Sec. 5.102. Review of Appraisal Standards
(a) The comptroller shall review the appraisal standards, procedures, and methodology used by each appraisal district that appraises property for an eligible school district as defined by Section 403.3011, Government Code, to determine compliance with generally accepted appraisal standards and practices. The comptroller by rule may establish procedures and standards for conducting the review.
(b) In conducting the review, the comptroller is entitled to access to all records and reports of the appraisal district and to the assistance of the appraisal district’s officers and employees.
(c)If the review results in a finding that an appraisal district is not in compliance with generally accepted appraisal standards and practices, the comptroller shall deliver a report that details the comptroller’s findings and recommendations for improvement to:
- the appraisal district’s chief appraiser and Board of Directors; and
- the superintendent and board of trustees of each school district participating in the appraisal district.
(d) 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 shall notify the judge of each district court in the county for which the appraisal district is established, who shall appoint a board of conservators consisting of five members to implement the recommendations. The board of conservators shall exercise supervision and control over the operations of the appraisal district until the comptroller determines under Section 403.302, Government Code, that in the same year 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 shall bear the costs related to the supervision and control of the district by the board of conservators.
Added by Acts 1991, 72nd Leg., ch. 843, § 9, eff. Sept. 1, 1991.Amended by Acts 1995, 74th Leg., ch. 260, § 46, eff. May 30, 1995; Acts 1997, 75th Leg., ch. 1040, § 65, eff. Sept. 1, 1997; Acts 2003, 78th Leg., ch. 1183, § 5, eff. June 20, 2003.
Sec. 1.04. Definitions
In this title:
(1) “Property” means any matter or thing capable of private ownership.
(2) “Real property” means:
(B) an improvement;
(C) a mine or quarry;
(D) a mineral in place;
(E) standing timber; or
(F) an estate or interest, other than a mortgage or deed of trust creating a lien on property or an interest securing payment or performance of an obligation, in a property enumerated in Paragraphs (A) through (E) of this subdivision.
(3) “Improvement” means:
(A) a building, structure, fixture, or fence erected on or affixed to land; or
(B) a transportable structure that is designed to be occupied for residential or business purposes, whether or not it is affixed to land, if the owner of the structure owns the land on which it is located, unless the structure is unoccupied and held for sale or normally is located at a particular place only temporarily.
(C) for purposes of an entity created under Section 52, Article III, or Section 59, Article XVI, Texas Constitution, the:
(ii) subdivision of land by plat;
(iii) installation of water, sewer, or drainage lines; or
(iv) paving of undeveloped land.
(1) “Personal property” means property that is not real property.
(2) “Tangible personal property” means personal property that can be seen, weighed, measured, felt, or otherwise perceived by the senses, but does not include a document or other perceptible object that constitutes evidence of a valuable interest, claim, or right and has negligible or no intrinsic value.
(3) “Intangible personal property” means a claim, interest (other than an interest in tangible property), right, or other thing that has value but cannot be seen, felt, weighed, measured, or otherwise perceived by the senses, although its existence may be evidenced by a document. It includes a stock, bond, note or account receivable, franchise, license or permit, demand or time deposit, certificate of deposit, share account, share certificate account, share deposit account, insurance policy, annuity, pension, cause of action, contract, and goodwill.
(4) “Market value” means the price at which a property would transfer for cash or its equivalent under prevailing market conditions if:
(A) exposed for sale in the open market with a reasonable time for the seller to find a purchaser;
(B) both the seller and the purchaser know of all the uses and purposes to which the property is adapted and for which it is capable of being used and of the enforceable restrictions on its use; and
(C) both the seller and purchaser seek to maximize their gains and neither is in a position to take advantage of the exigencies of the other.
(1) “Appraised value” means the value determined as provided by Chapter 23 of this Code.
(2) “Assessed value” means, for the purposes of assessment of property for taxation, the amount determined by multiplying the appraised value by the applicable assessment ratio, but, for the purposes of determining the debt limitation imposed by Article III, Section 52, of the Texas Constitution, shall mean the market value of the property recorded by the chief appraiser.
(3) “Taxable value” means the amount determined by deducting from assessed value the amount of any applicable partial exemption.
(4) “Partial exemption” means an exemption of part of the value of taxable property.
(5) “Taxing unit” means a county, an incorporated city or town (including a home-rule city), a school district, a special district or authority (including a junior college district, a hospital district, a district created by or pursuant to the Water Code, a mosquito control district, a fire prevention district, or a noxious weed control district), or any other political unit of this state, whether created by or pursuant to the constitution or a local, special, or general law, that is authorized to impose and is imposing ad valorem taxes on property even if the governing body of another political unit determines the tax rate for the unit or otherwise governs its affairs.
(6) “Tax year” means the calendar year.
(7) “Assessor” means the officer or employee responsible for assessing property taxes as provided by Chapter 26 of this code for a taxing unit by whatever title he is designated.
(8) “Collector” means the officer or employee responsible for collecting property taxes for a taxing unit by whatever title he is designated.
(9) “Possessory interest” means an interest that exists as a result of possession or exclusive use or a right to possession or exclusive use of a property and that is unaccompanied by ownership of a fee simple or life estate in the property. However, “possessory interest” does not include an interest, whether of limited or indeterminate duration, that involves a right to exhaust a portion of a real property.
(10) “Conservation and reclamation district” means a district created under Article III, Section 52, or Article XVI, Section 59, of the Texas Constitution, or under a statute enacted under Article III, Section 52, or Article XVI, Section 59, of the Texas Constitution.
(11) “Clerical error” means an error:
(A) that is or results from a mistake or failure in writing, copying, transcribing, entering or retrieving computer data, computing, or calculating: or that prevents an appraisal roll or a tax roll from accurately reflecting a finding or determination made by the chief appraiser, the appraisal review board, or the assessor; however, “clerical error” does not include an error that is or results from a mistake in judgment or reasoning in the making of the finding or determination.
(12) “Comptroller” means the Comptroller of Public Accounts of the State of Texas.
Sec. 23.01. Appraisals Generally
(b) Except as otherwise provided by this chapter, all taxable property is appraised at its market value as of January 1.
(c) The market value of property shall be determined by the application of generally accepted appraisal methods and techniques. If the appraisal district determines the appraised value of a property using mass appraisal standards, the mass appraisal standards must comply with the Uniform Standards of Professional Appraisal Practice. The same or similar appraisal methods and techniques shall be used in appraising the same or similar kinds of property. However, each property shall be appraised based upon the individual characteristics that affect the property’s market value. See Exhibit 8, page 22 for the address of the Appraisal Foundation to obtain a copy of the USPAP.
Sec. 25.18. Periodic Reappraisals
Each appraisal office shall implement a plan for periodic reappraisal of property to update appraised values.
The plan shall provide for reappraisal of all real property in the district at least once every three years.
A taxing unit by resolution adopted by its governing body may require the appraisal office to appraise all property within the unit or to identify and appraise newly annexed territory and new improvements in the unit as of a date specified in the resolution. On or before the deadline requested by the taxing unit, which deadline may not be less than 30 days after the date the resolution is delivered to the appraisal office, the chief appraiser shall complete the appraisal and deliver to the unit an estimate of the total appraised value of property taxable by the unit as of the date specified in such resolution. The unit must pay the appraisal district for the cost of making the appraisal. The chief appraiser shall provide sufficient personnel to make the appraisals required by this subsection on or before the deadline requested by the taxing unit. An appraisal made pursuant to this subsection may not be used by a taxing unit as the basis for the imposition of taxes.
Section 23.011. Cost Method of Appraisal
If the chief appraiser uses the cost method of appraisal to determine the market value of real property, the chief appraiser shall:
(1) use cost data obtained from generally accepted sources;
(2) make any appropriate adjustment for physical, functional, or economic obsolescence;
(3) make available to the public on request cost data developed and used by the chief appraiser as applied to all properties within a property category and may charge a reasonable fee to the public for the data;
(4) clearly state the reason for any variation between generally accepted cost data and locally produced cost data if the data vary by more than 10 percent; and
(5) make available to the property owner on request all applicable market data that demonstrate the difference between the replacement cost of the improvements to the property and the depreciated value of the improvements.
Added by Acts 1997, 75th Leg., ch. 1039, § 22, eff. Jan. 1, 1998.
Section 23.012. Income Method of Appraisal
(a) If the income method of appraisal is the most appropriate method to use to determine the market value of real property, the chief appraiser shall:
(1) analyze comparable rental data available to the chief appraiser or the potential earnings capacity of the property, or both, to estimate the gross income potential of the property;
(2) analyze comparable operating expense data available to the chief appraiser to estimate the operating expenses of the property;
(3) analyze comparable data available to the chief appraiser to estimate rates of capitalization or rates of discount; and
(4) base projections of future rent or income potential and expenses on reasonably clear and appropriate evidence.
(b) In developing income and expense statements and cash-flow projections, the chief appraiser shall consider:
(1) historical information and trends;
(2) current supply and demand factors affecting those trends; and
(3) anticipated events such as competition from other similar properties under construction.
Added by Acts 1997, 75th Leg., ch. 1039, § 22, eff. Jan. 1, 1998. Amended by Acts 2003, 78th Leg., ch. 548, § 1, eff. Jan. 1, 2004.
Section 23.013. Market Data Comparison Method of Appraisal
If the chief appraiser uses the market data comparison method of appraisal to determine the market value of real property, the chief appraiser shall use comparable sales data and shall adjust the comparable sales to the subject property.
Added by Acts 1997, 75th Leg., ch. 1039, § 22, eff. Jan. 1, 1998. Amended by Acts 1999, 76th Leg., ch. 1295, § 2, eff. Jan. 1, 2000.
Section 403.302. Determination of School District Property Values
(a) The comptroller shall conduct an annual study using comparable sales and generally accepted auditing and sampling techniques to determine the total taxable value of all property in each school district. The study shall determine the taxable value of all property and of each category of property in the district and the productivity value of all land that qualifies for appraisal on the basis of its productive capacity and for which the owner has applied for and received a productivity appraisal. The comptroller shall make appropriate adjustments in the study to account for actions taken under Chapter 41, Education Code.
(b) In conducting the study, the comptroller shall determine the taxable value of property in each school district:
(v) using, if appropriate, samples selected through generally accepted sampling techniques;
(vi) according to generally accepted standard valuation, statistical compilation, and analysis techniques; and
(vii) ensuring that different levels of appraisal on sold and unsold property do not adversely affect the accuracy of the study.
(c) If after conducting the annual study the comptroller determines that the local value for a school district is valid, the local value is presumed to represent taxable value for the school district. In the absence of that presumption, taxable value for a school district is the state value for the school district determined by the comptroller under Subsections (a) and (b) unless the local value exceeds the state value, in which case the taxable value for the school district is the district’s local value. In determining whether the local value for a school district is valid, the comptroller shall use a margin of error that does not exceed five percent unless the comptroller determines that the size of the sample of properties necessary to make the determination makes the use of such a margin of error not feasible, in which case the comptroller may use a larger margin of error.
(c-1) Notwithstanding Subsection (c), if after conducting the annual study for the year 2002 the comptroller determines that the local value for a school district is invalid and the local value exceeds the state value for the school district determined by the comptroller under Subsections (a) and (b), the taxable value for the school district for that year is the district’s state value as established by the comptroller. This subsection expires September 30, 2004.
(d) For the purposes of this section, “taxable value” means the market value of all taxable property less:
(1) the total dollar amount of any residence homestead exemptions lawfully granted under Section 11.13(b) or (c), Tax Code, in the year that is the subject of the study for each school district;
(2) one-half of the total dollar amount of any residence homestead exemptions granted under Section 11.13(n), Tax Code, in the year that is the subject of the study for each school district;
(3) the total dollar amount of any exemptions granted before May 31, 1993, within a reinvestment zone under agreements authorized by Chapter 312, Tax Code;
(4) subject to Subsection (e), the total dollar amount of any captured appraised value of property that:
(A) is within a reinvestment zone created on or before May 31, 1999, or is proposed to be included within the boundaries of a reinvestment zone as the boundaries of the zone and the proposed portion of tax increment paid into the tax increment fund by a school district are described in a written notification provided by the municipality or the board of directors of the zone to the governing bodies of the other taxing units in the manner provided by Section 311.003(e), Tax Code, before May 31, 1999, and within the boundaries of the zone as those boundaries existed on September 1, 1999, including subsequent improvements to the property regardless of when made;
(B) generates taxes paid into a tax increment fund created under Chapter 311, Tax Code, under a reinvestment zone financing plan approved under Section 311.011(d), Tax Code, on or before September 1, 1999; and
(C) is eligible for tax increment financing under Chapter 311, Tax Code;
(5) the total dollar amount of any exemptions granted under Section 11.251, Tax Code;
(6) the difference between the comptroller’s estimate of the market value and the productivity value of land that qualifies for appraisal on the basis of its productive capacity, except that the productivity value estimated by the comptroller may not exceed the fair market value of the land;
(7) the portion of the appraised value of residence homesteads of individuals who receive a tax limitation under Section 11.26, Tax Code, on which school district taxes are not imposed in the year that is the subject of the study, calculated as if the residence homesteads were appraised at the full value required by law;
(8) subject to Subsection (e), the total dollar amount of any captured appraised value of property that:
(A) action required by statute or the constitution of this state that, if the tax rate adopted by the district is applied to it, produces an amount equal to the difference between the tax that the district would have imposed on the property if the property were fully taxable at market value and the tax that the district is actually authorized to imposed on the property, if this subsection does not otherwise require that portion to be deducted, or
(B) action taken by the district under Subchapter B or C, Chapter 313, Tax Code;
(9) the market value of all tangible personal property, other than manufactured homes, owned by a family or individual and not held or used for the production of income;
(10) the appraised value of property the collection of delinquent taxes on which is deferred under Section 33.06, Tax Code;
(11) the portion of the appraised value of property the collection of delinquent taxes on which is deferred under Section 33.065, Tax Code; and
(12) the amount by which the market value of a residence homestead to which Section 23.23, Tax Code, applies exceeds the appraised value of that property as calculated under that section.
(e) The total dollar amount deducted in each year as required by Subsection (d)(4) in a reinvestment zone created after January 1, 1999, may not exceed the captured appraised value estimated for that year as required by Section 311.011(c)(8), Tax Code, in the reinvestment zone financing plan approved under Section 311.011(d), Tax Code, before September 1, 1999. The number of years for which the total dollar amount may be deducted under Subsection (d)(4) shall for any zone, including those created on or before January 1, 1999, be limited to the duration of the zone as specified as required by Section 311.011(c)(9), Tax Code, in the reinvestment zone financing plan approved under Section 311.011(d), Tax Code, before September 1, 1999. The total dollar amount deducted under Subsection (d)(4) for any zone, including those created on or before January 1, 1999, may not be increased by any reinvestment zone financing plan amendments that occur after August 31, 1999. The total dollar amount deducted under Subsection (d)(4) for any zone, including those created on or before January 1, 1999, may not be increased by a change made after August 31, 1999, in the portion of the tax increment retained by the school district.
(f) The study shall determine the values as of January 1 of each year.
(g) The comptroller shall publish preliminary findings, listing values by district, before February 1 of the year following the year of the study. Preliminary findings shall be delivered to each school district and shall be certified to the commissioner of education.
(h) On request of the commissioner of education or a school district, the comptroller may audit the total taxable value of property in a school district and may revise the annual study findings. The request for audit is limited to corrections and changes in a school district’s appraisal roll that occurred after preliminary certification of the annual study findings by the comptroller. Except as otherwise provided by this subsection, the request for audit must be filed with the comptroller not later than the third anniversary of the date of the final certification of the annual study findings. The request for audit may be filed not later than the first anniversary of the date the chief appraiser certifies a change to the appraisal roll if the chief appraiser corrects the appraisal roll under Section 25.25 or 42.41, Tax Code, and the change results in a material reduction in the total taxable value of property in the school district. The comptroller shall certify the findings of the audit to the commissioner of education.
(i) If the comptroller determines in the annual study that the market value of property in a school district as determined by the appraisal district that appraises property for the school district, less the total of the amounts and values listed in Subsection (d) as determined by that appraisal district, is valid, the comptroller, in determining the taxable value of property in the school district under Subsection (d), shall for purposes of Subsection (d)(12) subtract from the market value as determined by the appraisal district of residence homesteads to which Section 23.23, Tax Code, applies the amount by which that amount exceeds the appraised value of those properties as calculated by the appraisal district under Section 23.23, Tax Code. If the comptroller determines in the annual study that the market value of property in a school district as determined by the appraisal district that appraises property for the school district, less the total of the amounts and values listed in Subsection (d) as determined by that appraisal district, is not valid, the comptroller, in determining the taxable value of property in the school district under Subsection (d), shall for purposes of Subsection (d)(12) subtract from the market value as estimated by the comptroller of residence homesteads to which Section 23.23, Tax Code, applies the amount by which that amount exceeds the appraised value of those properties as calculated by the appraisal district under Section 23.23, Tax Code.
(j) For purposes of Section 42.2511, Education Code, the comptroller shall certify to the commissioner of education:
(1) a final value for each school district computed on a residence homestead exemption under Section 1-b(c), Article VIII, Texas Constitution, of $5,000;and
(2) a final value for each school district computed on:
(A) a residence homestead exemption under Section 1-b(c), Article VIII, Texas Constitution, of $15,000; and
(B) the effect of the additional limitation on tax increases under Section 1-b(d), Article VIII, Texas Constitution.
(k) For purposes of Section 42.2522, Education Code, the comptroller shall certify to the commissioner of education:
(1) a final value for each school district computed without any deduction for residence homestead exemptions granted under Section 11.13(n), Tax Code; and
(2) a final value for each school district computed after deducting one-half the total dollar amount of residence homestead exemptions granted under Section 11.13(n), Tax Code.
(l) If after conducting the annual study for the year 2003 or a subsequent year the comptroller determines that a school district is an eligible school district, for that year and the following year the taxable value for the school district is the district’s local value. Not later than the first anniversary of the date of the determination that a school district is an eligible school district, the comptroller shall complete an appraisal standards review as provided by Section 5.102, Tax Code, of each appraisal district that appraises property for the school district.
(m) Repealed by Acts 2003, 78th Leg., 3rd C.S., ch. 10, § 3.02.
Added by Acts 1995, 74th Leg., ch. 260, § 26, eff. May 30, 1995. Amended by Acts 1997, 75th Leg., ch. 592, § 1.07, eff. Sept. 1, 1997; Acts 1997, 75th Leg., ch. 1039, § 44, eff. Jan. 1, 1998; Acts 1997, 75th Leg., ch. 1040, § 63, eff. Sept. 1, 1997; Acts 1997, 75th Leg., ch. 1071, § 27, eff. Sept. 1, 1997; Acts 1999, 76th Leg., ch. 62, § 8.04, eff. Sept. 1, 1999; Acts 1999, 76th Leg., ch. 396, § 3.01(b), eff. Aug. 31, 1999; Acts 1999, 76th Leg., ch. 396, § 1.36, eff. Sept. 1, 1999; Acts 1999, 76th Leg., ch. 983, § 9, 10, eff. June 18, 1999; Acts 1999, 76th Leg., ch. 1467, § 1.19, eff. June 19, 1999; Acts 1999, 76th Leg., ch; 1525, § 1, eff. Sept. 1, 1999; Acts 2001, 77th Leg., ch. 1420, §9.005, eff. Sept. 1, 2001; Acts 2001, 77th Leg., ch. 1505, § 7, eff. Jan. 1, 2002; Acts 2003, 78th Leg., ch. 411, § 7, eff. Jan. 1, 2004; Acts 2003, 78th Leg., ch. 1183, § 3, eff. June 20, 2003; Acts 2003, 78th Leg., ch. 1276, § 9.004, eff. Sept. 1, 2003; Acts 2003, 78th Leg., 3rd C.S., ch. 10, § 3.01, 3.02, eff. Oct. 20, 2003.
Sec. 5.07. Property Tax Forms and Records Systems
(a) The comptroller shall prescribe the contents of all forms necessary for the administration of the property tax system and on request shall furnish sufficient copies of model forms of each type to the appropriate local officials. The comptroller may require reimbursement for the costs of printing and distributing the forms.
(b) The comptroller shall make the contents of the forms uniform to the extent practicable but may prescribe or approve additional or substitute forms for special circumstances.
(c) The comptroller shall also prescribe a uniform record system to be used by all appraisal districts for the purpose of submitting data to be used in the annual studies required by Section 5.10 of this code and by Section 403.302, Government Code. The record system shall include a compilation of information concerning sales of real property within the boundaries of the appraisal district. The sales information maintained in the uniform record system shall be submitted annually in a form prescribed by the comptroller.
Acts 1979, 66th Leg., p. 2222, ch. 841, Sec. 1, eff. Jan. 1, 1980. Amended by Acts 1991, 72nd Leg., 2nd C.S., ch. 6, Sec. 4, eff. Sept. 1, 1991; Acts 2003, 78th Leg., ch. 1183, Sec. 4, eff. June 20, 2003.
Uniform Standard of Professional Appraisal Practice Standards
The USPAP Standards may be obtained from the Appraisal Foundation,1029 Vermont Avenue, NW, Suite 900 Washington, DC 20005-3517, Phone: 202/347-7722, FAX: 202/347-7727, or they may be viewed on the Internet at the following location: www.appraisalfoundation.org.
International Association of Assessing Officers Standards
International Association of Assessment Officers (IAAO) Standards of Assessment Practice. The standards can be obtained from the IAAO Office, 130 East Randolph St., Suite 850, Chicago, IL, 60601. Phone 312/819-6100, Fax 312/819-6149, Web site: www.iaao.com.
Appraisal Standards Review Protocol
188.8.131.52 Determine County Appraisal District’s Compliance with Appraisal Standards and State Laws
184.108.40.206 Review of the Board of Directors
The quality of the property tax system depends on the appraisal district’s Board of Directors. Individuals serving on the Board of Directors bring to the board knowledge, judgment and expertise in establishing policies and procedures for the district’s organization and operation.
220.127.116.11 Activities to be Performed
Successful Respondent(s) must perform all of the following deliverables and include findings, commendations, and relevant written recommendations in the written draft and final reports:
A. Examine the current budget for the District for compliance with Texas Tax Code requirements as set forth in Section 6.06 and where deviations are noted, discuss the deviations and suggest possible remedies;
B. Examine the most recent District financial audits and determine how the District has addressed the findings in the management letter or any noted material weaknesses. If material weaknesses are present, make specific recommendations for immediate remediation if the District has not already taken steps to rectify the situation. Discuss any findings that have not been remedied and suggest ways to address these issues; and
C. Examine all contracts entered into by the District for the last year to determine compliance with the Tax Code and Subchapter C, Chapter 271, Local Government Code. Where deviations are noted, discuss the deviations and make recommendations to bring the District into compliance with state laws and regulations.
3.5.2 Review of Appraisal District Policies, Procedures & Operations
In organizing and administering a county appraisal district, the Chief Appraiser is responsible for hiring, firing, and training personnel, for ensuring compliance with a wide range of legal requirements and for the maintenance of policies and procedures for the effective appraisal district office operations.
18.104.22.168 Activities to be Performed
Successful Respondent(s) must perform all of the following deliverables and include findings, commendations, and relevant written recommendations in the written draft and final reports:
A. Review the District’s policies and procedures and note and discuss all efforts aimed at compliance and note any deviations from law, regulations or rules. Make comprehensive, well-reasoned recommendations to remediate any exceptions or non-compliance found to be applicable;
B. Examine the District’s application forms to determine whether the forms are in compliance with Comptroller’s Rules found at 34 Texas Administrative Code (TAC) Sections 9.402, 9.415, 9.417, and 9.419. Where applications do not comply with any of the foregoing rules, the exceptions or non-compliance must be identified, noted and recommendation must be made to outline the necessary changes required to achieve full compliance;
C. Examine a sample of the District’s appraisal records to determine whether the records conform to the requirements set forth in Comptroller’s Rule found at 34 TAC Section 9.3059, as well as with Section 26.01, Tax Code. Where deviations are noted, Successful Respondent must make recommendations to ensure compliance; and
D. Examine the District’s documentation for evidence of compliance with certification of the appraisal roll to each taxing unit as required by law. If certifications were not done timely, determine the reason for the delay and determine what actions have been taken to ensure compliance in the future. Additionally, where applicable, make recommendations for improvements that will ensure full compliance.
3.5.3 Evaluation of the Appraisal District’s Information Processing System(s)
The Successful Respondent must conduct a comprehensive examination and evaluation of the information processing system, including the systems and information technology operations, in each county appraisal district reviewed under the Review Contract.
22.214.171.124 Activities to be Performed
Successful Respondent(s) must perform all of the following deliverables and include findings, commendations, and relevant written recommendations in the written draft and final reports:
A. Examine documentation on the real property discovery methods utilized by the District to determine whether the District is in compliance with Section 23.12, Tax Code, as well as IAAO and IAAO on Personal Property. Where deviations are noted, discuss and make recommendations for improvement;
B. Examine the internal control mechanisms within the District’s information management system(s) to determine whether sufficient controls exist to ensure uniformity and accuracy of appraisals. Evidence that additional controls may be needed may be found by examining measures for uniformity, such as a ratio study, as outlined in the Uniform Standards of Appraisal Practice (USAP). Where control weaknesses are noted, discuss and make recommendations for improvement;
C. Examine the District’s method of obtaining and entering sales information to determine if the methods used are in compliance with USAP. Where system or procedural weaknesses are noted, discuss and make recommendations for improvement;
D. Examine the District’s method for verifying and confirming sales data gathered to determine whether the methods used are in compliance with the USAP. Where system or procedural weaknesses are noted, discuss and make recommendations for improvement;
E. Examine the District’s method of maintaining its sales files, including the written procedures for maintaining the District’s sales file. In this regard, Successful Respondent must check the District’s procedures for adequacy. Where system or procedural weaknesses are noted, discuss and make recommendations for improvement;
F. Examine all documentation and output to determine whether the current District information system adequately ensures compliance with applicable Comptroller rules; and
G. Determine whether the District is in compliance with Tax Code on granting, verifying, and denying exemptions, and or special appraisals, as shown in Subchapters A, B, and C of the Tax Code. Where system or procedural weaknesses are noted, discuss and make recommendations for improvement.
3.5.4 Review District Staffing, Personnel Qualifications & Positions
The Successful Respondent must conduct a comprehensive examination and evaluation of the District’s Staffing, Personnel Qualifications, and the system of positions, as well as assess the human resources in the District available to perform District functions in each county appraisal district reviewed under the Review Contract.
126.96.36.199 Activities to be Performed
A. Examine the qualifications of District staff to determine compliance with certifications and other legal requirements. Note any areas of deviation from the law and recommend improvements; and
B. Examine the District’s policies on staff conflicts of interest and note any deviations from law, as well as make recommendations and commendations for achieving full compliance.
3.5.5 Compliance with Generally Accepted Appraisal Practices; Equality & Uniformity of Appraisal Standards.
In general, in appraisal circles there are three approaches to value — cost, income, and market — that a Chief Appraiser must consider in determining the market value of property. The Chief Appraiser must consider all three and use the method most appropriate in appraising a particular property. These three approaches are outlined below.
188.8.131.52 Appraisal Methods
Additional information about the approaches to determining or appraising value may be found in appraisal textbooks. Appraisers usually determine the value of producing mineral deposits—such as oil, gas, and coal—by using the income approach to value. Most appraisal districts contract with consultants to appraise mineral properties. The Chief Appraiser can provide information concerning the method used to appraise certain mineral properties.
When using the cost method of appraisal, the appraiser will:
1. use cost data obtained from generally accepted sources;
2. adjust appropriately for physical, functional, or economic obsolescence;
3. make available to the public on request, for a reasonable charge, cost data developed and used by the chief appraiser on properties within a property category;
4. state clearly the reason for any variation between generally accepted cost data and locally produced cost data, if the data vary by more than 10 percent; and
5. make available to a property owner on request all applicable market data that demonstrates the difference between an improvement’s replacement cost and the improvement’s depreciated value.
When using the income method of appraisal, the appraiser will:
1.analyze comparable rental data available to the chief appraiser or the potential earnings capacity of the property, or both, to estimate the gross income potential of the property;
2.analyze comparable operating expense data available to the chief appraiser to estimate the operating expenses of the property;
3.analyze comparable data available to the chief appraiser to estimate rates of capitalization or rates of discount; and
4.base projections of future rent or income potential and expenses on reasonably clear and appropriate evidence.
When using the market data comparison method of appraisal, the appraiser will use comparable sales data and adjust the comparable sales data to the subject property.
184.108.40.206 Special Use Property Appraisals.
The Tax Code also requires appraisers to use special methods or principles for the following type of property: Land qualifying for agricultural or timber appraisal (Chapter 23, subchapters C, D, E and H); (See Appraisal Standards for Uniformity and Equality as well as Tax Code, Sections 23.01, 1.43, and 42.26).
A. Examine use of special methods by district. Report any findings.
3.5.6 International Association of Assessing Officers (IAAO) Standards on Ratio Studies and Uniform Standards of Professional Appraisal Practices Standard 6.
220.127.116.11 Activities to be Performed.
1. Examine the district’s re-appraisal plan for the last two years to see if it complies with Section 25.18, Tax Code, and the guidelines set out in the Comptroller’s Board of Directors Manual. Where deviations are noted, discuss and make recommendations for improvement;
2. Examine appraisal manuals for each category of property to determine compliance with the Uniform Standard of Professional Appraisal Procedures and International Association Assessing Officers (IAAO) Standard on Appraisal. Where deviations are noted, discuss and make recommendations for improvement;
3. Examine the District’s cost approach system for compliance with the Uniform Standard on Professional Appraisal Practice, IAAO, and Tax Code. Where deviations are noted, discuss and make recommendations for improvement;
4. Examine the District’s income approach system for compliance with the Uniform Standards on Professional Appraisal Practice, IAAO Standard on Appraisal, and Tax Code. Where deviations are noted, discuss and make recommendations for improvement;
5. Examine the District’s sales comparison system for compliance with the Uniform Standards on Professional Appraisal Practice, IAAO, and Tax Code. Where deviations are noted, discuss and make recommendations for improvement;
6. Examine the District’s agricultural use appraisal system and procedure’s for granting and verifying qualified lands for compliance with the Tax Code, Comptrollers Agricultural Manual, and Wildlife Management Guidelines. Where deviations are noted, discuss and make recommendations for improvement;
7. Examine the District’s timber appraisal system and procedures for granting and verifying qualified lands for compliance with the Tax Code and the Comptroller’s Timber Manual. Where deviations are noted, discuss and make recommendations for improvement;
8. Examine the District’s personal property appraisal system and procedures for discovery and verification of personal property for compliance with the Tax Code, IAAO Standard on Personal Property, and Uniform Standards of Professional Appraisal Practice. Where deviations are noted, discuss and make recommendations for improvement;
9. Assess the District’s compliance with Uniform Standard of Appraisal Practice and standards promulgated by the IAAO. Where deviations are noted, discuss and make recommendations for improvement;
10. Evaluate the District’s consistency in appraisal practices by reviewing ratios for uniformity and equality among the following categories of property: single family residential real property; multi-family residential real property; vacant lots and tracts; real property acreage; farm and ranch improvements; commercial real property; industrial real property; oil, gas, and other mineral property; non-business vehicle; utility real and personal property; commercial business personal property; industrial business personal property; non-business tangible personal property; intangible personal property; and residential real property inventory;
11. Examine the District’s procedures for using sales in the appraisal process and confirm that procedures are written and updated. Determine whether these procedures and the corresponding computer system used to maintain that data is adequate and in compliance with generally accepted standards. Where system or procedural weaknesses are noted, discuss and make recommendations for improvement; and
12. By examining ratio studies conducted by the District and methods, procedures and output measures produced determine what output measures are produced and how they are used in the process to ensure compliance with Uniform Standards on Appraisal Practice and IAAO Standards. Where system or procedural weaknesses are noted, discuss and make recommendations for improvement.
Lexington School District Summary Worksheet
Lexington School District Confidence Interval Detail
Texas Comptroller of Public Accounts
Property Tax Division
International Association of Assessing Officers
Self Evaluation Questionnaire
Lee County Appraisal District
Chapter 1: Setting, Legal Framework, Value Standard and Assessment Cycle
1. What does the assessment office do to keep current with legislative proposal, laws, and court decisions?ATTEND LEGISLATIVE UPDATE SEMINARS, REGIONAL TAAD MEETINGS AND INFOR IS GIVEN TO US FROM OUR ATTORNEYS.
2. Does the law require general uniformity in property taxation?YES
3. What measures in the law support a current market value standard, and what matters undercut such a standard?
4. Does the assessment district have the size, resources and fiscal capacity to perform the assessment function effectively and efficiently?YES
Chapter 2: Resources and Management
1. Does the assessment office engage in formal planning?
2. Has the assessment office prepared a formal estimate of resources it requires?
3. Is office space sufficient, and are other facilities adequate?YES
4. Are performance- or program-based budgeting methods used?
5. Is the office’s funding adequate?YES
6. Does the staff have the right skills?YES
7. Is the assessment office well organized?YES
8. Is the staff well managed?YES
9.Are skills in procurement and contract management sufficient?YES
10.Is the staff quality-conscious?YES
Chapter 3: Computerization
1. Do you have at least one computer workstation (terminal or personal computer) for each appropriate staff member?YES
2. Does the infrastructure provide for the following services? (See page 23)
3. Is the system based on a database management system (DBMS)—preferably a relational DBMS—that provides integration possibilities with other applications not provided by the base system?YES
4. Does the assessment office maintain data security and integrity including an audit trail of changes in records the affect assessments?YES
5. Does the computer system adequately address issues of security and privacy?YES
6. Does the system provide query/reporting tolls to allow advanced users to work independently of programming personnel in addressing needs that had not been anticipated at the time the system was first installed?YES
7. Does the computer system support multiyear processing?YES
8. Does the office provide public web access to information and services?YES
9. Does the system provide geographic information services (GIS) capabilities?YES
10. Does the system provide advanced workflow processing and management?YES
11. Does the system offer the ability to manage document images or photo imagery?YES
Chapter 4: Mapping
1. Does the assessment office maintain a complete set of cadastral maps showing the size, shape, and location of each parcel in the jurisdiction?YES
2. Are maps maintained using professionally accepted standards for size, scale, payout, lines, symbols and the like?YES
3. Are parcel splits and combinations noted on maps within one month of a deed’s recordation?
NO, BUT IN THE PROCESS OF CHATCHING UP, CONTRACTED WITH AND OUTSIDE FIRM
4. Are all parcels assigned a parcel identifier that uniquely identifies the parcel?YES
5. Are geographic coordinates displayed on cadastral maps?YES
6. Does the assessment office maintain map representations of spatial assessment areas and the valuation influence?YES
7. Does the assessment office have computerized maps?YES
8. Are the assessment office’s maps and records part o f a multipurpose GIS or US?GIS
Chapter 5: Data Collection
1. Do computer records contain information on current property use, highest and best (most probable) use, and indicators of legal uses, such as zoning?YES
2. Does the assessment office maintain computerized data on land attributes important in the local market?YES
3. Does the assessment office physically inspect properties at least every four to six years?YES
4. Does your assessment office regularly obtain copies of building permits, occupancy permits, or both, and does it conduct physical inspections of affected properties?YES
5. Does the assessment office maintain only data necessary in valuation or the support of values?YES
6. Is the residential property record card well designed and supported by a data-coding manual and training program?YES
7. Does your office use a hand held computer for field data collection?YES
8. Does the assessment office have a computerized edit program that includes both range and consistency checks?YES
9. Are data for commercial properties collected by experienced appraisers?YES
10. Does the assessment office have a program of routinely collecting income data for apartment buildings, retail stores, office buildings, and other commonly leased or rented properties?YES
Chapter 6: Land Evaluation
1. Are land sales reviewed, confirmed, and maintained in a sales file?YES
2. Do you stratify land by zoning or use and by location?YES
3. Are land sales analyzed in terms of value per unit, and are the per unit values plotted on maps?
YES AND YES
4. In downtown and other high density commercial areas, are standard unit values assigned to each block face?YES
5. Does the assessment office use market-derived tables to make size or depth adjustments?
6. Does the assessment office have a standard procedure for adjusting land values for shape or corner location, and are the adjustments based on market analysis?
BASED ON MARKET
7. Are adjustments made for positive location (situs) factors, such as golf course frontage, other premium frontage, premium view, or negative situs factors, such as excess traffic, limited access, adverse topography?YES
8. Does the assessment office use spreadsheets or statistical software to help develop land values?YES
9. Does the assessment office use a geographic information system to assist in data quality control and fine-tuning valuation models?YES
10. In built-up areas with few vacant land sales, does the assessment office use the abstraction, allocation, or land residual capitalization methods to derive standard unit values?YES
11. Does the assessment office use the cost-of-development method in the appraisal of large tracts of land awaiting development?YES
Chapter 7: Residential Property Valuation
1. Does the assessment office place primary emphasis on the sales comparison approach in the appraisal of subdivision homes, condominiums, and town homes?YES
2. Are sales ratios analyzed by neighborhood, size, age, and other key features during the appraisal process?YES
3. Are value estimates reviewed by appraisers and reconciled before generation of final values?YES
4. Are comparable sales readily available and used for residential property valuation, analysis, and value support?YES
5. Are statistical models technically sound and the coefficients reasonable?YES
6. Are cost schedules checked against local buildings of known cost and adjusted as necessary?
WE USE MARSHALL AND SWIFT COST HANDBOOK
7. Are cost schedules fully computerized?YES
8. Are depreciation schedules based on sales analysis?
BASED ON MARSHALL AND SWIFT
Chapter 8: Commercial Property Valuation
1. Does the assessment office employ the three approaches to value in appraising business properties?YES
2. Has the assessment office defined separate market areas or neighborhoods for business properties?YES
3. Does the assessment office make a comprehensive effort to collect local income and expense data?YES
4. Does the assessment office use commercial publications to help in the development of rental rates, vacancy ratios, expenses and expense ratios, and capitalization rates?
NO WE USE LOCAL INFORMATION AND SURROUNDING COUNTY INFORMATION
5. In the income approach, does the office maintain automated income data to analyze reported sales, revenue, and expense data to develop the following: typical market rents and other income, vacancy ratios, expense ratios, capitalization rates and/or gross rent multipliers?YES
6. Are available sales used to: Help derive capitalization rates and income multipliers? Help calibrate depreciation schedules? Develop benchmark per-unit values or build market models?YES
7. In the cost approach, have base rates and cost factors been developed from local cost data or adjusted to the local market?YES
8. Are observed physical condition, economic obsolescence, and functional obsolescence considered in estimating total depreciation?YES
9. Are automated value estimates reviewed and reconciled by senior appraisers?YES
10. Does your assessment office employee software tools in analyzing commercial properties?YES
Chapter 9: Sales Data, Ratio Studies, and Stratification
1. Are real estate sales properly screened?YES
2. Does the assessment office’s computer system maintain a “snapshot” of properties at time of sale?YES
3. Are sales used in valuation analyses and ratio studies adjusted to the valuation date?YES
4. Has the assessment office stratified residential properties by market area and sub-area (neighborhood)?YES
5. Are ratio studies conducted in a timely manner?YES
6. Does the assessment office use ratio studies in planning and determining reappraisal priorities?YES
7. Does the assessment office conduct ratio studies by property groups and subgroups?YES
8. Does the assessment office have the capability of running ratio studies by user-selected combinations of property characteristics?YES
9. Does the ratio study program compute standard measures of level and uniformity and confidence intervals?YES
10. Does the ratio study software have graphics capabilities?YES
11. Does the assessment office supplement ratio study analyses with tests to ensure that unsold properties have been appraised similarly to properties that have been sold?YES
Chapter 10: Personal Property Assessment
1.Does the assessment office systematically employ several methods to discover taxable personal property?YES
2.Does the assessment office deliver personal property declaration forms to owners of taxable personal property?YES
3.Does the assessment office follow up on nonreturns by making supplemental mailings, filed inspections, and estimated assessments?YES
4.Are personal property reporting forms tailored to the needs of different businesses and industries, and do they collect the appropriate data including information on fully depreciated items?YES
5.Does the assessment office coordinate real and personal property field inspections to ensure the fixtures, trade fixtures, and leasehold improvement are identified and properly classified?YES
6. Does the assessment office audit returns and inspect businesses to ensure complete and accurate reporting?YES
7. Does the assessment office employ all appropriate approaches to appraisal in valuing personal property?
8. In the cost approach, does the assessment office maintain separate cost trend and depreciation indexes for each class of personal property?YES
9. Does the assessment office use price guides to value items that are frequently sold as used items?YES
10. Does the assessment office use the income approach to value leased equipment?NO
Chapter 11: Assessment Administration
1. Does the assessment office update ownership and legal description information within thirty days of a transfer being recorded?
NO BECAUSE WE ARE UNABLE TO GET NEW DISKS FROM CLERK MORE THAN ONCE A MONTH, THEN IT TAKES ABOUT 2 WEEKS TO GET THEM ENTERED INTO OUR SYSTEM
2. Do computer records contain the source of all appraised or assessed values?YES
3. Does the assessment office verify eligibility for exemptions or other relief?YES
4. Do you ensure that properties are assigned to the correct tax rate area?YES
5. Do you notify property owners by mail of the amount and reason for changes in appraised and assessed values, as well as of their right to appeal?YES
6. Does your jurisdiction produce computerized assessment rolls or listings, recapitulations of the rolls, and indexes to all of the properties on the assessments rolls or listings?YES
Chapter 12: Defense of Values
1. Does a supervisory agency or review body have the power to review values and valuation methods on its initiative, or is the assessment office required to submit valuations to a regulatory body for approval before taxes can be levied?
SUBMIT THE VALUES TO THE APPRAISAL REVIEW BOARD FOR CERTIFICATION
2. Are owners and taxpayers encouraged to discuss concerns and complaints with the assessment office before lodging a formal appeal?YES
3. Do you track the status of each formal appeal to ensure that it is appropriately disposed of and that records are properly updated?YES
4. Does your office have a documented process for handling formal appeals?YES
5. When the valuation is difficult and considerable value is at issue, does the assessment office obtain an independent review from another appraiser as part of the defense in a formal appeal?NO
Chapter 13: Public Relations
1. Are you required to submit information to a regulatory body for approval?YES
2. Does your office have an active public relations program that reaches out to the public?YES
3. Does the assessment office have an active program of public appearances to keep the public informed of actions that may affect them?YES
4. Can property records be accessed by parcel identification, situs address, and owner?YES
5. Does your office take advantage of automated mapping or GIS to facilitate public access to information?YES
6. Does the assessment office have available for public distribution a nontechnical description of how property is assessed, of appeal rights and procedures, of exemptions and other forms of tax relief, and of how property tax bills are calculated?YES
PROPERTY VALUE STUDY
This section presents an overview of the Property Value Study and then explains the procedures in detail for those wanting more in-depth knowledge of the Study.
2.1 The Property Value Study
The Property Value Study (Study) is conducted annually by the Comptroller to estimate the taxable property value in each school district and to measure county appraisal district performance. It is often referred to as a ratio study because it uses the appraisal roll values divided by market value. The appraisal roll value is the property value estimated by the local appraisal district. Market value, in simple terms, is the price for which a property would sell under normal conditions.
Primary Purpose of the Property Value Study
The primary purpose of the Study is to ensure that state funds for public schools are distributed equitably.
In Texas, public education is funded through a combination of state and local funds. Local funding comes from local property taxes. The chief appraiser of each county appraisal district (CAD) determines local property values, and school districts set tax rates that determine the amount of local tax revenue. State funding is based on the total taxable property value within each school district as determined by the Study.
The Commissioner of Education uses the Study to ensure equitable distribution of education funds so that school districts have roughly the same number of dollars to spend per student, regardless of the school district’s wealth, or lack of wealth. School districts with less taxable property value per student receive more state dollars for each pupil than districts with more value per student. The state’s fair distribution of school funding depends largely on the Comptroller’s taxable value findings.
School Funding Equity Example
Relying solely on the values set by the 253 Texas appraisal districts could result in inequitable school funding in some school districts. For example, assume that two school districts, school district A and school district B, are identical in every respect except that the appraisal district for school district B does a better job appraising property than the appraisal district for school district A. Appraisal districts are required to appraise most property at market value—in short, a property’s fair selling price. If property values in school district A are at 75 percent of market value, while property values in school district B are at 100 percent of market value, school district A would appear to have less taxable property value per student than school district B. Accordingly, more state funding would flow to school district A, even though the two districts have the same number of students, the same taxable property value and are alike in every way. This is clearly an unfair result.
Court Challenges/State Response
A series of court cases brought in the 1980s by poor school districts challenged the Texas funding system. One of the issues was that property values were not set at uniform percentages of market value in each school district, resulting in an unfair distribution of funds. As part of its response to these court challenges, the legislature directed the Texas Comptroller to provide an independent estimate of taxable property value in each school district to ensure fair school funding—providing more money to those districts that are less able to raise money locally because of insufficient taxable property wealth.
The independent estimate is accomplished through the Study by adjusting school district property values to market value. If the locally appraised value in a school district (local value) is within an acceptable range of the adjusted value (state value), the Comptroller’s Property Tax Division (PTD) certifies the local value to the Commissioner of Education. If the local value is outside the acceptable range, PTD certifies the state value, unless the school district is eligible for a grace period—a two-year period when local value is used even though it is invalid.
The state funds districts based on either the local value or the state value – depending on which was certified. The state values do not directly affect local property taxes, which are based on the local appraised values provided by each appraisal district. If state value is used in the funding formula, however, it normally is higher than the local value and causes the school district to receive less money than expected. For this reason, school districts should monitor the efforts of their appraisal districts to maintain market values and should encourage them to perform accurate appraisals.
Chapters 41 and 42 of the Texas Education Code describe how the findings of the Study are used in the school funding formula to determine state aid. For questions about state aid or the funding formula, contact the Texas Education Agency at 512/463-9238.
The secondary purpose of the Study is to provide taxpayers, school districts, appraisal districts and the Legislature with measures of appraisal district performance and to provide accountability for appraisal districts that fail to meet certain performance standards. PTD staff achieves this by publishing measures of appraisal level and uniformity, conducting performance audits and appraisal standards reviews.
Appraisal Level and Uniformity
Section 5.10 of the Property Tax Code requires the Comptroller to measure appraisal district performance annually and to publish the results. PTD measures the level and uniformity of property tax appraisals in each appraisal district using data collected in the annual school district study. The level of appraisal shows whether the district has appraised typical properties at 100 percent of the legally required level—normally the market value. The uniformity of appraisal indicates how much the percentage of market value varies from property to property.
The school district study required by Section 403.302 of the Government Code and the appraisal district study required by Section 5.10 of the Property Tax Code are jointly referred to as the Comptroller’s Property Value Study.
Appraisal Standards Reviews
In addition to the performance audits, Section 5.102, Government Code requires the Comptroller to perform an appraisal standards review of the appraisal district(s) serving a school district that receives a grace period. This review produces a report with recommendations for improving their appraisal procedures so that future studies will validate their property values. And, as with the performance audits, the affected school districts will receive a copy of the Comptroller’s findings so that they can work directly with their appraisal district to remedy any problems. The school district, through its appraisal district, can prevent any adverse funding consequences by achieving valid values in the year after the two-year grace period. It can also meet an important requirement for re-establishing eligibility for a future grace period by achieving valid values for two years in a row. If the appraisal district fails to take remedial action within a year of the report’s issuance, the Comptroller is required to notify the judge of each district court in the county. The district judge would be required to appoint a five-member board of conservators to take control of the appraisal district. The board of conservators would supervise the appraisal district until all its component school districts’ values are found valid in the Study.
Other Legal Requirements
The Government Code, Section 403.302, requires the Texas Comptroller to conduct the school district taxable value portion of the property value study.
Taxable value is the estimated property wealth of each school district. By law, it equals the market value of all property in a district, minus certain exemptions and deductions. The Comptroller’s estimated taxable value reflects deductions for state-mandated homestead, disabled veterans’ exemptions and value limitations. Deductions are also made for reinvestment zones, freeport exemptions, productivity appraisal of qualified agricultural lands, and the school tax ceiling for homeowners over age 65 or disabled, and other state-mandated exemptions.
In estimating school district taxable values, the Government Code requires the Comptroller to:
- use generally accepted sampling, valuation and statistical techniques;
- ensure that different levels of appraisal on sold and unsold property do not adversely affect the accuracy of the Study; and
- test the validity of taxable values and presume that appraisal roll values are correct when values are valid.
Margin of Error
The Comptroller tests the validity of the taxable values assigned to each category of property by the appraisal district as required by the Code by constructing a statistical margin of error around the Comptroller’s estimate of value for selected property categories in each school district. Values are presumed valid when they are within the error margin. The margin of error is plus or minus 5 percent of the state value at a minimum, but may be higher.
Local Value Above Market Value
Even though a school district’s local value is invalid, the law requires the Comptroller to certify the local value if the local value is higher than the state value. This requirement prevents a school district from receiving extra state funding based on a lower state value while receiving local funds from taxes on property that is appraised above market value.
The Government Code also requires the Comptroller to use the local appraisal roll values to estimate the total taxable value in an eligible school district for up to two years even when the local appraisal roll values are invalid. This is known as a grace period. A school district is eligible for the grace period if it meets three conditions:
- the district’s values are invalid in the most recent property value study;
- the district’s values were valid in the two studies preceding the most recent study; and
- the district’s local value is above 90 percent of the lower threshold of the margin of error.
The Study is an annual project by PTD staff with the assistance of appraisal districts and taxpayers. The Study begins in February each year and concludes in July of the following year. A new Study begins while the previous year’s Study is being modified by protests, so there is considerable overlap.
Under the Government Code, the agency must certify the preliminary findings of taxable value for each district before February 1 of the year following the year under study. The agency delivers the findings to school and appraisal districts and also certifies them to the Commissioner of Education. Districts that wish to protest preliminary value findings must do so within 40 days after the date of preliminary certification.
The Comptroller publishes the results of the appraisal district study simultaneously with the school district study and distributes copies to all appraisal districts and members of the Legislature. Although the Property Tax Code does not give appraisal districts the right to protest Study findings, the Comptroller allows appeals of level and uniformity measures in an effort to enhance fairness and accuracy.
After Study protests are complete, the Comptroller certifies final values to the Commissioner of Education on or about July 1. The Commissioner uses the final values to adjust school district funding the following September.
The Government Code and the Property Tax Code require the Comptroller to develop ratios and value estimates for property categories and to combine information on the various property categories into overall estimates.
The property categories generally used are:
A. real property: single-family, residential;
B. real property: multifamily, residential;
C. real property: vacant lots and tracts;
D/E. real property: acreage at market value, and farm and ranch improvements;
D1. real property: acreage at productivity value;
F1. real property: commercial;
G. real property: oil, gas and other minerals;
J. real and tangible personal property: utilities; and
L1. personal property: commercial.
SCOPE AND OBJECTIVES
An appraisal standards review (ASR) examines and evaluates a county appraisal district’s (CAD) appraisal practices including appraisal planning, appraisal procedures and methodology, and application and adherence to appraisal standards. The review assesses the comprehensiveness of the district’s procedure manual and IT appraisal support systems and staff qualifications to perform appraisals efficiently and effectively. The review determines whether the CAD is in compliance with generally accepted appraisal standards and practices. District practices, standards and procedures are evaluated against Texas property statutes and rules, the Uniform Standards for Professional Appraisal Practices (USPAP) and the International Association of Assessing Officers Standards (IAAO).
The two principal focuses of the review are to determine why a school district served by the CAD was deemed eligible and whether or not the appraisal district is in compliance with generally accepted appraisal standards and practices.
The review evaluates five broad areas of CAD functions for equality and uniformity, including district information processing systems, district staffing, property mapping and discovery, appraisals and appraisal standards.
The review is not a performance audit and does not evaluate district functions that do not support the district appraisal process. Items not reviewed include board minutes, notices, applications, exemptions, collections and appraisal review board procedures.
As the result of the review process, the Comptroller will issue a report of its findings that includes recommendations for change and commendations for exemplary district appraisal practices. The appraisal district will have one year to implement the recommendations.
The review process will use a Comptroller-developed protocol to assess the district’s compliance with appraisal standards. The process will include a review of the final Property Value Study results, a self-assessment questionnaire, a review of documents submitted by the district in response to a preliminary data request, interviews of the CAD’s chief appraiser, appraisal staff and appraisal firms, an assessment of the district’s mapping system, procedures and practices, and, as necessary, a review of a select sample of appraisals.
Limitations of Scope
The appraisal standards review was limited to appraisal district’s operations directly related to appraisal functions.
The objectives of this audit were to:
- determine the extent to which the appraisal district complies with applicable laws or generally accepted standards for appraisal or other relevant practices;
- determine the cause for any significant deviations from ideal uniformity and equality;
- report on the general efficiency, quality of service and qualification of appraisal district personnel; and
- provide recommendations and assistance to help the appraisal district provide a more equitable and effective appraisal system.
2003 PVS STATISTICAL ASSESSMENT
From a statistical standpoint, the 2003 PVS found that the following were contributing factors to an overall finding of an invalid value in Lexington ISD:
- Category A, Residential Properties, with a weighted mean ratio of 0.9413, and
- Category D, Rural Real Land, with a weighted mean ratio of 0.9397.
Districts with a ratio of 0.95 to 1.05 are typically in compliance.
METHODOLOGY OF REVIEW
This chapter of the report includes the basics of the methodology used for the review.
The following methodology was used to accomplish the objectives of this review:
1. Reviewed and analyzed existing documents. Reviewed written policies and procedures of the district to develop an understanding of the appraisal district’s operations. This included reviewing the following:
a) appraisal schedules and guidelines;
b) reappraisal plan;
c) annual financial audit;
d) appraisal district budget; and
e) policies and procedures manuals.
2. Conducted interviews. Interviewed the chief appraiser and senior appraiser.
3. Reviewed the records system. Reviewed samples of appraisal cards, the appraisal roll, exemption and agricultural-use valuation applications to determine the extent to which the appraisal district complies with the Tax Code and Comptroller’s rules.
4. Developed recommendations. Compiled and analyzed the results of interviews, tests, inspections, and document reviews and determined alternative operating procedures.
5. Prepared a report of findings, recommendations and commendations. A draft of the report was prepared by the review staff, circulated for agency comment and the updated draft of the report was delivered to the appraisal district for review and comment.
6. Report finalized and published. The district’s comments on the report were reviewed and addressed as appropriate, the report was set in its final format, published in paper and electronic form and distributed as directed by law(s) and agency guidelines.
The Tax Code and Comptroller rules were the major criteria used to measure the appraisal district’s performance. The evaluation of the appraisal district’s appraisal methods was based on a comparison of local methods and procedures to those generally accepted by the mass appraisal industry in Texas. The Tax Code dictates certain appraisal procedures or standards such as the Uniform Standards of Professional Appraisal Practice (USPAP), specifically Standard 6: Mass Appraisal and Standard 7: Personal Property. Also the International Association of Assessing Officers (IAAO) Standards on Assessment were used as guidelines on the operation of an assessment office. All related standards as required by Section 23.01 of the Tax Code were used.