Chapter 2:
Findings of the Appraisal Standards Review
Tom Green CAD formed in 1980 and became active in 1981. As of January 2009, Tom Green CAD had 26 full-time positions consisting of the chief appraiser, assistant chief appraiser, nine appraisers, two appraisal clerks, a mapper, two abstractors, one executive secretary, one systems administrator, two information system personnel, one bookkeeper, one bookkeeper clerk and four cashier/clerks. Tom Green CAD contracts with a professional appraisal services firm to appraise mineral, business personal, industrial and utility properties. Exhibit 1 shows Tom Green CAD's organizational structure.
Tom Green CAD's board of directors consists of five members.
All board members responded to the Comptroller's board survey regarding board policies and procedures; chief appraiser and staff; property appraisals; and appraisal review boards. All board members gave Tom Green CAD high marks. One member disagreed that the CAD uses an agricultural advisory board to develop productivity values for the special agricultural appraisal.
The Comptroller performed an ASR of the CAD in 2005 that was published in May 2006. Tom Green CAD completed all recommendations made in the ASR.
Key Recommendations
As part of the review process, PTAD makes recommendations to address challenges identified during its review of a CAD. Below are recommendations addressing key challenges associated with Tom Green CAD's appraisal activity.
FINDING
Tom Green CAD did not complete the use of ratio study results to properly adjust all categories of property to market value in all school districts, nor did it completely consider valuation issues in a changing market as required by Property Tax Code Section 23.01.
Property Tax Code Section 23.01 requires:
(a) Except as otherwise provided by this chapter, all taxable property is appraised at its market value as of January 1.
(b) The market value of property shall be determined by the application of generally accepted appraisal methods and techniques. If the appraisal district determines the appraised value of a property using mass appraisal techniques, the mass appraisal standards must comply with the Uniform Standards of Professional Appraisal Practice. The same or similar appraisal methods and techniques shall be used in appraising the same or similar kinds of property. However, each property shall be appraised based upon the individual characteristics that affect the property market value.
USPAP Rule 6-7 requires appraisers to "employ recognized mass appraisal testing procedures and techniques to ensure that standards of accuracy are maintained." The rule further comments the following:
appraisers engaged in mass appraisal have a professional responsibility to ensure that, on an overall basis, models produce value conclusions that meet attainable standards of accuracy. This responsibility requires appraisers to evaluate the performance of models, using techniques that may include but are not limited to, goodness-of-fit statistics, and model performance statistics such as appraisal-to-sale ratio studies, evaluation of hold-out samples, or analysis of residuals. (Emphasis added.)
Tom Green CAD's computerized appraisal system allows it to analyze appraisals through ratio studies within and among all categories of property. Exhibit 2 provides the CAD's 2007 ratios for Category A for all six school districts.
Exhibit 2
Tom Green CAD
Category A 2007 Ratio Study Results
| School District | 2007 CAD Ratio |
|---|---|
| Christoval Independent School District | 0.8660 |
| San Angelo Independent School District | 0.8980 |
| Water Valley Independent School District | 1.0145 |
| Wall Independent School District | 0.8590 |
| Grape Creek Independent School District | 0.9900 |
| Veribest Independent School District | 0.9662 |
Source: Tom Green CAD Ratio Studies, 2007.
Tom Green CAD's 2007 ratio studies show it was not appraising Category A property at market in the three school districts identified as deficient in the PVS. The CAD did properly "evaluate the performance of models" and adjust them to ensure it maintained "standards of accuracy."
The assistant chief appraiser said several reasons caused the properties to be undervalued: lack of time, insufficient manpower, implementation of the three-year cycle and schedules not updated for 2007. Tom Green CAD hired two appraisers since 2007, which it believes will help. Both appraisers are inexperienced but the CAD placed them on a "fast track" training program and they are beginning to contribute to the appraisal product. Tom Green CAD lost an important resource of sales information in 2006 when the local Board of Realtors discontinued providing sales information due to an attorney general's opinion. Ratio studies conducted during the 2007 appraisals were very limited. The local Board of Realtors started providing sales to the CAD again in March 2008.
The assistant chief appraiser said the CAD is divided into three major regions and appraises all real property every three years, doing one of the three regions annually, regardless of any ratio study/report findings and as time allows. In addition to the three-year cycle, sales ratio reports are run on all neighborhoods and subdivisions outside of the region undergoing a full reappraisal; this enables staff to identify areas within the CAD that need to be reappraised during the current year. Those areas or subdivisions whose ratios are above or below statutory requirements are reappraised in the current year regardless of the region in which they are located or as time allows. One of the three regions was completed in 2007, thereby leaving two regions that were not appraised. In 2007, outlying land schedules and two of the three Tom Green CAD market area appraisal/reappraisals were not updated or completed.
A review of 214 sampled Category A property values in San Angelo ISD, which were all based on sales, reveals the CAD appraised below the acceptable ratio in more than half of the sampled parcels and within the acceptable ratio in less than a third of the properties (Exhibit 3).
Exhibit 3
Tom Green CAD
San Angelo Category A Property Analysis
| Description | Data |
|---|---|
| Total Parcels | 214 |
| Ratios<.95 | 125 |
| Percent Low Ratios (<.95) | 58.4% |
| Ratios>1.05 | 21 |
| Percent High Ratios (>1.05) | 9.8% |
| Ratios between .95 and 1.05 | 68 |
| Percent Ratios between .95 and 1.05 | 31.8% |
Source: Texas Comptroller of Public Accounts, Property Value Study, 2007.
Tom Green CAD appraisers identify individual properties in critical need of field review through sales ratio analysis. Sold properties with a high variance in sales ratios are reviewed on a regular basis to check for accuracy of data characteristics.
As the CAD's parcel count has increased through new home construction, and the homes constructed in the boom years of the late 1970s and early 1980s undergo remodeling, the appraisers are required to perform the field activity associated with transitioning and high demand neighborhoods. Increased sales activity resulted in a more substantial field effort on the part of the appraisers to review and resolve sales outliers. Appraisers frequently review subjective data items such as quality of construction; condition; physical, functional and economic obsolescence; and factors contributing significantly to the market value of the property. After preliminary estimates of value have been determined in targeted areas, the appraisers take valuation documents to the field to test the computer-assisted values against appraisal judgment. During this review, appraisers are able to physically inspect both sold properties and unsold properties for comparability and consistency of values.
The CAD attempts to ensure that the appraised values it produces meet the standards of accuracy in several ways. Overall sales ratios are generated for each school district to allow the appraiser to review general market trends within an area of responsibility, and provide an indication of market appreciation or depreciation over a specified period of time. The neighborhood descriptive statistics are reviewed for each neighborhood being updated for the current tax year.
Statistical analysis of final values is an essential component of quality control. This methodology represents a comparison of the final value against the standard and provides a concise measurement of the appraisal performance. Statistical comparisons of many different standards are used, including sales of similar properties, the previous year's appraised value, audit trails, value change analysis and sales ratio analysis.
Overall sales ratios are generated by property type from the sales database and the computer assisted mass appraisal (CAMA) system. Appraisers use desktop applications such as database and spreadsheet programs to evaluate subsets of data by property category type or a specific and unique data item. On the desktop, this may be customized and performed by building class and age. In many cases, field checks are conducted to ensure the ratios produced are accurate and the appraised values used are based on accurate property data characteristics. These ratio studies aid the appraisers by providing an indication of market activity by economic area or changing market conditions.
The 2008 Category A ratio studies in the three eligible school districts indicate the CAD is doing a better job appraising property (Exhibit 4).
Exhibit 4
Tom Green CAD
Category A 2008 Ratio Study Results Compared to Preliminary 2008 PVS
|
School District |
2008 CAD Ratio |
Preliminary 2008 PVS |
|---|---|---|
| Christoval | 1.0040 | 0.9890 |
| San Angelo | 0.9780 | 0.9405 |
| Wall | 0.9770 | 1.0471 |
Sources: Tom Green CAD Ratio Studies, 2008 and Texas Comptroller of Public Accounts Preliminary 2008 PVS.
The Preliminary 2008 PVS confirms the improvement. While the Preliminary 2008 PVS shows improvement in Category A appraisals, the CAD's largest school district, San Angelo ISD, still received invalid values. The CAD will have an opportunity to appeal the preliminary PVS and may be able to achieve valid value.
Effective CADs conduct frequent ratio studies with associated appraisal maintenance, thus ensuring necessary adjustments are made. Failing to use ratio studies effectively and in a timely manner to perform appraisal maintenance can result in unequal appraisal of properties.
IAAO's Standard on Ratio Studies provides recommendations on the design, preparation, interpretation and use of ratio studies. The standard ratio studies generally involve the following seven basic steps:
Step 1. define the purpose, scope and objectives;
Step 2. design;
Step 3. stratification;
Step 4. collection and preparation of market data;
Step 5. matching of appraisal and market data;
Step 6. statistical analysis; and
Step 7. evaluation and use of results.
RECOMMENDATION 1
Continue improving the complete use of ratio studies to analyze current market data to help ensure the CAD attains market appraisals in all school districts.
FINDING
Tom Green CAD has not completed converting paper maps to computerized maps as part of a geographic information system (GIS).
IAAO's Standard on Digital Cadastral Maps and Parcel Identifiers points out the following:
Computerization of the map and parcel data provides new, exciting capabilities to manage, analyze, summarize, and display geographically referenced information. Digital cadastral map layers and parcel data are easily shared, allowing various users to manipulate and selectively retrieve layers of parcel and other information and to produce composite maps with only the data needed by each. Such sharing also reduces the duplication of effort inherent in separate, possibly incompatible, map systems.
The CAD does not have a written plan or timeline for completing this project. According to the mapper, about one-half of Tom Green CAD is electronically mapped. Completion is estimated to take another two years. New parcel splits and combinations are mapped as they occur. The mapper is working on the remainder of the county, as time permits. In the meantime, the CAD continues to rely on paper maps. The paper maps comply with Texas Comptroller's Property Tax Rules Section 9.3001 (Exhibit 5).
Exhibit 5
Tom Green CAD
Compliance with Rule 9.3002 on Tax Maps
|
Comptroller Rule 9.3002 Mapping Requirement |
Description of CAD's Level of Compliance with Specific Sections of Rule 9.3002 |
|---|---|
| Does the CAD draw its tax map system to scale and delineate lot and property lines with dimensions or areas and identifying numbers, letters or names for all delineated lots or parcels? | Yes. All parcels are drawn according to legal description and identified with identification number plus area, either acreage or square footage. |
| Does the CAD divide the tax map into sections drawn at a scale large enough to serve the purposes of property assessment? | Yes. All parcels can be grouped into sections in legible form. |
| Does the CAD tax map assign each section and each parcel numbers in accordance with a parcel identification numbering system? | Yes. Each parcel has its own unique 16-digit number that is on all tax maps. |
| Does the CAD record these numbers on the tax map, section and parcel? | Yes. Each tax map of parcels contains an identification number relevant to location. |
| Does the CAD also record the identifying number for each parcel as recorded on the tax map on the appraisal card maintained for that parcel? | Yes. The identification number on the tax map is consistent with the number on the appraisal card. |
| Does the CAD annually update the tax map system to incorporate any new subdivisions or property transfers as indicated by the filing of subdivision plats or deeds with the county clerk's office? | Yes. The tax maps are updated quarterly when the CD is received from the county clerk's office. |
| Does the CAD maintain information required by Rule 9.3002 in electronic data processing records rather than physical document? | Parcel data in the GIS is retained in digital form. Data is backed up and stored locally and off site. Maintenance occurs regularly in partnership with the city of San Angelo. |
Sources: Texas Comptroller of Public Accounts Comptroller Rule 9.302 and Tom Green CAD Onsite Review.
In 2003, Tom Green CAD began the process of converting paper maps to computerized maps as part of a GIS. Using mapping software, the CAD's mapper enters metes and bounds of property taken from recorded deeds and plats. Each parcel is given a unique identifying number. Parcels can be displayed electronically as a single parcel or as part of a larger group of parcels, such as a subdivision or neighborhood. The GIS shows parcels with relation to streets, roads, rivers, streams and other topographical features that can have an influence on property values. The system identifies taxing entity boundary lines.
The CAD's aerial maps are being integrated into the GIS, allowing all of the same data to be displayed on aerial maps. Upon completion, the mapping system will be integrated into the appraisal system.
The CAD lacks detailed plans that ensure a completion goal and provide feedback for the board, chief appraiser and staff.
Having an integrated appraisal/GIS system helps capture and verify more sales information, which the CAD can use to improve its valuation of properties. An integrated system allows CADs to respond quickly to information requests by the public, and gives both the appraiser and ARB access to more comprehensive information on a real time basis. Lack of such a system can contribute to untimely and inefficient reappraisals and can lead to inconsistent property valuation.
IAAO recommends that a computerized mapping system include the following elements:
- geodetic network;
- base map layers;
- additional map layers;
- parcel identifiers;
- ownership information;
- imagery;
- map products;
- facilities and equipment;
- program management;
- staff and training; and
- procedures, standards and records.
RECOMMENDATION 2
Develop and implement a plan and timeline for completing and integrating of the GIS mapping and appraisal systems within two years.