Appraisal Standards Review
Nueces County Appraisal District Follow-Up Report
June 2007
Introduction
In July 2004, the Robstown Independent School District (ISD), Banquete ISD and Flour Bluff ISD, in Nueces County, Texas, were identified as three of 54 school districts in the state meeting the criteria that initiate an Appraisal Standards Review (ASR) of its county appraisal district (CAD).
In July 2005, the Comptroller’s Property Tax Division (PTD) released the results of an ASR of Nueces County Appraisal District. The report made five recommendations to improve Nueces CAD’s appraisal practices and operations. ASRs are intended to determine why the local value is invalid and to recommend changes in operations and management that would improve appraisal practices. The Nueces CAD review team evaluated five functional areas: board of directors; appraisal district policies, procedures and operations; information processing systems; staffing, personnel qualifications and positions; and generally accepted appraisal practices, equality and uniformity of appraisal standards.
At the time of the review, Nueces CAD faced a number of challenges including:
- using a modified cost approach using market data to adjust cost-driven schedules on lower-value property when there are insufficient sales;
- improving fiscal management functions; and
- using the district’s Geographic Information System (GIS) more effectively.
Texas Property Tax Code Section 5.102(d) requires that if the appraisal district fails to comply with the recommendations in the report and the Comptroller finds that the board of directors of the appraisal district failed to take remedial action before the first anniversary of the date the report was issued, the Comptroller must notify the judge of each district court in the county for which the appraisal district is established. The judge(s) must appoint a five-member board of conservators to implement the recommendations. The board of conservators exercises supervision and control over the operations of the appraisal district until the Comptroller determines, under Section 403.302 of the Government Code, that the taxable value of each school district for which the appraisal district appraises property is the local value for the school district. The appraisal district shall bear the costs related to the supervision and control of the district by the board of conservators.
For the one-year follow-up report, an appraisal district is in compliance with the statute if it takes remedial action to implement the recommendations in the ASR. Remedial action means that the CAD has corrected or intends to correct, remedy or improve the deficiencies identified in the ASR. Remedial action generally is demonstrated by having implemented or nearly completed most of the recommendations by the first year anniversary of the release of the report. The Comptroller recognizes that some recommendations included in ASRs will require more than a year to implement. Some ASRs include more recommendations than a CAD with limited resources can implement within a year. As long as the CAD is working to implement the recommended actions, the Comptroller continues to work with the CAD to achieve full compliance. CADs that have completed all recommendations by the one year anniversary have met their statutory obligations and will not require additional monitoring.
In August 2006, PTD reviewed the progress made by Nueces CAD in implementing the recommendations found in the original report. Nueces CAD has fully implemented all recommendations.
PTD sent the Nueces CAD’s board members surveys soliciting their views and comments on the ASR. One board member responded, indicating strong agreement to all questions posed and that board members faced no “difficult” decisions because of the ASR.
PTD believes that Nueces CAD’s efforts meet the state’s legal requirements.
History and Significant Events
Nueces CAD received an ASR because the 2003 Property Value Study (PVS) found property values in Robstown ISD, Banquete ISD and Flour Bluff ISD to be invalid. The school districts were eligible for the “grace period” provided in Section 403.3011 of the Government Code. Single-family residential properties were the primary reason the schools’ values were not within the acceptable range determined by the study. The 2003 PVS reported the following ratios for residential properties in the three school districts as follows: Robstown ISD, .9198; Banquete ISD, .9291; and Flour Bluff ISD, .9203.
In the 2004 PVS, Nueces CAD received valid findings in all school districts.
The 2005 PVS, however, indicated the CAD’s values were low for residential properties in the Callallen and Agua Dulce ISDs. The 2005 PVS found the weighted mean ratio for single-family residences to be .9139 for the Calallen ISD and .9130 for Agua Dulce ISD. Furthermore, Agua Dulce ISD received local value for 2005. Calallen ISD had some market activity and became an eligible district in the 2005 PVS since it had not been reappraised.
In response to the ASR and ratio study results, the CAD took several steps to improve appraisal consistency and accuracy, including reorganizing the residential appraisal department, retraining residential staff appraisers and reworking residential classification schedules during 2005. Additionally, the CAD purchased software services from “Pictometry,” a digital, oblique aerial photography company. The company provides visual information the CAD will use in a variety of applications that are capable of integrating with the existing geographic information system (GIS) programs. The CAD installed the product in late 2005 and training took place August 24-25, 2006.
Status of Recommendations;
What Remains to Be Done
The Appendix lists the recommendations identified in the original report, with a summary of actions to date. The CAD has completed all five recommendations.
Appendix
Nueces County Appraisal Standards Review Implementation Status Report
2.1 Board of Directors
| Rec. # | Recommendation | Implementation Status | If Not Complete, Projected Completion Date | Description of Actions Taken to Date |
|---|---|---|---|---|
| 1 | Develop a timeline and guidelines for addressing audit findings in a timely manner. | Complete |
The chief appraiser developed procedures for addressing audit findings in late 2005. The procedures include a timeline for addressing audit findings/recommendations, procedures for planning corrective actions and a method for implementing the plan. The procedures require approval from the board of directors. |
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| 2 | Expand the detail of the budget presented to the Board of Directors for adoption to include salary and benefits for each employee. | Complete |
On July 12, 2006, the Board of Directors adopted the CAD's 2007 budget that includes a detail of the salaries and benefits associated with each position. The CAD presented the recommended details of the 2007 Proposed Budget to the board of directors on May 10, 2006, and the board approved it. |
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| 3 | Renegotiate the contract to include a list of properties to be appraised and include monitoring clauses that would allow the CAD to withhold payment until conditions are met. | Complete |
On October 12, 2005, the board of directors approved the contract with T.Y. Pickett & Co. for the term of January 1, 2006-December 31, 2007. The contract includes a list of properties for appraisal as well as a monitoring clause with dates for various appraisal processes and deliverables. |
Section 2.2 of the Nueces Appraisal Standards Review did not contain any findings or recommendations.
2.3 Information Processing Systems| Rec. # | Recommendation | Implementation Status | If Not Complete, Projected Completion Date | Description of Actions Taken to Date |
|---|---|---|---|---|
| 4 | Develop a timeline and procedures for integrating the district's appraisal and GIS systems to all properties in the county. | Complete |
The CAD has a GIS Implementation Plan dated July 10, 2005 that includes the following sections: Introduction, Recent Steps, Current Parcel Map Status, GIS Implementation Plan, Phase I-VIII and Summary & Conclusions. The plan includes a timeline that indicates 2005 and 2006 action items. In addition, the CAD provided a report dated June 30, 2006 that outlines the status of the GIS implementation. |
Section 2.4 of the Nueces Appraisal Standards Review did not contain any findings or recommendations.
2.5 Generally Accepted Appraisal Practices; Equality and Uniformity of Appraisal Standard
| Rec. # | Recommendation | Implementation Status | If Not Complete, Projected Completion Date | Description of Actions Taken to Date |
|---|---|---|---|---|
| 5 | Use a modified cost approach using market data to adjust cost driven schedules on lower value property when there are insufficient sales. | Complete | The CAD purchased the Marshall & Swift (M &S) Field Appraisal System software and the M &S Residential Cost Guide in January 2006 and used the data to develop a local modifier adjustment for the 2006 appraisal year. The residential appraisal department director provided examples of the ratio results and local modifiers that were developed and applied to the Nueces CAD Reappraisal Region 3, consisting of Agua Dulce ISD, Driscoll ISD, Bishop Consolidated ISD, Banquete ISD, Calallen ISD and Robstown ISD. The staff chose a representative sample for the different classes of properties in Region 3 and compared M &S results with available sales data. The staff then developed a local modifier as indicated by the ratio study results and applied it where necessary. Nueces CAD did not reappraise Calallen ISD in 2005 using the new cost schedules, even though there was a lot of sales activity. Nueces CAD anticipates Calallen ISD will be back in the margin of error in the 2006 PVS. |