Appraisal Standards Review
Rockwall County Appraisal District Follow-Up Report
September 2007
Introduction
In July 2004, the Royce City Independent School District (ISD), located in Rockwall County, was identified as one of 54 school districts in the state meeting the criteria that initiate an Appraisal Standards Review (ASR) of the county appraisal district that serves it. In January 2006, the Comptroller’s Property Tax Division (PTD) released the results of an ASR of the Rockwall Central Appraisal District (CAD).
The ASR report made 10 recommendations to improve Rockwall CAD’s appraisal practices and operations. ASRs are intended to determine why the Comptroller’s Property Value Study (PVS) found local values invalid and to recommend changes in operations and management that would improve appraisal practices. The Rockwall CAD review evaluated five functional areas: the board of directors; appraisal district policies, procedures and operations; information processing systems; staffing, personnel qualifications and positions; and generally accepted appraisal practices.
At the time of the review, challenges facing Rockwall CAD included improving management of district operations, automating processes to improve capabilities and documenting appraisal procedures.
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 Government Code Section 403.302, 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 appraisal district by the board of conservators.
For the one-year follow-up report, an appraisal district complies with the statute if it takes remedial action to implement the recommendations in the ASR. Remedial action means the CAD has corrected or intends to correct, remedy or improve the deficiencies identified in the ASR. The CAD demonstrates remedial action 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 recommendations, the Comptroller continues to work with the CAD to achieve full compliance. CADs completing all recommendations by the one-year anniversary will not require additional monitoring.
PTD’s consultant met with Rockwall CAD’s chief appraiser in March 2007 to assess its progress in implementing the report recommendations. Although some work remains, PTD found clear evidence that Rockwall CAD has made progress. The CAD has implemented five of the 10 recommendations, and the remaining five are in progress.
History and Significant Events
Rockwall CAD became the subject of an ASR because local values in Royce City ISD were found to be invalid in the state’s PVS and the school district was eligible for the “grace period” provided in Government Code Section 403.3011.
In the 2003 PVS, Royce City ISD’s local values fell outside the study’s statistical margin of error. Category D, Rural Real, tested with a mean ratio of 0.8637. This was the primary reason the school district’s local value fell outside the confidence interval determined by the study.
Rockwall CAD’s reappraisal efforts in 2004 and 2005 produced valid results, and the local values for Royce City ISD fell within the confidence interval on the final PVS in both years. The 2006 PVS found the taxable values of Rockwall and Royce City ISDs to be valid.
PTD will continue to monitor the CAD’s progress toward full implementation. Specific steps that remain to be taken are outlined below.
What Remains to Be Done
The Appendix that follows lists the 10 recommendations identified in the ASR, with a summary of the actions taken to date. The Comptroller acknowledges the steps Rockwall CAD has taken over the last year.
Five of the recommendations are complete. Five are in progress.
Recommendation 2: 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.
The CAD’s contract with its appraisal firm is missing a date on the signature page. One attachment to the contract includes provisions for the auditing of the firm’s work, timeframes in which services will be delivered and a performance rating. The contract and attachments, however, have conflicting delivery dates.
The contract’s Provision 7 states that the firm shall provide copies of appraisals and supporting data to the CAD no later than May 1 of each year. The contract’s Provision 8 states it shall provide appraisal and support data to the CAD no later than May 15 of each year. The contact has an attachment that is not dated or signed. This attachment indicates values will be provided by April 15 of each year. There are three different delivery dates, and it is not clear that the attachment supersedes the contract.
To complete this recommendation, the CAD should date the signature page and provide language in the attachment indicating that it supersedes the contract. The attachment should be dated and signed by the appraisal firm’s authorized parties and the CAD. A copy of the revised contract should be provided to PTD by December 2007.
Recommendation 3: Develop a comprehensive written policy and procedures manual for district administrative operations.
The chief appraiser provided an Operations Manual for assessment, appraisal, geographic information systems and data processing. The manual, however, does not include procedures for payroll processing, accounting and purchasing, as called for in the ASR. The operations manual is not currently in effect and has not been approved by the board.
To complete this recommendation, the CAD should add sections for payroll processing, accounting and purchasing. A copy of the completed manual and board minutes approving it should be forwarded to PTD by December 2007.
Recommendation 6: Conduct a staff needs analysis and establish staffing allocation guidelines that will ensure the number and type of staffing is appropriate and annually adjusted to meet reappraisal plan goals each year, based on growth.
Rockwall CAD reported employing 16 full-time staff members and one part-time employee from 2003 to the time of the report. Four employees are assigned to collection operations. Six of the remaining 12 are in management or professional appraiser positions.
The chief appraiser has received staff needs analysis information used by Taylor and Lee CADs. The CAD will use this information and modify it to their situation. The chief appraiser is compiling internal information on staffing and is working to complete the project, only needing time to prepare the supporting narrative. The chief appraiser said the study would be completed by the end of December 2007.
To complete this recommendation, the chief appraiser should establish staffing guidelines and forward a copy to PTD by the end of December 2007.
Recommendation 8: 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 CAD board adopted the reappraisal plan in September 2006. The plan, however, does not follow Property Tax Code Section 25.18, which identifies the information required in a reappraisal plan.
Section 25.18 states:
a. Each appraisal office shall implement a plan for periodic reappraisal of property approved by the board of directors under Sec 6.05(i).
b. The plan shall provide for the following reappraisal activities all real and personal property in the district at least once every three years:
- identifying properties to be appraised through physical inspection or by other reliable means of identification, including deeds or other legal documentation, aerial photographs, land-based photographs, surveys, maps and property sketches;
- identifying and updating relevant characteristics of each property in the appraisal records;
- defining market areas in the district;
- identifying property characteristics that affect property value in each market area, including:
- the location and market area of property;
- physical attributes of property, such as size, age and condition;
- legal and economic attributes; and
- easements, covenants, leases, reservations, contracts, declarations, special assessments, ordinances or legal restrictions;
- developing an appraisal model that reflects the relationship among the characteristics affecting value in each market area and determines the contribution of individual property characteristics;
- applying the conclusions reflected in the model to the characteristics of the properties being appraised; and
- reviewing the appraisal results to determine value.
To complete this recommendation, the CAD should revise its reappraisal plan to comply with Section 25.18. A copy of the revised reappraisal plan should be forwarded to PTD by December 2007.
Recommendation 9: Produce a comprehensive appraisal procedures manual that includes local procedures and directives for handling all types of in-house and contract appraisals.
The appraisal manual includes cost schedules and property descriptions, but it has no instructions on how to use the cost schedules and land table or how to apply them to neighborhoods.
To complete this recommendation, the CAD should provide a better description of the tables and schedules; provide instructions for using the tables and appraisal process; complete the missing parts of the appraisal manual; create market areas and neighborhoods for the CAD; and review schedules for calibration to CAD neighborhoods. A copy of the manual should be provided to PTD by December 2007.
Appendix
Rockwall County Appraisal District Appraisal Standards Review Implementation Status
2.1 Board of Directors
| Rec. # | Recommendation | Implementation Status | If not Complete, Projected Completion Date | Description of Actions Taken to Date |
|---|---|---|---|---|
| 1 | Expand the detail of the budget to include the benefits proposed for each position as required by Section 6.06 of the Tax Code. |
Complete |
The chief appraiser provided the CAD’s 2006-07 approved collection budget and its 2007 approved operating budget. Both conform to the requirements of Property Tax Code Section 6.06. The last section of each budget breaks down salary and benefits for individual positions. It features unique titles and descriptions for each position, conforming to the individual allocation by position required by Property Tax Code Section 6.06. Both budgets were approved by the board at the June 14, 2006, meeting. |
|
| 2 | 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 Progress |
December 2007 |
The chief appraiser provided a revised copy of the CAD’s contract with its appraisal firm dated Oct. 10, 2006, on the contract’s front page, but the signature page is missing a date. The contract and attachment deliverable dates are inconsistent. Because neither document is dated, it is unclear whether the attachment supersedes the contract. |
2.2 Appraisal District Policies, Procedures and Operations
| Rec. # | Recommendation | Implementation Status | If not Complete, Projected Completion Date | Description of Actions Taken to Date |
|---|---|---|---|---|
| 3 |
Develop a comprehensive written policy and procedures manual for district administrative operations. |
In Progress | December 2007 |
The chief appraiser used policy and procedure manuals from Lee, Jefferson and Taylor CADs to assist with the development of the CAD’s manual. The chief appraiser provided a comprehensive operations manual for assessment, appraisal, geographic information systems and data processing. The manual does not include payroll processing, accounting and purchasing, as noted in the ASR. |
2.3 Information Processing Systems
| Rec. # | Recommendation | Implementation Status | If not Complete, Projected Completion Date | Description of Actions Taken to Date |
|---|---|---|---|---|
| 4 |
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. |
Complete |
The chief appraiser had two meetings with the Rockwall county clerk but was unsuccessful in obtaining an online connection with that office. The clerk’s office requires the CAD to pay the public rate for copies of $1 per page. With 2,500 transfers per year, the chief appraiser estimates that these copies will cost the CAD $10,000 to $12,000 per year. The chief appraiser discussed this problem with the board on three occasions in 2006. At present, it is fiscally impossible for the CAD to pay the per-page rate. Instead, the CAD uses the services of a third-party provider that charges $3,360 per year to transfer documents on compact discs monthly. Though the contractor is inconsistent in delivery, the set rate allows the CAD to budget more easily. The CAD has properties that overlap with surrounding counties. The CAD is online with Collin CAD and the multiple listing services. According to the chief appraiser, the DFW Dallas Multiple Listing Services provide information on about 80 percent of all residential sales in its jurisdiction. The CAD receives electronic copies of sales from Hunt and Kaufman CADs as well. The CAD is receiving most of the sales transfer information in a timely manner, which was the intent of the original recommendation. The CAD should continue its efforts to obtain online access to the Rockwall county clerk’s office. |
|
| 5 |
Develop a plan with project specifications and timelines for purchasing and implementing a Geographic Information System. |
Complete |
In August 2006, the CAD contracted with a third party to complete GIS mapping for the district by May 2007. The company will automatically update the GIS. The contract includes a list of delivery dates and a Gantt chart for the project completion. The contract was signed on May 11, 2006, and completed on May 31, 2007. The CAD has begun receiving automatic updates. |
2.4 Staffing, Personnel Qualifications and Positions
| Rec. # | Recommendation | Implementation Status | If not Complete, Projected Completion Date | Description of Actions Taken to Date |
|---|---|---|---|---|
| 6 |
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. |
In Progress |
December 2007 |
The chief appraiser gathered information from Taylor and Lee CADs for reference in completing the project. The CAD will use this information to assist it in developing staff needs guidelines. |
| 7 |
Develop a timeline and plan for updating the district’s personnel policy manual as well as making the policies more comprehensive. |
Complete |
The chief appraiser developed a comprehensive personnel manual that meets the requirements of this recommendation. The manual was based on information from several other appraisal districts and was completed in December 2006. |
2.5 Generally Accepted Appraisal Practices; Equality and Uniformity of Appraisal Standards
| Rec. # | Recommendation | Implementation Status | If not Complete, Projected Completion Date | Description of Actions Taken to Date |
|---|---|---|---|---|
| 8 |
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. |
In Progress |
December 2007 |
The chief appraiser used reappraisal plans from Lee, Taylor and Jefferson CADs as guides in writing the CAD’s reappraisal plan. The board adopted the reappraisal plan in September 2006. The reappraisal plan, however, does not include all of the requirements of Property Tax Code Section 25.18. |
| 9 |
Produce a comprehensive appraisal procedures manual that includes local procedures and directives for handling all types of in-house and contract appraisals. |
In Progress | December 2007 |
The appraisal manual includes cost schedules and property descriptions, but it has no instructions as to the use of the cost schedules and land tables. |
| 10 |
Establish comprehensive written ratio study procedures that allow proper reappraisal and maintenance planning. |
Complete |
The chief appraiser provided a written ratio study procedures manual and a sample ratio study report that follows the recommendations of the IAAO's Standard on Ratio Studies. |