Appraisal Standards Review
Wharton County Appraisal District Follow-Up Report
September 2007
Introduction
In July 2004, Boling Independent School District (ISD), located in Wharton County, was identified as one of 54 school districts in the state meeting the criteria that initiate an Appraisal Standards Review (ASR) of its county appraisal district. Boling ISD is one of five school districts in the appraisal district.
In September 2005, the Comptroller’s Property Tax Division (PTD) released the results of its ASR of the Wharton County Appraisal District (Wharton CAD). The ASR made 11 recommendations to improve Wharton CAD’s appraisal practices and operations.
ASRs are intended to determine why the local value is invalid according to the annual Property Value Study (PVS) and recommend changes in operations and management to improve appraisal practices. The Wharton CAD review evaluated five functional areas: the board of directors; appraisal district policies, procedures and operations; information processing systems; staffing, personnel qualifications and positions; and generally accepted appraisal practices; equality and uniformity of appraisal standards.
At the time of the review, the challenges facing Wharton CAD included a need to document and update procedures and plan for reappraisals.
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 judges appoint a five-member board of conservators to implement the recommendations. The board of conservators shall exercise supervision and control over the operations of the appraisal district until the Comptroller determines that 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 shall bear the costs related to the supervision and control of the district by the board of conservators.
For the one-year follow-up reports, an appraisal district is in compliance with statute if it takes remedial action to implement the recommendations in the ASR. Remedial action means the CAD has corrected, remedied or improved the deficiencies identified in the ASR or intends to do so. Remedial action generally is demonstrated by having implemented or nearly completed most of the recommendations by the first year anniversary of the release of the report. The Comptroller recognizes that some ASR recommendations require more than a year to implement. Some ASRs include more recommendations than a CAD with limited resources can implement within a year. So long as the CAD is working at remediation of the findings, the Comptroller will continue to work with the CAD to achieve full compliance and will continue to monitor the CAD’s performance until it implements all recommendations. The Comptroller considers CADs that have completed all recommendations by the one-year anniversary to have met their statutory obligations and will not require additional monitoring.
In September 2006, a PTD team returned to Wharton CAD to assess its progress toward implementing the report recommendations.
PTD sent the CAD’s board members surveys soliciting their views and comments on the ASR. PTD received four responses. The respondents agreed that the ASR contained useful information and that CAD administrators had done a good job of communicating the status of work on the recommendations to the board. All agreed that the board and CAD administration are working together to accomplish the recommendations.
The respondents identified appraisal equality and a need for adequate staffing as the report’s most significant recommendations. They cited reappraisals, public acceptance and budgeting as the most difficult decisions they faced as a result of the ASR and identified public acceptance of the reappraisals, office space, technology and manual development as the most significant remaining challenges. One board member felt property reappraisals were ill-timed.
PTD recognizes Wharton CAD’s efforts to date and will continue to monitor its progress toward full implementation to meet state legal requirements.
History and Significant Events
Wharton CAD became eligible for an ASR because PTD found Boling ISD’s property values invalid according to the 2003 PVS, making the school district eligible for the grace period provided for in Government Code Section 403.3011. Within Boling ISD, property values in Category A, Single-Family Residential, and Category D, Rural Real Property, fell outside the state’s acceptable value range.
The 2004 and 2005 Property Value Studies continued to reflect poor appraisal performance by the CAD. Four of its five school districts received invalid findings in 2004; Louise ISD was the only school district to receive a valid finding, while Boling, East Bernard, El Campo and Wharton ISDs received invalid findings. In the 2005 PVS, Boling, El Campo, Louise and Wharton ISDs received invalid findings, and only East Bernard ISD received a valid finding. In the 2006 PVS, all school districts in Wharton CAD were found to have valid taxable values and all received local value.
The results of these studies indicate Wharton CAD faced many challenges in improving its appraisal practices. During the past year, the CAD has made significant progress toward implementing PTD’s recommendations.
What Remains to Be Done
The Appendix lists PTD’s 11 ASR recommendations and summarizes actions toward implementing them to date. The Comptroller’s office acknowledges the work the CAD has performed over the last year and encourages it to remain on task to complete the recommendations.
At this writing, seven of PTD’s recommendations have been completed and four are works in progress.
Recommendation 4: Amend the professional appraisal services contract in accordance with the IAAO standards on contracting when it comes up for renewal later this year and consider competitively bidding the appraisal services in 2006.
This recommendation is in progress. The chief appraiser said the board received this ASR recommendation in September 2005, after it approved the most recent contract for professional appraisal services (on July 14, 2005). The chief appraiser indicated the contract for tax years 2008 and 2009 will comply with IAAO’s Standard on Contracting for Assessment Services and include product delivery dates, a payment schedule based on production milestones and a list of accounts.
The current chief appraiser was hired in October 2005 and informed the board at its July 13, 2006 budget workshop that professional appraisal services should be competitively bid for the 2008 and 2009 tax years. Board minutes indicate that the chief appraiser also discussed this recommendation with the board at its Nov. 10, 2005 meeting. The chief appraiser said she faxed a copy of the ASR recommendation to the contractor in November 2005.
To complete the recommendation, the board will amend future contracts for professional appraisal services to comply with IAAO’s Standard on Contracting for Assessment Services before allowing the contractor to perform appraisals for the 2008 tax year. The CAD should send copies of the bids and a copy of the signed contracts to PTD for review no later than December 2007.
Recommendation 5: Develop a comprehensive policy and procedures manual for district operations and integrate available procedures, instructions or guidelines into the manual as appropriate.
The chief appraiser said the district needs more time to complete this recommendation, but hopes to have a comprehensive policies and procedures manual available by December 2007.
In March 2006, the chief appraiser told the board that preparation of appraisal notices, appraisal review board hearings and budget preparations would need to take precedent over the development of manuals. She also said that completing this recommendation within the required one-year time period would be very difficult.
In July 2006, the chief appraiser told the board she had requested a December 2006 extension to the September 2006 deadline for completing this recommendation and others requiring the development of policies and procedures. She also told the board that PTD would conduct a follow-up review in September 2007 and the CAD needed to show progress towards completing each recommendation.
According to the chief appraiser, the draft personnel and records management policies provided in PTD’s Recommendation 2 will be included in the CAD’s comprehensive policy and procedures manual for district operations. In February 2006, the chief appraiser received a copy of El Paso CAD’s policies and procedures manual as a reference tool. In May 2006, the board updated appraisal review board policies and procedures. In the same month, the chief appraiser developed written procedures for staff to follow in processing protests.
To complete this recommendation, the CAD should complete the policies and procedures manual by December 2007. The chief appraiser should provide the board with regular updates on the manual’s progress. The CAD should mail a copy of the manual to PTD no later than January 2008.
Recommendation 9: Develop and implement a detailed reappraisal plan.
The chief appraiser said the Wharton County Appraisal District Reappraisal Plan: Tax Years 2007 & 2008 is a work in progress. She began working on a draft of the reappraisal plan in August 2006 and needs to add more detail on property category procedures.
The CAD’s reappraisal plan is modeled after a plan developed by the Texas Association of Appraisal Districts. The draft plan states that the CAD will reappraise all property in the district every three years by targeting a third of the county each year. Geographic areas of the CAD are identified for reappraisal within each year of the three-year cycle. The draft contains a calendar of key events for the 2007 and 2008 reappraisal years.
The reappraisal plan does not identify real and personal property in the CAD that will be reappraised, just that one-third of the county will be reappraised each year. According to the ASR, “A complete plan would indicate instances or types of properties that will be appraised using sources of information other than physical inspection.” The current plan, however, does not give the activities that will take place to identify and update relevant characteristics of each property in the county. The plan does not indicate the number and types of parcels that will be appraised; how these properties will be appraised; whether the properties will be physically inspected or reappraised using alternative methods, or reviewing the appraisal results. The plan also does not indicate property characteristics that affect the property value in each market area, such as the location and market area of the property, physical attributes of the property, such as size, age and condition, legal and economic attributes and easements, leases, contracts and the like.
Furthermore, the current plan does not link staffing requirements with the budget, or correlate how ratio studies will be used to identify problem areas that need to be re-inspected, but that ratio studies will be conducted.
In June 2006, the contracted appraisal firm submitted drafts of periodic reappraisal procedures for utility, railroad, pipeline, industrial and mineral properties. These guidelines are included in the CAD’s overall reappraisal plan.
The reappraisal plan was adopted on Nov. 16, 2006. Property Tax Code Section 6.05 (i) requires boards to approve reappraisal plans no later than Sept. 15 of even-numbered years. The board chairman stated he was aware of the statutory deadline, but the plan had been incomplete on this date. The Comptroller’s office received the reappraisal plan on Nov. 27, 2006.
To complete this recommendation, the chief appraiser and board must work expeditiously to ensure that the plan complies with Property Tax Code Sections 6.05 and 25.18.
The chief appraiser plans to have a comprehensive appraisal procedures manual completed by December 2007.
Recommendation 11: Prepare a detailed appraisal procedures manual that provides local procedures and practices for each type of property the district appraises.
Portions of the 2006 appraisal data manual will be included in the local appraisal procedures manual. The chief appraiser has developed current building cost and land schedules and calculated agricultural productivity values for 2006; these will be updated for the 2007 appraisal manual.
The chief appraiser said she is working on local field procedures for appraisers to follow and a classification guide and has taken photos of sales to be used as examples of properties typical for each class of property. The chief appraiser also is developing written descriptions of attributes and characteristics typical to each property class.
To complete this recommendation, the chief appraiser should develop of local procedures and classification guidelines to ensure the completion of the appraisal procedures manual by December 2007. The chief appraiser should provide the board with regular updates on the progress of the appraisal manual, and mail a copy of the manual to PTD no later than January 2008.
Appendix
Wharton 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 | Expand the detail of the budget presented to the board of directors for adoption to include the salary and benefits for each employee and detail on capital expenditures. |
Complete |
On Sept. 14, 2006, the chief appraiser presented the CAD’s 2007 proposed budget to the board of directors for adoption. The budget included salary and benefits for each employee and detail on capital expenditures. The board adopted the budget on Sept. 14, 2006. |
|
| 2 |
Update the existing district policy handbook. |
Complete |
In September 2006, the chief appraiser completed the first draft of Wharton County Appraisal District Policy and Procedures Manual. The chief appraiser stated this draft, when adopted by the board, will replace the existing Policy Handbook. The chief appraiser also said that the draft manual was submitted to the board for approval at its regular meeting on Nov. 9, 2006. The board adopted the policy and procedures manual on Feb. 8, 2007. |
|
| 3 |
Develop a hiring process and an objective set of evaluation measures for the chief appraiser position and evaluate the chief appraiser annually. |
Complete |
During the period of January through August 2006, the chief appraiser and board chairman developed an objective set of evaluation measures for the chief appraiser and a hiring process. The hiring process is included in the draft Wharton County Appraisal District Policy and Procedures Manual. The evaluation instrument was distributed to board members in September 2006 and the chief appraiser was evaluated on Oct. 19, 2006. |
|
| 4 |
Amend the professional appraisal services contract in accordance with the IAAO standards on contracting when it comes up for renewal later this year and consider soliciting competitive bids for appraisal services in 2006. |
In Progress | Dec. 2007 |
The chief appraiser said the board received this ASR recommendation in September 2005, after the most recent contract for professional appraisal services was approved in July 2005. The contract covers technical appraisals for the 2006 and 2007 tax years. It does not contain dates for deliverables or a list of properties to be appraised. |
2.2 Appraisal District Policies, Procedures and Operations
| Rec. # | Recommendation | Implementation Status | If Not Complete, Projected Completion Date | Description of Actions Taken to Date |
|---|---|---|---|---|
| 5 |
Develop a comprehensive policy and procedures manual for district operations and integrate available procedures, instructions or guidelines into the manual as appropriate. |
In Progress |
December 2007 |
The chief appraiser cited lack of time as the reason for not completing this recommendation, but hopes to have a comprehensive policies and procedures manual available by September 2007. Completed to date are a new personnel policy, a records management policy, ARB procedures and protest procedures. |
2.3 Information Processing Systems.
| Rec. # | Recommendation | Implementation Status | If Not Complete, Projected Completion Date | Description of Actions Taken to Date |
|---|---|---|---|---|
| 6 |
Develop and implement district policies and procedures for granting or denying exemptions. |
Complete |
In early December the chief appraiser and the Agricultural Advisory Board (Ag) developed an Agricultural Use Guidelines pamphlet. The chief appraiser and the Ag board developed definitions and minimum standards for Wharton County. The pamphlet includes an explanation of how agricultural productivity values are calculated and other statutory information relating to granting agricultural use. The chief appraiser said she will expand this information to include local policies and procedures for granting all exemptions and agricultural use. PTD suggests that the CAD review and analyze the guidelines on an annual basis and consider the addition of wildlife management. While there is not a lot of wildlife management in the CAD, it is increasing all over the state. By adding wildlife management to the guidelines the CAD will have more comprehensive procedures for granting and denying agricultural and wildlife exemptions. |
2.4 Staffing, Personnel Qualifications and Positions
| Rec. # | Recommendation | Implementation Status | If Not Complete, Projected Completion Date | Description of Actions Taken to Date |
|---|---|---|---|---|
| 7 |
Conduct a staff needs analysis and establish staffing allocation guidelines that will ensure that the number and type of staffing are appropriate and adjusted to meet reappraisal plan goals each year based on growth. |
Complete |
As part of the 2007 budget process, the chief appraiser conducted a staff needs analysis in July 2006. IAAO standards, the ASR and the CAD’s staff analysis all indicated the CAD was understaffed. In September 2006, the board adopted the 2007 budget that includes two additional staff positions. The chief appraiser hopes to hire two more appraisers. The budget also includes funds for a part-time employee. |
|
| 8 |
Perform employee evaluations as outlined in the district’s Policy Handbook. |
Complete |
In September 2006, the chief appraiser developed an employee evaluation instrument. Using a rating scale from 1 to 4, the chief appraiser evaluates staff on four major areas – dependability, productivity, cooperation and “other.” According to the chief appraiser, all employees of the CAD were individually evaluated in December 2006. |
2.5 Generally Accepted Appraisal Practices; Equality and Uniformity of Appraisal Standards
| Rec. # | Recommendation | Implementation Status | If Not Complete, Projected Completion Date | Description of Actions Taken to Date |
|---|---|---|---|---|
| 9 |
Develop and implement a detailed reappraisal plan. |
In Progress |
December 2007 |
The chief appraiser said the Wharton County Appraisal District Reappraisal Plan: Tax Years 2007 & 2008 is a work in progress. The chief appraiser also said that she began working on the reappraisal plan in August 2006 and needs to add more detail on property category procedures. |
| 10 |
Continue the process of analyzing ratio studies and considering market changes for all properties within the district zones. |
Complete |
During the months of January through May 2006, the chief appraiser conducted ratio studies on all properties appraised locally by the CAD. The ratio studies were analyzed to determine market changes and appraisal performance. The chief appraiser said the process of analyzing ratio studies is under way and ratio studies are conducted each month. |
|
| 11 |
Prepare a detailed appraisal procedures manual that provides local procedures and practices for each type of property the district appraises. |
In Progress | January 2008 |
The chief appraiser plans to have a comprehensive appraisal procedures manual completed by December 2007. Current building costs and land schedules have been developed and agricultural productivity values have been calculated for 2006 and will be updated for the 2007 appraisal manual. The chief appraiser is working on local field procedures for appraisers and a classification guide. Photos of sales have been taken and will be used as examples of properties typical within each class of property. |