Appraisal Standards Review
Wood County Appraisal District Follow-Up Report
May 2007
Summary
In July 2004, Alba-Golden Independent School District (Alba-Golden ISD), located in Wood County, Texas, 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. In July 2005, the Comptroller’s Property Tax Division (PTD) released the results of the ASR of Wood County Appraisal District (Wood CAD).
The report made 10 recommendations to improve Wood CAD’s appraisal practices and operations. The intent of ASRs is to determine why the local value is invalid and to recommend changes in operations and management that would improve appraisal practices. The Wood CAD review evaluated five functional areas: board of directors; appraisal district policies, procedures and operations; information processing systems; staffing, personnel qualifications and positions; and generally accepted appraisal practices, equality and uniformity of appraisal standards.
At the time of the review, the challenges facing Wood CAD included conducting effective market analyses, documenting procedures and planning 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 shall notify the judge of each district court in the county for which the appraisal district is established, who shall appoint a board of conservators consisting of five members to implement the recommendations The board of conservators shall exercise supervision and control over the operations of the appraisal district until the Comptroller determines under Section 403.302, Government Code, that in the same year the taxable value of each school district for which the appraisal district appraises property is the local value for the school district. The appraisal district shall bear the costs related to the supervision and control of the district by the board of conservators.
For the one-year follow-up report an appraisal district is in compliance with the statute if they take remedial action to implement the recommendations in the ASR. Remedial action means that the CAD has or intends to correct, remedy or improve the deficiencies identified in the ASR. Remedial action is demonstrated by having implemented or nearly completed the preponderance of the recommendations by the first year anniversary of the release of the report, and, in some instances, some of the recommendations with a strong commitment by the board to complete the remaining recommendations timely. The Comptroller recognizes that some recommendations included in ASRs will require more than a year to implement. Some ASRs include more recommendations than a CAD can implement all within a year in CADs with limited resources. 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 performance of a CAD until it implements all recommendations. The Comptroller considers CADs who have completed all recommendations by the one-year anniversary to have met their statutory obligations and will not require additional monitoring.
The PTD team returned to Wood CAD in July 2006 to assess its progress in implementing the report recommendations. At that time, the review team found that the CAD had not completed implementation of the recommendations. Since that return visit, the CAD has continued to work on the recommendations and completed six recommendations. While the CAD has made significant progress in implementing the recommendations, work remains in order to complete all of the recommendations.
PTD sent the CAD’s board members surveys soliciting their views and comments on the ASR. One board member responded, agreeing that the ASR contained information useful to the appraisal district. The board member also felt that the CAD needed to implement the recommendations that would save the appraisal district money and that resulted in improved operations. The board member added that the CAD has had a problem producing documentation for implementing the suggestions and that the most significant challenge remaining was funding “state-mandated” changes in the property tax system. The board member indicated that PTD should take into account the size of the appraisal district when making recommendations. The member felt the ASR was somewhat generic, indicating they should vary according to CAD size.
PTD believes that Wood CAD’s efforts to date, though considerable, still need work to comply fully. PTD will continue to monitor the CAD’s progress toward full implementation. The following pages outline specific steps the CAD still should take.
History and Significant Events
Wood CAD received an ASR because PTD found Alba-Golden ISD’s property values invalid and the school district was eligible for the “grace period” as provided for in Section 403.3011 of the Government Code. Within Alba-Golden ISD, property values in Category A, Single-Family Residential, Category D, Acreage and Category F1, Commercial fell outside the PVS’s acceptable value range. Ratio studies conducted by the CAD prior to certification of 2003 appraisal records indicated appraised values were low in the school district but the CAD did not adjust values to reflect the ratio study results. According to the chief appraiser, he was not sure that the sales used in the ratio studies were true indicators of market value. Yantis ISD also received an invalid finding in the 2003 PVS, but did not qualify as an eligible district because its values exceeded acceptable variances and it received state value.
Although the Comptroller released the ASR in July 2005, Wood CAD began to implement one of the ASR’s recommendations in May 2005. The chief appraiser developed a written plan for completing the CAD’s geographic information systems (GIS) mapping. The CAD has not implemented the plan due to time and resource constraints, but the CAD appears to be working steadily on its completion. The CAD modified the plan in May 2006 to extend the timeline for completion and included a progress report for the preceding 12 months.
Reappraisal efforts taken by the CAD in 2004 and 2005 produced positive results. Each of the CAD’s school districts received local value in the final 2004 and 2005 PVS. In August 2005, the CAD began working on a written reappraisal plan implementing the successful procedures used in 2004 and 2005.
The results of the 2004 and 2005 PVS indicate that Wood CAD improved its appraisal practices. Two school districts in Wood CAD had invalid local values in the preliminary 2006 PVS, but local value was assigned because they were higher than state value. The CAD still faces challenges in documenting practices and procedures, which are critical if the CAD is to sustain the progress made to date. When the CAD can provide written documentation on how it performs the recommended tasks, the Comptroller can consider it in full compliance with PTD’s recommendations.
Status of Recommendations; What Remains to Be Done
Appendix A lists the 10 recommendations identified in the ASR, with a summary of actions to date. The CAD implemented seven of the recommendations. Three are in progress, with the CAD having made significant progress towards full implementation. The Comptroller acknowledges the work the CAD has performed over the last year and encourages it to implement all recommendations. The chief appraiser indicated time has been a major issue, preventing the completion of some recommendations within the past year. The CAD has placed its emphasis on developing a reappraisal plan and completing GIS mapping, while continuing the day-to-day operations of the CAD.
PTD will continue to monitor CAD operations and require quarterly reports until all recommendations are complete. PTD will require the CAD to submit written reports every 90 days on the progress it is making in implementing outstanding recommendations. Wood CAD needs to complete implementation of all recommendations within one year of the issuance of this report.
Recommendation 7: Prepare and issue to each appraiser a detailed procedures manual that provides local polices and procedures for each type of property the staff appraises.
The chief appraiser noted that time has been the main factor preventing him from taking action on the recommendation. A draft of the appraisal manual was not available at the time of this review, but the chief appraiser advised that the manual would include:
- local polices and procedures for appraising each type of property in the CAD;
- a classification guide with photos and property characteristics; and
- guidelines for analyzing sales and ratio studies.
To complete this recommendation, the chief appraiser must prepare and issue to each appraiser a detailed procedures manual that provides local policies and procedures for each type of property the staff appraises. In order to increase efficiency and ensure appraisal equality, the CAD should also implement procedures for regularly updating the appraisal manual. To complete this recommendation, the CAD must adopt the procedures manual and mail a copy of the manual to PTD by June 30, 2007.
Recommendation 8: Establish written procedures to analyze the local market in order to delineate markets.
According to the chief appraiser, he and the assistant chief appraiser monitor sales to identify market areas in the county and to identify those areas with specific neighborhood codes. The CAD will develop procedures for performing these analyses and will include them in the appraisal manual.
Texas Property Tax Code, Section 23.01(b) mandates that appraisal districts appraise property by applying generally accepted appraisal methods and techniques. This section also requires appraisal districts to comply with USPAP Standard 6, Mass Appraisal, Development and Reporting that requires similar appraisal methods and techniques be applied to the same or similar properties, while taking care to account for the contributions of individual property characteristics on value. A comprehensive appraisal procedures manual would help the CAD meet these standards.
To complete this recommendation, the chief appraiser must establish written procedures to analyze local markets in order to delineate markets, and must include the procedures in the appraisal manual. The CAD will mail a copy of the procedures to PTD by June 30, 2007.
Recommendation 9: Establish performance thresholds, as indicated by the district’s ratio studies, to identify when to reappraise.
When sales and appraisal ratios of categories or subcategories of property fall outside the established performance threshold for ratio studies of 95 to 105 percent of market value, the CAD analyzes the results, develops market adjustment factors and determines if a reappraisal is necessary.
The chief appraiser advised that the CAD will establish written procedures and performance thresholds and will develop subsequent analyses. The CAD will include these in the appraisal manual and reappraisal plan. The chief appraiser suggested there was not enough time to develop written procedures relating to performance thresholds.
To complete this recommendation according to the IAOO Standard on Ratio Studies, the chief appraiser must establish performance thresholds, as indicated by the CAD’s ratio studies, to identify when to reappraise property and mail a copy of the performance thresholds to PTD on or before June 30, 2007.
Appendix A
Wood County Appraisal Standards Review Implementation Status Report
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 published budget to include each proposed capital expenditure. | Complete |
Wood CAD’s 2006 and 2007 approved budgets contain line item expenditures labeled “Computer System” with appropriations of $34,155 and $40,000, respectively. The chief appraiser indicated the “Computer System” line item was a capital expenditure for a proposed lease/purchase payment on a new automated appraisal system. Section 6.06 of the Tax Code requires appraisal district budgets to list each proposed capital expenditure. By describing the capital expenditure line item as a computer system, the CAD provides taxing entities and the public with information it needs for proper oversight. |
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| 2 | Revise the professional appraisal services contract in accordance with the IAAO Standard on Contracting. | Complete |
In July 2005, the CAD entered into a new contract with Pritchard & Abbott, Inc. (P&A) for 2006-07. The 2006-07 contract lacks dates for deliverables and monitoring provisions, as required by IAAO. According to the chief appraiser, P&A was aware of the ASR recommendation and they will revise the 2008-09 contract to comply with the IAAO Standard on Contracting for Assessment Services. In October 2006, the board entered into a new contract with P&A for 2006-07 appraisal work. This contract included dates for completion of the work P&A is required to perform as well as amounts the CAD will pay P&A at the time of completion of each task. The contract also requires P&A to provide the CAD with an expected completion date if P&A is not going to meet the contractual deadline provided for in the agreement. |
2.2 Appraisal District Policies, Procedures and Operations
| Rec. # | Recommendation | Implementation Status | If Not Complete, Projected Completion Date | Description of Actions Taken to Date |
|---|---|---|---|---|
| 3 | Combine appraisal district policies and procedures into an organized operations manual. | Complete |
The CAD developed a comprehensive operations manual and presented it to the board for approval on September 1, 2006. The chief appraiser, deputy chief appraiser and key department personnel were responsible for developing the plan. The chief appraiser also prepared a separate one-page procedure for payroll, purchasing and accounts payable. The board also adopted a comprehensive personnel policy. These efforts indicate a commitment to implement this recommendation and they meet the requirements set out in the report. |
2.3 Information Processing Systems
| Rec. # | Recommendation | Implementation Status | If Not Complete, Projected Completion Date | Description of Actions Taken to Date |
|---|---|---|---|---|
| 4 | Develop a plan that includes a realistic timeline to complete the GIS within the next twelve months. | Complete |
In May 2005, the CAD drafted a plan for completing the digital mapping of Wood County. The plan called for completion of the mapping in 12 months. In May 2005, 131 of the county’s 721 abstracts still required mapping. During the 12 months that followed, the CAD developed written procedures for mapping and research standards, mapped 79 abstracts and maintained and updated existing maps. The chief appraiser added that several of the remaining abstracts the CAD needed to map contain cities and towns. He indicated mapping these areas was more time consuming because of the number of parcels and outdated plat maps. Given this information, the chief appraiser felt the CAD needed to revise the plan to extend the completion deadline. At the end of this 12-month period, in May 2006, the CAD provided the board a report on its progress and informed the board that in order to accomplish the mapping, he extended the deadline for completion. Instead of 12 months, the plan now calls for completion within 24 to 32 months from the May 2005 start date, or on May to January 2008. The CAD clearly has a timeline to complete this project, as called for by the recommendation. |
2.4 Staffing, Personnel Qualifications and Positions
| Rec. # | Recommendation | Implementation Status | If Not Complete, Projected Completion Date | Description of Actions Taken to Date |
|---|---|---|---|---|
| 5 | Discuss the chief appraiser’s performance evaluation results with him. | Complete |
The board evaluated the chief appraiser on June 30, 2005, in executive session. The evaluation consisted of board members expressing their opinion on the chief appraiser’s job performance. According to the chairman, the consensus was positive and the board was pleased with the chief appraiser’s performance. Following the executive session, the board members told the chief appraiser they were satisfied with his job performance during an open meeting. A board member added that if there had been any concerns or issues with the chief appraiser, the board would have discussed them with the chief appraiser in the executive session. In August 2006, the chief appraiser provided PTD with an instrument the board would use to conduct his next evaluation. |
2.5 Generally Accepted Appraisal Practices; Equality and Uniformity of Appraisal Standard
| Rec. # | Recommendation | Implementation Status | If Not Complete, Projected Completion Date | Description of Actions Taken to Date |
|---|---|---|---|---|
| 6 | Adopt and execute a detailed reappraisal plan that, at a minimum, includes the vital steps in the process, which are an evaluation of appraisal performance, an explanation of exactly how and when the steps will be executed, and identification of all resources necessary to implement the plan. | Complete | In August 2005, the CAD began working on a written reappraisal plan following guidelines developed by the Texas Association of Appraisal Districts and Harris CAD. The board reviewed and adopted the plan in September 2006, after the required public hearing. The CAD forwarded a copy of the adopted plan to PTD. The reappraisal plan includes the steps taken to reappraise property in Wood CAD; a specific plan and schedule for the performance of the reappraisal; and critical activities and completion date. |
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| 7 | Prepare a detailed appraisal procedures manual that provides local policies and procedures for each type of property and issue it to each appraiser. | In Progress | June 2007 |
To complete this recommendation, the chief appraiser must prepare and issue to each appraiser a detailed procedures manual that provides local policies and procedures for each type of property the staff appraises. In order to increase efficiency and ensure appraisal equality, the CAD should also implement procedures for regularly updating the appraisal manual. The CAD should complete the appraisal manual no later than June 30, 2007. |
| 8 | Establish written procedures to analyze the local market in order to delineate markets. | In Progress | June 2007 |
As part of the appraisal procedure manual, the chief appraiser assigned the deputy chief appraiser to develop written procedures for analyzing sales and delineating markets. The procedures will be included in the appraisal procedures manual and completed by June 30, 2007. |
| 9 | Establish appraisal performance thresholds, as indicated by the district’s ratio studies, to identify when to reappraise. | In Progress | June 2007 | The CAD does not have written local procedures for establishing performance thresholds and ratio study criterion; they follow the chief appraiser’s and deputy chief appraiser’s direction in performing this task. The chief appraiser added that it is his intent to include written procedures in the appraisal procedures manual and to distribute them to appraisers June 30, 2007. |
| 10 | Implement a plan to annually inspect all personal property parcels. | Complete | According to the chief appraiser, the CAD inspects all personal property on an annual basis. The draft reappraisal plan indicates the CAD will inspect personal property each year. The reviewer randomly selected 12 personal property accounts district-wide and verified that the CAD inspected each account for fiscal 2006. |