In July 2004, the Lago Vista Independent School District (Lago Vista ISD), located in Travis County, Texas, was identified as one of 54 Texas school districts meeting the criteria that initiate an Appraisal Standards Review (ASR) of the county appraisal district that serves them.
In March 2005, the Comptroller's Property Tax Division (PTD) began its ASR of the Travis Central Appraisal District (Travis CAD). Appraisal districts refer to themselves as county or central appraisal districts. Travis CAD refers to itself as a central appraisal district; in this report, therefore, the acronym CAD, when used in relation to Travis CAD, means a central appraisal district; otherwise, it means county appraisal district.
Appraisal Standards Reviews
The 2003 Legislature directed the Comptroller's office to conduct appraisal standards reviews of county appraisal districts if the Comptroller's office finds in its annual Property Value Study (PVS) that the appraisal district has one or more "eligible" school districts. Eligible school districts are those meeting all of the following conditions:
- the district's values are invalid in the most recent property value study;
- the district's values were valid in the two studies preceding the most recent study; and
- the district's local value is above 90 percent of the lower threshold of the margin of error.
In Texas, public education is paid for by a combination of state and local funds. Local funding comes from local property taxes. The chief appraiser of each CAD determines local property values, while school districts set tax rates that determine the amount of local tax revenue. Appraisal districts, under most circumstances, are required by law to appraise property at or near market value. Market value, in simple terms, is the price for which a property would sell under normal conditions. State funding is based on the total taxable property value within each school district as determined by the PVS.
The PVS independently estimates the taxable property value in each school district to ensure that state values reflect market value, which in turn ensures that school districts have approximately the same number of dollars to spend per student, regardless of the school district's property wealth or lack of property wealth. School districts with less taxable property value per student receive more state dollars for each pupil than those with more value per student. The state's fair distribution of school funding, then, depends largely on the Comptroller's taxable value findings.
By conducting ASRs, the Comptroller's office helps school districts to understand the reason for the invalid finding so they can effectively work with their appraisal districts to correct the problems and determine accurate market values. ASRs identify problems and recommend changes in procedures or methods to improve appraisal accuracy.
An ASR examines and evaluates CAD appraisal practices including appraisal planning, appraisal procedures and methodology and the application of and adherence to appraisal standards. The Tax Code and Comptroller rules are the major criteria used to measure CAD performance. The evaluation is based on a comparison of local methods and procedures to those generally accepted by the "mass appraisal" industry in Texas. (Mass appraisal is the valuation of a group of properties as of a given date, using common data, standardized methods and statistical testing.)
The Tax Code dictates certain appraisal procedures or standards such as the Uniform Standards of Professional Appraisal Practice (USPAP), specifically Standard 6: Mass Appraisal and Standard 7: Personal Property. The International Association of Assessing Officers' (IAAO's) Standards on Assessment also is used for guidelines.
The two principal focuses of the ASR are to determine why a school district is deemed eligible and to make recommendations to improve appraisal practices so that the school district's values can be determined valid in future studies. The review evaluates five broad functional areas of CAD operations: information processing systems, district staffing, property mapping and discovery, appraisals and appraisal standards.
The review methodology includes a self-assessment completed by the CAD; staff interviews; reviews of written policies, procedures and plans; financial and management audits; and assessments of manual and automated records systems.
Upon completion of the review process, the Comptroller's office issues a report of findings that includes recommendations for change and commendations for exemplary district appraisal practices. The appraisal district is required by law to comply with the recommendations within one year of the release of this report. If the Comptroller determines that the appraisal district board of directors failed to take remedial action within one year after the issuance of the review, the Comptroller shall notify the district judges serving in the county, who shall appoint a five-member board of conservators to implement the recommendations.
This board of conservators shall supervise the CAD's operations until the Comptroller determines pursuant to the annual property value study, Section 403.302, Government Code, that in the same year the taxable value of each school district for which the appraisal district appraises property is the local value for the school district. The appraisal district shall bear the costs related to the supervision and control of the district by the board of conservators.
The review team found several commendable practices implemented by dedicated and hardworking Travis CAD employees. At the same time, Travis CAD faces a number of challenges to improve its appraisal practices.
Key Findings and Recommendations
Improve mass appraisal consistency. Travis CAD does not use its mass appraisal software system's capabilities to the fullest. The reviewer's sample and comparison of changes in assessed property values in three different neighborhoods found that values were not changing consistently. Since the appraisal staff routinely adjusts selected neighborhood and property values rather than composing rules for the appraisal software component that provides for mass appraisal by neighborhood, uniformity in adjustments is not certain. Successful appraisal districts use their available staff and software capabilities to ensure appraisal consistency and accuracy.
Renew efforts to update Lago Vista land characteristics. The review team found inaccuracies in appraisal card information after inspecting randomly selected lakefront and lakeview properties across the Lago Vista ISD lakefront area and comparing the inspection data with the appraisal card information on file at Travis CAD. The lack of current, accurate appraisal data and few existing sales contributed to the overall undervaluing of Lago Vista ISD lakefront properties, causing Travis CAD to meet the 2003 PVS eligibility criteria for an appraisal standards review. Successful appraisal districts apply adequate appraisal resources as needed to ensure accurate assessments, resulting in property appraisals that reflect the individual characteristics affecting their market value.
Travis CAD has commendable practices that might prove useful for other county appraisal districts.
Travis CAD has a comprehensive set of policy and procedure manuals for property appraisal and administrative support operations. The district has detailed procedures for administrative support functions such as open records inquiries, mail processing, records management and customer service and training. Personnel procedures and daily financial operations such as payroll processing and purchasing are addressed in separate documents. The district also has detailed procedures for mass appraisal, open space land appraisal and granting or denying exemptions. Other functions with procedural or policy documentation include mapping, information technology, ratio studies, improved sales, land sales property identification and special public and taxpayer notices.
Travis CAD has excellent computer capabilities for ratio studies. The district's computerized appraisal system allows it to analyze appraisals through ratio studies within and among property classifications. Only property sales information and market area specification are needed to request statistics on demand. These standard ratio study findings are useful in analyzing appraisal performance.