Findings of the Appraisal Standards Review
This chapter of the report addresses the findings, commendations and recommendations from the appraisal standards review of the Starr County Appraisal District 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 1980 and became active in 1982. The district Board of Directors consists of six members (Exhibit 4).
Board of Directors Members
Board Member Represents Starting Date Raul Pena Jr., Chairman Starr County 2004 Roberto Gutierrez Rio Grande City ISD 2004 Eloy Garza Starr County 2004 Roque Rosales Roma ISD 2004 Cesar Gonzalez Rio Grande City ISD 2004 Carmen A. Pena Starr County 2004 Source: Starr CAD March 2005.
Carmen A. Pena is the Starr County Tax Assessor-Collector. Eloy Garza and Raul Pena Jr. are county commissioners. Roque Rosales is a Roma ISD board of trustee. Roberto Gutierrez and Cesar Gonzalez are Rio Grande City ISD board of trustees. All are elected officials.
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 as the chief operating officer of the district;
- 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. One of the six 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 member gave the board, the chief appraiser and district staff high marks. No problems were noted by the board member.
The district'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, 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 their principal administrative offices.
Copies of the budgets for 2003, 2004 and 2005 were reviewed. Each budget contained detailed listings of proposed capital expenditures, as well as the required budget allocations to each taxing unit. No budget, however, contained a listing of each position showing salary and all benefits for each position. Additionally, the budget contained a single line item for capital expenditures and did not outline what the expenditures were, as required by the code. A summary of the 2003, 2004 and 2005 budgets is in Exhibit 5.
Starr CAD 2003, 2004 and 2005 Budgets
2003 2004 2005 Expenditure Amount Percent
Chief Appraiser $48,639 6.52% $48,639 6.69% $51,039 6.56% Asst. Chief Appraiser $0 0.00% $0 0.00% $36,000 4.62% Land Appraiser $31,755 4.26% $31,755 4.37% $0 0.00% Appraiser IV $24,478 3.28% $24,478 3.37% $25,679 3.30% Appraiser IV $23,872 3.20% $23,872 3.28% $25,073 3.22% Appraiser IV $19,737 2.65% $21,711 2.97% $22,912 2.94% Appraiser III $16,792 2.25% $17,772 2.45% $19,672 2.53% Map Specialist $16,792 2.25% $17,772 2.45% $15,200 1.95% Secretary/ Office Manager $25,276 3.39% $25,276 3.48% $26,477 3.40% Chief Data Clerk $21,937 2.94% $21,937 3.02% $23,138 2.97% Data Clerk III $14,000 1.88% $14,000 1.93% $15,200 1.95% Data Clerk II $16,208 2.17% $16,208 2.23% $17,409 2.24% Data Clerk I $14,000 1.88% $14,000 1.93% $15,200 1.95% Title Search Clerk $19,417 2.60% $19,417 2.67% $20,618 2.65% Receptionist $14,535 1.95% $14,535 2.00% $15,735 2.02% Maintenance $11,440 1.53% $11,440 1.57% $12,640 1.62% Retirement $34,000 4.56% $33,000 4.54% $33,000 4.24% Group Health & Life Insurance $59,675 8.00% $68,000 9.36% $85,000 10.92% General Insurances $3,500 0.47% $3,500 0.48% $3,500 0.45% Capital Outlay $1,000 0.13% $1,000 0.14% $1,000 0.13% Repairs (Bldg) $750 0.10% $750 0.10% $750 0.10% Office Supplies $2,000 0.27% $5,000 0.69% $5,000 0.64% Map Supplies $1,500 0.20% $0 0.00% $0 0.00% Copier Supplies $1,500 0.20% $0 0.00% $0 0.00% Preprinted Forms $2,100 0.28% $2,100 0.29% $2,500 0.32% Postage $10,000 1.34% $12,000 1.65% $15,000 1.93% Books & Periodicals $1,000 0.13% $1,000 0.14% $1,000 0.13% Dues & Fees $1,200 0.16% $1,200 0.17% $1,200 0.15% Workshops $6,000 0.80% $8,000 1.10% $8,000 1.03% Workshops (ARB) $1,300 0.17% $1,300 0.18% $0 0.00% Workshops (AG Board) $500 0.07% $500 0.07% $500 0.06% Travel $24,000 3.22% $24,000 3.30% $34,000 4.37% Legal Notices $750 0.10% $1,000 0.14% $1,000 0.13% Unemployment & Medicare $5,000 0.67% $5,000 0.69% $6,000 0.77% Telephone & Pagers $6,000 0.80% $8,000 1.10% $9,000 1.16% Board of Directors $5,000 0.67% $5,000 0.69% $5,000 0.64% Board of Review $6,000 0.80% $7,000 0.96% $9,000 1.16% Auditing $2,500 0.34% $2,500 0.34% $3,000 0.39% Accounting $5,200 0.70% $5,200 0.72% $5,800 0.74% Legal (BOD) $7,000 0.94% $7,000 0.96% $7,000 0.90% Legal (ARB) $4,500 0.60% $4,500 0.62% $6,000 0.77% Legal (Litigation) $71,128 9.54% $25,000 3.44% $18,000 2.31% Mineral Appraisers $56,650 7.60% $59,000 8.12% $61,500 7.90% Equipment Rental & Maint. $3,000 0.40% $6,000 0.83% $7,000 0.90% Office Space $18,000 2.41% $18,000 2.48% $18,000 2.31% Utilities $6,000 0.80% $6,000 0.83% $6,500 0.83% Data Processing $28,150 3.77% $28,340 3.90% $28,340 3.64% Contingencies 0.00% $3,000 0.41% $3,000 0.39% General Supplies $2,000 0.27% $2,000 0.28% $2,000 0.26% Construction Fund $50,000 6.70% $50,000 6.88% $50,000 6.42% Total $745,781 100.00% $726,702 100.00% $778,582 100.00% Source: Starr CAD budgets, 2003-2005.
Boards of Directors are required by law to hold a public hearing on the budget. The hearing for the 2003 budget was held on September 11, 2002. The notice was posted with the county clerk's office on September 2, 2002 and a notice was placed in the Rio Grande Herald on August 29, 2002. For 2004, the budget hearing was held on September 3, 2003, with a notice placed in the paper on August 27, 2003. For 2005, the budget hearing was held on August 30, 2004, with a notice placed in the paper on August 19, 2004.
The budget summarized above does not give sufficient detail for a member of a taxing unit or a member of the public to understand how district employees are compensated. With more than 59 percent of the budget going to wages and benefits, both taxing units and the public need the detail required by state law to be assured the number of staff in the district is sufficient to perform the work and that the staff is correctly compensated.
Expand the detail of the budget presented to the Board of Directors for adoption to include the salary and benefits for each employee and a detailed list of each capital expenditure.
The Starr CAD contracts with Pritchard & Abbott Inc (P&A) for appraisal services and data processing services, but the contracts lack standard contract provisions and do not provide for effective contract monitoring.
The contract for professional appraisal services with P&A does not include the dates when services will be delivered. The contract does list several appendices with properties the appraisal firm needs to appraise. The contract was signed by the chief appraiser, board secretary and board chairmen on October 16, 2003. The contract covers services for tax years 2004 and 2005. The contract expires on December 31, 2005, unless the parties agree to extend it.
P&A is to provide appraisals for all minerals, industrial, utilities and personal properties located in the district. The contract defines each of these properties. The company will make sufficient staff available for ARB hearings at no additional charge. P&A will charge the CAD for any work related to assisting the district with an appeal of the Comptroller's property value study.
The district agreed to pay P&A $59,000 in 2004 and $61,500 in 2005. The payments are due in February, May, August and November of each year. The contract does not tie the payments to any deliverables. The contract states the deliverables for the entire year are: one copy of appraisal records; two copies of notices of appraised value; one copy of the appraisal roll for the district; one copy of the appraisal roll for each taxing unit, and; one copy of division orders listing all current record owners of interest in oil and gas producing properties.
Except for a clause concerning legislative changes or interpretations by a court, there are no termination clauses in the contract or a venue clause, which are routine clauses in governmental contracts.
The chief appraiser reviews and approves each invoice for all contracts. There is no written procedure for invoices and no status reports of work progress are turned in by the contractor.
The data processing contract lacks deliverable dates, venue and termination clauses as well. The data processing contract covers the period January 1, 2004 through December 31, 2005. The contract costs the district $28,340 per year. Payments are due to P&A in the same months as the appraisal contract. The contract provides the district with hardware and software and a toll free maintenance help and assistance line. The contract does not have emergency assistance clauses and does not outline what the district's options are if they experience a hardware or software outage. The contract was not signed by the district.
IAAO's Standard on Contracting for Assessment Services, Section 4, requires contracts have specific provisions, including a detailed scope of work, deliverables, due dates, etc.
Develop a procedure for creating and monitoring contracts, put deliverables and due dates in all future contracts and tie payments to all deliverables.
The district financial audits for 2002 and 2003 contained no management letter outlining problems or material weaknesses, yet the district overspent in a number of budgeted categories. There was no evidence that the district adopted a new budget for each of these fiscal years to account for the additional expenditures. The district has contracted with the same auditor since 1989.
In 2002, according to pages 5 and 6 of its audit, the district spent more than was budgeted in the following categories: Salaries-Secretary/Bookkeeper ($3,068); Payroll Taxes ($1,499); Workshops ($1,680); Office Supplies ($686); Postage and Freight ($127); Dues and Fees ($1,574); Repairs - Building ($318); Miscellaneous ($1,676) and Capital Outlay ($8,250); and Telephone ($2,467).
In 2003, according to pages 5-6 of its audit, the district spent more than was budgeted in the following categories: Retirement Plan ($524); Group Health Insurance ($4,564); Workshops ($10,882); Travel ($1,184) Office Supplies ($3,213); Postage and Freight ($120; Repairs - Building ($428); Miscellaneous ($996); Office Equipment Maintenance ($1,450); Utilities ($860) and Telephone ($1,720).
The district has no written contract with its financial auditor, so it is difficult to determine what the auditor is supposed to be reviewing. The same auditor performed the audit in 2002 and 2003. The 2004 audit was unavailable at the time of the review. Rotating auditors periodically is an industry practice that helps ensure auditor independence.
A contract with a financial auditor specifies what the auditor needs to review and what information needs to be included in the report.
Implement an audit rotation policy, develop specifications for a financial audit and solicit proposals for audit services.
In organizing and administering an appraisal district, the chief appraiser is responsible for hiring, firing, and training personnel, 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 the law.
The Starr CAD does not have well documented, written policies and procedures to guide the day-to-day operations of the district in areas such as payroll processing, accounting, and purchasing.
Instead, long time employees of the district have a series of memos, notes or long-term memory to guide them through the day-to-day processes. Policies adopted by the board are recorded in board minutes, but 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.
In processing payroll, for example, the district issues paychecks twice a month. The office manager is responsible for typing each payroll check and the chief appraiser has two stamps, one with the board secretary's signature and one with the board chairman's signature, to sign each of the payroll checks. The chief appraiser uses these stamps to sign all district checks. There is no written procedure for how this process works and no written policies guiding when the chief appraiser should sign checks and when the stamps should be used. The district outsources its bookkeeping functions to an external bookkeeper.
A policy tells a person, department, or group of individuals what they must do, whereas procedures 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. Other examples abound of whole departments without trained back-ups for critical positions like payroll, and of poor training techniques that show new employees how to perform a task, but not why.
To be effective, policy and procedure manuals must be 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.
A good example is the Jefferson County appraisal district, recently reviewed by the Comptroller's office. It maintains a current and comprehensive policy and procedure manual detailing procedures for payroll, accounting, purchasing, budget, travel, bank reconciliations and similar procedures.
Develop a comprehensive policy and procedures manual for district 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.
Starr CAD has an outdated mapping system, which is not integrated with the appraisal system and the district has limited hardware. Currently, the district relies on paper maps, some dating back to inception of the district. The chief appraiser noted in the self assessment questionnaire that maps have not been updated timely to reflect ownership changes. According to staff interviews, the district is updating electronic maps, although the chief appraiser's self assessment questionnaire responses noted the district does not have a geographic information system. The district has only five personal computers, requiring staff to share equipment. The mapping system is not integrated with ArcView, the district's appraisal system. The appraisal system hardware includes nine PCs, five dumb terminals, and six printers. These are linked to the P&A mainframe system outside of the county. The district can only access the system Monday through Friday from 8 am to 5 pm.
Section 9.3002 of the Texas Comptroller's Property Tax Rules addresses mapping as follows:
(a) All appraisal offices and all tax offices appraising property for purposes of ad valorem taxation shall develop and maintain a system of tax maps covering the entire area of the taxing units for whom each office appraises property.
(b) Each tax map system shall be drawn to scale and delineated for lot lines or property lines or both, with dimensions or areas and identifying numbers, letters, or names for all delineated lots or parcels.
(c) Each tax map shall be divided into sections drawn at a scale large enough to serve the purposes of property assessment. Developed or subdivided areas may be drawn at a different scale than undeveloped or unsubdivided tracts.
(d) The tax map, each section thereof, and each parcel thereon shall be assigned numbers in accordance with a parcel identification numbering system. Such numbers shall be recorded on the tax map, section, and parcel. The identifying number for each parcel as recorded on the tax map shall also be recorded on the appraisal card maintained for that parcel.
(e) The tax map system shall be annually updated to incorporate any new subdivisions or property transfers as indicated by the filing of subdivision plats or deeds with the county clerk's office of the county or counties in which the taxing units for whom each office appraises property are located.
(f) Any information required by these sections may be maintained in electronic data processing records rather than physical documents.
(g) Development of tax map systems (or substantial progress toward development) shall be completed by January 1, 1983.
(h) Appraisal offices and tax offices failing to establish a tax map system as required in this section may be judged to be in compliance upon a showing to the [Comptroller] that a tax map system substantially equivalent to that required in this section has been established.
Outdated maps make it difficult to locate property, making the reappraisal process less accurate.
Once integrated, the mapping system would have many benefits including expanded public and staff access to more information and more current, timely integration of data between the mapping and recently purchased automated appraisal systems.
Implement a complete automated mapping system, integrate the mapping and appraisal systems and acquire the proper hardware for all staff.
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.
The Starr CAD staff is organized as outlined in Exhibit 6.
Starr County Appraisal District
Positions, Certifications, Years with CAD and Salaries
Position BTPE Certification Years
Salary Chief Appraiser RPA 23.0 $51,039 Asst. Chief Appraiser RPA 12.0 $36,000 Appraiser IV RPA 12.0 $25,679 Appraiser IV RPA 9.5 $25,073 Appraiser IV RPA 6.5 $22,912 Appraiser III RPA 4.5 $19,672 Mapping Specialist 1.0 $15,200 Secretary - Office Manager - 16.0 $26,477 Chief Data Clerk - 12.0 $23,138 Data Clerk III - 2.5 $15,200 Data Clerk II - 6.5 $17,409 Data Clerk I - 1.0 $15,200 Title Search Clerk - 22.0 $20,618 Receptionist - 10.0 $15,735 Custodian - 2.0 $12,640 Source: Starr CAD and Board of Tax Professional Examiners, 2005.
Appraisal district staff who appraise property are required to be Registered Professional Appraisers (RPA) or to be working towards certification as an RPA. Collections staff must be working towards the Registered Texas Assessor (RTA) designation. 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.
Starr CAD has a personnel policy and personnel manual that explains the district's policy as an at-will employer and covers federal employment guidelines dealing with the Federal Medical Leave Act. The manual also describes guidelines for employee behavior in dealing with customers and guidance on the use of district equipment including telephones and Internet access. The district's manual also addresses issues of business gifts, moonlighting, loafing, wages, and political activity. Fifty-three pages long, the policy manual is divided into 73 sections, ranging from information absenteeism, demotion, leave and timecards.
Personnel policy and procedures manuals help organizations define issues such as attendance, performance, insubordination and leave policies and ensure management and staff understand their roles and responsibilities. Good policy and procedure manuals protect both management and staff from arbitrary practices and provide procedures to help management conflicts that may arise from day to day operations.
The district has adopted a personnel manual that informs employees of their rights and responsibilities.
Starr CAD does not have a systematic approach for employee evaluation. The chief appraiser does not evaluate staff and the board does not evaluate the chief appraiser in writing. The one board member who responded to the board survey said the district does evaluate the chief appraiser, but no information was provided by the district. The district Personnel Manual, on page 13, says the district will maintain a job evaluation system for all employees. The description is limited in scope and provides no direction on how management should conduct evaluations or how often evaluations should be conducted.
The district does have job descriptions for the following staff: chief appraiser, assistant chief appraiser, appraiser supervisor, land appraiser, head secretary/office manager, title search clerk, chief clerk, appraiser IV, appraiser I, appraiser II, data clerk I, data clerk II, receptionist, and mapping information specialist. The job description for appraiser II and III are the same job description, with appraiser II scratched out and III written in.
IAAO's Property Appraisal and Assessment Administration states, "Although employees may improve their skills by their own efforts and the help of peers, managers have organizational responsibility for employee development. They use training, education, counseling, and performance reviews to identify talents and help employees grow." (Chapter 16, Administration)
The employee's performance of assigned duties and other job-related criteria provides the basis for an annual (at a minimum) employee evaluation. Employees need to be informed of the criteria on which they will be evaluated. A detailed job description is essential. Evaluation and performance appraisal ratings are based on the evaluation instrument and cumulative performance data gathered by supervisors throughout the year. The district was unable to provide written job descriptions for staff.
Each employee needs to have at least one evaluative conference annually to discuss the written evaluation and may have as many conferences about performance of duties as the supervisor deems necessary. Evaluation records and forms, reports, correspondence and memoranda may be placed in each employee's personnel records to document performance. All records that support appraisal ratings need to be maintained for at least two years. Official appraisal records are then maintained throughout a person's employment with the district and for two years after an employee ceases to be employed with the district. All employees need to receive a copy of their annual written evaluation.
A proper personnel evaluation process is essential to employee development and high morale. The district was unable to provide any recent performance appraisals of staff.
Reassess existing job descriptions to ensure job descriptions match staff duties, develop additional job descriptions and adopt an annual personnel performance evaluation system to use in evaluating all district staff.
There are generally 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.
Starr CAD uses the cost approach to value, using data from local contractors and Marshall and Swift to build cost schedules that is then used in a computer mass appraisal system. The market approach is used to build the cost schedules and then in defending the values to the property owners.
The Starr CAD lacks written procedures for determining productivity values for land designated for agricultural use.
Sections 23.41 and 23.51 of the Tax Code state that land designated for agricultural use should be valued based on the land's capacity to produce agricultural products. The land's productivity value is found by capitalizing the average net income the land would have yielded under prudent management during the five years preceding the current year.
Section 23.51(4) states that the chief appraiser shall calculate the average net income by considering the income that would have been due a land owner under cash lease, share lease, or whatever lease is typical for the area. Expenses directly attributable to the land's agricultural use are to be deducted and the resulting net income is to be capitalized using a rate established annually by the Farm Credit Bank of Texas (rate plus 2 and one half percent) or 10 percent whichever is greater (Section 23.53 Tax Code).
According to the chief appraiser, the district conducts an annual study of agriculture in the district and is assisted in this task by its agricultural advisory board. The district sends out an annual survey to agriculture land owners, requesting information, but there were no procedures on how to apply the information to locally appraised properties, nor was there any information to indicate that survey information was used to determine values.
In the 2003 Property Value Study, Roma ISD received an invalid finding due in part to its productivity values. The Comptroller found the school district's productivity values to be low - possibly a result of the appraisal district's lack of current data.
Develop procedures for agriculture valuation and annually calculate productivity values for land designated for agricultural use.
Starr County Appraisal District does not have an adequate written reappraisal plan to ensure the execution of timely and accurate appraisals. The chief appraiser said the district reappraises every three years.
The district's reappraisal plan is a one-page reappraisal plan that was adopted in August 1995. For tax year 2005 a summary report is attached that discusses some policies and methods of appraisal, but does not include specifics in which areas of the county will be reappraised and when, which staff will be assigned to each area, how the county is divided for reappraisal, or how the reappraisal plan is linked to the budget.
The district uses its appraisal and mapping software efficiently during reappraisals. Field appraisers are provided a list of mapped properties before the actual field work takes place. This allows for productive work while inspecting properties. The district also codes properties in the computer system with the date of last reappraisal.
Section 25.18 of the Property Tax Code requires appraisal districts to implement a plan for reappraisal, which provides for the reappraisal of property within the district once every three years. A comprehensive reappraisal plan is critical to the success of the district in many ways including: budgeting, market analysis, continuity of district performance during staff changes, as well as a directive for current staff.
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.
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:
- 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 inspections.
The primary function of every appraisal district is to appraise all taxable property equally and uniformly at market value. The chief appraiser and appraisal district staff are responsible for the day-to-day operations of the appraisal district, but the Board of Directors must adequately plan to accomplish these objectives and establish policies that serve as clear directives to the chief appraiser and staff. As representatives of the member taxing units, the Board of Directors is responsible for ensuring that the appraisal district produces an appraisal roll that reflects market value for all taxable properties.
A thorough reappraisal plan discusses in detail how and when the district plans to perform each of the activities mentioned above. A detailed reappraisal plan, if executed properly, 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. A detailed and properly executed plan would also ensure that taxpayers are treated uniformly in the payment of property taxes.
Develop and adopt a comprehensive reappraisal plan.
The district does not have a comprehensive appraisal manual for valuing all types of property in the district.
The district has a nine page document titled Personal Property Appraisers Manual. The first two pages are an introduction. The next two pages address classification of property as real or personal. The remaining five pages address appraisal reports, memo for personnel property appraisers and a method for inspecting personal property. The district also has a summary report of appraisal methods that is attached to the district's reappraisal plan, but the summary is mostly a document that can be handed out to the public and lacks detailed information on how appraisers appraise properties. There are no procedures on appraising residential or rental properties, commercial properties or any other property classifications. There are no land appraisal procedures.
Section 23.01 of the Tax Code, mandates that appraisal districts appraise property 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 accounting for the contributions of individual property characteristics to value.
A comprehensive appraisal procedures manual can provide staff information regarding local procedures for performing fieldwork for each type of property the staff appraises as well as directions for gathering and processing property characteristics and for reviewing and evaluating appraised values.
Develop an appraisal manual that includes comprehensive instructions on how to perform an appraisal for typical property in Starr County.
Starr CAD does not have written procedures for gathering and analyzing sales. According to the chief appraiser, he sends out sales verification letters when he finds out about sales, but the district has a poor response rate. There is no Multiple Listing Service (MLS) in Starr County. Sales are typically discovered by the district's field appraisers.
Section 5.07 of the Tax Code requires appraisal districts to submit sales data to the Comptroller's office annually beginning June 2005. Currently, the CAD provides the Comptroller's field appraiser with a list of confirmed sales. The CAD does not submit warranty deed data to the Comptroller's office. The Comptroller's office mails sales questionnaires based on deed transfers and shares the responses with the appraisal districts. By providing the state with sales and deed information, the district would have another source of confirmed sales data.
Establish written procedures for gathering and analyzing sales.
The appraisal district does not physically inspect business personal property regularly and lacks detailed procedures for valuing personal property. The district does have a nine-page document for personal property, but it lacks data for appraising property and gives the appraiser only limited direction. No staff member is dedicated to locating and valuing personal property,
The district relies mainly on rendition forms in valuing business personal property. The rendition forms are sent out annually. The chief appraiser said the response rate to renditions is low. Rendition forms are reviewed for reasonableness and compared to renditions from similar types of businesses.
The nature of personal property means that it is usually very mobile and often only temporarily kept or stored at a location. The mobility and temporary status of personal property parcels makes its discovery and classification among the most challenging problems for tax appraisers. Annual physical inspections to discover, list and classify personal property and to verify rendered amounts are essential to insure that property does not escape taxation. In addition, the quantity and condition of personal property, two key elements in determining the value of personal property, changes regularly. The inspection process further helps to insure appraisal equity and equal taxation.
Section 22.07 of the Tax Code permits the chief appraiser or a representative to enter the premises of a business during normal business hours (or at an agreed time) to inspect the property to determine the existence and value of personal property used for production of income. Efforts to identify such property in this manner should be made.
Section 23.01 of the Tax Code requires all property to be appraised at market value, taking into consideration the individual characteristics of each property. Regular inspections help identify changes in the character of the accounts, as well as changes in ownership and location of property. Verification, inspection and valuation of inventories, fixtures and equipment ensure that accounts reflect market value.
Inspect business personal property accounts and develop an independent valuation of the business personal property.
According to the chief appraiser, the district does not have a process for collecting income data. The district does not collect income information on apartment buildings, retail stores, office buildings or other commonly leased or rented properties.
The chief appraiser wrote in his response to the self assessment questionnaire that the district's computer records do not contain information on current property use, highest and best use of property or indicators of legal use of the property, such as zoning. The district also does not maintain computerized, or manually stored, data on land attributes important to the local market.
Starr CAD uses the cost approach to value, using data from local contractors and Marshall and Swift to build cost schedules that are then used in a computer mass appraisal system. The market approach is used to build the cost schedules and then in defending the values to the property owners.
The income approach to appraisal is commonly used to assess the value of commercial properties. To determine value, the appraiser will analyze comparable rental data available or the potential earnings capacity of the property, or both, to estimate the gross income potential of the property. Comparable operating expense data is analyzed to estimate the operating expenses of a property. The data is also analyzed to estimate rates of capitalization or rates of discount. Then the appraiser develops projects of future rents or income potential to assist the valuation of the property.
Without a means of collecting accurate income data, the district cannot use the income approach effectively in valuing specific income generating properties.
Develop a process for collecting income data and use the data to develop income schedules for valuing properties.