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TEXAS PROPERTY TAX TRENDS

By Paul Pennington

SECTION ONE

I. OVERVIEW OF TEXAS PROPERTY SYSTEM

A)
The Texas Property Tax Code provides for all taxable
property to be appraised at
its market value as of January 1.

B)
* "Market value" means the price at which
a property would transfer for cash or its equivalent
under prevailing market conditions if:

(a)
exposed for sale in the open market with a reasonable
time for the seller to find
a purchaser;

(b)
both the seller and the purchaser know of all the uses
and purposes to which the
property is adapted and for which it is capable of being
used and of the enforceable
restrictions on its use; and

(c)
both the seller and purchaser seek to maximize their
gains and neither is in aposition to take advantage
of the exigencies of the other.

*
Section 1.04(7)

II.
THE APPEAL PROCESS (ADMINISTRATIVE REMEDY)

A)
Filing a timely real and personal property rendition.
Pursuant to the 1995 Taxpayers’ Rights,
Remedies
& Responsibilities;

"A
rendition is a form you may use to report the taxable
property you own on January 1
to the appraisal district. The rendition identifies,
describes and gives the location of your
taxable property. You also may give your opinion of
your property’s value on the rendition
form, but it isn’t required. Business owners must report
a rendition of their personal
property.

*
advantages

–
If you file a rendition, you are in a better position
to exercise your rights as a taxpayer.

·
Your correct mailing address is on record so taxing
units will send your tax bills to the right
address. · Your opinion of your property’s value is
on record with the appraisal district.
The chief appraiser or the appraisal review board must
send you a notice of appraised
value if either one puts a higher value on your property
than the value you listed on
your rendition.

*
deadline – File your rendition with the appraisal district
after January 1 and no later than April
14.

The
chief appraiser may extend the deadline to April 30
if you show good cause for needing an
extension."

III.
INFORMAL APPEALS (DATES VARY DEPENDING ON JURISDICTION):

A)
A property owner in Texas has the right to file
an appeal of a property tax assessment
if he/she feels the valuation is in excess of
the property’s market value.

B)
Typically, after an appeal has been filed, a property
owner or their agent is given
the opportunity to discuss and hopefully resolve
the dispute informally with an
appraisal district staff appraiser. If an appeal
cannot be resolved at this level, the
taxpayer will be given an opportunity to appeal
the assessment to the appraisal
review board.

C)
Filing a protest:

*
"1. File a written protest .

The
appraisal district has protest forms available,
but you need not use an official form. A notice
of protest is sufficient if it identifies the
owner, the property that is the subject of the
protest and indicates that you are dissatisfied
with a decision made by the appraisal district.
< 2. File your notice of protest by May 31
or no later than 30 days after the appraisal district
delivers a notice of appraised value to you, whichever
date is later."                                                             

*
1995 Taxpayers’ Rights, Remedies & Responsibilities

IV.
FORMAL APPEALS (THE ARB):

A) So, what are ARB’s and
what ground rules govern them? The Texas Property Tax
Code requires each county to have an appraisal district
and to establish an appraisal review board. ARB’s may
vary in size; however, the Property Tax Code does give
guidelines. The code requires that ARB’s have a least
three members and, depending on the county’s population,
they may have as many as 45 members.ARB members are
appointed by the appraisal district board of directors
and serve terms of two years, with the terms beginning
the first of each year.

B)
WHO CAN SERVE ?

1) The Property Tax Code does have some
restrictions on eligibility of board members. These
restrictions deal mainly with conflicts of interest,
nepotism, and residency requirements. The code does
not require, however, members have even a general knowledge
of either real or personal property appraisal methods.

2) The code does provide for the compensation (per diem)
of ARB members. The amount varies from county to county.
The Dallas Central Appraisal District, for example,
pays its ARB members a maximum of $150.00 per day. The
Collin Central Appraisal District, on the other hand,
pays its ARB members $96.00 per day, plus one meal.

V.
ARB’s – THEORY vs. PRACTICE :

A) THEORY

1)
In theory, the ARB is to function as an independent
board that reviews evidence and arguments from both
the appraisal district staff and the taxpayer or his
agent. Then, after reviewing the evidence and testimony,
it should make a fair decision as to the market value
of the property in question.

B) PRACTICE

1)
Unfortunately, in the real world, some ARB’s tend to
side with the staff the majority of the time.

2)
In general terms, the very idea that a group of citizens
who are hand-picked, trained and paid by the appraisal
district can be expected to dispense fair and impartial
rulings toward taxpayers is ludicrous. Human nature
would suggest that, normally, employees tend to perform
in a manner that pleases their employer. In this case,
the appraisal district is the employer and the board
member is the employee.

3) The Legislature, recognizing
this problem, recently amended the property tax code
(41.66) to state that "the appraisal review board
may not consider any appraisal district information
on a protest that was not presented to the appraisal
review board during the protest hearing." This
amendment was designed to prevent the board members
and staff from discussing an appeal before or after
an appeal hearing.

VI.
EXAMPLES OF EVIDENCE TO BE USED BEFORE THE ARB :

A)
Under the current system the appraisal district assessment
stands correct until it is proven
otherwise by a taxpayer or his agent. Thus, the burden
of proof is placed squarely
on the shoulders of the taxpayer.

B)
The code states in 41.45(b) that "the property
owner initiating the protest is entitled to
an opportunity to appear before the ARB to offer evidence
or arguments."

C)
EVIDENCE DEFINED

·
Appraisals (Real Estate and Personal Property)

·
Purchase Price

·
Asking Price

·
Historical Offers

·
Capitalization of the Income Stream

·
Comparable Sales

·
Environmental Studies

·
Balance Sheets

·
Depreciation Schedules

D)
DOUBLE STANDARDS

·
It’s a bad appraisal

·The
appraiser is a "low ball" or "bad"
appraiser

·
Your client manages the property poorly

·
The asking price is too low

·
We’re assessing everybody else the same way

·
Bank/F.D.I.C./R.T.C. sales are distress sales
not market sales

VII.
OPTIONS AVAILABLE AFTER ADMINISTRATIVE REMEDY

A)
LATE APPEALS

1)
Section 25.25(C) (3)
Property does not exist in the form or location described
on tax roll.

2)
Section 25.25(D)
Property over assessed by more than 33.3%, carries 10%
late correction penalty.

3)
Section 25.25(H)

Carries no penalty, requires joint motion between chief
appraiser and property owner.

B)
LITIGATION

1)
After an unsuccessful appeal to the appraisal review
panel, the taxpayer should evaluate the possibility
and cost-effectiveness of litigating. At this state
of the game the advantage suddenly swings to the taxpayer.
The appraisal district loses its home court advantage
of appointing its people to decide valuation appeals.

VIII.
IMPORTANT TEXAS TAX DATES :

NOTICE
OF LITIGATION WITH APPRAISAL DISTRICTS:
Within 15 days of receipt of the ARB Order Determining
Protest.

FILING
SUIT:…………….Within 45 days of receipt of the
ARB Order

TAX
RATES SET:……….Generally September-October

TAX
BILLS MAILED:….Generally October-November

JANUARY:…………………Assessment
Date January

JANUARY
31:…………….Last day for payment of taxes
before they become delinquent for

property litigation for property
subject protest.

JANUARY
31:………………Last day to file motion to correct
an incorrect
appraisal

APRIL
15:………………………………………Rendition
Due Date

TAX
ROLL CERTIFICATION:………………….Generally July-August

TEXAS PROPERTY TAX TRENDS

SECTION TWO

XI. Overview Trends in 1995 Tax Rolls (Metroplex Example)

AREA PROPERTY VALUES

Change in certified taxable property values for 1995
in percent

A. Dallas County

B) COLLIN COUNTY

C) DENTON COUNTY*
Denton County

D) ROCKWALL COUNTY   

*No city or school districts available.
SOURCE: Dallas, Collin, Rockwall and Tarrant appraisal
districts The Dallas Morning News

F) Ten year history of Dallas Central Appraisal District
(See Exhibit A).

TEXAS PROPERTY TAX TRENDS

SECTION THREE

X.
EMERGING PROPERTY TAX ISSUES