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City works to challenge commercial property values

Thursday, October 23, 2014 by Elizabeth Pagano

City Council continues to move forward with a potential challenge to commercial property values in the city, but there are still some details to be worked out.

The push to challenge commercial property appraisals comes at a time when Austinites are seeing steep increases in their home valuations and property taxes. Recent research has shown that commercial properties, on the other hand, may be appraised below market value.

The Council resolution, which passed at 3:30 a.m. June 12, noted that the “undervaluation of commercial property imposes an unfair tax burden on residential property owners” and asked the city manager to move forward with putting together a challenge to appraisals of categories of commercial properties that are undervalued.

Austin is not the only local government that wants to take a closer look at commercial property appraisals. In fact, Travis County is currently embarking on a similar project, and the city has the option of joining forces (and sharing costs) with it. Council’s Audit and Finance Committee got an update on the process Wednesday, and members were told that option might make sense, given the small pool of experts available.

According to Elaine Hart, the city’s chief financial officer, Travis County has already identified and is in negotiations with its preferred expert about the work. The city is currently in the process of looking for its own expert, and a request for proposals will end in November so that Council can finalize a selection in December.

Travis County has indicated an interest in working with the city. Council also has the option of choosing another taxing authority to help complete the study of some 34,000 commercial properties. That work is set to start Jan. 1.

The goal is to have the Travis Central Appraisal District appraisals reviewed in time for the city to file a challenge petition by the June 1 deadline.

Audit and Finance Committee members also learned that they might have to vote on a budget amendment to pay the expert. If that is the case, Council will consider it at its Nov. 6. meeting.

Under the current proposal, the hired appraisers will start looking at the properties after Jan. 1.

Council Member Kathie Tovo reminded those present that Council hoped to “focus within the category of commercial property valuations in such a way that would not unduly impact renters,” noting that multifamily properties are included in commercial property valuations.

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