Appraisal Standards Review
Kendall County Appraisal District Follow-Up Report
July 2007
Introduction
In July 2004, the Boerne Independent School District (Boerne ISD), located in Kendall County, was identified as one of 54 school districts in the state meeting the criteria that initiate an appraisal standards review (ASR) of its county ap-praisal district (CAD). In December 2005, the Comptroller’s Property Tax Division (PTD) released the results of an ASR of Kendall County Appraisal District (Kendall CAD).
The report made eight recommendations to improve Kendall CAD’s appraisal practices and operations. ASRs determine why the local value is invalid and recommend changes in operations and management to improve appraisal practices. The Kendall 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, Kendall CAD faced a number of challenges in documenting procedures and appraisal methods; processing sales, conducting ratio studies and evaluating schedules; and reappraising regularly.
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 appraisal district’s operations until the Comptroller determines that each school district for which the appraisal district appraises property attains the local value for the school district in the same year. The appraisal district shall 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 complies with the 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 generally is demonstrated by having imple-mented or nearly completed most of the recommendations by the first-year anniversary of the release of the report. The Comptroller recognizes that some ASR recommendations require more than a year to implement for a CAD with limited resources. As long as the CAD is working to implement the recommended actions, 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 additional monitoring.
In January 2007, PTD reviewed the progress made by Kendall CAD in implementing the recommendations found in the original report. Kendall CAD has completed all eight recommendations. PTD sent the CAD’s board members surveys soliciting their views and comments on the ASR. One board member responded, agreeing that the ASR fairly portrayed the challenges facing the CAD.
PTD believes that Kendall CAD’s efforts to date have met the state’s legal requirements. While Kendall CAD took an alternative approach in implementing two recommendations, PTD believes that the CAD has satisfied the ASR’s concerns.
History and Significant Events
Kendall CAD received an ASR because the 2003 Property Value Study (PVS) found the Boerne ISD property values to be invalid. The school district became eligible for the grace period provided in Government Code Section 403.3011. The PVS tested the following four property categories in Boerne ISD:
- Category A, Single-Family Residences, with a weighted mean ratio of 0.9196;
- Category C, Vacant Lots, with a weighted mean ratio of 0.9441;
- Category D, Rural Real Property, with a weighted mean ratio of 0.8730; and
- Category F1, Commercial Real Property, with a weighted mean ratio of 0.9880.
In the Comfort ISD, the PVS tested three property categories with the following results:
- Category A, Single-Family Residences, with a weighted mean ratio of 0.8810;
- Category D, Rural Real Property, with a weighted mean ratio of 0.8216; and
- Category F1, Commercial Real Property, with a weighted mean ratio of 1.0394.
In summary, Kendall CAD fell out of the confidence interval because it incorrectly appraised single-family residential properties and rural residences.
In the 2004 and 2005 PVS, Kendall CAD received valid value in both school districts in both years. The Preliminary 2006 PVS certified local value for Boerne ISD but found that Comfort ISD had invalid local value. Kendall CAD successfully appealed the PVS findings for Comfort ISD, and it received local value.
In February 2006, the CAD hired an experienced chief appraiser, and the board directed the new chief appraiser to implement the Comptroller’s recommendations. The chief appraiser has worked steadily to do so in a timely manner.
What Remains to Be Done
The Appendix at the end of this report lists the eight recommendations identified in the original report, with a summary of actions to date. The CAD has implemented all eight recommendations made in the original report.
Appendix
Kendall 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 | Revise the professional appraisal services contract to include deliverable dates and contract monitoring procedures. |
Complete |
|
The CAD revised its contract with its appraisal services firm on Oct. 18, 2006. The revised contract includes dates the appraisal firm will deliver appraisals. The chief appraiser performs contract monitoring by comparing actual performance to the contractual provisions. The contract also provides for the CAD to review performance on or before Sept. 15 of each year to determine if it will make funds available for a subsequent year. On that date, the CAD will also determine if all deliverables are acceptable. |
2.2 Appraisal District Policies, Procedures and Operations
| Rec. # | Recommendation | Implementation Status | If Not Complete, Projected Completion Date | Description of Actions Taken to Date |
|---|---|---|---|---|
| 2 | Develop a written policy and procedures manual for district operations. |
Complete |
|
The CAD took an alternative approach to addressing this recommendation. Instead of developing a policy and procedures manual, it produced detailed job descriptions that outline the procedures for its operations. For example, the bookkeeper’s job description covers two pages and lists duties specific to payroll, accounting, reconciling accounts and preparing deposits. While the CAD did not include procedures in an operations manual, the job descriptions provide sufficient detail to ensure that work continues in the event of staff changes. The board also adopted a Kendall Personnel Policy Manual in March 2007. |
| 3 |
Amend the district’s Rendition of Real Property Inventory form and submit it to the Comptroller for approval prior to usage in the 2006 tax year and review its other rendition forms for compliance with Tax Code Section 22.24. |
Complete |
|
The CAD submitted a rendition form to PTD for approval on Dec. 5, 2005. PTD approved it with revisions. Subsequently, however, the chief appraiser chose to use the state-provided rendition form instead of the revised form. |
2.3 Information Processing Systems
The report had no findings or recommendations in this section.
2.4 Staffing, Personnel Qualifications and Positions
| Rec. # | Recommendation | Implementation Status | If Not Complete, Projected Completion Date | Description of Actions Taken to Date |
|---|---|---|---|---|
| 4 |
Conduct a staff needs analysis and establish staffing allocation guidelines that will ensure the number and type of staffing is appropriate and annually adjusted to meet the CAD’s needs. |
Complete |
|
The CAD analyzed staffing needs and allocations during the budget process for the 2006-07 budget. In response to this analysis, the CAD revised its organization chart, increased salaries and started paying social security. The CAD plans to review its organizational structure and job titles annually. It will monitor growth and parcel counts, and as these increase, the CAD will consider the need for additional staff and will address the issue in subsequent budget cycles. |
| 5 |
Review job descriptions for all staff to ensure the descriptions are current and standardize the use of titles for all district document |
Complete |
|
The CAD revised all its job descriptions to include details and provide staff guidance to perform assigned duties. The revised job descriptions match the organization chart. During the 2007-08 budget process, the CAD aligned budgeted positions to job descriptions and the organization chart. |
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 |
Prepare and issue to each appraiser detailed appraisal procedures manuals that provide local procedures and practices for each type of property the staff appraises. |
Complete |
|
The CAD developed an appraisal procedures manual with local procedures and practices for each type of property appraised. The manual helps the field appraiser, new employees and the public understand the methods and techniques used by the Kendall CAD. The manual includes descriptions of the CAD’s property identification system, the valuation approach, analysis of the CAD with respective entity codes, neighborhood analysis, highest and best-use analysis, property classification codes, data collection, market analysis, valuation analysis and other procedures and processes. The newly developed manual helps appraisers comply with Uniform Standards of Professional Appraisal Practice (USPAP) and helps ensure appraisers apply similar appraisal methods and techniques to similar properties. |
| 7 |
Attempt to inspect all business personal property accounts each year and develop an independent valuation method through the request as provided by law. |
Complete |
|
The chief appraiser believes that an annual inspection of all business personal property is currently impractical from a staffing standpoint. As an alternative approach, the chief appraiser plans on periodic inspections of business personal property accounts on a rotational basis. The CAD addressed the appraisal of business personal property in the appraisal procedures manual as well as the reappraisal plan. Additionally, staff will code individual accounts when inspected to track onsite visits. The CAD will conduct inspections annually, as needed and as practical. It will base this decision on the appraiser’s judgment. It will continue to inspect the personal property on all new businesses and will compare current rendered values to prior years’ values for existing businesses. Any large fluctuations will trigger an inspection. A staff member now devotes more than 90 percent of his or her time to business personal property accounts. While the CAD is not currently inspecting all business personal property annually, its alternative approach addresses the concerns of this recommendation. |
| 8 |
Adopt a detailed reappraisal plan. |
Complete |
|
The CAD adopted a reappraisal plan for the 2007-08 appraisal years that meets the requirements of the Property Tax Code and USPAP. The CAD board adopted the reappraisal plan at its Aug. 16, 2006, meeting. |