 percent) increase in personal property accounts. A printout of all accounts provided by the chief appraiser at the onsite visit indicates that from 2001 to 2006, the number of accounts for personal property increased from 369 to 402, a 9 percent increase in personal property accounts. PTD found no other evidence of a significant increase in personal property accounts in the past five years. To complete this recommendation, the CAD should implement a plan to physically inspect all personal property parcels to help ensure accuracy of records. |
| 9 | Research the details of all land sales to identify all market influences then stratify all similar properties subject to the same market influences. | Complete |
The chief appraiser provided documents that detail sales information by date, parcel, size, CAD value and total sales price. In addition, several other methods of analysis are incorporated into the chief appraiser’s analysis of sales data, including grouping sales by school district and by classification. The chief appraiser stated Perrin-Whitt CISD lies within Jack, Palo Pinto, and Parker Counties. Properties in Palo Pinto and Parker Counties historically have sold for higher prices per acre than in Jack County. Two-thirds of the school district lies in Jack County, with the rest of the school district divided between the other two counties. By researching sales, the CAD was able to document that Palo Pinto and Parker sales should not be included in local ratio studies. In addition, the analysis provided evidence for the chief appraiser to explain why Palo Pinto and Parker property sales data should not be used in the PVS. As a result, the CAD received local value in the 2004 and 2005 PVS. |