Commercial tax appeals put burden on Texas homes

September 30, 2013 1:51:03 AM PDT
A rising number of commercial owners are successfully challenging their property valuations and driving down their tax bill, putting a greater burden on Texas homeowners as the tax base shrinks.

Texas is one of four states that do not require the disclosure of property sale prices, making it difficult to assess a fair market value, the Austin American-Statesman reported Sunday.

Also, a law adopted by the Legislature a decade ago allows property owners to file so-called "equity appeals" so the appraised value of their properties can be brought down to the median value of a comparable property. As the value of higher-priced properties is lowered, so is the median, continually eroding the tax base.

For four of the past five years, the growth in value on the tax rolls has been offset by value taken away in the appeals process, even as land and building prices marched steadily upward.

Since 2000, the property tax burden on homeowners statewide has grown from 45 percent to 54 percent, while the share paid by commercial and industrial owners has slipped to less than 20 percent.

Discrepancies between the value of properties listed on tax rolls and the sale prices, the newspaper added, are gaping and widespread, in particular when it comes to commercial and multifamily properties. For instance, buildings valued at $65.8 million sold for $103 million in August or a 20-story office building listed at $82.5 million was sold for $102 million in April. In another case, the owners of a luxury 502-apartment complex sold it for $80 million, shortly after they got its tax value reduced to $59 million.

Technological giant Advanced Micro Devices has repeatedly protested the appraisal by the Travis Central Appraisal District in order to reduce the listed value of its properties. In April, it sold a 59-acre office park to a San Francisco group for $164 million, $37.5 million more than the value of an appraisal they thought was too high. Over the past two years, AMD was No. 1 in a list of 25 property owners who saw their appraisals lowered by the Travis Central Appraisal District.

Those benefiting from the provision are not evenly distributed across the board. The average value of properties protested was $744,084; the average value of those under equity lawsuits was $11.5 million.

"These are not your typical homeowners," Travis chief appraiser Mayra Crigler said.

All of the more than 8,000 formal appeals to Bexar County's Appraisal Review Board are based on the "equity appeals." The chief appraiser for that district, Michael Amezquita, called the provision a "scam" that puts most of the burden of taxes on lower- and middle-class homeowners.

About 70 percent of the appeals are brought by hired tax agents that have taken to mass marketing in order to get more clients.

Legislative proposals to only allow "equity appeals" for properties valued less than $1 million and to mandate sale price disclosure have not found support in the Legislature in past years.

Mark Lehman, vice president of governmental affairs for the Texas Association of Realtors, said: "All we want is a good, fair, balanced appraisal process."

Lehman said sales figures are available to appraisal districts through the Multiple Listing Service run by local real estate agent boards. However in some counties, local boards deny appraisers access to their listings.

And the listings don't usually cover high-end homes -- and never commercial properties. To fill in the gaps, larger, richer districts pay tens and even hundreds of thousands of dollars for other information services.

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