Appraisal Standards Review
Val Verde County Appraisal District Follow-Up Report
July 2007
Introduction
In July 2004, the Comptroller’s Property Tax Division (PTD) identified Comstock Independent School District (ISD), located in Val Verde County, 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 July 2005, PTD released results of its ASR of the Val Verde County Appraisal District (CAD). The report made eight recommendations to improve Val Verde CAD’s appraisal practices and operations. ASRs determine why the Comptroller’s property value study (PVS) found local values invalid and recommends changes in operations and management to improve appraisal practices. The Val Verde CAD review evaluated five functional areas: 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, Val Verde CAD faced challenges in documenting procedures and appraisal methods, establishing productivity values and reappraising regularly.
Texas 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), in turn, appoints a five-member board of conservators to implement the recommendations. The board of conservators must exercise supervision and control over the operations of the appraisal district until the Comptroller determines each school district for which the appraisal district appraises property has the same taxable value as the local value for the school district in the same year. The appraisal district bears the costs related to the supervision and control of the district by the board of conservators.
For the one-year follow-up report, an appraisal district complies with 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. Remedial action is generally demonstrated by having implemented or nearly completed most of the recommendations by the first-year anniversary of the report. The Comptroller recognizes that some ASR recommendations take more than a year to implement for a CAD with limited resources. As long as the CAD works to implement the recommendations, the Comptroller continues to work with the CAD to achieve full compliance. CADs that have completed all recommendations by the first-year anniversary have met their statutory obligations and will not require further monitoring.
In this report, PTD assesses Val Verde CAD’s progress toward implementing the ASR’s recommendations. The CAD imple-mented three of the eight ASR recommendations, and it is in various stages of completion on the remaining five.
PTD sent the Val Verde CAD’s board members surveys soliciting their views and comments on the ASR. No board member responded.
PTD will continue to monitor Val Verde CAD’s progress. This report outlines the steps the CAD still must take to complete implementation of the recommendations.
History and Significant Events
PTD conducted an ASR for Val Verde CAD when Comstock ISD’s local value fell outside the confidence interval on the 2003 PVS, and the school district was eligible for a grace period under Section 403.3011 of the Government Code.
The 2003 PVS found Subcategory D1, Productivity Value of Qualifying Acres, was the primary factor causing PTD to assign Comstock ISD an invalid finding. Subcategory D1 had a category ratio of 0.6552. The CAD indicated it did not perform productivity calculations for 2003 or the prior year because of a lack of verifiable income and expense data.
The other school district within Val Verde CAD’s jurisdiction is San Felipe-Del Rio Consolidated Independent School District (SF-DRCISD). The Comptroller certified SF-DRCISD’s local value for 2003. Subcategory D1 had a category ratio of 0.6736. Despite this valuation, the proportionately small category value of Qualified Land (less than 1 percent of total test values) had only slight impact on local value, which remained within the margin of error.
The CAD’s reported local values for both school districts were in line with the PVS’s confidence interval limits in 2004, and the Comptroller certified the local values. In the 2004 PVS, productivity values continued to vary significantly when compared to the PTD value estimates in both Comstock ISD and SF-DRCISD.
The 2005 PVS deemed SF-DRCISD an eligible school district because the reported local value fell outside the PVS confidence interval. The two property categories with the largest differences in value between local and state value were Category A, Single-Family Residential, which tested with a weighted mean ratio of 0.9323, and Category F1, Commercial Real, which tested with a weighted mean ratio of 0.9223 on the final 2005 PVS.
In 2006, the PVS found the taxable values of both Val Verde CAD school districts to be valid, and the Comptroller’s office certified local values.
What Remains to Be Done
The Appendix lists the eight recommendations identified in the original report, with a summary of actions taken to date. Val Verde CAD implemented three recommendations and is working on completing the remaining five.
PTD will continue to monitor Val Verde CAD operations and will require quarterly reports until all recommendations are complete. Val Verde CAD must complete the recommendations within one year of the issuance of this report. The following recommendations require additional work.
Recommendation 1: Develop and implement written procedures for responding to financial audits.
In August 2006, the chief appraiser indicated to the reviewer that the CAD’s attorney would draft written procedures for responding to financial audits to present to the board on July 20, 2006. Upon board approval, the CAD was to incorporate the procedures into its policy manual. The board did not receive this document.
The August 2006 board minutes reflect the board discussed the 2005 financial audit with its Certified Public Accountant (CPA), who suggested amending the budget for capital outlays in the future. The CAD did not provide the Comptroller evidence that it followed the CPA’s advice, nor did it provide documentation that it has adopted the procedures needed to assure compliance with this recommendation.
The chief appraiser tendered his resignation during the August board meeting, but the board voted against it, stating that the reasons given warranted more than an acceptance of a resignation. A motion for dismissal was then carried. One of the reasons given was for “normally violating the check cashing policy for payroll and mileage allowance checks.” These control items were findings in the 2002 financial audit, and the chief appraiser’s dismissal in 2006 indicate procedures were not implemented addressing the auditor’s recommendations.
To complete this recommendation, the board must direct the new chief appraiser to draft and implement written procedures for responding to financial audit findings. Board minutes should reflect that the board adopted the procedures and that it regularly reviews management’s responses to financial audit findings.
Recommendation 4: Develop a plan and timeline for purchasing and integrating a geographic information system with the CAD’s appraisal software by the end of 2006.
In October 2005, Val Verde CAD purchased a geographic information system (GIS) from the firm that provides the CAD’s computer-assisted mass appraisal (CAMA) system. In February 2006, the firm used existing CAD maps for conversion into the new GIS system. According to the chief appraiser, the firm installed the system in May 2006, and by August 2006, it had converted approximately 25 percent of the CAD’s maps.
The current chief appraiser indicated that the CAD would provide training on the GIS in April 2007 but did not provide a time-line developed for completing the project.
To complete this recommendation, the CAD must develop a timeline for integrating the GIS and CAMA systems. By developing a timeline, the CAD will be able to monitor the project’s progress, plan any additional training and plan to use the GIS system in future appraisal activities, such as field appraisals, sales analysis and reappraisal plan activities.
Recommendation 5: Adopt and implement a detailed reappraisal plan.
In May 2006, the chief appraiser obtained a copy of the Starr CAD mass appraisal report and made changes to that document to reflect staff names and parcel counts in Val Verde CAD. In August 2006, the Comptroller received an unsigned reappraisal plan. The CAD did not provide evidence that the board adopted the reappraisal plan.
In April 2007, the chief appraiser sent PTD a signed copy of a reappraisal plan and minutes from the August board meeting that show its adoption. The reappraisal plan is based on a mass appraisal report and lacks detail. For example, the draft does not address reappraisal budgeting, training, staffing levels, work flow or costs associated with the plan. Additionally, the plan should clearly define market areas or neighborhoods, and timelines and resources, including staffing needs, should be specific.
To complete this recommendation, the CAD must finish revising and adapting the reappraisal plan to local standards and procedures. The CAD should refer to Texas Property Tax Code Sections 6.05(i) and 25.18(b)(1) – (7) to ensure the approved reappraisal plan complies with the statutory requirements.
Recommendation 6: Prepare and issue detailed appraisal procedures manuals to each appraiser.
As a first step in developing a detailed appraisal procedures manual, the chief appraiser expanded the existing property classification guide. When working in the field, appraisers use the recently expanded residential classification guide that now includes descriptions and photos of various classes of homes.
In May 2007, the chief appraiser delivered a two-page set of steps the CAD follows in the appraisal process, but the guidelines lacked specific details typically found in most appraisal manuals. An appraisal procedures manual provides staff local procedures for activities such as cost-based model use, rendition reviews, appraisal methods and other techniques such as depreciation calculation or fieldwork procedures, and appraisal district practices. Local appraisal procedures are tools the CAD can use to train staff members to ensure consistency in appraisal performance.
To complete this recommendation, the CAD must develop appraisal procedures manuals for staff members.
Recommendation 8: Annually calculate productivity values for land designated for agricultural use as required by Sections 23.41 and 23.51 of the Property Tax Code.
Working with the agricultural appraisal advisory board and the county extension agent, the CAD distributed agricultural surveys and gathered income and expense information for 2004 and 2005. The chief appraiser indicated data was not available for the 2006 tax year, but historical data showed a stable trend. The chief appraiser explained that it is difficult to obtain local agricultural cost and income data.
To complete this recommendation, the CAD must follow Tax Code Section 23.51(4) in calculating “net to land.” “Net to land” means the average annual net income derived from the use of open-space land that would have been earned from the land during the five-year period preceding the year before the appraisal. Net to land is the net income that would be due to the land-owner under the cash lease, share lease, or whatever lease agreement is typical in the area for a class of land. Failure to collect 2006 data for net to land will impact the 2007 net-to-land calculation.
Appendix
Val Verde 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 | Develop and implement written procedures for responding to financial audit findings. |
In progress |
September 2007 |
Minutes of the August 2006 meeting show the board discussed the 2005 financial report with the auditor who suggested the budget be amended for capital outlays in the future. The CAD did not provide copies of procedures that address the issue in response to the audit. The chief appraiser tendered his resignation during the August board meeting, but the board voted against it, stating that the reasons given warranted more than an acceptance of a resignation. They carried a motion for dismissal. One of the reasons given was for “normally violating the check cashing policy for payroll and mileage allowance checks.” These control items were findings in the 2002 financial audit. The chief appraiser’s dismissal in 2006 indicates procedures were not implemented addressing the auditor’s recommendations. |
| 2 |
Develop a job description and objective set of evaluation measures for the chief appraiser position and establish a written, annual evaluation process |
Complete |
In November 2005, the chief appraiser gave board members the “Val Verde Appraisal District Performance Evaluation System” packet, which it used to complete the chief appraiser’s performance review, along with a job description. In April 2007, the chief appraiser furnished PTD an updated copy of the chief appraiser evaluation form the CAD intends to use for this recommendation. |
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 |
Establish written guidelines for administering 1-d-1 open space agricultural appraisals. |
Complete |
|
The CAD obtained a copy of the “Agriculture Intensity Standards for Open Space Land (1-d-1)” used by Dimmit CAD. The chief appraiser planned to use it in establishing guidelines for Val Verde CAD. In April 2007, the chief appraiser provided PTD a copy of the CAD’s guidelines for administering 1-d-1 land. |
| Rec. # | Recommendation | Implementation Status | If Not Complete, Projected Completion Date | Description of Actions Taken to Date |
|---|---|---|---|---|
| 4 |
Develop an implementation plan and timeline for the purchase and integration of a geographic information system with the CAD’s appraisal software by the end of 2006. |
In Progress | August 2007 |
In October 2005, Val Verde CAD purchased a geographic information system (GIS) from the firm that provides the CAD’s computer-assisted mass appraisal (CAMA) system. In February 2006, the firm used existing CAD maps for conversion into the new GIS system. According to the chief appraiser, the firm installed the system in May 2006, and by August 2006 it had converted approximately 25 percent of the CAD’s maps. The current chief appraiser indicated that the CAD would provide training on the GIS in April 2007 but did not provide a timeline for completing the project. |
2.4 Staffing, Personnel Qualifications and Positions
The report did not contain recommendations for this section.
2.5 Generally Accepted Appraisal Practices; Equality and Uniformity of Appraisal Standard
| Rec. # | Recommendation | Implementation Status | If Not Complete, Projected Completion Date | Description of Actions Taken to Date |
|---|---|---|---|---|
| 5 |
Adopt and implement a detailed reappraisal plan. |
In Progress |
September 2007 |
In May 2006, the chief appraiser obtained a copy of the Starr CAD mass appraisal report and made changes to that document to reflect staff names and parcel counts in Val Verde CAD. In August 2006, the Comptroller received an unsigned reappraisal plan. The CAD did not provide evidence that the board adopted the reappraisal plan. In April 2007, the chief appraiser sent PTD a signed copy of a reappraisal plan and minutes from the August board meeting that show its adoption. Val Verde CAD’s reappraisal plan does not address reappraisal budgeting, training, staffing levels, work flow or costs associated with the plan. Additionally, the plan should clearly define market areas or neighborhoods, and timelines and resources, including staffing needs, should be specific. |
| 6 |
Prepare and issue detailed appraisal procedures manuals to each appraiser. |
In Progress |
September 2007 |
The chief appraiser made changes and additions to the existing property classification system by adding descriptions and photos to residential classes. In May 2007, the chief appraiser delivered a two-page set of steps the CAD follows in the appraisal process, but the guidelines lacked specific details typically found in most appraisal manuals. An appraisal procedures manual provides staff local procedures for activities like cost-based model use, rendition reviews, appraisal methods and other techniques, such as depreciation calculation or fieldwork procedures, and appraisal district practices. Local appraisal procedures are tools the CAD can use to train staff members to ensure consistency in the appraisals. |
| 7 |
Establish written procedures for gathering and analyzing sales. |
Complete |
The chief appraiser provided a copy of the “Data Collection Procedures” that is part of the draft of the reappraisal plan for the CAD. The procedures state that “clerical staff assigned to process recorded deeds are instructed to mail a sales questionnaire to both grantor and grantee through use of a CAD-generated questionnaire (sales letter). Any completed questionnaire returned is then entered into the CAMA system for use in ratio studies.” In April 2007, the chief appraiser furnished a copy of the sales letter/questionnaire the CAD uses in gathering and analyzing sales data. The letter screens sales for arm’s-length transactions. |
|
| 8 |
Annually calculate productivity values for land designated for agricultural use as required by Section 23.41 and Section 23.51 of the Property Tax Code. |
In Progress |
October 2007 |
The CAD did not obtain adequate income or expense data relating to the calculation of agricultural values for the 2006 tax year and was unable to calculate or incorporate any 2006 data into the income history. |