Appraisal Standards Review
Johnson County Appraisal District Follow-Up Report
July 2007
Introduction
In July 2004, Cleburne Independent School District (ISD) and Venus ISD in Johnson County, Texas, were identified as two 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 them. In December 2005, the Comptroller’s Property Tax Division (PTD) released the results of the ASR of the Johnson County Central Appraisal District (Johnson CCAD).
The report made six recommendations to improve Johnson CCAD’s appraisal practices and operations. ASRs are intended to determine why local values were deemed invalid and to recommend changes in operations and management that would improve appraisal practices. The Johnson CCAD 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, challenges facing Johnson CCAD included documenting budgets and formally monitoring contracts; and supporting appraisal accuracy.
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 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 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 ASR recommendations will 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 have met their statutory obligations and will not require further monitoring.
PTD conducted a conference call with Johnson CCAD in December 2006 to assess its progress in implementing the report recommendations. PTD found that Johnson CCAD has implemented the six ASR recommendations.
PTD sent the CAD’s board members surveys soliciting their views and comments on the ASR. Four board members responded and agreed that the ASR contained suggestions useful to the CAD and that the board was supportive of the recommendations. The board members further indicated that the review provided focus and direction for the CAD. Finally, the board members responded that the board and administration were working together to accomplish the recommendations and that the CAD has made significant progress in implementing the Comptroller’s recommendations.
PTD believes that Johnson CCAD’s efforts to date meet the state’s legal requirements and that it has complied with implementation of the recommendations.
History and Significant Events
Johnson CCAD became the subject of an ASR because the local values in Cleburne ISD and Venus ISD were invalid in the state’s PVS. The school districts were eligible for the grace period provided in Government Code Section 403.3011.
In the 2003 PVS, Cleburne ISD’s local values fell outside the study’s statistical margin of error. Category A, Single-Family Residential, tested with a sample weighted mean ratio of .8892. This was the primary reason the school district’s local value fell outside the confidence interval determined by the study.
In the 2003 PVS, Venus ISD’s local values fell outside the study’s statistical margin of error. Category A, Single-Family Residential, tested with a sample weighted mean ratio of .8990. This was a contributing factor to the study’s finding of invalid local value.
Johnson CCAD’s reappraisal efforts in 2004 and 2005 produced valid results and the local values for all nine school districts fell within the confidence interval on the final PVS in both years. The 2006 preliminary PVS found the taxable value of Joshua ISD to be invalid, but local value was certified because the ISD was deemed eligible for the grace period again. The preliminary PVS finding was under appeal at the time of this report.
What Remains to Be Done
The Appendix lists the six recommendations identified in the ASR, with a summary of the actions taken to date. The Comptroller acknowledges the CAD’s work during the last year.
Johnson CCAD has completed and complied with all six recommendations, and no further action is required for this ASR.
Appendix
Johnson County Central 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 | Perform a written evaluation of the chief appraiser annually. |
Complete |
|
In an executive session held Dec. 21, 2006, the Johnson CCAD’s board evaluated the chief appraiser’s performance and extended his employment contract for one year with an annual salary increase of $12,000. The board gave the chief appraiser excellent marks and the individual members signed the performance evaluation over the period from Dec. 22 to Dec. 26, 2006. |
| 2 |
Expand the budget format to comply with the Tax Code. |
Complete |
The CAD’s 2007 approved budget shows each position’s allocated salary, retirement benefits and the premium the CAD paid for each staff member’s health, dental and life insurance benefits, which complies with the format required by Tax Code Section 6.06(a). |
|
| 3 |
Adopt a formal contract monitoring process. |
Complete |
In June 2006, the CAD adopted the International Association of Assessment Officers Standard on Contracting for Assessment Services as its formal contract monitoring process. The chief appraiser and administrative assistant are responsible for overseeing the implementation of the contract monitoring process. The chief appraiser provided PTD with a “Contract Schedule - Gantt Chart” that indicates the start and ending dates of each contract and shows which individual(s) is responsible for monitoring the contract. The CAD provided examples of its procedures for the photocopier and postage machine service contracts and a list of the CAD’s contracted services and their respective providers. |
|
| 4 |
Call at least three meetings of the Agricultural Appraisal Advisory Board annually. |
Complete |
According to the Ag Advisory Board Minutes, in 2006 the agricultural appraisal advisory board (ag board) met at the call of the chief appraiser on April 11, May 30 and Dec. 11. At these meetings, the chief appraiser and the ag board discussed:
|
2.2 Appraisal District Policies, Procedures and Operations
The report had no findings or recommendations in this section
2.3 Information Processing Systems
The report had no findings or recommendations in this 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 |
Research and document sales data for all property types based on periodic ratio studies. |
Complete |
|
Johnson CCAD uses Multiple Listing Services for collecting sales data on residential and commercial real property. Sales and income/expense information are collected and reviewed by the appraisal director, sales analyst, sales clerk and commercial/personal property director. The two-page procedures document provides an overview of the process, but it does not have sufficient detail to verify that the CAD conducts adequate market research. The CAD provided samples of its requests to property owners for information, MLS reports and a sample listing of sold properties. Two samples of owners’ responses are included with the documentation submitted to PTD. At the time of the follow-up review, PTD requested the following sample statistics from internal ratio studies from the chief appraiser: median, coefficient of dispersion and price-related differential. The CAD provided a second sales data list that included median, mode and inside confidence intervals as calculated by the CAD. In order to further develop this core appraisal process, PTD suggests that the CAD review the IAAO’s Standard on Ratio Studies, especially Section 7, “Ratio Study Statistics and Analyses,” for establishing procedures on statistical calculations that are quality assurance measures used by the Comptroller’s PVS. The CAD’s internal ratio studies should calculate the following measures of central tendency, variability and bias: median, coefficient of dispersion, percentage of ratios within 10 percent of the median, percentage of ratios within 25 percent of the median and the price-related differential. The median describes the middle of the sample ratios, or level of appraisal. The coefficient of dispersion and percentage ranges are measures that describe the distribution of the sample ratios, or appraisal uniformity. The price-related differential isolates the source of systematic error in the mass appraisal system and describes bias, or inaccuracies, in the appraisal of low-value versus high-value parcels. |
| 6 |
Compute productivity values annually using methods required by law for all land classifications. |
Complete |
|
The CAD provided PTD with the following:
The 2006 agricultural productivity unit values are lower than 2005 agricultural productivity unit values. The chief appraiser indicated the appraisal director calculates the net to land for agricultural productivity use values by entering lease, income and expense data onto a spreadsheet. The appraisal director then enters the productivity unit values into the CAD’s computer-assisted mass appraisal system for calculating individual agricultural parcel values. The chief appraiser provided samples of agricultural applications (1-d-1) with supplemental information forms, lease and printed records of the market value and productivity value of sample parcels. |