Appraisal Standards Review
Jefferson County Appraisal District Follow-Up Report
February 2007
Summary
In July 2004, the Hamshire-Fannett Independent School District (Hamshire-Fannett ISD), located in Jefferson County, Texas, was identified as one of 54 school districts in the state that met the criteria for initiating an Appraisal Standards Review (ASR) of its county appraisal district (CAD). In July 2005, the Comptroller’s property tax division (PTD) released the results of an ASR of Jefferson County Appraisal District (Jefferson CAD).
The report made three recommendations to improve Jefferson CAD’s appraisal practices and operations. The intent of ASRs is to determine why the local value is invalid and recommend changes in operations and management that would improve appraisal practices. The Jefferson 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, Jefferson CAD faced the challenge of appraising properties at market value.
Texas Property Tax Code, Section 5.102(d) requires CADs under review by PTD to comply with PTD’s recommendations within one year of the report’s release. If the CAD fails to comply with these recommendations, and the Comptroller finds that the CAD board of directors failed to take remedial action, the Comptroller must notify the judge of each district court in the county that the CAD serves. District judges then must appoint a board of conservators to implement the recommendations. This board must supervise and control the CAD’s operations until each school district has a valid local value in its annual PVS. The CAD must bear the costs related to the board’s supervision.
In July 2006, the PTD reviewed the progress made by Jefferson CAD in implementing the recommendations found in the original report. Jefferson CAD has made steady progress and fully implemented all three recommendations.
PTD sent Jefferson CAD’s board members surveys soliciting their views and comments on the ASR. Three of the five board members responded, all agreeing that since the release of the review, the board and administration are more aware of challenges facing the CAD. Two board members agreed that business operations of the CAD have improved. The third member who responded had no opinion. One board member indicated that the most significant challenge facing the CAD was to monitor market area. Another member who responded expressed a similar view, saying the CAD’s greatest challenge was to close the margin between appraised and sales values. The third board member who replied did not agree with the report, pointing out that not enough property had changed hands “to do a valid appraisal.”
While the CAD took an alternate approach from the one originally recommended by PTD on one finding, PTD believes that Jefferson CAD’s efforts met the state’s requirements.
History and Significant Events
Jefferson CAD received an ASR because the 2003 PVS found Hamshire-Fannett ISD property values to be invalid, and the school district was eligible for the grace period provided for in Section 403.3011 of the Government Code. In particular, Category A: Single-Family Residential was the primary reason that the school district’s values were not within the acceptable range. The CAD appraised this category of property outside of market value. Category A properties make up 61 percent of the tested value and almost 50 percent of the total property value in the school district. Category A received a weighted mean ratio of 0.8822 in the PVS. Additionally, the 2003 PVS indicated that Jefferson CAD was appraising Category D: Acreage in the Hamshire-Fannett ISD outside of acceptable ratios. The 2003 PVS Category D sampled ratio for Hamshire-Fannett ISD was 0.8810.
The 2004 PVS indicated that Hamshire-Fannett ISD showed improvement in Categories A and D with PVS results of 0.9708 and 0.9220, respectively.
In 2005, the PVS showed considerable improvements in Hamshire-Fannett ISD Category A—0.9768—and Category D—0.9851. The 2005 PVS results give an indication that the CAD has addressed the issues involved in the school district’s 2003 PVS results.
Status of Recommendations; What Remains to Be Done
Appendix A lists the three recommendations identified in the original report, with a summary of actions to date. The Comptroller applauds the CAD for its hard work over the last year. The CAD completed and complied with all three recommendations. The CAD took an alternative approach in correcting the problem identified in Recommendation 3. A discussion of their approach, which proved successful, follows.
Recommendation 3: Examine the hunting activities reported to the Texas Parks and Wildlife Commission for Jefferson County and annually use the hunting lease information to correctly adjust agricultural values.
Instead of acquiring data from the Texas Parks & Wildlife Commission, the CAD conducted a survey of property owners who receive agricultural exemptions. The CAD mailed 1,564 questionnaires requesting information regarding the leased price per acre on hunting leases. The CAD received 892 responses indicating that 91.8 percent of the respondents had no hunting leases. The CAD applied the information to all productivity values, except those within incorporated areas.
In 2004, the CAD appealed PTD’s PVS findings as they related to hunting income rates. The CAD contended that PTD native pastureland hunting income rates distorted hunting productivity values and that PTD should reduce or remove them to arrive at the accurate value. The CAD provided hunting lease data from the survey that indicated a majority of landowners in Jefferson CAD did not have hunting leases, thus generating no hunting income.
Based on additional hunting statistics and statements provided by Texas A&M University and Texas Parks and Wildlife Commission agents, PTD deleted the 1998 through 2002 hunting income from native pasture and applied the deleted hunting income for each of the same years to irrigated land. PTD considered the CAD’s survey information in arriving at this recommendation.
The CAD’s value ratio for Category D in Hamshire-Fannett ISD showed considerable and consistent improvement from 2003 through 2005 (Exhibit 1).
Exhibit 1
Mean Ratios for Category D Properties
Hamshire-Fannett ISD in Jefferson CAD
2003 through 2005
Hamshire-Fannett ISD
| 2003 | 0.881 |
|---|---|
| 2004 | 0.922 |
| 2005 | 0.985 |
Appendix A
Jefferson County Appraisal Standards Review
Implementation Status Report
2.1 Board of Directors
| Rec. # | Recommendation | Implementation Status | If not Complete, Projected Completion Date | Description of Actions taken to Date |
|---|---|---|---|---|
| 1 | 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, according to board policy and include Contract Monitoring in the process. | Complete | January 2006 | In January 2006, the CAD initiated a new contract with Capitol Appraisal Group for the 2006 and 2007 tax years. The contract includes dates when the district will receive deliverables and a listing of industrial, personal and utility properties valued by the firm. The chief appraiser will monitor the contract by the new deliverable dates included in the contract. |
| Sections 2.2, 2.3 and 2.4 of the Jefferson Appraisal Standards Review did not contain any findings or recommendations. |
|---|
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 |
|---|---|---|---|---|
| 2 | Examine the district's ratio study sample sizes and annually insure that the sample size is sufficiently large enough to insure the accuracy of future findings. | Complete | January 2006 | The CAD provided a sales ratio report for 2004 sales, as well as a subdivision summary listing that shows land values in 2004 versus 2005. Through several staff meetings and reappraisal work in the Hamshire-Fannett ISD, the CAD reexamined its land-to-building ratios and adjusted land values as reported on the subdivision summary listing. The chief appraiser stated that sales data in the lower strata Category A, Single Family Residential properties is sometimes difficult to obtain, as these properties often sell privately and are not on the local Multiple Listing Service. The chief appraiser responded to this finding by saying that the CAD mails out sales questionnaires on all deed transfers requesting sales information and it examines and analyzes all known sales in the school districts. The CAD has refocused its efforts on gathering sales data. The CAD reappraised all properties, including land in the Hamshire-Fannett ISD, for 2004. The 2004 and 2005 PVS indicated improvements within Category A with ratios of 0.9708 and 0.9768, respectively. The 2004 sales recap provided by the CAD shows it collected data on 45 sales in the Hamshire-Fannett ISD. The chief appraiser stated that sales data in the Hamshire-Fannett ISD area indicated that the CAD should adjust land values in parts of that school district, and the subdivision summary listing provided by the CAD indicates it did adjust land values from 2004 to 2005 as reported by the chief appraiser. |
| 3 | Examine the hunting activities reported to the Texas Parks and Wildlife Commission for Jefferson County and annually use the hunting lease information to correctly adjust agricultural values. | Complete | January 2006 | The CAD provided a survey mailed to property owners who received agricultural exemptions covering 1998 through 2002. The questionnaire requested information regarding leased price per acre on hunting leases. The CAD mailed out 1,564 questionnaires to area landowners and received 892 responses that indicated that 91.8 percent of the respondents had no hunting leases. The CAD stated that it applied the information obtained to all productivity values except those within city limits. The 2005 PVS for Hamshire-Fannett ISD showed consistent improvement in productivity ratios from 2003 to 2005. |