COVID-19 Triggers Property Tax Administrative Issues: ARBs, etc.

Date Sent: March 18, 2020

COVID-19 Triggers Property Tax Administrative Issues: ARBs, etc.

COVID-19 creates extraordinary issues this appraisal cycle. While most appraisal districts are either finished or near-finished with crafting preliminary values for 2020 (with the exception of Travis CAD, which is not reappraising single family residential properties), conducting face-to-face informal appeals, and formal appeals before appraisal review boards (ARBs) is concerning. A large number of ARB members are over the age of 65, and may be at higher risk from COVID-19. Conducting public hearings with multiple ARB members in a crowded room is most certainly not ideal during a highly contagious pandemic.

Freezing Values? Some chief appraisers are discussing approaching the Governor about using his emergency powers to suspend certain provisions that would essentially allow the use of 2019 values (for either all properties, or perhaps just residential properties) in adopting 2020 tax rates. Theoretically, this could either negate or discourage the need for appeals, as these values had been previously vetted. For chief appraisers this would minimize the work of local appraisal offices while also doing harm to the business of property tax consultants, many of whom they view as adversaries.

For TTARA, the use of current market value is a key principle that ensures taxation is equal and uniform. Using values that do not reflect current market conditions injects substantial inequities into the administration of the single largest tax that state or local governments levy in Texas. Further, it creates arbitrary distortions once properties are reappraised, as homesteads are subject to a 10% cap, and other properties are not. This could shift hundreds of millions, if not billions, of property tax dollars from residential property owners onto business. We have relayed our concerns to the leadership offices.

Tax Bills Going Up, Regardless. Some policy makers also find the idea of using 2019 values superficially appealing—after all, many homeowners have blamed rising values for their rising tax bills. The Governor’s disaster declaration opens the door for taxing jurisdictions to adopt property tax rates that would raise 8% more revenue over last year, negating the 3.5% that would have been in effect otherwise. So even with values frozen, property owners may see substantial increases in their tax bills this fall. Cities, in particular are likely to be aggressive in adopting higher tax rates, as many face the prospect of falling sales tax revenues.

Remote ARB Hearings? While Chapter 418 of the Government Code gives the Governor broad powers over state agencies, in fact his emergency powers over local governments are more limited. It is questionable that he could take actions to freeze values, although appraisal districts may be able to do so on their own authority, provided their local CAD board approves. The Governor unquestionably has authority to extend local deadlines at the request of local officials. Section 418.016(e) of the Government Code specifically references ad valorem tax deadlines. Using this authority, the Governor could allow for a longer period for ARBs to meet. Chief appraisers might have to certify estimated tax rolls for use in local tax rate setting, but this already is not uncommon. It is possible the Governor might be able to allow the use of tele conferencing for ARB hearings, which would limit direct public interaction. The Governor has already authorized the Comptroller’s Office to provide ARB training remotely.

The COVID-19 pandemic clearly creates huge challenges for Texas, and the administration of the property tax is, in the grand scheme of things, a lesser concern; however, it is an important issue for our tax community and TTARA will actively monitor events and weigh in when necessary.

Reminder about Rendition Deadlines and Extensions

Due to the trying times we are all facing, below is a reminder of the general filing deadlines stated in Sec 22.23 of the tax code:

  • Rendition statements and property reports must be delivered to the chief appraiser after January 1 and not later than April 15, except as provided by Section 22.02.
  • On written request by the property owner, the chief appraiser shall extend a deadline for filing a rendition statement or property report to May 15. The chief appraiser may further extend the deadline an additional 15 days upon good cause shown in writing by the property owner,
  • Repealed.
  • Notwithstanding any other provision of this section, rendition statements and property reports required to be filed by a property owner regulated by the Public Utility Commission of Texas, the Railroad Commission of Texas, the federal Surface Transportation Board, or the Federal Energy Regulatory Commission must be delivered to the chief appraiser not later than April 30, except as provided by Section 22.02. On written request by the property owner, the chief appraiser shall extend the filing deadline to May 15. The chief appraiser may further extend the deadline an additional 15 days for good cause shown in writing by the property owner.

Questions have been raised concerning acceptable methods to “deliver” renditions and extension requests to the appraisal district and, in particular in view of the current increase in working remotely from home, whether electronic delivery is statutorily compliant. Since the Tax Code is silent as to method of delivery, electronic delivery would appear to be permitted but we encourage our members, as a cautionary measure, to contact the appraisal district to confirm acceptable methods of delivery and the correct email address to which electronic submissions would be sent.

TTARA is currently monitoring any possible ARB delays or any changes regarding how ARB hearings will be conducted.