Chapter 2
Findings of the Appraisal Standards Review
This chapter of the report addresses findings and recommendations from the ASR of the Knox CAD in two sections:
2.1 Key Recommendations
2.2 Other Recommendations
Knox CAD was formed in 1981 and became active in 1982. The CAD has no full-time employees. The chief appraiser also serves as the elected Knox County tax assessor collector. The four clerical employees are paid from the county assessor/collector's office funds and with funds from the CAD budget (Exhibit 1).
The CAD performs appraisals for 14 taxing entities and collects taxes for 13.
In 2008, the CAD had contracts with outside appraisal companies for all field appraisal work (Exhibit 2).
Exhibit 2
Knox CAD: Professional Service Contracts
|
Services Provided by Contract |
Deliverables | Amount of Contract | Expiration Date |
Staff Responsible for Monitoring Compliance |
|---|---|---|---|---|
| E-1 field inspection | Review 700 +/- E-1 parcels | $25/parcel | April 15, 2008 | Chief appraiser |
| Online data processing | Electronically maintain parcel records; appraisal roll; estimate of value for taxing units; notices of appraised value; appraisal tolls; property tax reports; electronic data submission to the Comptroller's office. | $28,490/annually | Dec. 31, 2009 | Chief appraiser |
| Tax collections | Assessing and collecting property taxes for taxing entities | No additional cost | Jan. 31, 2009 | Chief appraiser |
| Appraisals | Improvements; land; agriculture-value schedule; 50 percent of remaining real property parcels as agreed | $34,800/annually | 2008 | Chief appraiser |
| Appraisals | Mineral, industrial, utility and personal property |
$28,100 for 2008 $28,400 for 2009 |
2009 | Chief appraiser |
Source: Knox CAD, 2008 contract files.
The contract for appraisal of improvements, land and 50 percent of remaining real property parcels, and development of agriculture-value schedule was cancelled through a mutual agreement.
Three of the five Knox CAD board members responded to PTAD's Appraisal District Board of Directors Questionnaire designed to assess the board's understanding and perceptions of the CAD's operations. The questionnaire includes 21 questions and a section for providing additional comments about specific challenges or opportunities facing the CAD.
One board member pointed out that the current staff is new, and current chief appraiser has been with the appraisal district for 17 months. To compensate for this lack of experience, the board obtained outside professional appraisal assistance including a consultant to evaluate and assist the staff and board of directors. Two board members expressed a need for the board to establish measurable criteria to evaluate the chief appraiser annually and to provide staff training. One board member indicated staff appraisers lacked the skill, experience and credentials to appraise property appropriately. All three responding board members indicated a need for board member training in Texas open government laws.
2.1
Key Recommendations
As part of the review process, PTAD makes recommendations to address challenges identified during its review of a CAD. Below are recommendations addressing key challenges associated with Knox CAD's appraisal activities.
FINDING
Knox CAD does not have written local guidelines for administering open space agricultural valuations; consequently, it consistently undervalues native pastureland.
Property Tax Code Section 23.52(a) requires:
The appraised value of qualified open-space land is determined on the basis of the category of the land, using accepted income capitalization methods applied to average net to land. The appraised value so determined may not exceed the market value as determined by other appraisal methods.
Section 23.52(e) states, "...the chief appraiser also shall determine the market value of qualified open-space land and shall record both the market value and the appraised value in the appraisal records."
In 2007, Knox CAD served three school districts. For 2007, Benjamin ISD failed to receive local value primarily due to a low productivity value ratio. The Benjamin ISD weighted mean ratio for Category D was 0.9302 and failed to receive local value. Although market value was satisfactory, the productivity value was significantly lower than the targeted 100 percent, contributing to the school district's being designated eligible.
Agricultural advisory board (Ag board) members indicated, and the chief appraiser agreed, that the D1 property category has historically been problematic for Knox CAD. They believe it to be the reason Benjamin ISD failed to achieve local value in 2007. As shown in Exhibit 3 the preliminary 2008 PVS shows the problem appears to be worsening.
Exhibit 3
Knox CAD Native Pasture Values: 2003-08
| 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | |
|---|---|---|---|---|---|---|
| Number of Acres | 235,077 | 235,197 | 234,592 | 234,691 | 234,519 | 194,060 |
| Reported Value Per Acre | $23.34 | $25.26 | $26.12 | $25.45 | $26.77 | $24.06 |
| Reported Values | $5,485,780 | $5,941,080 | $6,126,800 | $5,973,525 | $6,278,680 | $4,669,940 |
| PTAD Values Per Acre | $29.70 | $31.30 | $30.70 | $30.90 | $36.43 | $40.21 |
| PTAD Values | $6,980,245 | $7,361,648 | $7,200,274 | $7,254,259 | $8,543,671 | $7,803,153 |
| Ratio CAD to PTAD | 78.6% | 80.7% | 85.1% | 82.4% | 73.5% | 59.8% |
Source: Comptroller of Public Accounts and Final PVS, 2003-07 and Preliminary PVS 2008.
Knox CAD provides for three land classes: irrigated cropland, dry cropland and native pasture. It further breaks each classification into seven subclasses. Knox CAD hired an appraisal consulting firm that developed its market/productivity schedule for the 2007 tax year. The schedule includes seven market classes and corresponding agriculture classes for native pastureland (Exhibit 4).
Exhibit 4
Knox CAD Market/Productivity Schedule for Native Pasture: Tax Year 2007
| Category | Market Class | Market Value | Ag Class | Ag Value |
|---|---|---|---|---|
| Native Pasture | RP1 | $800 | AP1 | $64.10 |
| Native Pasture | RP2 | $700 | AP2 | $57.05 |
| Native Pasture | RP3 | $600 | AP3 | $48.07 |
| Native Pasture | RP4 | $500 | AP4 | $35.25 |
| Native Pasture | RP5 | $400 | AP5 | $28.84 |
| Native Pasture | RP6 | $350 | AP6 | $19.23 |
| Native Pasture | RP7 | $300 | AP7 | $12.82 |
Source: Knox CAD Market/Productivity Schedule, Tax Year 2007.
The firm also performed an analysis of the 2007 native pastureland cash lease values for 2001-05 to arrive at a net-to-land value. The analysis considered lease, hunting and other income, as well as expenses for taxes, fencing, management, water and brush control. This resulted in a net-to-land value for native pastureland of $4.86. This was considered the typical land and was factored at 100 percent to arrive at an estimated market value per acre of $48.60. This figure typically is assigned to the most common subclass, and the remaining subclasses are factored from that figure, depending on production features. This figure does not appear in the CAD's schedule for native pastureland; the closest figure to it is $48.07 for AP3.
According to an analysis performed by PTAD on Knox CAD's native pastureland, which was sent to the Comptroller's office via electronic appraisal roll submission (EARS), the typical parcel of native pastureland was valued at $28.86 per acre, or it fell in the subclass AP5, rather than AP3 as the CAD's schedule suggests. PTAD then used this finding to assess the effect of revising the CAD's schedule based of AP5 being the typical land class valued at $48.60 per acre and adjusting corresponding sub classes accordingly (Exhibit 5).
Exhibit 5
Effect of Revising Knox CAD Market Schedule: Using AP5 as the Typical Native Land Class
| Market Class | Ag Value Per Acre | Number of Acres |
CAD Estimated Productivity Value |
Revised Ag Values Per Acre |
Revised Estimated Productivity Value |
|---|---|---|---|---|---|
| AP7 | $12.82 | 103,039.52 | $1,320,967 | $29.16 | $3,004,424 |
| AP6 | $19.23 | 17,398.71 | $ 334,577 | $35.64 | $ 620,066 |
| AP5 | $28.84 | 28,258.38 | $ 814,972 | $48.60 | $1,373,357 |
| AP4 | $35.25 | 10,661.68 | $ 375,824 | $57.68 | $ 614,955 |
| AP3 | $48.07 | 21,468.65 | $1,031,998 | $64.81 | $1,391,313 |
| AP2 | $57.05 | 8,202.08 | $ 467,929 | $77.09 | $ 632,319 |
| AP1 | $64.10 | 5,035.37 | $ 322,767 | $84.03 | $ 423,132 |
| Totals | n/a | 194,064.38 | $4,669,033 | n/a | $8,059,567 |
| Productivity Value Per Acre | n/a | n/a | $24.06 | n/a | $41.23 |
| PTAD Value Per Acre | n/a | n/a | $40.21 | n/a | $40.21 |
| Ratio | n/a | n/a | 59.8% | n/a | 103.3% |
Source: Texas Comptroller of Public Accounts analysis and 2008 EARS.
This analysis clearly shows that the CAD may be misclassifying its ag value schedules. The CAD updated the market/productivity schedules for 2008 by increasing the market values, but it did not change agriculture values. Not correctly developing and applying the ag value schedule has contributed to the CAD undervaluing productivity land in Benjamin ISD. Properly using ag value schedules may result in Knox CAD achieving acceptable value in the PVS.
The Comptroller's Manual for the Appraisal of Agricultural Land explains the eligibility requirements and the appraisal procedures for agricultural land, as provided by Property Tax Code Chapter 23, Appraisal Methods and Procedures. The law requires appraisal districts to follow the methods described in the manual. The manual provides a number of examples and figures to illustrate to CADs how agricultural land is to be appraised.
RECOMMENDATION 1
Develop written local guidelines for administering agricultural appraisals, review and revise, as warranted, the agriculture value schedules and prioritize the reappraisal activities for native pasture land.
FINDING
While Knox CAD's reappraisal plan fulfills the fundamental requirements of Property Tax Code Section 25.18, it lacks critical elements such as definitions of critical activities, completion dates, assignment of responsibilities and established data collection and fieldwork standards for it to be an effective tool.
Texas Property Tax Code Section 25.18 states:
a) Each appraisal office shall implement the plan for periodic reappraisal of property approved by the board of directors under Section 6.05(i)
b) The plan shall provide for the following reappraisal activities for all real and personal property in the district at least once every three years:
(1) Identifying properties to be appraised through physical inspection or by other reliable means of identification, including deeds or other legal documentation, aerial photographs, land-based photographs, surveys, maps, and property sketches;
(2) identifying and updating relevant characteristics of each property in the appraisal records;
(3) defining market areas in the district;
(4) Identifying property characteristics that affect property value in each market area, including:
(A) the location and market area of property;
(B) Physical attributes of property, such as size, age, and condition;
(C) legal and economic attributes; and
(D) Easements, covenants, leases, reservations, contracts, declarations, special assessments, ordinances, or legal restrictions;
(5) Developing an appraisal model that reflects the relationship among the property characteristics affecting value in each market area and determines the contribution of individual property characteristics;
(6) Applying the conclusions reflected in the model to the characteristics of the properties being appraised; and
(7) reviewing the appraisal results to determine value.
Knox CAD's reappraisal plan is based on a generic template and does not address local conditions in Knox CAD. IAAO's Property Appraisal and Assessment Administration, Chapter 18 Revaluation Planning, provides vital elements for an effective work plan, such as inclusion of a timeline or calendar for performing reappraisal tasks. The work plan needs definitions of critical activities, with completion dates, assignment of responsibilities and established data collection and fieldwork standards.
The 2007-2008 Reappraisal Plan provides information for appraisal procedures and states that all property is reappraised each year, although there are no photos or maps to facilitate reappraisals. The plan calls for physical inspections every other year for land, residential and commercial properties. Under the plan, business personal property is supposed to be reappraised every year.
The plan does not include provisions for appraisal of agricultural land, which constitutes the major landmass in Knox County.
The CAD also provided a reappraisal plan for 2009-10. Both plans are 40-page documents with no table of contents, making it difficult for someone to locate and review particular reappraisal areas of interest. Both plans identify an appraisal firm as being responsible for appraising minerals, utilities, industrial and oil field-related business personal property. The plans indicate another appraisal firm is responsible for appraising residential, vacant land, commercial and any other business personal property in the 2007-08 plan. This contract was terminated by mutual agreement in March 2008. That same month, Knox CAD entered into a one-month contract with an Abilene appraisal firm to reappraise "700+/-" parcels and provide Appraisal Review Board (ARB) testimony as required.
The 2009-10 plan identifies one appraisal firm and Knox CAD personnel to perform the reappraisals. Neither plan is clear as to whether one-half of the identified property categories are reappraised in each year of the two-year period or if all of the categories are reappraised in each year of the two-year period.
Page Two of both reappraisal plans states that a general reappraisal of taxable property is conducted "every year." Page Five of both plans states a goal to "periodically field inspect land, residential and commercial properties in the district every other year." The statements make it unclear whether a reappraisal is accomplished every year or every other year and if inspections or other methods are used to accomplish the reappraisal.
The 2009-10 reappraisal plan identifies Knox CAD as an appraisal resource, although only the chief appraiser is currently registered with BTPE. As of Oct. 29, 2008, the chief appraiser had completed only three BTPE approved professional appraisal courses.
The lack of appraiser training, dual responsibilities as elected county assessor/collector and chief appraiser and untrained new employees point to a lack of resources to perform an effective reappraisal consistent with Property Tax Code Section 25.18 and IAAO standards.
The chief appraiser said the CAD adapted the reappraisal plan from one used by one of its contractors. Not developing a reappraisal plan that describes the type and number of properties to be reappraised annually, along with a time line of dates, personnel and other resources needed to accomplish the reappraisal, fails to provide taxpayers and the CAD board members with information needed to ensure equitable appraisal of property values and assessment of taxes.
Property Assessment Valuation, Second Edition, Chapter 13 Mass Appraisal, published by IAAO offers a 10-step best practice for the reappraisal of property. The 10 activities in a revaluation or reappraisal in a mass appraisal environment are:
- Performance analysis is the first step for which the primary tool is a ratio study. Effective reappraisal plans include in-house appraisal district ratio studies, which should precede the PVS.
- Revaluation decision primarily involves identification of properties to be reappraised on the basis of ratio study results.
- Analysis of available resources entails evaluation of staff, budget, data processing equipment and support, existing data records and maps. This also includes an analysis of time needed to achieve reappraisal objectives.
- Planning an organization identifies target dates for completion of reappraisal activities necessary to achieve objectives in a timely manner.
- System development produces procedures, methods, manuals and software revisions needed to produce good reappraisal results. Also included are forms and standardized procedures for collecting data including sales and income information.
- Pilot study tests procedures through conducting test activities in one or two reappraisal areas to insure that reliable and targeted results are achieved. Again, ratio studies should be used and needed modifications made to fine-tune the changes.
- Data collection can begin to achieve reappraisal objectives. Quality control procedures must be in place in order to ensure the consistency and accuracy of the data.
- Production of values resulting from all of the reappraisal activities should again be desk reviewed and tested against ratio studies and field reviewed as needed.
- Production of the appraisal roll results in reappraisals that are notified to the property owners and are subjected to both informal and formal appeals.
- Final performance analysis is the last of the 10 steps and involves using ratio studies to evaluate appraisals that support value estimates and are reliable and uniform, and to serve as a tool for preparing for the next reappraisal.
RECOMMENDATION 2
Revise the appraisal district's reappraisal plan so that it not only satisfies the letter requirements of Property Tax Code Section 25.18, but which also includes tasks for effectively executing the essential requirements of the statute.
FINDING
Knox CAD's maps do not meet the standards established by Comptroller Rule 9.3002.
Exhibit 6 lists the requirements of Comptroller Rule 9.3002 along with the manner in which Knox CAD addresses these requirements.
Exhibit 6
Knox CAD Compliance with Rule 9.3002 on Tax Maps
| Comptroller Rule 9.3002 Mapping Requirement |
Description of CAD's Level of Compliance with Specific Sections of Rule 9.3002 |
|---|---|
| Does the CAD draw its tax map system to scale and delineate lot and property lines with dimensions or areas and identifying numbers, letters or names for all delineated lots or parcels? | No |
|
Does the CAD divide the tax map into sections drawn at a scale large enough to serve the purposes of property assessment? (Note: The CAD can draw developed or subdivided areas at a different scale than undeveloped or unsubdivided tracts.) |
Yes. In Benjamin, Knox City, Goree and Munday. Benjamin and Goree maps are undated. Knox City map is dated 1971 and Munday, 1969. |
| Does the CAD tax map assign each section and each parcel numbers in accordance with a parcel identification numbering system? | The account number on the appraisal cards has the abstract number at the end that matches the abstract numbers on the county maps. |
| Does the CAD record these numbers on the tax map, section and parcel? | Abstract numbers |
| Does the CAD also record the identifying number for each parcel as recorded on the tax map on the appraisal card maintained for that parcel? | Yes |
| Does the CAD annually update the tax map system to incorporate any new subdivisions or property transfers as indicated by the filing of subdivision plats or deeds with the county clerk's office? | Deed changes are made to the appraisal cards as recorded. |
|
Does the CAD maintain information required by Rule 9.3002 in electronic data processing records rather than physical document? If yes, please describe. If no, provide CAD's reason for not doing so. |
No. CAD has no provisions for cadastral mapping with Pritchard & Abbott, the appraisal software vendor, or any other mapping entity. |
Source: Comptroller Rule 9.3002 and Knox CAD maps, 2008.
Knox CAD maps primarily consist of rolled paper maps. The most recent map noted is of Knox City, dated 1971. Maps for the cities of Benjamin, Goree and Munday are either older, some dating back to 1955, or undated. Maps do not reflect current or recent ownership information or property account information. Ownership records are maintained in the CAD's computerized database. The appraisal software vendor and appraisal contractor for selected properties have some computerized maps. These maps utilize a grid system, but do not tie the appraisal records to the maps.
A soil survey of Knox County published by the United States Department of Agriculture, in cooperation with Texas Agricultural Experiment Station, provides topographic maps, soil type and acreage information the CAD can use in conjunction with land appraisals, particularly those having rural situs.
Effective appraisal maps provide a correlation between the maps, account numbers and legal descriptions of specific properties. Up-to-date maps are an essential to an effective mass appraisal system. A CAD that does not have a current mapping system cannot be sure that it has discovered and appraised all properties or that some properties are not double assessed.
IAAO's Property Assessment Valuation, Chapter 15 Land Identification and Cadastral Maps, states "the first requirement of a good assessment system is a complete and accurate set of cadastral maps on which legal descriptions are represented graphically, not merely in writing." The chapter provides a best practice CADs can use to ensure an effective mapping program for well-organized assessment valuation activities. The standard provides direction on requirements for legal descriptions, parcel identification systems, base maps and geographic information systems (GIS).
RECOMMENDATION 3
Develop a plan and timeline for completion of a mapping system that complies with Comptroller Rule 9.3002.
The development of a good mapping system can take from one to three years, depending on available resources.
2.2
Other Recommendations
During the course of the review process, PTAD identified certain management and operational issues that may not be directly related to the appraisal process, but could indirectly affect the CAD's ability to conduct appraisals accurately and consistently. Knox CAD is not obligated to implement these recommendations, but they are provided here for consideration as additional ways to enhance operational effectiveness and efficiency. Some of these recommendations, however, may advise compliance with existing laws. Appraisal districts, as Texas governmental entities, are required to comply with all applicable laws.
FINDING
Knox CAD does not have the size, resources and fiscal capacity to perform the property appraisal function effectively, and its staff is inadequately prepared to ensure successful reappraisals for 2009-10.
The IAAO's Self-Evaluation Guide, points out that an appraisal district "...needs the resources to maintain records and to appraise and assess property accurately. Some small districts may find this difficult." IAAO provides appraisal districts with criteria to determine whether they have the resources to operate effectively.
The first criterion is the number of parcels the CAD appraises. Knox CAD locally appraises 8,954 parcels. The second criterion is the level of tax levy assessed by the CAD's member taxing entities. Exhibit 7 shows the taxing level for the 12 taxing entities in Knox CAD.
Exhibit 7
Tax Levy Assessed by Knox CAD Taxing Entities
| Name of Taxing Entity | Tax Levy |
|---|---|
| Knox County | $1,119,677 |
| Knox City-O'Brien Consolidated Independent School District | 776,690 |
| Munday Independent School District | 515,748 |
| Benjamin Independent School District | 280,955 |
| Panhandle Groundwater Conservation District | 15,633 |
| City of Benjamin | 27,227 |
| City of Goree | 26,578 |
| City of Knox City | 173,215 |
| City of Munday | 148,652 |
| Rolling Plains Groundwater Conservation District | 37,128 |
| Knox County Drainage District | 13,791 |
| Knox County Hospital District | 686,803 |
| North Central Texas MWA | 65,876 |
| Total | $3,887,973 |
Source: Texas Property Tax Annual Report, Texas Comptroller of Public Accounts, December 2008.
Using a tool IAAO provides appraisal districts to assess whether they have the resources needed to perform appraisals effectively it appears that the CAD does not have the required resources (Exhibit 8).
Exhibit 8
Criteria for Evaluating Knox CAD's Size Sufficiency
| Practice | Yes | No | Comments |
|---|---|---|---|
| The appraisal district has at least 5,000 parcels of assessable real estate. | X | Knox CAD appraises 7,799 parcels locally. | |
| The appraisal district serves taxing jurisdictions that levy at least $12 million annually. | X | The total levy for the 12 taxing entities in the Knox CAD is $3.9 million. |
Source: Developed from Assessment Practices: Self-Evaluation Guide, Second Edition, IAAO, 2003 with data provided by Texas Comptroller of Public Accounts from Operations Self-Reports, 2007.
While the CAD has the size, in terms of parcels, to defend the need for an appraisal office, it does not appear to have the financial resources available to operate such an office. This is further substantiated by another IAAO criterion - the amount of money that an appraisal district should spend:
...about 1.5 percent of property tax revenues on property tax administration, including tax collection, and half of the revenues should be applied to each function. Using typical salaries, ratios of personnel costs to total costs, and budgets per parcel, a minimal assessment district should have a budget of about $90,000, which is 0.75 percent of a total levy of $12 million. (Emphasis added.)
In 2007, Knox CAD reported an appraisal budget of $82,000, which is less than the "minimal" amount IAAO suggests.
The CAD contracts with a professional appraisal firm to appraise mineral, industrial utility and personal property. The firm does not appraise single-family residences, vacant lots, rural real estate or commercial real estate. According to its 2009-10 reappraisal plan, Knox CAD staff will appraise these categories, which total 7,799 parcels.
IAAO's Assessment Practices: Self-Evaluation Guide, Second Edition provides appraisal districts alternative methods for determining staff needs. One method is to compare staffing to comparable offices, also called benchmarking. Following this method, PTAD selected four other CADs comparable to Knox CAD in the number of parcels they appraised; for purposes of this analysis they are referred to as peer CADs. PTAD compared the peer appraisal districts' budgets and full-time staff numbers as reported in the 2007 Operations Report. Knox CAD reported having four full-time equivalent (FTE) employees, but in fact has four time part-time staffers equaling two FTEs. Exhibit 9 shows that Knox CAD provides its staff half the budget to appraise nearly twice as many parcels per employee compared to its peers.
Exhibit 9
Knox CAD Staffing Compared to Peer CADs
| CAD | 2007 Budget |
Number of Parcels |
Cost per Parcel to Appraise |
Number of Full-time Equivalent Employees | Parcels per Full-time Equivalent Staff |
|---|---|---|---|---|---|
| Crosby | $173,815 | 8,841 | $19.66 | 2 | 4,421 |
| Baylor | $ 90,000 | 8,870 | $10.15 | 5 | 1,774 |
| Hall | $112,124 | 9,234 | $12.14 | 2 | 4,617 |
| Jim Hogg | $200,133 | 9,784 | $20.46 | 4 | 2,446 |
| Peer Average | $144,018 | 9,182 | $15.60 | 3 | 3,314 |
| Knox | $ 82,000 | 8,954 | $ 9.16 | 4 | 4,477 |
Source: Texas Comptroller Annual Tax Report, 2007.
In 2008, the CAD proposed a budget of $187,010. Although the budget does not show the amount specifically used for appraisal and the amount that it uses for collections, the CAD reported a 50-50 split in previous operations reports. Based on this, the 2008 appraisal budget would be $93,505, slightly more than the minimum amount recommended by IAAO.
While the CAD reported four FTE positions in its annual operations report to the Comptroller's office, all four positions are part-time. Assuming, staff members split their time equally between the appraisal office functions and their tax office duties, the CAD has only two FTE positions. Additionally, the time for these positions is not exclusively dedicated to appraising property, since the CAD also serves as the collection agent for taxing entities.
IAAO points out that the criterion on the number of parcels assumes that "competent assessment administration requires a full-time professionally qualified assessor and at least one assistant." (Emphasis added.) Knox CAD does not have any "full-time professionally qualified" employees; all four employees and the chief appraiser are part-time CAD employees.
IAAO's Standard on Professional Development Section 2 points out that "Assessing officers require detailed knowledge related to their specific responsibilities in the assessment office. In-service training and continuing education of assessment personnel are essential parts of an effective program of assessment administration."
In Texas, the Board of Tax Professional Examiners (BTPE) is charged with overseeing education and training for tax professionals. Property Tax Code Section 5.04(a) requires the Texas Comptroller:
...shall consult and cooperate with the Board of Tax Professional Examiners or any successor agency responsible for certifying tax professionals in this state in setting standards for and approving curricula and materials for use in training and educating appraisers and assessor-collectors, and the comptroller may cooperate with the board or other public agencies, educational institutions or private organizations in sponsoring courses of instruction and training programs.
BTPE records show an application date and base date of April 18, 2007, and a field completion deadline date of April 18, 2012, for the Knox CAD chief appraiser. BTPE determined the five-year span is needed for a Texas tax professional to achieve needed necessary mass appraisal experience and the necessary education to become a competent tax appraiser professional.
The chief appraiser has been in his current position since March 2007 and is the only CAD employee registered with the BTPE for property appraisals. The chief appraiser has a Class 2 assessor/collector and Class 2 appraiser certifications from BTPE, and has completed five appraisal courses, including ethics, introduction to the Texas property tax system, appraisal of real property, property tax law and an elective at the Chief Appraiser Institute. The chief appraiser has not yet completed any appraisal methodology courses.
The Knox CAD chief appraiser is also the elected county tax assessor-collector whose duties primarily include all county vehicle registrations and voter registrations. Knox CAD assesses for 14 entities and collects ad valorum property taxes for 13 taxing units within the county.
Knox CAD has three employees, two of whom are new and whose salaries and duties are split between the county assessor/collector's office and the CAD. A third employee, also paid by both the CAD and tax office, is registered with BTPE in the assessor/collector field only, which limits the employee's CAD responsibilities to clerical functions.
The two new employees have not received the training needed to develop the skills necessary to carry out appraisal responsibilities. In 2007, the CAD provided $1,500 for training in its budget, which is less than half of peer CADs (Exhibit 10).
Exhibit 10
Knox CAD Training Budget Compared to Peer CADs
| CAD | 2007 Training Budget |
Number of Full-time Equivalent Employees |
Training Dollars per Full-time Equivalent Employee |
|---|---|---|---|
| Crosby | $6,000 | 2 | $3,000 |
| Baylor | $1,500 | 5 | $ 300 |
| Hall | $2,000 | 2 | $1,000 |
| Jim Hogg | $7,000 | 4 | $1,750 |
| Peer Average | $4,125 | 3 | $1,513 |
| Knox | $1,500 | 2 | $ 750 |
Source: Texas Comptroller Annual Tax Report, 2007.
The 2008 Knox CAD budget provides for an increase in 2008 to $8,000.
The CAD staff does not have the training, and as part-time employees of the CAD, do not have the required time to effectively perform the needed appraisal tasks for a county the size of Knox. Failing to provide the needed staff and the necessary training to its staff, Knox CAD may yield continuing unsuccessful PVS results. Increasing the appraisal staff number and training can help ensure successful reappraisals and PVS results.
The Texas Association of Assessing Officers and the Texas Association of Appraisal Districts offer training courses that assist appraisal district employees to learn appraisal techniques and to obtain the needed BTPE certifications.
The Blanco County Tax-Assessor Collector manages the Blanco CAD and employs a full-time appraiser to oversee day-to-day appraisal operations. Other appraisal districts, such as Jeff Davis and Hudspeth, outsource their appraisal function to private firms. Some counties, including some larger than Knox, have joined forces to achieve efficiency. For example, Potter-Randall CAD is a consolidated county appraisal district that serves both Potter and Randall counties. Finally, some appraisal districts outsource some or all appraisal functions to another appraisal district. Hansford CAD outsources all of its minerals appraisals to Ochiltree CAD.
RECOMMENDATION 4
Evaluate the need for increasing appraisal staff, and providing existing staff with the training needed to effectively perform appraisals.
One option available to the CAD is to reassign existing staff to full-time status in either the appraisal or tax offices, rather than splitting their time between the two. Having two full-time appraisal office employees dedicating all their time and effort to appraising may result in more efficiency than having four part-time employees, all distracted by other responsibilities.
FINDING
Many Knox CAD appraisal cards do not include needed appraisal information as required by Comptroller Rules 9.3001.
Rule 9.3001 requires an appraisal district to develop and maintain a system of appraisal cards for each parcel of residential or commercial real estate that includes the following:
- the legal description of the land (this does not require field note descriptions);
- the account number of the property;
- zoning classification (if any);
- street improvements (e.g.: unimproved, graveled, paved);
- utilities available (e.g., water, sewer, electricity, gas);
- basic measurements of the land (e.g., frontage, depth, acreage);
- computation of the land value;
- any remarks by the appraiser relevant to the parcel;
- the identification of each taxing unit in which the property is taxable.
- a diagram of all improvements on the parcel indicating perimeter measurements;
- the type of construction for the foundation, floor, exterior walls and roof;
- the date of appraisal and the initials of the appraiser;
- the use type of the improvements (e.g., single-family, duplex, apartment, store, warehouse, factory, etc.);
- additional details of construction (e.g., porches, garages, storage buildings, fireplaces, etc.);
- depreciation calculation related to the improvements;
- computation of the improvement value; and
- any remarks or comments by the appraiser relevant to the improvements on the parcel.
The appraisal card must also indicate the amount of appraised value of property included in the parcel for each category classification required by the PVS. The chief appraiser indicated that value, as well as remarks, is recorded in the comment section of the appraisal software, but not on the appraisal card.
On rural parcels, the appraisal card must indicate the size of the parcel and the number of acres in each of the following use categories: irrigated; dry cropland; improved pasture; native pasture; orchard; timber; and barren or waste. The card should also indicate road access (e.g., paved, gravel, dirt, unimproved, none); utility availability (electricity, gas, sewer, etc.); and, in CADs with irrigated land, the number and capacity of irrigation wells or the number of acres covered by irrigation permits.
Appraisal card information may be maintained in electronic data processing records rather than in physical documents.
As part of the ASR process, PTAD requires the review of sample properties to assess the CAD's appraisal process. This review indicated that Knox CAD appraisal cards have significant appraiser information omitted.
None of the cards inspected showed a 911 address. Many property owners may not be familiar with property legal descriptions, but know their 911 address. The 911 address information also allows the appraiser to double-check the appraisal card and property he or she is appraising is the same.
Each appraisal card should also reflect a date the property was last reappraised. The appraisal cards reviewed do not record that information nor do they reflect effective age information. Effective age is the age property improvements appear to be based on condition and is important in making estimates of depreciation for those improvements.
Many business personal property appraisal cards do not include 911 addresses or SIC codes used to uniformly estimate economic life of types of personal property and that corresponds with PTAD schedules for personal property deprecation. All business personal property records should include SIC codes. Business personal property files should be maintained for each personal property account that contains the appraisal card along with property renditions and all other pertinent appraisal information. The chief appraiser has said that personal property files will be used for the 2009 appraisals.
IAAO's Standard on Mass Appraisal provides detailed directions for a CAD to maintain proper data records. It states, among other items, that:
Data should be collected in a prescribed format designed to facilitate both the collecting of data in the field and entry of the data into the computer system. A logical arrangement of the collection format makes data collection easier. ...In general, the data collection format should maintain consistency among data collectors, be clear and easy to use, and adaptable to virtually all types of construction. Specialized data collection formats may be necessary to collect information on agricultural property, timberland, industrial parcels, and other property types.
RECOMMENDATION 5
Comply with Comptroller Rule 9.3001 by establishing a plan and timeline for acquiring and recording needed appraisal card information for real property and business personal property appraisal cards.