By Dave Lieber
dlieber@star-telegram.com
Some wealthy property owners in Texas no longer have to appeal their property tax assessments like the rest of us. They get a simpler, faster method that costs less than going to district court and paying expensive lawyer bills.
A little-known pilot program in some Texas counties, including Tarrant, affects only residential or commercial property owners whose property has been appraised for tax purposes at more than $1 million. To appeal an unfavorable Arbitration Review Board decision, these owners can go to the state.
Such a property owner can argue her or his case before an administrative law judge in a hearing that doesn't require hiring a lawyer. Court rules of civil procedure are not followed, including no discovery of evidence or testimony taken in depositions.
Since the test program began in 2010, only 85 property owners in five original test counties filed an appeal with the State Office of Administrative Hearings, known as SOAH. Most came from homeowners and from owners of motels, apartment complexes and strip shopping centers, SOAH officials say.
Only 11 cases went to a hearing. The rest were settled before a hearing, dismissed because of errors or withdrawn.
The pilot program was expanded last year, Now, aside from Tarrant, property owners in these counties are eligible: Bexar, Cameron, Collin, Denton, El Paso, Fort Bend, Harris, Montgomery, Nueces and Travis.
Some observers of the program say that since the numbers are so small, it doesn't provide a true measurement of success or failure. Others say a follow-up law enacted last year that increases the counties involved and extends the program's expiration from this year to 2014 will provide more information.
Here's how it works: Those with properties valued above $1 million may enter the test program after hearing the decision on their appeal by an Appraisal Review Board. The rest of us can go to binding arbitration or court.
At a state hearing, property owners may represent themselves or they can hire a lawyer, a certified public accountant or a registered property tax consultant. Most owners chose tax consultants. But the law also allows anyone to assist an owner who is pursuing an appeal.
For $1 million-plus owners, a SOAH decision is final. These property owners may not go to court afterward. By contrast, for lower-valued properties, the appeal process allows for binding arbitration, which is final, or the owners can go straight to court, where a case can be appealed all the way to the state Supreme Court.
Some Texas property tax consultants say they believe the pilot program is designed to pave the way for a massive shift from county-run appraisal districts to a statewide uniform property tax administered out of Austin by the state comptroller's office.
Lanette Andrews, executive director of the Texas Association of Property Tax Professionals, told me that a state-run property tax system would remove the power of local property taxation from counties, cities and school districts. The comptroller's office was unavailable for comment.
Sen. Robert Duncan, R-Lubbock, introduced a state constitutional amendment last year that would eliminate the local property tax system and create a statewide property tax. At the time, he said a new system would help equalize education funding among school districts. His bill didn't pass.
When the pilot program for appeals was created by lawmakers in 2009, discussion did not center on a statewide property tax. Instead, that bill was touted as a way to streamline the appeals process for those who qualified and make it cheaper and faster than going to court.
Another reason, according to a bill analysis in 2009: Some taxpayers believe that an Arbitration Review Board operating within the confines of an appraisal district will not act in the taxpayer's best interests.
"To change this perception, the system itself must be changed," the analysis stated, without giving more specifics.
If that is the concern, some may wonder why only the wealthiest property owners were given this opportunity. Program supporters say they wanted to test the program in a smaller version to see if it works.
Rep. Vicki Truitt, R-Keller, who was one of the bill sponsors, declined an interview. Truitt lost her GOP primary and will not return to the Legislature next year. The bill's main sponsor, Rep. John Otto, R-Dayton, said Saturday night that the pilot program is not a precursor to a statewide property tax.
In Tarrant County, only two appeals have been filed in the new program. Both were settled before a hearing. One came from the owner of a Southlake property valued for tax purposes at $1.6 million. The owner wanted it knocked down to $783,000 because a house on the land was unfinished. The agreed amount in settlement was $1.25 million.
This year, the finished home is valued at $1.7 million. There is no protest on file.
The other appeal came from auto dealership Clay Cooley Suzuki in Arlington. The property was valued at $5 million, but the trust that owns the land asked that it be lowered to $3.4 million. In a pre-hearing settlement, both sides agreed to lower the value to $4.4 million. This year, the Tarrant Appraisal District set the value back up at $5 million. The owner is appealing again.
Applicants must pay $1,500 for a SOAH hearing. They do get the money back if they settle before a hearing. For the remaining property owners, binding arbitration at the Tarrant Appraisal District costs $500 for a regular session, or $250 if a property owner agrees to limit the presentation of testimony to one hour.
The Watchdog column appears Fridays and Sundays.Dave Lieber, 817-390-7043Twitter: @davelieber
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