Findings of the Appraisal Standards Review
This chapter of the report addresses the findings and recommendations from the appraisal standards review of the Rockwall CAD in five sections:
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.
The appraisal district was formed in January 1982 and became active in January 1983. The district Board of Directors consists of six members; one position is currently vacant. Current members of the board are listed in Exhibit 4.
Board of Directors Members
Board Member Represents Starting Date William Wiese, Chair City of Heath 1/1/2002 Frank Miller, Vice Chair City of Rockwall 1/1/2000 Johnny Gibbs, Secretary School & City, Royce City 1/1/2000 V. Clark Beaird Rockwall County 1/1/2004 Vacant Rockwall ISD - Kathryn Feldpausch, Non-Voting County Tax Assessor 1/1/1997 Source: Rockwall CAD, April 2005.
Kathryn Feldpausch, Rockwall County Tax Assessor-Collector, is an elected official.
The Board of Directors has the following primary responsibilities:
- establish the appraisal district's appraisal office;
- adopt the appraisal district's annual operating budget;
- contract for necessary services;
- hire a chief appraiser;
- hire a taxpayer liaison officer (districts in counties having a population of over 125,000);
- appoint appraisal review board members; and
- Make general policy on the appraisal district's operation.
The Board of Directors received a written survey about board activities. Three of the five board members responded. The survey was broken down into board policies and procedures, chief appraiser and staff, property appraisals, appraisal review boards, and budgeting and financial management. The board generally gave itself, the chief appraiser, and staff high marks for running the district. On the majority of questions, the board agreed or strongly agreed that the district was operating effectively. All three board members strongly agreed or agreed with the statement that "the board maintains a comprehensive set of policies and procedures to guide the operation of the appraisal district" and disagreed with the statement that "all board policies in my district are reviewed and updated at least every two years." The board members felt they did not evaluate the chief appraiser annually, but felt they did have a written job description and a performance plan for the chief appraiser. Two board members disagreed with the statement that "the external audit contract is periodically bid and the auditors are rotated periodically," as well as the statement "the board regularly monitors the performance of contracts after a contract is signed."
The Board of Directors hires a chief appraiser as the chief operating officer of the district.
Rockwall CAD's budget lacks the detail necessary to comply with Section 6.06 of the Tax Code.
Section 6.06 requires a listing of each proposed position including the salary and benefits for the position and each proposed capital expenditure and an estimate of the amount of the budget allocated to each taxing unit. Taxing units are also required to maintain a copy of the budget for public inspection at its principal administrative office.
Copies of the budgets for 2001 through 2005 were reviewed. Each budget contains a listing of each proposed staff position showing its proposed salary. The benefits allocated to each position, however, are shown as category totals rather than itemized for each proposed position. According to the budgets, benefits for fulltime staff include health insurance and retirement.
There was a significant changed made to the appraisal operating budget from the preliminary to the approved without any explanation. No changes were made to the collection budget.
Boards of directors are required by law to hold a public hearing on the budget. The board held the public hearing for the 2005 budget on July 13, 2004.
While the budget contains a great deal of information and detail, it does not follow the statutory provisions for listing of each proposed position including the salary and the benefits for the position. With a significant amount of the budget allocated to wages and benefits, both taxing units and the public need the detail on positions and benefits required by state law to be assured the number of staff in the district is sufficient to perform the work and that each staff member is fairly compensated.
Exhibit 5 is the appraisal district's approved budgets for the years 2001-2005.
Rockwall CAD Approved Appraisal Budgets
2001 - 2005
Category 2001 2002 2003 2004 2005 Appraisal Staff Salary Chief Appraiser $60,580 $63,000 $65,500 $70,872 $72,999 Asst. Chief Appraiser $48,900 $50,850 $53,688 $55,299 Commercial Appraiser $42,000 $45,450 $47,250 $47,250 $48,668 Senior Appraiser $39,260 $40,850 $42,450 $42,450 $43,724 Appraiser II $31,200 $35,000 $36,400 $36,400 $37,492 Appraiser I $31,200 $33,500 $34,505 Secretary $31,500 $33,100 $34,400 $34,400 $35,432 Mapper (Drafter) $29,100 $30,250 $31,450 $32,880 $33,867 Appraisal Clerk I $20,000 $21,000 $23,000 $24,500 $25,235 Appraisal Clerk II $22,000 $23,000 $25,000 $26,000 $26,780 Appraisal Clerk III $23,500 $24,500 $25,450 $26,640 $27,440 Records Clerk $24,000 $24,000 $24,720 Part Time $2,000 $2,000 $2,000 $2,000 Benefits Retirement $28,300 $30,000 $38,000 $42,000 $45,004 Group Insurance $48,730 $54,800 $75,425 $58,800 $60,000 Workmen Compensation $4,000 $4,200 $4,950 $5,500 $5,500 State Unemployment/FICA $5,900 $6,200 $6,200 $8,500 $8,500 Benefit Reserves $5,000 $5,000 $6,000 $6,000 $6,000 Social Sec/Deferred Comp $33,250 $30,000 $30,000 Expenses Auto Allowances $25,500 $25,500 $30,600 $30,600 $30,600 Computer $23,655 $4,135 $3,890 $3,890 $29,250 Additional Computer $24,725 $29,330 $34,780 $32,375 $32,415 Mapping $46,500 $26,500 $42,500 $36,500 $36,500 Building Mortgage $54,002 $54,002 $54,002 $54,002 $54,002 Equipment Rental $11,205 $10,465 $8,255 $7,255 $5,255 Legal Fees $15,000 $15,000 $15,000 $12,000 $15,000 Accounting / Audit $4,000 $4,000 $4,000 $4,000 $4,000 Bond Insurance $600 $600 $600 $600 $600 General Insurance $3,880 $4,000 $4,000 $5,500 $7,000 Liability Insurance $3,640 $4,000 $4,500 $6,000 $7,000 Professional Services $6,500 $6,500 $10,000 $10,000 $11,500 Legal Notices $600 $600 $600 $600 $600 Board of Review $10,000 $18,750 $22,500 $22,500 $22,500 Utilities $31,380 $35,760 $35,760 $35,640 $35,640 Bldg Maint/Repairs $21,320 $39,800 $39,800 $14,600 $15,680 Equip Maint/Repairs $3,800 $5,180 $5,180 $5,180 $5,680 Supplies/Materials $11,000 $12,650 $14,550 $14,000 $15,000 Postage $10,500 $12,000 $14,900 $14,900 $16,390 Registration/Dues $2,640 $3,000 $3,500 $3,500 $4,000 Travel/Education $6,000 $6,500 $7,000 $7,000 $7,500 Furniture/Equipment $7,100 $34,200 $6,750 $2,000 $4,500 Inhouse Appraisal Info $7,700 $9,500 $9,500 $7,500 $9,000 Contingency $3,000 $3,000 $3,000 $3,000 $3,000 TOTAL $725,317 $832,222 $977,942 $938,522 $995,777 Source: Rockwall CAD, 2005
Exhibit 6 is the appraisal district's collection budgets for the years 2001-2005.
Rockwall CAD Approved Collection Budgets
2001 - 2005
Category 2001 2002 2003 2004 2005 Collection Staff Salary Collection Director $36,800 $40,000 $37,600 $40,540 $40,540 Clerk II/System Admin $22,170 $24,000 $29,000 $30,947 $30,947 Clerk I $20,500 $22,000 $23,000 $24,578 $24,578 Receptionist $19,450 $21,000 $22,000 $22,400 $22,400 Part Time $2,000 $2,000 $2,000 $2,000 Benefits Retirement $7,000 $8,000 $9,750 $10,300 $15,000 Group Insurance $24,000 $24,000 $26,000 $25,200 $36,960 State Unemployment/FICA $2,000 $2,200 $2,500 $2,500 $2,500 Benefit Reserves $2,000 $2,000 $2,000 $2,000 $2,200 Social Sec/Deferred Comp $8,540 $7,500 $7,500 Expenses Auto Allowances $900 $900 $900 $900 Computer $10,050 $4,090 $4,090 $1,800 $14,250 Additional Computer $9,205 $10,972 $10,927 $11,500 $10,267 Accounting / Audit $3,850 $3,850 $3,850 $3,850 $3,850 Surety Bond $2,000 $2,000 $2,000 $2,000 $2,000 Legal Notices $1,400 $1,400 $1,400 $1,400 $1,400 Postage $9,485 $10,500 $13,000 $14,300 $15,730 Supplies $7,500 $8,600 $10,850 $10,850 $10,580 Education $1,800 $2,400 $2,400 $2,400 $3,000 Furniture/Equipment $1,700 $1,700 $4,500 $2,200 $4,500 Contingency $2,000 $2,000 $2,000 $2,000 $2,000 TOTAL $182,910 $193,612 $218,307 $221,165 $253,102 Source: Rockwall CAD, 2005.
Expand the detail of the budget to include the benefits proposed for each position as required by Section 6.06 of the Tax Code.
The appraisal district's contract for appraisal services with the Capitol Appraisal Group, Inc. (CAG) does not include the dates when services will be delivered to the appraisal district nor does it contain adequate monitoring provisions. The Agreement for Appraisal Services was signed January 16, 1996 by the Board of Director's chairman and the chief appraiser. Rockwall CAD and CAG have extended the contract each subsequent year with an addendum entitled Acknowledgment of Fee for Appraisal Services. The contract extension by addendum is stated in the original agreement and is in effect until either party decides to terminate.
An acknowledgement letter is delivered to the district in December which once signed becomes an addendum to the existing Agreement for Appraisal Services for the subsequent year. The acknowledgment states the extension of the contract and the fee for services performed. The current acknowledgment is dated December 10, 2004 and was signed by the chief appraiser and the president of CAG and covers services for the tax year 2005.
The addendum does not explain the increase in the cost of the services. There is no provision for the board to review the contract periodically nor is there any authorization from the board for the chief appraiser to enter into this contract.
According to the contract, CAG is to prepare valuation for all telephone companies, electric utility systems, pipeline systems, railroad companies and related properties located in the district. In addition, the contract states that the appraisal firm will secure for the district "all information possible and available" for the district's and appraisal review board's "use in determining the proper valuations to be fixed upon such properties for assessment and taxation purposes and to compile such information as shall be of aid and benefit to the chief appraiser and Appraisal Review Board for the purposes of equalizing the values of such properties for taxation purposes." The contract, however, fails to establish what records the appraisal firm will provide the district or to include when such services will be delivered.
In order to get the appraisal roll ready each year, the appraisal district has all of the appraisal information complete and entered in the appraisal district system before the appraisal notices are run. Without dates for specific deliverables, the district would have no recourse to compel the vendor to perform the services within a prescribed timeframe.
IAAO's Standard on Contracting for Assessment Services, Section 4, requires contracts have specific provisions, including the timeframes when services or goods will be delivered.
Good procedures identify the contract monitor and the duties that the contract monitor is to perform for each contract. Without contract monitoring, the district cannot make a decision on the quality of services rendered by the contractor.
IAAO's Standard on Contracting for Assessment Services, Section 5, requires monitoring contract performance.
Revise the professional appraisal services contract to include a detailed description of the work to be performed by the appraisal firm, dates when the appraisal firm will perform its services and deliver its appraisals to the district and establish contractual provisions and procedures for monitoring.
In organizing and administering an 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 effective appraisal district office operations. The district is also required to comply with Comptroller rules concerning application forms and appraisal records.
The chief appraiser is required by law to prepare and certify an appraisal roll for each taxing unit participating in the district. Certification of the appraisal roll for the 2003 tax year by the district was completed according to law.
Rockwall CAD does not have well documented policies and procedures to guide the day-to-day operations of the district in areas such as payroll processing, accounting, purchasing and the like. Rockwall CAD does have a high level policy manual that is divided into three broad areas: board of directors, administration and personnel, but it lacks detailed procedures.
Instead of documented policies and procedures, employees of the district have a series of memos, notes or oral instructions to guide them through the day-to-day processes. It is unclear how certain policies are translated into practice in the district, nor is it clear that the chief appraiser or any other employee is responsible for monitoring day-to-day operations to insure that policy decisions of the board are carried out.
A policy tells a person, department, group of individuals what they must do, whereas a procedure enumerates how it can be accomplished.
Well-written and organized procedures:
- implement and assure compliance with board policies as well as documenting the intent of those policies;
- protect the institutional knowledge of an organization, so that as experienced employees leave, new employees have the benefit of the others' years of experience;
- provide the basis for training new employees; and
- offer a tool for evaluating employees based on their adherence to procedures.
In the absence of well-documented procedures and policies, the work of the appraisal district may come to an abrupt stop if key personnel leave a position as a result of sudden illness, death or other personal tragedies.
To be effective, policy and procedure manuals are updated and kept current at all times. This means setting up a system for regular updates and distribution, as well as periodic reviews to ensure that all old policies are removed when no longer needed.
The Jefferson County Appraisal District, recently reviewed by the Comptroller's office, maintains a current and comprehensive policy and procedures manual detailing procedures for payroll, accounting, purchasing, budget, travel, bank reconciliations and similar functions.
Develop a comprehensive written policy and procedures manual for district administrative operations.
Appraisal districts use information technology to provide detailed records that are easily accessible to staff and the public. Information technology systems allow staff to effectively manage large amounts of data on individual properties and make the appraisal process more efficient.
The district does not gather deed information in a timely manner. The district receives deed transfer information from a deed service company. The deed service company acts as an intermediary obtaining deed transfer information from the Rockwall County Clerk's office and selling that information to the district. The deed service company provides deed information on CD's. The district purchases approximately three CD's a month at a cost to the district of $280 per month, or $3,360 per year.
The district is delayed in obtaining and processing the deed information because it uses an intermediary. The chief appraiser said that the district stays seven to ten days behind in entering deed transfer information into the computer system which in turn delays the district two weeks in making ownership changes.
Evaluating sales data is critical to the district's mission of appraising property at market value. The district mails warranty deed letters to both the buyers and sellers in an effort to obtain or verify sales data. The warranty deed letters request that the buyer/seller provide the sales price, date of sale, financing details, and information to determine if the sale was an arms-length sale.
As one of the fastest growing counties in the state, it is critical that Rockwall CAD maintain current records and that it receive sales data in a timely and cost effective manner. CADs use a variety of approaches to getting information from the county clerks office on a timely basis. To facilitate this process, for example, Atascosa CAD maintains a copy machine in the clerk's office and sends a clerk over to the office to make copies on a regular basis. Some appraisal districts are on-line with their county clerk's office, which enables those districts to obtain current deed information.
Establish on-line capabilities with the county clerk's office, which will enable the district to obtain deed information in a more timely and cost effective manner.
Rockwall CAD lacks a geographic information system. The district currently has a complete set of paper maps along with maps in an electronic format. The mapping systems cover the entire area for which the district appraises and the system is kept current as possible through processing recorded deeds and plats. The district's goal is to process deeds within two to three months from the deed date. However, Rockwall CAD overlaps with Hunt, Kaufman and Collin Counties and those deed changes take longer to process because information is not submitted to Rockwall CAD in a timely manner.
Each parcel has its own unique identifier. The identifiers are lot, block or tract number. When a parcel is split or combined with another account, a new identifier is assigned.
The district budgeted the funds for a Geographic Information System (GIS) for the past three fiscal years. A GIS mapping system is already noted in the budgets and approved by the board of directors. A GIS system will provide the district with a seamless mapping system and eliminate the dependence on a paper mapping system with 64 pages of maps. A GIS system will enable the district to evaluate sales data more effectively and fine-tune neighborhood modifiers. In addition, a GIS will provide a display of sales for defending values before the appraisal review board.
Develop a plan with project specifications and timelines for purchasing and implementing a Geographic Information System.
The system will assist in evaluating sales data, determining market trends and establishing reappraisal priorities, which are critical issues for Rockwall CAD.
Personnel and human resources management are a critical function of appraisal districts. Successful management of personnel includes efficient recruiting, hiring, classification and compensation, benefit administration, training and development, and performance evaluation. Compliance with equal employment opportunity statutes and other applicable federal and state laws and the establishment of fair and workable policies, procedures and training are important for the recruitment and retention of competent staff.
Rockwall CAD staff is outlined in Exhibit 7.
Rockwall County Appraisal District Positions, Certifications,
Years with Rockwall County and Salaries
Position BTPE Certification Hire Date Salary Appraisal Staff Chief Appraiser RPA,RTA,CTA 02/11/85 $72,999 Asst. Chief Appraiser RPA 01/08/02 $55,299 Commercial Appraiser RPA 03/21/05 $43,900 Senior Appraiser Class III 10/13/04 $41,000 Appraiser II Class II 03/16/05 $36,500 Appraiser I Class II 08/16/04 $34,500 Mapper (Drafter) 01/01/92 $33,867 Records Clerk 10/01/83 $24,720 Secretary 11/02/98 $33,500 Appraisal Clerk III 01/01/93 $27,440 Appraisal Clerk II 03/15/05 $26,780 Appraisal Clerk I 03/13/00 $19,750 Collections Staff Collections Director RPA, RTA 10/10/83 $42,766 Clerk II, Sys Admin. Class II 04/07/99 $32,544 Collection Clerk I 03/05/01 $25,858 Receptionist 10/22/02 $24,720 Source: Rockwall CAD, April 2005.
Appraisal district staff who appraise property are required to be Registered Professional Appraisers (RPA) or to be working towards certification as an RPA. Staff must be certified within five years of their hire date. Interim certifications include Class II and Class III. In addition, RPAs must re-certify five years from the date of first certification and every five years while registered. An RTA is a Registered Texas Assessor.
The district provides appraisal services for eight taxing units, including Rockwall County, City of Fate, City of Heath, City of Rockwall, City of Royce City, Rockwall Independent School District, Royce City Independent School District and Rockwall County Municipal Utility District #1.
Being a fast growing county, the CAD is having problems processing sales, conducting ratio studies and evaluating schedules.
According to the chief appraiser, Dallas is growing east and northeast resulting in Rockwall County's fast growth. As a result of the growth, land uses are changing and real estate values are increasing.
Such growth puts an additional strain on a district's efforts to maintain current records and market valuations. An increase in sales volume requires that the processing of the sales keep pace. The changing use of land from rural/agricultural to subdivision or commercial tracts requires the mapping department keep pace as well. Appraisers must be trained to properly appraise more complicated and custom type properties. Finally, the district must be aware of the market changes and compare this new market data to existing costs schedules and valuations.
According to the 2003-04 Appraisal District Operations Report, the chief appraiser does appraisals. While doing appraisals the chief appraiser has less time for managing the district's functions, such as developing or maintaining schedules, creating procedures, training and evaluating staff or developing a reappraisal plan.
Currently, the chief appraiser is responsible for researching sales, conducting ratio studies and evaluating schedules. The chief appraiser has other responsibilities and is unable to devote full attention to these tasks. For example, the chief appraiser is only able to research approximately 50 percent of the outlying ratios. Much more time is needed to adequately evaluate the market. Lack of sales data and analysis contributed to Royce City ISD being designated as ineligible school district.
The Rockwall CAD's locally appraised parcels to staff ratio is under the state average by approximately 800 and their group average by 300 according to Exhibit 3. Looking at the comparable districts in size to Rockwall, the number of parcels per staff member for Rockwall CAD was 2,640. Gillespie CAD was 3,280, Palo Pinto CAD was 2,297, Val Verde CAD was 2,469 and Atascosa was 2,383.
Rockwall CAD reported 12 full-time staff and one part-time staff during the 2003 appraisal cycle when parcels were being appraised locally. Exhibit 3 in chapter one estimated the total number of locally appraised parcels at 31,678. This resulted in a ratio of 2,640 local parcels per staff, as compared to a statewide average of 3,404 local parcels per staff member and 2,911 local parcels per staff in the counties included in the district's parcel count peer group. Rockwall has two thirds the number of staff of the state average and two more staff than its peer districts that are part of the 25,000 to 34,999 category of locally appraised parcels (Exhibit 3). The 2004 budget per locally appraised parcel of $29.63 is higher than state averages of $17.41 and peer averages of $15.65, which further supports the fact that adequate resources are available to the district.
The more important issue appears to be in the type of staffing employed in the district and their skill levels. Of the 13 full and part-time staff reported in 2003, only six were appraisers, a number that included the chief appraiser and the assistant chief appraiser who cannot possibly be carrying a full appraisal work load and still carry out his many other administrative duties. Further, of those six appraisers, Rockwall CAD reported that only three had some form of appraisal certification. Exhibit 5 indicates that three of the appraisers are working toward certification, but are not currently fully certified.
The majority of staff is either supervisors or support staff, who are important and can reduce the demands on an appraiser, but are not qualified to carry out the district's core mission of appraising property. An examination of the actual productivity of each category of worker would determine whether the staffing levels are appropriate for the work at hand.
IAAO standards recommend that typical appraisal districts allow around 2,000 parcels per staff member. According to information reported by the appraisal district to the Comptroller in the 2003-04 Operations Survey, Rockwall CAD's parcel to staff member count around 2,700. In another comparison using the number of real property parcels per appraiser and CADs that are experiencing fast growth, Rockwall 's appraisers have on average about 5,280 parcels to appraiser. This compares to about 6,450 in Denton CAD, 9,410 in Collin CAD and 7,430 in Parker CAD.
Successful appraisal districts monitor staffing and parcel counts and make necessary adjustments to ensure adequate county coverage while maintaining appraisal accuracy.
Conduct a staff needs analysis and establish staffing allocation guidelines that will insure that the number and type of staffing is appropriate and annually adjusted to meet reappraisal plan goals each year based on growth.
Rockwall CADs personnel policies are out of date. Rockwall CAD has developed a personnel policies manual, which are found in the district's Rockwall County Appraisal District Policy Manual. The table of contents for the manual includes board of directors, administration and personnel. The policy manual has no origination date and there does not appear to have been any updates. The section on board of directors includes the boards policies and the administration section includes job descriptions for staff and a few policies such as closing the office due to weather conditions, auditing, publications and the handling of petty cash.
The personnel section of the policy manual addresses staffing, employee recruitment, conduct and ethics, personnel files, leave policies, holidays, travel insurance and resignations. Most of the polices are two or three sentences in length.
It does not address policies concerning sexual and other forms of harassment, the Americans with Disabilities Act, the Family Medical Leave Act or any of the many changes in personnel law over the last decade.
Having an outdated or narrowly written personnel policy that fails to adequately inform employees of their rights and responsibilities places both the employee and district at risk.
Updating personnel policies will assist in management and office operations.
Develop a timeline and plan for updating the district's personnel policy manual as well as making the policies more comprehensive.
In appraisal there are generally three approaches to value (cost, income, 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.
Rockwall CAD contracts with CAG for utility appraisal. Utilities are appraised using the unit value technique. The unit value technique requires the appraiser to determine the market value of the entire utility and apportion the value to each taxing unit within the appraisal district.
The district uses cost-based schedules to appraise real property improvements. The cost-based schedules used by the district are purchased as a subscription service from Marshall & Swift/Boeckh (MS/B).
MS/B provides residential and commercial building cost data necessary for real estate cost valuations and is widely considered by the appraisal profession as the authority in cost appraisal. Their cost data allow appraisers to develop replacement costs for hundreds of property types, construction types and property uses. It can develop depreciated values of properties as well as developing values for other contributing property features and improvements such as swimming pools, fences and storage buildings.
When appraising residential property, Rockwall CAD appraisers use the Dallas area modifier from the MS/B cost guide. The district further modifies costs with a local modifier for Rockwall County neighborhoods. The local modifier is developed by appraising confirmed residential sales using MS/B residential cost data. Any disagreement between the sales price and the appraised value results in an adjustment factor. By applying this method to sales in a neighborhood or concentration of residential property, the CAD can determine an appropriate overall local modifier from the pattern of adjustment factors that are developed. The agreed upon local modifier can then be applied to all cost appraisals of similar properties in that area. The cost appraisals are then considered to be "market adjusted."
The district uses the same procedures in appraising commercial properties. Rockwall CAD again uses the Dallas area modifier from the MS/B commercial guide and then further modifies costs by applying a neighborhood factor. The district will use the income approach when sufficient income and expense data is available. The chief appraiser estimates that the income approach has been applied to about one-third of the commercial accounts
Rockwall CAD lacks a detailed reappraisal plan to ensure the execution of timely and accurate reappraisals.
Currently, Rockwall CAD's reappraisal plan is a one-page policy statement and was developed in 1993. The reappraisal plan states that the district will do a complete reappraisal every three years, send required notices and update schedules every three years. The reappraisal plan also states that the district will reappraise the areas that have decreased or increased in value by 10 percent between reappraisal years. The reappraisal plan addresses mailing notices of appraised value, submitting the appraisal roll to the ARB, and protest hearings with taxpayers.
The chief appraiser said that the reappraisal process begins by conducting countywide ratio studies to evaluate land and improvement schedules and to identify areas in need of work. If ratio studies indicate a neighborhood's values have increased or decreased by 10 percent, the district will reappraise that area. This 10 percent reappraisal policy has been in place for the past ten years.
The reappraisal policy states the district will do a complete reappraisal every three years, but the district primarily relies on the 10 percent increase or decrease policy in conducting reappraisals. A weakness of this policy is not being able to determine if all properties within the county have been physically inspected and reappraised over a period of time. The chief appraiser estimated that in a five year period only 50 to 60 percent of real properties had been physically inspected.
The written reappraisal policy does not give any detail as to the steps to be performed, staffing levels, workflow or the costs associated with plans and goals. The plan does not discuss how market areas might be grouped to provide sufficient sales for appraisal model analysis and development.
The reappraisal plan does not link the appraisal district's budget, training, contracting, market analysis, field inspections and data processing in one document. The appraisal district's policy includes statements about some of these elements but the Board of Directors has not adopted a plan that includes documentation of how the appraisal district staff will implement the reappraisal plan. In addition, the Board of Directors has not adopted or reviewed the work plan the staff would follow to accomplish the reappraisal policy.
Lack of a detailed reappraisal plan could cause the execution of the plan to fail and result in property values that deviate from market value. This market value deviation could cause any of Rockwall County's school districts to receive an invalid finding in the state's PVS.
Section 25.18, Tax Code, requires appraisal districts to implement a plan for reappraisal. The plan for reappraisal shall provide for reappraisal of all real property in the district at least once every three years. A reappraisal plan is a roadmap for performing the work. It is also a communication tool that shows the appraisal district board of directors how the appraisal district staff plans to accomplish its appraisals, and if the board chooses to require the chief appraiser to submit the plan for approval, the board can direct the appraisal activities by amending the plan.
According to USPAP Standard 6, a functional reappraisal plan includes the following activities:
- identifying properties to be appraised;
- identifying and updating in the appraisal records the relevant characteristics of each property to be appraised;
- defining market areas;
- identifying property characteristics that affect property value in each market area;
- developing an appraisal model that reflects the relationship among the property characteristics affecting value in each market area;
- calibrating the model to determine the contribution of the individual property characteristics affecting value;
- applying the conclusions reflected in the model to the characteristics of the properties being appraised; and
- reviewing the appraisal results.
The USPAP, Standards Rule 6-2(g), requires appraisers to "identify the characteristics of the properties that are relevant to the purpose and intended use of the mass appraisal, including:(i) the group with which a property is identified according to similar market influence;
(ii) the appropriate market area and time frame relative to the property being valued; and
(iii) their location and physical, legal, and economic characteristics."
To comply with this standard, appraisal districts typically record property characteristics that include but are not limited to: the Comptroller's property category code, the location and market area of property; the physical attributes of the property such as the size, age, condition and construction type; the number of various kinds of rooms; the presence of amenities such as central air conditioning; any legal and economic attributes or restraints; and the presence of easements, covenants, leases, special appraisals, ordinances or other legal restrictions.
A reappraisal plan also provides for a physical inspection of the properties being appraised. Alternatively, the plan can include reliance on reliable sources of property information instead of physical inspections. Such sources include, but are not limited to, deeds or other legal documentation, aerial photographs, land-based photographs, surveys, maps and property sketches. A complete plan would indicate instances or types of properties that will be appraised using sources of information other than physical inspection.
Adopt a detailed reappraisal plan that, at a minimum, includes the vital steps in the process, explains exactly how and when the steps will be executed, and explains how sufficient resources will be allocated to follow the plan.
The district needs to adopt an annual reappraisal plan due to the increased market activity in Rockwall County. The district should ensure that all properties are physically inspected over a three-year period and that those inspection dates be recorded on the appraisal cards.
Rockwall CAD lacks a written, comprehensive appraisal procedures manual. Specifically, written local procedures and directives for handling both in-house and contract appraisals are absent.
In-house appraisal system
The appraisal district uses an automated computer appraisal system (valuation model). Through fieldwork the appraisers gather specific information about properties such as condition of the property, age of the property, construction details and physical dimensions. In addition, the appraisers gather information such as dimensions, shape and location for the land associated with the real property. The appraisers gather the same information for vacant land, whether a vacant lot or a rural tract.
Most in-house appraisals are accomplished by entering the accumulated property characteristics into the computerized valuation model. The model, when directed, produces a taxable value for each property that the appraiser then reviews for reasonableness and accuracy.
As part of their computerized model, Rockwall CAD uses cost-based schedules to appraise improvements. The cost-based schedules used by the district are based on the MS/B Valuation Service guide. In addition, the district found it necessary to develop additional improvement classifications which were not provided for in the MS/B appraisal guide.
The CAD has developed an appraisal manual, which lists these improvement classifications along with pictures from MS/B and the local market. The manual also contains depreciation tables, land tables, exemptions and tax rates. The manual displays the different classifications but lacks detailed instruction on its use. The MS/B appraisal guides also do not address local procedures or directives.
Rockwall CAD contracts with CAG for all types of utility appraisal. Utilities are appraised using the unit value technique. The unit value technique is a technique that requires the appraiser to determine the market value of the entire utility company. The utility company value is then apportioned to each taxing unit based on an agreed measure of the company's presence in the taxing unit such as miles of track, historical cost or number of meters. The unit valuation is widely accepted as the preferred income technique for appraising utility properties. No manual with local procedures supporting the contracted appraisals or appeal of these appraisals was available at the district office for staff or the public.
Business personal property
According to the chief appraiser, the appraisal district physically inspects all business personal property annually. Personal property values are based on cost schedules and physically verified renditions. The district mails renditions to all businesses each year. Renditions are monitored for items omitted from previous declarations and then physical inspections are scheduled. The CAD uses the Comptroller and Dallas County personal property manuals as a guide. No local procedures manual exists to guide the appraisers in rendition reviews or field inspections.
While Rockwall CAD has some excellent appraisal tools, it is lacking a written document that explains the complete in-house and contract appraisal process including how and when these tools are expected to be used. This lack could cause inconsistent appraisals and result in property values that deviate from market value. Royce City ISD received an invalid finding in the 2003 PVS, which indicates change is needed to prevent a future loss of state funding. Further, if the level of appraisal (percentage of market value) varies from school district to school district, or from taxpayer to taxpayer, some taxpayers could be bearing more than their fair share of the local tax burden.
Section 23.01, Tax Code, mandates that property be appraised by applying generally accepted appraisal methods and techniques. This section also requires appraisal districts to comply with the USPAP and requires similar appraisal methods and techniques be applied to the same or similar properties, while taking care to account for the contributions of individual property characteristics on value. A comprehensive appraisal procedures manual for all property types would help ensure that these standards and requirements are attained and appraisal tools are applied consistently.
Produce a comprehensive appraisal procedures manual that includes local procedures and directives for handling all types of in-house and contract appraisals.
The manual should explain in detail how the various appraisal tools are used in the complete appraisal process. Detailed appraisal procedures manuals would help ensure that values in each school district are valid in the PVS, thereby avoiding the possibility of a school district receiving less than the expected amount of funding from the state. Detailed appraisal procedures manuals would also help ensure that taxpayers are treated uniformly in the payment of property taxes.
Rockwall CAD lacks detailed ratio study procedures. The Rockwell CAD's computerized appraisal system allows the appraisal district to analyze its appraisals through ratio studies within and among property classifications. According to IAAO's Property Appraisal and Assessment Administration, a ratio study is a study of the relationship between appraised or assessed values and market values. Indicators of market values may be either sales or independent "expert" appraisals. Of common interest in ratio studies are the level and uniformity of the appraisals or assessments.
The chief appraiser runs ratio studies within property classes and by neighborhoods. However the district has not developed comprehensive detailed written procedures, which would guide staff through the process. Ratio studies are conducted three times a year and results are used to evaluate cost schedules. Sales used in the ratio studies are verified by local realtors, the Multiple Listing Service (MLS) and warranty deed letters. Outlier ratios are flagged and researched through physical inspections and, if needed, owners contacted. Categories of properties included in the ratio studies are A, C and D. Statistical measures included in the ratio study process include range, mean, median, absolute deviation and coefficient of dispersion.
Appraisal districts use ratio studies to plan appraisal maintenance programs. The ratio study results indicate those market areas in the appraisal district whose values no longer reflect the market.
Frequent ratio studies and the appraisal maintenance that follows enable an appraisal district to keep its values at or near the market.
Establish comprehensive written ratio study procedures that allow proper reappraisal and maintenance planning.