PEPennington & Co Property Tax News

Many issues created the environment we Texans now find ourselves in now with demand to change our property Texas systems.  When we look at the “administrative remedy” phase of the system we see that groups that should  be fighting to save the current system are fueling the fires for change. 

A. Issues from the taxpayers/consultants point of view:

1. Unfair informal hearings.

2. Unfair Appraisal Review Board (ARB) hearings:

a. Bias of board members.

b. The staff has too much influence at ARB hearings.

c. Lack of qualifications of board members.

i. They need better unbiased training as it relates to The Property Tax Code and Case Law.

3. Taxpayers feel overwhelmed by the process:

a. They feel like they are fighting a huge, rigid monolithic bureaucracy.

b. They are not properly educated and do not have a good understanding of the Texas property tax system.

i. Some appraisal districts provide training on how to present an effective appeal informally and formally.

c. Thus they are drawn to special interest groups who claim to have quick fixes to change the current property tax system.

4. Rogue appraisal district(s): Bexar County appealing ARB rulings:

a. Bexar County; they want two bites at the apple.

5. Pressure to constantly increase values because of the Comptroller’s Annual Property Value Study (PVS).

a. Both the appraisal districts and the Comptrollers’ Office have agreed that the current methodology is an accurate measure of valuations, which is incorrect.

b. Statistical samples do not reflect market as of the assessment date because of the natural ebb and flow of valuations.

6. Harris County Appraisal District’s inability to make local value over the past three years.

a. So goes HCAD, so goes the Texas property tax system.b. HCAD vs. the State Comptrollers’ Office.

7. “Appraisal districts are not at fault!   

a. “If we had open sales records everything would be just fine”.

i. They essentially have it with residential properties (MLS) and still  there are errors.

ii. They currently have Costar, Loopnet, etc.

iii. How does sales disclosure affect uniform and equal appeals?

b. “If we had audit powers with BPP everything would be just fine”.

i. The districts would hire third party entities to conduct audits. 

8. Currently appraisal districts are not regulated as it relates to their day to day operations.

a. There is a lack of accountability.

i. With the exception of an occasionally adverse court ruling, Attorney General’s opinion and The Comptroller’s Office PVS, appraisal districts operate with immunity. 

ii. Currently there is no agency to field complaints from the public and/or agents regarding issues they may have with appraisal districts.

9. The media, Appraisal districts and local government officials continue to claim businesses don’t pay their fair share of property taxes.

a. Neutral third party research groups disagree with this opinion;

i. http://www.taxfoundation.org. Businesses pay more property taxes in Texas than Homeowners.

b. Why are businesses portrayed as not paying their fair share of property tax?

i. (Easy Target) Homeowners vote and  businesses don’t.

ii. Since appraisal districts and local governments won’t take any responsibility they pass the buck.

c. Businesses do pay their fair share of property taxes and the Margin tax.

i. This fact doesn’t sell newspapers or make for good sound bites.

Local legislators, candidates call for appraisal system reform

By VAL CLIFTON <mailto:vclifton@hcnonline.com>

Published: 08.15.08
With many of their constituents feeling the pinch of increased taxes coupled with rising home valuations, legislators are expressing their disapproval of the state’s appraisal system.Senate Dist. 7 Dan Patrick said appraisal reform is an issue he’s been working on for the last 10 years.“It’s broken and it needs to be abolished because we need to move away from a property tax base to support our schools and our government,” Patrick said. “But within the system we have, the appraisals from one property to one another don’t represent the true value of the property.”Patrick said many of his constituents don’t feel they get a fair hearing and are forced to go to the appraisal review board, or even to court.

“I’ve have had countless people call my office and tell me their home was appraised for more than they sold it for, considerably more in some cases,” Patrick said.He said some counties in Texas appraise every three years, while other counties appraise annually, but reappraising every other year would be equal to cutting the appraisal cap from 10 to 5 percent.Patrick called for the state comptroller to be removed from the appraisal process.“We don’t need someone in Austin, who has no clue what someone’s house is worth in Tomball or Memorial or Katy, telling the appraiser here how to appraise their homes,” Patrick said.

HISD property dispute
Early last month, I wrote about a spat that had the state comptroller’s office on one side and the Houston Independent School District and the owners of some big office towers on the other.

Comptroller Susan Combs’ staff is responsible for ensuring that Texas counties fairly evaluate real estate for tax purposes. The reason is that the state, with contributions from rich districts, sends equalization funds to poor districts.

For the third consecutive year, Combs’ staff found that the Harris County Appraisal District had grossly undervalued commercial property. This would trigger a penalty of about $4 million for HISD. But a hearings examiner who works for the comptroller’s office, after listening to arguments from all sides and studying financial evidence, ruled for HISD and the office building owners.

The question was whether Combs would overrule her own hearing examiner, which would likely result in a lawsuit by HISD.
Possibly understanding that the publicity of such a trial and a possible loss could be a political liability, Combs entered into an agreement with HISD to accept the examiner’s findings.

With one caveat: Normally, being in compliance would mean that the school district wouldn’t have to worry for three more years. But the agreement specifies that if the appraisal district is found to undervalue properties in the school district next year, the penalties can be levied.

You can write to Rick Casey at P.O. Box 4260, Houston, TX 77210, or e-mail him at rick.casey@chron.com <mailto:rick.casey@chron.com>

Skyrocketing commercial property values have led to costly court battles for the Harris County Appraisal District, prompting its leaders to propose increasing its budget to nearly $65 million next year.

If approved by the district’s board of directors next week, the budget will have increased 35 percent from a comparatively modest $48 million just last year.

News of yet another increase prompted calls for belt-tightening from officials at the Houston Independent School District, which funds a portion of the appraisal district’s budget along with about 900 other taxing jurisdictions whose property values are set by its appraisers. The school district’s bill would increase more than $1 million to about $10 million under the proposed budget.

“It’s quite a chunk of change for us,” said Melinda Garrett, the school district’s chief financial officer. “It’s taking $1 million out of our classrooms.”

Chief appraiser Jim Robinson said he has little choice but to ask for more money as the number of lawsuits filed by unhappy property owners increases yearly, and the state comptroller continues to fight for even higher commercial property appraisals.

“Certainly, I appreciate their concerns. The jurisdictions have to pay the bill. But, by that same token, we have to do what the law requires us to do,” Robinson said Tuesday.

Commercial property values in Harris County increased an average of 34 percent this year — from about $981,000 to a little more than $1.3 million — the highest one-year increase in at least a decade, according to Tax Assessor-Collector Paul Bettencourt. Ten ZIP codes, including all of downtown Houston, saw average appraisal increases of more than 50 percent.

That led to a record 350,000 protests from commercial, apartment and residential property owners.

More than 333,000 protests were filed last year, leading to about 3,500 lawsuits from owners who were not satisfied with the results of an Appraisal Review Board hearing.

At least a dozen of those lawsuits will involve significant litigation expenses, Robinson said. For example, fighting one company over one year’s appraisal for its downtown Houston office building already has cost the district $400,000.

“You either try the lawsuits or you settle them and give the people that brought them an unfair tax break,” Robinson said, adding the number of lawsuits filed increased 70 percent from 2005 to 2006 and another 60 percent the following year.

Robinson trimmed $2 million from the budget proposal he submitted to the board of directors in June by recommending that less complicated lawsuits be handled in-house.

Bettencourt, a member of HCAD’s board of directors, applauded that move, but said he thinks the legal expenses still are too high. He said he has been told by tax consulting firms that fewer lawsuits will be filed this year because property owners also are feeling the pinch of expensive litigation.

But Mary Van Kerrebrook, an attorney who represents the owners of commercial properties ranging from apartments to shopping malls, said she expects the number of lawsuits to remain steady or increase slightly as Texas Comptroller Susan Combs continues pushing for higher property values.

Van Kerrebrook said tax agents have told her that the appraisal review boards seem to be under pressure to keep values high this year.

Robinson said the amount of money budgeted for legal expenses could be reduced by settlement negotiations in several major cases.

Chronicle reporter Jennifer Radcliffe contributed to this report.

liz.peterson@chron.com

1. Ann Taylor is closing 117 stores nationwide.
2. Eddie Bauer to close more stores. The company has already closed 27 shops in the first quarter and plans to close up to two more outlet stores by the end of the year.
3. Cache is closing 20 to 23 stores this year.
4. Lane Bryant, Fashion Bug, and Catherines are closing 150 stores nationwide.
5. Talbots, and J. Jill are closing all 78 of its kids and men’s stores. Now the company says it will  close another 22 underperforming stores. The 22 stores wi ll be a mix of Talbots women’s and J. Jill.
6. Gap Inc. will be closing 85 stores.
7. Foot Locker to close 140 stores. 
8. Wickes Furniture is going out of business and closing all of its stores.
9. Levitz, the furniture retailer, is going out of business and closing all 76 of its stores in December.
10. Zales, Piercing Pagoda plans to close 82 stores by July 31. It has also announced that it is closing another 23 underperforming stores.
11. The Walt Disney Company subsidiary Children’s Place filed for bankruptcy protection in late March. Walt Disney, in a news release, said it has also obtained the right to close about 98 Disney Stores in the U.S.
12. ;  Home Depot has 15 store closings.
13. CompUSA clarifies details on its store closings. Any extended warranties purchased for products through CompUSA will be honored by a third-party provider, Assurant Solutions.
14. Macy’s is closing 9 stores.
15. Movie Gallery is closing 160 stores as part of reorganization plan to exit.  They plan to close 400 of 3,500 Movie Gallery and Hollywood Video stores in addition to t he 520 locations the video rental chain closed last fall.
16. Pacific Sunwear is closing 153 Demo stores.
17. Pep Boys is closing 33 stores.
18. Sprint Nextel is closing 125 retail locations.
19. J. C. Penney, Lowe’s, and Office Depot are scaling back.
20. Ethan Allen Interiors announced plans to close 12 of 300+ stores in an effort to cut costs.
21. Wilsons the Leather Experts is closing 158 stores.
22. Sharper Image: The company recently filed for bankruptcy protection and announced that 90 of its 184 stores are closing.
23. Bombay Company: The company unveiled plans to close all 384 U.S.-based Bombay Company stores.
24. KB Toys posted a list of 356 stores that it is closing around the United States as part of its bankruptcy reorganization.
25. Dillard’s plans to close more stores.
26. Steve and Barry’s Clothing, which has 240 stores filed for bankruptcy.
27. Starbucks is in the process of closing 600 stores.

 Source: WKYC NBC 3, http://www.wkyc.com