Chapter 2:
Findings of the Appraisal Standards Review
This chapter of the report addresses findings, commendations and recommendations from the appraisal standards review of the Van Zandt CAD in two sections:
2.1 Generally Accepted Appraisal Practices
2.2 Other Recommendations
2.1
Generally Accepted Appraisal Practices
Three general appraisal methods or approaches–cost, income and market–must be considered in determining the market value of property. The appraiser must use the method most appropriate to a particular property.
Additional information about the approaches to determining or appraising value may be found in appraisal textbooks and IAAO Technical Standards. Appraisers usually determine the value of producing mineral deposits, such as oil, gas and coal, and the value of many utility and commercial properties by using the income approach to value. Most appraisal districts contract with consultants to appraise mineral and utility properties. The chief appraiser can provide information that helps the contractor decide the proper method to use to appraise mineral and utility properties.
Appraisal districts are required to have appraisal manuals including local procedures for the appraisal of all categories of property the CAD appraises. A review was conducted of all appraisal manuals. It was determined that local procedures have been developed for the appraisal of land and business personal property.
FINDING
The appraisal district has developed a procedures manual for the appraisal of business personal property.
The CAD hired the current business personal property appraiser in 2001 and she began appraising business personal property in 2002. The personal property appraiser has maintained a personal property manual with local procedures throughout her tenure. Revisions and updates to the manual are made annually or as needed.
In 2006, the appraisal director and business personal property appraiser revised the business personal property manual to make the appraisal procedures easier to follow and perform.
The business personal property manual incorporates Property Tax Code definitions and requirements along with local appraisal procedures. The major sections and subsections of the manual are as follows:
- Introduction
- Challenges in appraising personal property;
- Property Tax Code definitions of personal property;
- Identification of CAD personnel involved in the appraisal process (personal property appraiser, appraisal director, appraisal secretary); and
- Listing data sources (field inspections, newspapers, renditions, etc.).
- Discovery of Property
- Property Tax Code rendering requirements; and
- Sources of information used to discover personal property and inventory.
- Listing of Property
- Preparation of assessment lists.
- Establishing Situs of personal property
- Guidelines on establishing taxing unit jurisdiction of personal property.
- Overall Valuation and Statistical Analysis
- Developing cost schedules;
- Statistical analysis; and
- Developing depreciation schedules and trending factors.
- Inventories
- Definition of inventories;
- Level of trade; and
- Inventory valuation.
- Use Items
- Definition of use items (furniture, fixtures, equipment);
- Asset valuation (replacement cost new less depreciation);
- Present value factor method; and
- Example of using present value factor.
- Guidelines for Categorizing Real and personal property
- Listing of business categories (e.g., bank, carwashes) and corresponding business items and whether items are real property or personal property.
The manual also includes a document titled Personal Property Administrative Guidelines. These administrative guidelines are local directives to the personal property appraiser to help ensure a consistent appraisal process. Examples of the guidelines include the following:
- on all big accounts ($100,000 or more) be sure you have certified documentation, if possible, for the inventory and other personal property;
- be sure you leave a form memo with someone at the business, if you miss the necessary contact party;
- be sure you always date the record when you were there and results of the visit;
- renditions are mailed when the owner can not be provided a rendition through an on-site visit. We want a practical approach to our personal property program;
- be sure you update rolling stock schedules annually or as needed;
- be sure to contact permit owners in writing that have leased trucks and trailers to see who is to pay on what; and
- list and value only those vehicles that belong to the business (i.e., not personal vehicles that are used in the business occasionally).
A comprehensive appraisal procedures manual helps ensure consistency and accuracy in the appraisal process.
COMMENDATION
The appraisal district has developed a business personal property manual with guidelines to outline a consistent and accurate appraisal process.
FINDING
In response to the 2005 PVS finding that indicated that commercial real property may have been systematically underappraised, Van Zandt CAD's chief appraiser used a process management approach to efficiently and cost-effectively improve the CAD's commercial valuation process and procedures.
The chief appraiser recruited needed technical expertise for commercial valuations and named an individual to the position of appraisal director. By using the residential appraisers' knowledge and experience in turn, the new appraisal director, who was also placed in charge of the commercial real valuation department, restructured fieldwork assignments to address the CAD's problem with appraisal uniformity for all classes of property. The field appraisers, who were normally responsible for appraising land and improvements within a defined territory, were deployed in the CAD's re-inspection project of commercial real properties by collecting data, measuring structures and photographing commercial parcel improvements located in his or her territory.
In July 2006, the Comptroller's PVS found Wills Point ISD's taxable value for 2005 to be invalid. Local value was certified because the school district was eligible for the first year of a possible two-year grace period. In Wills Point ISD, sample ratios of commercial real parcels tested with a weighted mean ratio of 0.6618, which contributed, in part, to the study's finding of invalid local value.
On a district-wide basis, sample ratios of the CAD's appraisal performance in Category F1 tested with a median of 0.82, indicating appraisals at a low percentage of market value. The COD, which measures uniformity/dispersion of appraisal, was 22.56 and indicates disperse ratios. The price-related differential (PRD), which is a statistic for measuring "vertical" uniformity, was 0.87 for Commercial Real in Van Zandt CAD. Chapter 20, Sales Analysis and Mass Appraisal Evaluation in the IAAO's Property Appraisal and Assessment Administration states "PRDs should range between 0.98 and 1.03. Lower PRDs suggest significant appraisal progressivity; higher ones suggest significant regressivity." A PRD of 0.87, therefore, suggests progressivity, which is an appraisal bias such that high-value properties are appraised higher than low-value properties in relation to market value. Both regressivity and progressivity of appraisals can result from misclassifications or systematic problems with appraisal schedules, tables or techniques.
Because of acquiring needed appraisal expertise and using the appraisal staff to gather cadastral data with new work processes, the chief appraiser was able to correct systematic problem in the CAD's appraisal model. For example, the unit of comparison previously used by CAD appraisers for commercial site valuations in Wills Point ISD was sale price per acre, which is typically used for valuing large industrial sites or rural and farm properties. By applying the staff appraisers' experience in data collection, the new director conducted a reappraisal of neighborhood businesses and the CAD rebuilt the commercial real land schedules for 2006 using sale price per front foot as the unit-value comparison, which is helpful for appraising commercial sites that benefit from visibility to drive-by and other types of traffic.
In 2006, the Wills Point ISD sample ratios for commercial real parcels tested with a weighted mean ratio of .9703, which represents a significant improvement in the category's level of appraisal within in the school district. Likewise, Van Zandt CAD had significant performance improvements from the previous year's commercial real appraisal as shown by the following measures from the 2006 preliminary PVS:
- the median level of appraisal of commercial real improved to 0.96 from 0.82 in 2005;
- the CAD's 2006 commercial real COD of 10.28 versus 22.56 in 2005, indicates improved uniformity of appraisal; and
- the commercial real PRD improved to 0.95 from 0.87 in the prior year.
COMMENDATION
The Van Zandt CAD chief appraiser hired an experienced appraiser for the appraisals director position to improve commercial real appraisal process and procedures, which resulted in improved appraisal performance in 2006.
FINDING
The CAD does not fully utilize the income approach when appraising commercial properties.
The chief appraiser said that the CAD has had difficulty obtaining market and income data on commercial properties which hinders the CAD in appraising commercial property. The chief appraiser noted that the appraisal district has predominately relied on the cost approach in appraising commercial property. The appraisal director is developing a process for using the income approach to value for certain commercial accounts.
The CAD gathers local commercial building cost information from area builders and uses sales data when available. The chief appraiser stated that the CAD's building cost schedules were developed from local costs and the Marshall & Swift Commercial Valuation Guide.
The chief appraiser also noted that in the past, the appraisal staff lacked the expertise to adequately appraise commercial property. For example, commercial site values in Wills Point had previously been based on a per acre price and were updated to a price per front foot schedule in 2006. In addressing the lack of commercial appraisal experience, the CAD hired an appraisal director in July 2006. The appraisal director has more than seven years experience in appraising commercial property. He will be responsible for valuing commercial accounts and training CAD staff in the appraisal of commercial real property.
According to the appraisal district, Van Zandt CAD reported 1,695 commercial accounts Category F1, Commercial Real, in the county. The majority of those accounts are located in the Canton ISD, which has 789 parcels and Wills Point ISD has 336.
Due to the limited commercial sales and local building cost information, the CAD should consider income as another source of data for appraising commercial properties, when applicable. While it is true that not all commercial properties lend themselves to the income approach, properties that generate income from rents and leases do, as well as some retail establishments.
A CAD that does not consider all three approaches to value when appraising commercial property does not comply with Property Tax Code Section 23.0101, and risks producing commercial valuations that do not accurately reflect current market value. Because of the CAD's inaccurate appraisals in Category F1, Commercial Real, the 2005 PVS found Wills Point ISD's taxable value invalid. The 2005 PVS results indicated commercial property was appraised at 66 percent of market value. If any Van Zandt CAD school district receives two consecutive invalid findings, it could potentially lose expected revenue in the school funding formula.
By developing methods to obtain reliable income and expense data and considering the income approach to value, the CAD will be using, according to Standard 4.4 of the IAAO's Standard on Mass Appraisal of Real Property, the preferred valuation approach for income-producing properties.
The appraisal director said he will be restructuring the CAD's commercial appraisal process for 2007 to include more emphasis on the income approach. Hotels and RV parks will be the first commercial property categories to be appraised using the income approach with additional commercial categories to be added.
Tom Green CAD, for example, improved its level of commercial appraisals by using surveys, commercial market reports, internet research and communicating with business owners to obtain more reliable income and market data on commercial property.
RECOMMENDATION 1
Develop methods for obtaining data on income-producing properties and, when appropriate, use the income approach to value for appraising commercial properties.
FINDING
Van Zandt CAD does not conduct trend analysis of the local real estate market nor plan for future changes in property use and valuations.
Van Zandt County, located in northeastern Texas, is located about 50 miles east of Dallas. According to the chief appraiser, the demand for real estate from Dallas County is spreading eastward which has caused an impact on land use and real estate values in the CAD's jurisdiction.
The chief appraiser said that the CAD was not prepared for the impact of the expanding Dallas market into the county. Wills Point ISD is located in the northeastern part of the county and is the closest school district to Dallas. Wills Point ISD's invalid taxable value in the 2005 PVS could be due to its having the closest proximity of all county ISDs to the expansion of the Dallas market and the CAD's lack of market trend analysis and planning.
The CAD conducts ratio studies every other month by school district as a general review of appraisal performance. In January or February of each year, the appraisal staff will review the previous year's data and conduct a more comprehensive ratio study analysis. Ratio studies are conducted by school district, market areas, property class and age as needed. Statistical measures used in the ratio study analysis include mean, weighted mean, median and coefficient of dispersion. Ratio studies are a good indicator of current appraisal performance, but market trend analysis and planning takes the data a step further and anticipate future trends and its impact on the appraisal process (determining values, modifying schedules, prioritizing reappraisals, assessing staffing needs, training, etc.).
The chief appraiser and appraisal director noted the county is undergoing changes in land use from rural/agricultural to subdivided, commercial and recreational developments. The chief appraiser, appraisal director and several local chambers of commerce officials identified these examples of recent real estate developments for Van Zandt County:
- a water park located in Canton, opened in June 2006, is the largest water park between Dallas and Shreveport and Houston and Tulsa;
- a health system clinic located in Canton, opened in November 2006, is a 25,000 square feet, $7 million facility;
- a distribution center currently being built on Highway 19 in Canton; and
- an industrial park, located on U.S. Hwy 80 East of downtown Wills Point, consists of 146 acres and $2 million worth of infrastructure. The economic director reported a significant increase in interest from Dallas-Fort Worth Metroplex businesses during 2006.
The report issued by the Real Estate Center at Texas A&M University, Trends in Rural Land Values for 2006, which included general market conditions for North Texas and Northeast Texas, states that this area is becoming an extension of the Dallas-Fort Worth Metroplex. Land is higher in all classes, with the median size continuing to decline. Larger sales are heavily influenced by out-of-state buyers. The report also states that in many of these counties, the continued subdivision of wooded and pasture tracts into rural residential or recreational tracts has almost eliminated sales larger than 300 acres.
Chapter 4, Appraisal Theory, in the IAAO's Property Appraisal and Assessment Administration, states that developing correct appraisal models for mass appraisal depends on collecting and analyzing market data, making a judgment as to highest and best use and studying supply and demand factors operating in the market.
The chief appraiser is aware of the changes in the real estate market and has already begun to take steps. First, the CAD hired an appraisal director in 2006, which gives the CAD more commercial appraisal experience. Second, the CAD has budgeted for an additional appraiser position in 2007. The chief appraiser anticipates that the addition of an entry-level appraiser will free up a more experienced appraiser who can then work with her on market trend analysis and planning. Third, in 2007 the CAD budgeted for a building expansion project which will increase the appraisal department work area and accommodate additional appraisal staff as needed. The chief appraiser also mentioned that the CAD is considering developing a sales map which will display market data across the county and provide a visual basis for trend analysis.
Chapter 16, Elements of Administration, in the IAAO's Property Appraisal and Assessment Administration, states that planning is an essential task of managers, it prepares an organization for the future and is critical in times of change. Strategic planning provides the consistent framework for operational and project planning, in which departments set objectives, determine resource requirements and prepare action plans. By conducting market trend analysis and then developing strategic plans, an appraisal district can better anticipate future market shifts and the following effect on the appraisal process.
RECOMMENDATION 2
Based on ratio studies performed by property type, conduct market trend analysis and strategic planning to help ensure that CAD resources and valuation models are appropriate for the changing local real estate market.
FINDING
By not developing expense data for calculating net to land, the results of the CAD's agricultural appraisal process overstate the unit value of native pastureland in Van Zandt County when compared to the 2005 estimates of both the state and surrounding counties.
The CAD's agricultural appraiser explained that lease rates and expense information were obtained primarily from agricultural use applications and the appraiser's personal knowledge of this industry. The appraiser said that the CAD mails out an agricultural use application and sales letters on all land sales that previously had agricultural use. The agricultural use application asks for lease information and the sales letter requests market information concerning the property that sold. The appraiser estimates that the CAD mails 90 to 120 applications a month.
The agricultural appraiser attempts to obtain income and expense information from the agricultural advisory board, but information has been hard to obtain. The agricultural advisory board did not meet in 2006, but members were contacted by the CAD's agricultural appraiser for information. According to the appraiser, feedback from the board members indicated stable lease rates across the county.
The chief appraiser and agricultural use appraiser have developed an agricultural and timber manual, which was last updated in December 2006. The manual consists of the following major sections:
- net-to-land tables and local development procedures;
- 1-D-1 special appraisal qualifying guidelines and intensity standards;
- procedures for processing applications;
- Comptroller's wildlife management guidelines;
- Texas Forest Service forest zone determination rules;
- Texas Forest Service basal area determination;
- Texas Forest Service reforestation appraisal guidelines;
- field inspection process;
- on-site review process;
- notice of approval process;
- notice of denial process; and
- notice of cancellation process.
The CAD's procedures for developing net to land state, "analyze all cash leases by class and add them to the previous four years. Then average to determine the new net to land and then update our net to land schedules." By summing and averaging the lease rate, the chief appraiser's procedure does not follow the second step of the Comptroller's Agricultural Appraisal Process shown in Exhibit 6, which defines the typical lease rate as that which is most common.
Exhibit 6
Comptroller's Agricultural Appraisal Process
| Comptroller's Guidelines for Calculating Net to Land |
|---|
| Gather as many leases as possible for each year of the five year period. In most cases you will need to gather four to six leases per year to develop a reliable net to land value for a specific land class. |
| Determine a lease rate for each year based on the most common lease rate. You should not assume that the typical lease rate is the average of the lease rates collected. The typical lease rate is the most common or most likely lease rate. |
| Establish a lease rate for each year of the five-year period. Section 23.51(4), Tax Code, defines the net to land base period as the five-year period preceding the year before the appraisal. |
| Determine typical landowner expenses. |
| For each of the five base years, subtract the expenses from the typical lease rate. The remainder is the net to land value. |
| Average the five net to land values for each of the five years to obtain the overall net to land value for the land class for the five year period. |
| Divide this net to land value by the capitalization rate to obtain the agricultural use value for the class. |
Source: Texas Comptroller, Guidelines for the Appraisal of Agricultural Land, 1990.
The agricultural use appraiser said that he did not develop separate net-to-land figures for each year of the five year period, but instead combined all lease data from the five years and averaged the data to obtain new net-to-land figures for each class. The agricultural appraiser supported this practice by explaining that the majority of lease agreements in the county were for multiple years and lease data indicated a stable market.
The agricultural appraiser also said that in calculating net to land, no landowner expenses are normally deducted from the lease rates. The agricultural land appraiser noted that, due to the large number of absentee owners and owners who have inherited property, the vast majority of leases in the county are cash leases. The appraiser estimated that 95 percent of the leases he examined did not provide for landowner expenses.
Documentation of the CAD's net to land included productivity class schedules, copies of lease agreements and a listing of collected pasture lease data by class. But no five-year net-to-land calculations were available.
The Texas Attorney General has stated the Comptroller's Guidelines for the Appraisal of Agricultural Land properly discusses the best methodology to make net-to-land calculations, whether cash lease method, share lease method, or reasonable alternatives when these two cannot be used. (See Op. Tex. Att'y Gen. No. DM-355, 1995)
Net to land is a key appraisal process for calculating productivity values and is comprised of seven distinct steps. As with all appraisal methods, net to land requires the collection and verification of data. The collection and maintenance of agricultural appraisal data is one of an appraisal district's key appraisal processes.
The ISD Productivity Reports from the 2005 PVS showed different net to land in three CAD land classes. Specifically, the CAD reported lower values for dry cropland and higher values for improved pasture and native pasture land classes than PTD. The CAD and PTD valued the other land classes similarly.
Exhibit 7 indicates that Van Zandt CAD's calculated productivity values in native pastureland differ widely from corresponding values in surrounding counties, which are more consistent with state values.
Exhibit 7
2005 Native Pastureland Values For Van Zandt and Neighboring Counties
| County |
Percent of Total Productivity Acres in Native Pastureland |
Reported Value/Acre | PTD Value/Acre | Appraisal Ratio |
|---|---|---|---|---|
| Van Zandt | 66% | $ 96.49 | $ 49.70 | 1.94 |
| Smith | 27 | 74.27 | 54.80 | 1.35 |
| Wood | 8 | 90.54 | 83.20 | 1.08 |
| Rains | 42 | 59.86 | 66.70 | 0.90 |
| Henderson | 52 | 70.12 | 68.40 | 1.03 |
| Average of surrounding counties | 32% | $ 73.70 | $ 68.27 | 1.09 |
Source: 2005 School District Report of Property Value.
The difference may be the result of not following standard procedures for determining annual net to land for each of the five base years. In addition, the CAD is not deducting land owner expenses. The Comptroller's office has established that depreciation of fencing and property taxes are typical statewide landowner expenses and should be deducted. Other expenses should be determined based on what is typical for the area.
By meeting with the agricultural advisory board at least three times a year, as required by Property Tax Code Section 6.12, to obtain further board input and by following mandated classification and valuation guidelines, the CAD can help ensure documented and consistent appraisal processes and open-space land valuations that reflect local practices. Under the Property Tax Code, the board's function is to advise the chief appraiser on major issues dealing with agricultural and timber appraisal-net to land, degree-of-intensity standards, and other agricultural appraisal issues.
Property Tax Code Section 23.51 states that to qualify for an agricultural appraisal the land must be dedicated principally to agricultural use to "the degree of intensity generally accepted in the area." An active agricultural advisory board is instrumental in helping the chief appraiser determine which agricultural activity is typical in the CAD. Agricultural operations vary from county to county in Texas. It is imperative that appraisal districts have written guidelines that are applied reasonably and flexibly, and define what is typical for their county. Guidelines, of course, should never be used to discourage innovation or to unreasonably deny agricultural use to a genuine agricultural operation.
Atascosa CAD, for example, developed an agricultural valuation manual to document its agricultural appraisal process. The manual contains the following:
- a definition of agricultural productivity valuation;
- qualification criteria;
- degree-of-intensity standards (livestock/hay, orchard, grain);
- management practices (fencing, weed control, economic returns);
- animal unit carrying capacities per pasture type; and
- rollback tax information.
The manual included 2004 lease data used for the 2006 agricultural productivity calculations. The manual divides lease data by land use (dry cropland, irrigated cropland, improved pasture, native pasture, brush and peanuts) and provides lease prices per acre submitted from area farmers and ranchers. The manual also lists the 2006 net-to-land calculations for each land class with corresponding expenses (taxes, insurance and fences). To document the agricultural appraisal process for a recent follow-up review, the CAD provided PTD with documentation of how expenses are used for net-to-land calculations, along with copies of the productivity data surveys submitted by landowners.
RECOMMENDATION 3
Correct the unit value of native pastureland and conduct valuation of open-space land according to the requirements of the Comptroller's Guidelines for the Appraisal of Agricultural Land.
2.2
Other Recommendations
During the course of the review process, the review team identified management and operational issues that may not be directly related to the appraisal process, but that can have an indirect impact on the ability of the CAD to accurately and consistently carry out its mission of property appraisal. In addition to the recommendations directly linked to the appraisal process, the following related management level recommendations are presented here for consideration by the CAD. However, several of the recommendations include compliance with existing laws. Appraisal districts, as Texas governmental entities, are required to comply with all applicable existing laws.
Governance and Management
The quality of the property tax system depends largely on an appraisal district's board of directors (board). The board should provide knowledge, judgment and expertise to establish policies and procedures for the appraisal district's organization and operation.
The Van Zandt CAD's board of directors consists of five members, one of whom serves on the board of trustees of Canton ISD. Board members are listed in Exhibit 8.
Exhibit 8
Van Zandt CAD Board of Directors Members
| Board Member | Entity Member Represents | Start Date | Occupation |
|---|---|---|---|
| W. A. Daniels, Chairman | Van ISD, City of Van | 1/2000 | Retired |
| Kellie La Prade | Grand Saline ISD, Fruitvale ISD | 1/1998 | Salt Production Company |
| Charlie Ellis | Van Zandt County | 1/2004 | Fireman |
| David Miller | Canton ISD | 1/2006 | Employment Service |
| Bobby Mayfield | Wills Point | 1/2004 | Cattle Rancher |
Source: Van Zandt CAD, December 2006.
According to Sections 6.03 through 6.13 of the Tax Code, the board has the following primary responsibilities:
- establish the appraisal district's appraisal office, Section 6.05;
- adopt the appraisal district's annual operating budget, Section 6.06;
- approve appraisal contracts, Sections 6.05 and 25.01(b);
- hire a chief appraiser, Section 6.05;
- hire a taxpayer liaison officer (in counties with a population of more than 125,000), Section 6.052;
- appoint appraisal review board members, Section 6.41;
- set general policy on the appraisal district's operations, Section 6.04;
- contract for an annual financial audit, Section 6.063; and
- designate the CAD depository, Section 6.09.
The Comptroller's office asked the board to complete a written survey about its activities. Three of the five board members responded. The survey includes board policies and procedures; chief appraiser and staff; property appraisals; appraisal review boards; and budgeting and financial management. Board members who responded gave Van Zandt CAD overall good marks.
The responding board members agreed that the CAD staff responds positively to the management style of the chief appraiser. Further, the members agreed that the appraisers possess the skills, experience and credentials needed to appropriately appraise property. One board member had a number of responses of disagree or strongly disagree. Among those responses were that the board does not annually evaluate the chief appraiser and that board policies are not updated at least every two years. This board member also commented that the board members do not have enough power in the property appraisal area, and that it is very difficult to serve on the board because the members have no say in the most important issue of the CAD, which is appraisals.
Exhibit 9 presents a summary of professional services contracts.
Exhibit 9
Van Zandt CAD Professional Service Contracts
| Contract | In Writing (Yes or No) | 2005 Budget | 2005 Actual | 2006 Budget | 2006 Actual | 2007 Budget | 2007 Actual |
|---|---|---|---|---|---|---|---|
| Professional Appraisal Services | Yes | 62,000 | 62,500 | 62,000 | 62,500 | 62,000 | N/A |
| Appraisal, Collection & Mapping Software | Yes | 76,000 | 76,000 | 76,000 | 76,000 | 76,000 | N/A |
| Financial Audit | Yes | 3,400 | 3,400 | 4,700 | 4,700 | 4,700 | N/A |
| Delinquent Tax Collection | Yes | 15% Fee | 15% Fee | 15% Fee | 15% Fee | 15% Fee | N/A |
Source: Van Zandt CAD, budgets and contracts 2005, 2006 and 2007.
FINDING
The chief appraiser has increased salaries and benefits for CAD employees.
The chief appraiser spent her first two years, 2003-04, at the position by evaluating salary and benefits levels. This consisted of evaluating the comparable levels of salaries and benefits at peer appraisal districts. The chief appraiser's analysis of salaries and benefits in similar appraisal districts showed that an increase in Van Zandt CAD's salary and benefits was needed.
The chief appraiser evaluated the opportunity cost of losing the investment in employee training if a staff member were to leave the CAD. The chief appraiser did not want Van Zandt CAD to become a training school for employees that went to work at appraisal districts paying higher salaries and benefits.
This information was presented to the board of directors in 2004 and adjustments were made to the CAD's salary and benefits levels. For example, in 2005, the CAD increased its employer contribution amount to the Texas County and District Retirement System (TCDRS) from 150 percent to 175 percent. As a result, for every $1 an employee contributes to the TCDRS, the CAD will now contribute $1.75.
The chief appraiser continues to conduct salary and benefit analysis annually and has been able to increase salary levels each year. Cost of living raises along with a performance based merit system make up the majority of salary increases.
A competitive benefits program helps the organization in the following areas:
- attracting good employees;
- increasing employee morale;
- reducing turnover;
- increasing job satisfaction;
- motivating employees;
- enhancing the organization's image among employees and the community; and
- making better use of compensation dollars.
When employees are motivated, the organization is more likely to achieve its objectives. Direct and indirect compensation helps create a rewarding and supportive work environment.
COMMENDATION
The chief appraiser upgraded the employees' benefits package to attract and retain the most qualified employees.
FINDING
The CAD developed a detailed 2007-08 tax calendar.
The tax calendar is contained in the 2007-08 biennially developed reappraisal plan. The calendar is a work plan for the CAD that includes tasks that must be performed by each CAD department. The layout of the calendar includes the date by which a task is to be performed, the department that is responsible for the task and a description of the task. The calendar begins on July 15, 2006, concludes on July 24, 2008, and comprises a total list of approximately 340 tasks.
The tax calendar includes reappraisal tasks as well as identifies other statutory CAD mandates and deadlines. Examples of tasks listed in the tax calendar are included in Exhibit 10.
Exhibit 10
Van Zandt County Appraisal District
2007-08 Tax Calendar
| Date | Department | Task |
|---|---|---|
| September 1-29 | Real Property Department | Connie audit Wills Point rural north |
| September 22 | Data Processing/Collections | Mail tax statements |
| October 2-31 | Real Property Department | Julie rechecks and new improvementsCanton ISD rural |
| December 1-22 | Personal Property Department | Prepare mailings for DBA, special inventory, allocation of value |
| February 1 | VZCAD | Delinquency date for collections |
| February 15 | Real & Commercial Property Departments | Run ratio and schedules |
| March 1-15 | All Appraisal Departments | Update depreciation schedules, BPP, Residential, Commercial |
| March 13 | VZCAD | Deadline for appeal of PVS |
Note: Regular deadlines for submission of appeals to the Comptroller of 2006 and 2007 Property Value Studies are March 12, 2007 and March 11, 2008, respectively.
Source: Van Zandt CAD, December 2006.
Content for the tax calendar begins with department planning sessions in which plans and objectives are set. The appraisal department establishes an annual plan of areas to be audited as well as categories to be reappraised. The mapping, records and collections departments annually discuss objectives for the coming year with the chief appraiser. These plans and objectives then become the content for the tax calendar.
Chapter 16, Elements of Administration, in the IAAO's Property Appraisal and Assessment Administration, states that planning prepares organizations for the future and is crucial in an era of rapid technological and social change.
COMMENDATION
The CAD has developed a work plan listing key departmental appraisal tasks in a calendar format.
FINDING
Van Zandt CAD's proposed budgets lack the information necessary to comply with Property Tax Code Section 6.06.
The board of directors is required by law to hold a public hearing on the budget. The board held the public hearing for the 2004 budget on Aug. 12, 2003. The public hearing for the 2005 budget was held on July 20, 2004. The public hearing for the 2006 budget was held on July 26, 2005, and the public hearing for the 2007 budget was held on Aug. 15, 2006. All of these dates meet the requirement under the Tax Code for holding a hearing and approving the budget by September 15.
The review team examined a copy of the 2005, 2006 and 2007 budgets. Each budget contained a section titled Expenditures 6100 - Salaries. Line items listed under salaries included a listing of employee positions and the corresponding salary amount for the current year and next budget year. Following the salaries section was a listing of employee benefits and corresponding budgeted amounts for each benefit. The employee benefits listed were retirement, health insurance, workman's compensation, unemployment, Social Security and Medicare.
The 2005, 2006 and 2007 budgets included a listing of each proposed position and corresponding salaries, but those budgets did not list the benefits by position.
Exhibit 11 presents Van Zandt CAD's salaries from the 2005-07 adopted budgets.
Exhibit 11
Van Zandt CAD Salaries 2005 through 2007
| 2005 Salaries | Appraisal | Collections | Total |
|---|---|---|---|
| Chief Appraiser | $41,400 | $4,600 | $46,000 |
| Administrative Assistant | 22,500 | 2,500 | 25,000 |
| Office Manager | 12,320 | 18,480 | 30,800 |
| Data Processing Director | 20,100 | 12,060 | 32,160 |
| Appraisal Director | 30,750 | 0 | 30,750 |
| Junior Appraiser II | 26,800 | 0 | 26,800 |
| Appraiser I | 27,600 | 0 | 27,600 |
| Senior Appraiser IV | 27,200 | 0 | 27,200 |
| Personal Property Appraiser | 26,800 | 0 | 26,800 |
| GIS Director | 28,150 | 0 | 28,150 |
| GIS Assistant Director | 23,965 | 0 | 23,965 |
| Collection Supervisor | 0 | 24,350 | 24,350 |
| Collection Clerk | 0 | 24,850 | 24,850 |
| Collection Clerk | 0 | 23,300 | 23,300 |
| Records Management Coordinator | 13,800 | 9,200 | 23,000 |
| Appraisal Secretary | 18,600 | 0 | 18,600 |
| Reserve for merit increases | 12,587.30 | 5,032.70 | 17,620 |
| Total 2005 Salaries | $332,572.30 | $124,372.70 | $456,945.00 |
| 2006 Salaries | Appraisal | Collections | Total |
|---|---|---|---|
| Chief Appraiser | $44,550 | $4,950 | $49,500 |
| Deputy Chief Appraiser | 32,500 | 0 | 32,500 |
| Administrative Assistant/Appraiser I | 23,400 | 2,600 | 26,000 |
| Appraiser I | 20,000 | 0 | 20,000 |
| Appraiser II | 26,000 | 0 | 26,000 |
| Appraiser II | 26,800 | 0 | 26,800 |
| Appraiser III | 28,000 | 0 | 28,000 |
| Appraiser IV | 29,000 | 0 | 29,000 |
| Appraisal Secretary | 21,000 | 0 | 21,000 |
| Office Manager | 13,200 | 19,800 | 33,000 |
| Assistant Office Manager | 14,400 | 9,600 | 24,000 |
| Collections RTA | 0 | 25,500 | 25,500 |
| Collections RTA | 0 | 26,500 | 26,500 |
| Collection Clerk | 0 | 24,500 | 24,500 |
| GIS Director | 31,000 | 0 | 31,000 |
| Deed Records Coordinator | 22,500 | 0 | 22,500 |
| Data Processing Director | 21,735 | 12,765 | 34,500 |
| Reserved for increases | 14,800 | 6,200 | 21,000 |
| Total 2006 Salaries | $368,885 | $132,415 | $501,300 |
| 2007 Salaries | Appraisal | Collections | Total |
|---|---|---|---|
| Chief Appraiser | $46,350 | $5,150 | $51,500 |
| Appraisal Director | 37,500 | 0 | 37,500 |
| Admin. Assistant/Appraiser II | 24,750 | 2,750 | 27,500 |
| Appraiser I | 24,000 | 0 | 24,000 |
| Appraiser II | 27,500 | 0 | 27,500 |
| Appraiser II | 27,500 | 0 | 27,500 |
| Appraiser III | 30,000 | 0 | 30,000 |
| Appraiser IV | 30,000 | 0 | 30,000 |
| Appraiser I | 22,000 | 0 | 22,000 |
| Appraisal Secretary | 21,500 | 0 | 21,500 |
| Office Manager | 13,400 | 20,100 | 33,500 |
| Assistant Office Manager | 10,800 | 16,200 | 27,000 |
| Collections RTA | 0 | 26,000 | 26,000 |
| Collections RTA | 0 | 28,000 | 28,000 |
| GIS Director | 32,500 | 0 | 32,500 |
| Deed Records Coordinator | 23,500 | 0 | 23,500 |
| Data Processing Director | 22,050 | 12,950 | 35,000 |
| Reserved for increases | 11,975 | 11,975 | 23,950 |
| Total 2007 Salaries | $405,325 | $123,125 | $528,450 |
Source: Van Zandt CAD 2005, 2006 and 2007 proposed budget.
Exhibit 12 presents Van Zandt CAD's 2005-07 adopted appraisal and collections budgets.
Exhibit 12
Van Zandt CAD
Adopted Appraisal and Collection Budgets
2005 through 2007
Appraisal Budgets
| Revenues | 2005 Budget | Percent | 2006 Budget | Percent | 2007 Budget | Percent | Percentage Increase (Decrease) 2005-2007 |
|---|---|---|---|---|---|---|---|
| Interest | $3,750.00 | 0.5% | $3,750.00 | 0.5% | $3,750.00 | 0.4% | 0% |
| Other Income | 18,500.00 | 2.5 | 18,500.00 | 2.3 | 18,500.00 | 2 | 0 |
| VZ Fire District #1 | 500.00 | 0.06 | 500.00 | 0.06 | 500.00 | 0.05 | 0 |
| Tax Certificates & MH Permits | 0.00 | 0 | 0.00 | 0 | 0.00 | 0 | 0 |
| Total Revenues | $22,750.00 | 3% | $22,750.00 | 2.9% | $22,750.00 | 2.5% | 0% |
| 6100 - Salaries and benefits | 2005 Budget | Percent | 2006 Budget | Percent | 2007 Budget | Percent | Percentage Increase (Decrease) 2005-2007 |
|---|---|---|---|---|---|---|---|
| Total Salaries | $332,572.30 | 44.8% | $368,885.00 | 47.0% | $405,325.00 | 44.0% | 21.9% |
| Retirement | 25,382.95 | 3.4 | 27,143.96 | 3.5 | 27,143.96 | 2.9 | 6.9 |
| Health Insurance | 126,000.00 | 17 | 126,000 | 16 | 126,000 | 13.7 | 0 |
| Workman's Comp. | 1,773.16 | 0.2 | 1,773.16 | 0.2 | 1,773.16 | 0.2 | 0 |
| Unemployment | 2,256.75 | 0.3 | 2,256.75 | 0.3 | 2,256.75 | 0.2 | 0 |
| Social Security & Medicare | 25,544.14 | 3.4 | 25,544.14 | 3.3 | 25,544.14 | 2.8 | 0 |
| Sub Total | 180,957.00 | 24.4 | 182,718.01 | 23.3 | 182,718.01 | 19.8 | 1 |
| Total - 6100 | $513,529.30 | 69.2% | $551,603.01 | 70.3% | $588,043.01 | 63.9% | 14.5% |
| 6200 - Contracted Services | 2005 Budget | Percent | 2006 Budget | Percent | 2007 Budget | Percent | Percentage Increase (Decrease) 2005-2007 |
|---|---|---|---|---|---|---|---|
| Legal Fees | $1,000 | 0.1% | $1,000 | 0.1% | $1,000 | 0.1% | 0% |
| Audit Fees | 2,000 | 0.2 | 3,149 | 0.4 | 3,149 | 0.3 | 57.5 |
| Data Processing | 43,320 | 5.8 | 43,320 | 5.5 | 43,320 | 4.7 | 0 |
| Professional Appraisal Services | 62,000 | 8.4 | 62,000 | 7.9 | 62,000 | 6.7 | 0 |
| Deed Images | 1,000 | 0.1 | 1,000 | 0.1 | 1,000 | 0.1 | 0 |
| Building Expansion | 0 | 0 | 0 | 0 | 100,000 | 10.9 | 100 |
| Bldg & Ground Maintenance | 5,606 | 0.8 | 5,606 | 0.7 | 5,606 | 0.6 | 0 |
| Equipment Repair & Maint. | 2,100 | 0.2 | 670 | 0.08 | 670 | 0.07 | (68.1) |
| Utilities | 8,000 | 1 | 8,000 | 1 | 8,000 | 0.9 | 0 |
| Telephone | 4,352 | 0.6 | 5,360 | 0.7 | 5,360 | 0.6 | 23.2 |
| Contingencies | 3,500 | 0.5 | 2,040 | 0.3 | 2,040 | 0.2 | (41.7) |
| Contract Labor | 1,000 | 0.1 | 1,000 | 0.1 | 1,000 | 0.1 | 0 |
| Accounting Services | 2,800 | 0.4 | 2,800 | 0.4 | 2,800 | 0.3 | 0 |
| Total - 6200 | $136,678 | 18.4% | $135,945 | 17.3% | $235,945 | 25.6% | 72.6% |
| 6300 - Supplies | 2005 Budget | Percent | 2006 Budget | Percent | 2007 Budget | Percent | Percentage Increase (Decrease) 2005-2007 |
|---|---|---|---|---|---|---|---|
| Books and Subscriptions | $650 | 0.09% | $650 | 0.08% | $650% | 0.07% | 0% |
| Office Supplies | 13,800 | 1.8 | 13,800 | 1.8 | 13,800 | 1.5 | 0 |
| Postage | 16,500 | 2.2 | 14,700 | 1.9 | 14,700 | 1.6 | (10.9) |
| Copier/Printer Supplies | 1,500 | 0.2 | 1,500 | 0.2 | 1,500 | 0.2 | 0 |
| Legal Notices | 650 | 0.9 | 650 | 0.08 | 650 | 0.07 | 0 |
| Total - 6300 | $33,100 | 4.4% | $31,360 | 4% | $31,360 | 3.4% | (5.3)% |
| 6400 - Other Operating Expenses | 2005 Budget | Percent | 2006 Budget | Percent | 2007 Budget | Percent | Percentage Increase (Decrease) 2005-2007 |
|---|---|---|---|---|---|---|---|
| ARB Expense | $5,000 | 0.7% | $5,000 | 0.6% | $5,000 | 0.5% | 0% |
| Travel Allowance | 39,000 | 5.2 | 44,160 | 5.6 | 44,160 | 4.8 | 13.2 |
| Insurance | 4,350 | 0.6 | 4,350 | 0.6 | 4,350 | 0.5 | 0 |
| Fees, Dues, Memberships | 3,500 | 0.5 | 3,500 | 0.4 | 3,500 | 0.4 | 0 |
| Education | 6,000 | 0.8 | 6,000 | 0.8 | 6,000 | 0.7 | 0 |
| Total - 6400 | $57,850 | 7.8% | $63,010 | 8% | $63,010 | 6.8% | 8.9% |
| 6600 - Capital Outlay | 2005 Budget | Percent | 2006 Budget | Percent | 2007 Budget | Percent | Percentage Increase (Decrease) 2005-2007 |
|---|---|---|---|---|---|---|---|
| Furniture and Equipment | $300 | 0.04% | $1,500 | 0.2% | $1,500 | 0.2% | 400% |
|
Computer Equipment/ Info. Systems |
1,000 | 0.1 | 1,000 | 0.1 | 1,000 | 0.1 | 0 |
| Total - 6600 | $1,300 | 0.14% | $2,500 | 0.3% | $2,500 | 0.3% | 92.3% |
| Total Allocation Summary | 2005 Budget | Percent | 2006 Budget | Percent | 2007 Budget | Percent | Percentage Increase (Decrease) 2005-2007 |
|---|---|---|---|---|---|---|---|
| Total Expenditures | $742,457.30 | 100% | $784,418.01 | 100% | $920,858.01 | 100% | 24% |
| Less Revenues | 22,750.00 | 3 | 22,750.00 | 2.9 | 22,750.00 | 2.5 | 0 |
| Total to be Allocated | $719,707.30 | 97% | $761,668.01 | 97.1% | $898,108.01 | 97.5% | 24.8% |
| Total Appraisal Budget | $742,457.30 | 100% | $784,418.01 | 100% | $920,858.01 | 100% | 24% |
Collection Budgets
| Collections Budget Revenues | 2005 Budget | Percent | 2006 Budget | Percent | 2007 Budget | Percent | Percentage Increase (Decrease) 2005-2007 |
|---|---|---|---|---|---|---|---|
| Interest | $500.00 | 0.2% | $500.00 | 0.2% | $500.00 | 0.2% | 0% |
| Other Income | 14,200 | 5.3 | 14,200 | 5.2 | 14,200 | 5.3 | 0 |
| VZ Fire District #1 | 0.00 | 0 | 0.00 | 0 | 0.00 | 0 | 0 |
| Tax Certificates & MH Permits | 43,500 | 16.2 | 43,500 | 15.8 | 43,500 | 16.4 | 0 |
| Total Revenues | $58,200 | 21.7% | $58,200 | 21.9% | $58,200 | 21.9% | 0% |
| 6100 - Salaries and benefits | 2005 Budget | Percent | 2006 Budget | Percent | 2007 Budget | Percent | Percentage Increase (Decrease) 2005-2007 |
|---|---|---|---|---|---|---|---|
| Salaries | $124,372.70 | 46.4% | $132,415.00 | 49.8% | $123,125.00 | 46.3% | (1)% |
| Retirement | 9,348.26 | 3.5 | 10,555.99 | 4 | 10,555.99 | 4 | 12.9 |
| Health Insurance | 42,000 | 15.7 | 42,000 | 15.8 | 42,000 | 15.8 | 0 |
| Workman's Comp. | 649.59 | 0.2 | 649.59 | 0.2 | 649.59 | 0.2 | 0 |
| Unemployment | 826.75 | 0.3 | 826.75 | 0.3 | 826.75 | 0.3 | 0 |
| Social Security & Medicare | 9387.50 | 3.5 | 9387.50 | 3.5 | 9387.50 | 3.5 | 0 |
| Sub Total | $62,212.10 | 23.2% | $63,419.83 | 23.9% | $63,419.83 | 23.9% | 1.9% |
| Total - 6100 | $186,584.80 | 69.7% | $195,834.83 | 73.7% | $186,544.83 | 70.2% | 0% |
| 6200 - Contracted Services | 2005 Budget | Percent | 2006 Budget | Percent | 2007 Budget | Percent | Percentage Increase (Decrease) 2005-2007 |
|---|---|---|---|---|---|---|---|
| Audit Fees | $1,400 | 0.5% | $1,551 | 0.6% | $1,551 | 0.6% | 10.8% |
| Data Processing | 32,680 | 12.2 | 32,680 | 12.3 | 32,680 | 12.3 | 0 |
| Professional Appraisal Services | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Deed Images | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Bldg & Ground Maintenance | 1,868 | 0.7 | 1,868 | 0.7 | 1,868 | 0.7 | 0 |
| Equipment Repair & Maint. | 1,000 | 0.4 | 330 | 0.1 | 330 | 0.1 | (67) |
| Utilities | 1,500 | 0.6 | 1,500 | 0.6 | 1,500 | 0.6 | 0 |
| Telephone | 2,112 | 0.8 | 2,640 | 1 | 2,640 | 1 | 25 |
| Contingencies | 2,500 | 0.9 | 1,960 | 0.7 | 1,960 | 0.7 | (21.6) |
| Contract Labor | 0 | 00 | 0 | 0 | 0 | 0 | 0 |
| Accounting Services | 1,200 | 0.4 | 1,200 | 0.5 | 1,200 | 0.5 | 0 |
| Total - 6200 | $44,260 | 16.5% | $43,729 | 16.5% | $43,729 | 16.5% | (1.2)% |
| 6300 - Supplies | 2005 Budget | Percent | 2006 Budget | Percent | 2007 Budget | Percent | Percentage Increase (Decrease) 2005-2007 |
|---|---|---|---|---|---|---|---|
| Books & Subscriptions | $0 | 0% | $0 | 0% | $0 | 0% | 0% |
| Office Supplies | 6,200 | 2.3 | 6,200 | 2.3 | 6,200 | 2.3 | 0 |
| Postage | 22,500 | 8.4 | 20,300 | 7.6 | 20,300 | 7.6 | (9.8) |
| Copier/Printer Supplies | 750 | 0.3 | 840 | 0.3 | 840 | 0.3 | 12 |
| Legal Notices | 850 | 0.3 | 850 | 0.3 | 850 | 0.3 | 0 |
| Total - 6300 | $30,300 | 11.3% | $28,190 | 10.6% | $28,190 | 10.6% | (7)% |
| 6400 - Other Operating Expenses | 2005 Budget | Percent | 2006 Budget | Percent | 2007 Budget | Percent | Percentage Increase (Decrease) 2005-2007 |
|---|---|---|---|---|---|---|---|
| ARB Expense | $0 | 0% | $0 | 0% | $0 | 0% | 0% |
| Travel Allowance | 1,500 | 0.6 | 1,840 | 0.7 | 1,840 | 0.7 | 22.7 |
| Insurance | 1,450 | 0.5 | 1,450 | 0.5 | 1,450 | 0.5 | 0 |
| Fees, Dues, Memberships | 450 | 0.2 | 450 | 0.2 | 450 | 0.2 | 0 |
| Education | 2,000 | 0.7 | 2,000 | 0.8 | 2,000 | 0.8 | 0 |
| Total - 6400 | $5,400 | 2% | $5,740 | 2.2% | $5,740 | 2.2% | 6.3% |
| 6600 - Capital Outlay | 2005 Budget | Percent | 2006 Budget | Percent | 2007 Budget | Percent | Percentage Increase (Decrease) 2005-2007 |
|---|---|---|---|---|---|---|---|
| Furniture & Equipment | $300 | 0.1% | $500 | 0.2% | $500 | 0.2% | 66.6% |
| Computer Equipment/Info. Systems | 1,000 | 0.4 | 1,000 | 0.4 | 1,000 | 0.4 | 0 |
| Total - 6600 | $1,300 | 0.5% | $1,500 | 0.6% | $1,500 | 0.6% | 15.4% |
| Total Allocation Summary | 2005 Budget | Percent | 2006 Budget | Percent | 2007 Budget | Percent | Percentage Increase (Decrease) 2005-2007 |
|---|---|---|---|---|---|---|---|
| Total Expenditures | $267,844.80 | 100% | $274,993.83 | 100% | $265,703.83 | 100% | (0.8)% |
| Less Revenues | 58,200 | 21.7 | 58,200 | 21.9 | 58,200 | 21.9 | 0 |
| Total to be Allocated | 209,644.00 | 78.3 | 216,793.83 | 81.6 | 207,503.83 | 78.1 | (1) |
| Total Collections Budget | $267,844.80 | 100% | $274,993.83 | 100% | $265,703.83 | 100% | (0.8)% |
Source: Van Zandt CAD 2005, 2006 and 2007 proposed budgets.
A section titled, "Capital Outlay," was also included in the budgets reviewed. For 2007, the proposed capital outlay included $2,500 for furniture and computer equipment. All budgets included a line item description of capital outlays.
Property Tax Code Section 6.06(a) requires the proposed budget to include all of the following data:
- each proposed position with associated salary and benefits;
- each proposed capital expenditure; and
- an estimate of the amount of the budget allocated to each taxing unit.
The 2005, 2006 and 2007 budgets included a listing of each proposed position and corresponding salaries; however, those budgets failed to list the benefits for each position.
With 64 percent of the 2007 appraisal budget going to wages and benefits, both taxing units and the public need the information required by state law to be assured the number of CAD staff is sufficient to perform the work and that the staff is sufficiently compensated.
Jefferson CAD's budget document, for example, complies with Property Tax Code 6.06. The budget lists all employees' salaries and benefits for each position. Jefferson CAD's budget provides enough information to allow members of the taxing units and the public to understand how the money in its budget is spent.
RECOMMENDATION 4
Expand the proposed budget to include the benefits for each position.
FINDING
Performance measures in the chief appraiser's evaluation form are not linked to the responsibilities listed in the chief appraiser's job description, and the board of directors has not established written policies and procedures for conducting a formal performance evaluation of the chief appraiser.
Although the CAD's board conducted an evaluation of the chief appraiser for the first time in 2006, it has not established a written policy for the evaluation of the chief appraiser.
The chief appraiser's job description evolved from previous administrations and was last updated in 2002. The job
description begins by listing these primary requirements of the chief appraiser:
- coordinates and implements goals set by board policy, the Property Tax Code, Comptroller Rules and other laws;
- serves at the pleasure of the board and is directly accountable to the board; and
- required by law to register with the Board of Tax Professional Examiners (BTPE) and have attained or be working toward a Registered Professional Appraiser (RPA) designation.
The chief appraiser's job description then states that the chief appraiser's primary statutory duty is to discover, list, review and appraise all taxable property in the appraisal district using generally accepted appraisal techniques. This section of the job description lists 13 specific tasks to be performed including:
- appraising all taxable property at market value;
- determining eligibility for exemptions;
- studying property value and sales to determine prevailing market prices;
- creating appraisal records, property cards, tax maps and property identification system;
- creating procedures for equitable and uniform taxation of inventory;
- determining whether property qualified for agricultural or timber appraisal has undergone a change of use and sending notice to owner;
- submitting complete appraisal records of all property to the appraisal review board; and
- certifying an appraisal roll to each taxing unit participating in the appraisal district.
The chief appraiser evaluation form includes three performance standards:
- exceeds what is expected;
- meets job requirements; and
- needs improvement.
The evaluation form is divided into four major sections. The first section is titled job duties and lists 18 job duties to be evaluated. The job duties listed in the evaluation form are more general in nature to those found in the job description. Examples of job duties listed in the evaluation form include:
- keeps abreast of changes in the law by attending educational conventions and conferences;
- attends and effectively participates in all meetings of the board;
- reports to the board such matters as deemed necessary to proper management of the appraisal district;
- carries out the personnel guidelines established by the board;
- develops a plan that will establish a comprehensive personnel evaluation; and
- establishes and maintains procedures and controls for all expenditures of appraisal district funds in accordance with the adopted budget.
As of December 2006, four of the five board members had responded to the evaluation. Two of the board members' overall evaluations stated "exceeds what is expected," and the other two board members responded with "meets job requirements."
As noted earlier, the duties graded in the evaluation form are general in nature and not tied to the more specific requirements listed in the chief appraiser's job description and do not include measurable benchmarks or goals. Examples of measurable benchmarks or goals for the chief appraiser might include:
- appraising all property at market value;
- the posting of notices properly and timely of all meetings;
- proposed budget delivered to the taxing units and board of directors before June 15;
- copy of the annual financial audit report sent to each taxing unit;
- conducting annual evaluations of all employees; and
- process state reports and send to Comptroller's office by Sept. 1.
Without an objective system in place to make certain that the board and the chief appraiser are in agreement as to what is expected of the chief appraiser, performance evaluations may be subjective and based on emotion rather than actual performance. A measurable evaluation system evaluates actual performance levels against what is expected and establishes employment decisions based on performance-based information.
An evaluation process that objectively assesses performance will allow the board to clarify their expectations and ensure strong and consistent leadership for the CAD. Further, developing a formal evaluation process by written policy sets up goals and objectives for the next twelve months and establishes employment decisions based on performance.
Chapter 16, Elements of Administration in the IAAO's Property Appraisal and Assessment Administration, states that for an evaluation to be fair and effective, the evaluation should be related to specific duties, performance standards, the job description and the operational plan.
In Nueces CAD, for example, the chief appraiser receives an annual performance evaluation on the anniversary date of his or her hire. The evaluation instrument for the chief appraiser is different from the evaluation tool used for other CAD staff. The instrument allows for input from all board members, and affords the chief appraiser an opportunity to address his or her own goals and objectives during the evaluation period. In addition, the evaluation sets up measurable goals and objectives for the next twelve months.
RECOMMENDATION 5
Revise the chief appraiser evaluation form to include the duties listed in the job description, develop benchmarks and goals for those duties and establish a board policy for the annual evaluation of the chief appraiser.
FINDING
Van Zandt CAD does not have a locally developed board of directors' manual.
The chief appraiser indicated that the CAD does not have a written locally developed board manual, but instead relies on the Comptroller's Appraisal District Directors Manual. The Appraisal District Director's Manual is appropriate only to guide development of a local manual and it is not intended to be a complete board policy manual. For example, page 11 of the Director's Manual states "Through its policies, the board determines the appraisal district's goals and operates as the decision-making body on the appraisal district's operation." The Appraisal District Director's Manual states the board sets the CAD goals, but it does not identify those goals.
Property Tax Code Section 6.04 requires the board to implement the following:
- The board shall develop and implement policies that provide the public an opportunity to appear and speak at board meetings on any subject under the board's jurisdiction (Section 6.04[d]);
- The board shall prepare and maintain a written plan that describes how non-English speaking and disabled persons have access to the appraisal district's programs (Section 6.04[e]); and
- The board shall prepare information of public interest describing the functions of the board and the board's procedures by which complaints are filed with and resolved by the board (Section 6.04[f]).
A review of the board's primary responsibilities are listed earlier in this chapter. Among the local issues that could be specifically addressed in a local board manual include:
- designation of a financial auditor and the monitoring of corrective action taken on issues identified in the financial audit;
- hiring, evaluating and dismissing personnel;
- establishing open meeting and executive session requirements;
- establishing budget development and adoption policy;
- requiring board member training;
- developing a measurable evaluation instrument for the chief appraiser and establishing an annual evaluation of the chief appraiser;
- adopting and annually reviewing appraisal district personnel and operations manuals;
- adopting and reviewing reappraisal plans and progress reports;
- appointing appraisal review board members and establishing policy for monitoring training requirements; and
- adopting contracting guidelines and performance monitoring policy.
The absence of locally developed board policies leaves the CAD vulnerable to mismanagement of service contracts, hiring unqualified chief appraisers and the mishandling of public complaints.
By adopting a local board policy and procedures manual, the board can be assured that the public is informed about how the board and CAD operates and that the CAD is in compliance with the Property Tax Code.
For example, Jefferson CAD has developed a detailed board manual that addresses such issues as board election processes, vacancy procedures, board meeting provisions, board minutes, resolutions and conflicts of interest. Hidalgo CAD has also developed a board policies and procedures manual that addresses budget preparation, audits, contracts and bidding.
RECOMMENDATION 6
Develop a board policy manual that includes general policies covering board functions.
Resources and Management
In organizing and administering a county appraisal district, the chief appraiser is responsible for hiring, firing and training personnel; ensuring compliance with a wide range of legal requirements; and maintaining policies and procedures for the CAD's effective operation.
The Van Zandt CAD staff is profiled in Exhibit 13.
Exhibit 13
Van Zandt CAD Positions, Certifications,
Years with Van Zandt CAD and Salaries
| Position | BTPE Certification(s) | Hire Date | Salary |
|---|---|---|---|
| Chief Appraiser | RPA | 08/07/00 | $51,500 |
| Appraisal Director | RPA | 07/17/06 | 37,500 |
| Office Manager | RTA/RTC | 08/15/82 | 33,500 |
| Assistant Office Manager | RTA/RTC | 01/02/02 | 27,000 |
| Data Processing Director | RPA/RTA/RTC | 02/01/81 | 35,000 |
| GIS Director | 07/12/99 | 32,500 | |
| Assistant GIS Director | 04/28/03 | 25,000 | |
| Chief Appraiser Assistant | Appraiser II | 11/24/03 | 29,300 |
| Personal Property Appraiser | RPA | 01/01/02 | 32,000 |
| Ag Appraiser | RPA | 01/02/92 | 33,800 |
| Appraiser | Appraiser III | 07/01/04 | 30,000 |
| Appraiser | Appraiser II | 01/24/05 | 27,500 |
| Appraiser | Appraiser II | 09/16/02 | 27,500 |
| Collections Clerk | RTC | 06/01/88 | 29,500 |
| Collections Clerk | RTC | 09/21/81 | 27,200 |
| Appraisal Secretary | 02/16/04 | 21,500 |
Source: Van Zandt CAD, December 2006.
CAD employees who conduct appraisals must be registered professional appraisers (RPAs) or be working towards certification as an RPA; the latter must be certified within five years of their hire date. Interim certifications include Class II and Class III. In addition, RPAs must recertify every five years to remain registered. All Van Zandt CAD appraisers are properly registered.
The appraisal district conducts an annual evaluation of all employees in November or December of each year. The 2006 employee evaluations were conducted in November and early December of 2006. The evaluations are performance based reviews and critical to the coming year salary adjustments.
Each department supervisor conducts employee evaluations of their staff. The evaluation document is then signed by the employee and supervisor and reviewed by the chief appraiser. Department supervisors are evaluated by the chief appraiser.
FINDING
Van Zandt CAD has developed job descriptions for each staff member.
Because job duties and responsibilities had become outdated and changed, the CAD updated job descriptions for all 16 employees in 2005. The process of updating the job descriptions included input from the chief appraiser, supervisors and employees. The process of revising job descriptions began by asking each employee to list the duties and responsibilities of their position. This served as an evaluation of the employee's knowledge of the position as well as content for revising job descriptions. The supervisors reviewed the feedback from each employee and developed a revision of job descriptions if needed. The chief appraiser then conducted a final review of all job descriptions.
Each CAD job description begins with the job title and the listing of the department and immediate supervisor. The remaining layout of the job description document is as follows with content from the appraisal director's job description as an example.
- Job Function – the appraisal director's job function statement reads "the appraisal director provides essential day-to-day support of the chief appraiser and assures efficient operation and supervision of the appraisal department."
- Supervisory Responsibilities – the appraisal director's supervisory responsibilities state "all field appraisers and appraisal secretary."
- Qualifications – this section is divided into two subsections:
- Minimum Qualifications. Minimum qualifications of the appraisal director's position include:
- RPA or in the pursuit of successful completion;
- working knowledge of computer and software applications;
- strong organizational and analytical skills; and
- professional oral and written communication skills.
- Education and/or Experience. The appraisal director is required to have:
- a high school diploma or equivalent at minimum;
- some college or technical training preferred; and
- prior field appraisal experience.
- Minimum Qualifications. Minimum qualifications of the appraisal director's position include:
- Language Skills – the appraisal director is required to possess the ability to effectively present information and respond to questions from the board members, managers, staff and the public.
- Essential Functions and Responsibilities – this section is divided into two subsections:
- Support Services. A listing of support service requirements of the appraisal director include:
- schedule necessary education for the appraisers;
- devise a yearly field plan;
- work the clerical error list each fall and report to chief appraiser;
- coordinate/mail legal notices and schedule ARB hearings;
- oversee agriculture applications and granting of agriculture exemptions; and
- complete annual performance evaluations on all appraisers.
- Leadership. Leadership qualities listed include:
- generates new ideas for change;
- evaluates and recognizes priorities; and
- select effective employees.
- Support Services. A listing of support service requirements of the appraisal director include:
The two remaining sections of the job description deal with interpersonal skills and continued education requirements of the position.
The job description concludes with the signatures of the employee and a witness and the date of the signatures.
Chapter 16, Elements of Administration, in the IAAO's textbook Property Appraisal and Assessment Administration, states that the organizational chart and related job descriptions formalize the manager's delegation of work. They also provide uniform information about assignments, help avoid duplication of tasks and are the basis for mutual agreement about personnel policies and procedures.
Job analysis and job descriptions serve the organization in a number of ways including:
- making employment decisions (selection, promotion, performance appraisal);
- aids the supervisor and employee in defining each employee's duties;
- provides job applicants with realistic job information regarding duties, working conditions and job requirements;
- determines job relative worth to maintain external and internal pay equity; and
- serves as a basis for establishing career development programs for employees.
COMMENDATION
The CAD has developed job descriptions that identify qualifications, skills and responsibilities for each position.
Information Processing and Data Collection
Computers have become a necessity for all appraisal districts. The use of computers allows the CAD to amass large amounts of data; perform complex tasks that otherwise would take hundreds of staff hours to perform manually; and more accurately analyze trend data to ensure accurate valuation of similar properties.
Technology infrastructure is the underlying system of cabling, phone lines, hubs, switches, routers and other devices that connect the various parts of an organization through a wide area network (WAN) and a series of local area networks (LANs). Maintaining a strong infrastructure and integrating the various systems used by the appraisal district is critical to increased staff productivity, the reduction of costly data errors and better customer service to users, members of the community and the taxing units dependent on the appraisal district's information.
Exhibit 14 presents a list of appraisal and administrative software used in Van Zandt CAD.
Exhibit 14
Van Zandt CAD
Appraisal and Administrative Software
| Type of Software | Stand-alone or Integrated | When Installed | Last Upgrade | Planned Upgrade |
|---|---|---|---|---|
| Mapping | Stand-alone | 1997 | None | As Needed |
| Mapping | Integrated | 2003 | 2005 | As Needed |
| Accounting | Stand-alone | 2004 | 2005 | As Needed |
| Appraisal & Collections | Integrated | 2005 | None | As Needed |
Source: Van Zandt CAD, December 2006.
FINDING
The CAD has developed a comprehensive disaster recovery plan.
In September 2004, the CAD completed a disaster recovery plan. Each year the disaster recovery plan is reviewed and updates to the plan are made available to CAD staff. Major sections of the 27-page disaster recovery plan include:
- roles and responsibilities of disaster recovery team;
- documentation of disaster and salvage operations;
- emergency and evacuation procedures;
- disaster notification procedures;
- vital records identification and protection;
- business resumption procedures;
- disaster response and recovery procedures;
- water damaged records: salvage and recovery procedures; and
- appendices:
- glossary of terms;
- phone list;
- contact list of vendors and suppliers;
- thorough washing procedures;
- damage assessment worksheet;
- salvage assessment worksheet; and
- disaster recovery kit.
Business resumption procedures have been developed for each major function of the appraisal district (collections, administration, appraisal, mapping, data processing, records management). Each department's procedures are further developed to address the possible temporary loss of staff, network, power and building in a disaster situation.
Disaster recovery plans not only address recovery, but also address disaster prevention. For example, the CAD purchased a fireproof vault in 2005 to protect vital records. The CAD also stores records and sensitive documents off-site at a local bank. In addition, the CAD has developed a computer back-up policy for conducting a system back-up each night along with daily back ups of the appraisal, collections and accounting programs.
Prudent appraisal districts have a plan to recover data and continue appraisal district operations with minimal interruptions in disaster situations. With an effective disaster recovery plan, Van Zandt CAD will ensure business continuity for the CAD, taxpayers and the taxing units.
COMMENDATION
The CAD has developed an effective disaster recovery plan.
FINDING
Van Zandt CAD has a records retention schedule that the CAD uses to maximize limited office space and ensure that confidential information is protected against disclosure.
Property Tax Code Section 6.13 states the following:
Preservation, microfilming, destruction, or other disposition of the records of each appraisal district are subject to the requirements of Subtitle C, Title 6, Local Government Code, and rules adopted under that subtitle.
This law requires that each local government develop a records control schedule and file the schedule with the Texas State Library and Archives Commission (TSLAC), or alternatively, file a certification with officials at the TSLAC, certifying that the appraisal district's records control schedules comply with the Local Government Code's minimum requirements.
The CAD uses a Local Government Records Control Schedule which provides for the proper maintenance and disposal of records. The schedule includes a listing of CAD records and details each record by number, the record title, retention periods and disposition instructions. Among the records listed in the schedule are the following:
- appraisal cards;
- appraisal field notes;
- exemption records;
- appraisal rolls;
- mailing lists;
- notices to taxpayers;
- renditions;
- tax maps;
- banking records; and
- board of director minutes.
In February 2005, the CAD filed a copy of the Local Government Records Control Schedule with the TSLAC. The chief appraiser is the designated records management officer. A copy of the schedule is located in the offices of the administrative assistant and assistant office manager. By using the records retention schedule, the CAD now makes efficient use of valuable office space by storing old records offsite and providing security for confidential or sensitive information.
According to the TSLAC, these are the benefits of records management:
- complying with legal requirements;
- destroying records that no longer have value to the government;
- providing legal protection to the government when destroying records;
- retaining records of permanent value;
- improving protection of vital records;
- providing security for records with confidential or sensitive information;
- efficiently using office space for active records;
- moving inactive records into less expensive storage areas, if possible;
- releasing equipment and reusable media for other productive uses; and
- maintaining records in formats offering optimum cost-effectiveness.
COMMENDATION
Van Zandt CAD uses a Local Government Records Control Schedule and has filed the schedule with the Texas State Library.