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Regional leaders sound off on appraisal challenge

Wednesday, May 27, 2015 by Tyler Whitson

In preparation for tomorrow’s decision, City Council members sat down with leaders from regional taxing entities Tuesday to discuss the pros and cons of challenging the Travis Central Appraisal District’s valuation of Austin commercial properties this year.

Those in attendance included representatives and legal counsel for Round Rock, Cedar Park, Leander, Central Health, Austin Community College, Austin Independent School District, Travis County and the appraisal district itself.

Mayor Steve Adler, who led the cautious discussion, sought advice from the attorneys and tax experts on ways the city might file a petition to the state’s Appraisal Review Board without adversely impacting the roughly 100 taxing entities that operate in the county.

The district’s chief appraiser, Marya Crigler, said that if the city were successful in its challenge, she would not be able to certify the tax roll until mid-November, in the “best-case scenario.” She would otherwise plan to do so by July 20.

Such a delay would likely push back the opportunities for taxing entities in the district to collect revenue, which could impact their budget adoption processes for the next fiscal year.

On May 20, Deputy Chief Financial Officer Ed Van Eenoo said in a discussion about the topic that a successful challenge would set the city’s property tax deadline from Jan. 31 to March 1.

When Adler asked if there might be a way to speed up the challenge process through a separate legal request, the attorneys in attendance acknowledged that there are different ways to interpret the law that would govern such a proceeding, prompting Adler to ask them to meet together to see if they could come to a consensus on the issue.

“The question was, could we get the legal issues in front of a district judge quickly so as to identify the timeline and the rules that we would need to follow,” Adler later told the Austin Monitor. “It would be a separate request outside of the challenge.”

When asked if there had been any updates, Adler said he was not yet sure if he had heard a “definite answer” to any of his questions. “I think we just kind of teed them up, but I think – and I hope – they’re all now working together to try to answer those questions.”

Council may not have time to wait for a definite answer, however, if it plans to make a decision at tomorrow’s meeting in order to meet a May 30 petition deadline.

Adler, considering this timeline, asked during the discussion about the possibility of Council filing a petition and then retracting it in 10 days if it is determined that the challenge would negatively impact other taxing districts.

Attorney Debbie Cartwright, representing the appraisal district, said that such an action would cause “no harm.”

Underlying the discussion was a report the city released on May 19 that asserts that the appraisal district has “substantially undervalued” Austin commercial properties for property tax purposes, citing an average undervaluation of 47 percent in 2012 through 2014.

If the appraisal district were to raise commercial property valuations, the report says, the city could see more revenue and reduce its tax rate, thereby decreasing the burden on residential property taxpayers.

The lion’s share of the undervaluation, the report says, applies to undeveloped or underdeveloped property, which had an average undervaluation of 92 percent during the study’s time frame.

To reach its conclusions, the study compared the appraisal district’s valuations to sales price data on commercial properties. The district does not have direct access to such data because the state does not have a law requiring property buyers or sellers to disclose sales prices to governmental entities.

Crigler said that, after reviewing the report, the district has concerns about its determinations and the methodology of the study, as well as its definition of “undervalued.” She concluded that, if the city were to file a successful challenge petition, the change in commercial property values “may not be quite as significant as the report may indicate.”

The appraisal district, however, does not have the data used in the report, so it cannot make a direct comparison. Cartwright said the city’s filing of a challenge petition, even temporarily, would allow the city and the appraisal district to exchange information, though she noted that this could be accomplished through other means that do not involve filing a petition.

Many of the taxing entity leaders in attendance expressed concerns about how a tax roll delay would impact their finances.

Round Rock Council Member Craig Morgan urged Council not to file a challenge this year. “It delays our adoption of our tax rate, our budget,” he said. “A unilateral action by the city of Austin makes our jurisdiction dip into our reserves and try to function with that budget through the first four or five months.”

Morgan also expressed concerns about potential litigation costs that the appraisal district would have to pay if the city’s challenge were successful and large commercial property owners were to protest the new property appraisals and take the issue to court.

AISD Chief of Staff and General Counsel Mel Waxler appeared optimistic about the ability of the jurisdictions to strike a path forward that would not adversely affect budget adoptions.

“I am hopeful that the attorneys can get together and really work through the differences here,” Waxler said. “This notion of a community solution is a very strong and attractive notion.”

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