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City to file suit, announces cooperation with TCAD

Monday, August 24, 2015 by Jo Clifton

The city of Austin will file suit in state district court this afternoon against the Travis Central Appraisal District challenging what the city calls the undervaluation of commercial and vacant properties in the city of Austin and seeking a declaration that the current tax appraisal system is unconstitutional.

Mayor Steve Adler and Mayor Pro Tem Kathie Tovo held a news conference this morning along with TCAD Chief Appraiser Marya Crigler, stressing that they intend to work cooperatively with the appraisal district on the property tax challenge. Nine other members of the Council, along with County Judge Sarah Eckhardt and Travis County Commissioner Brigid Shea, stood with them to indicate support for the legal action.

Adler said, “It is incredibly significant that you see Marya and me standing here together. … We stand here together because we do not see each other as adversaries in this action. We both care about our community and we are joining together to see if this district court action is a tool that can be used constructively in the pursuit of fairness.”

Crigler said although TCAD is doing the best job it can with the data it has, it would be able to provide much more accurate appraisals with full disclosure of commercial sales prices. After the press conference, Crigler told the Monitor, “It is very time-consuming and costly for the appraisal district to get the data . . . and sales data is one of the best indicators of market value. It’s a fundamental thing that we need to do something that the legislature did not provide us as part of the tools to do the job that we need to do.”

Crigler said the real problem is that the Texas Legislature failed to mandate access to commercial sales data for governmental entities. TCAD can purchase data from private companies, which Crigler estimated cost about $50,000 a year. “It is very costly and time-consuming for the appraisal district and that cost is an pass on to the taxpayers,” she said. Dick Lavine, who chairs the appraisal review board, noted that 38 other states mandate disclosure of sales price data to appraisal districts and many of those states are less dependent on property taxes than Texas.

Adler praised Crigler and TCAD for doing as well as can be expected “with one hand tied behind (their) back.” He said the lawsuit would allow the city and the appraisal district to gather information to make the appraisal process more fair.

In its lawsuit, the city is also seeking a declaration and injunction to prevent enforcement of two sections of the state tax code that the city says permit “arbitrary and unreasonable property tax appraisals” in violation of the Texas Constitution, because commercial properties are not appraised at market value.
The city is requesting that the court declare that the current tax appraisal system is inadequate and “fails to provide appraisal districts with the tools necessary to assess properties at market value and provide for equal and uniform taxation.”

Eckhardt said the level of cooperation exhibited between the city and TCAD in a necessarily adversarial process is indeed “a sight to behold.” She said the lawsuit was nothing to be feared and was being done in an unusual spirit of cooperation. “We go to our courts to peacefully resolve our disputes and that’s what this lawsuit is about.”

Adler said Crigler has told many groups and testified before the Legislature that it should have access to more sales data than the law allows her to get, her conclusions as to the market value of commercial and vacant property might be more fair. “One of the purposes of this lawsuit is to determine if the chief appraiser is correct. And the city of Austin is excited at the prospect of working with TCAD to investigate such possibilities,” Adler said.

The city commissioned a study in 2014 related to undervaluation of commercial and vacant property. According to that study, those properties “have been historically undervalued by 47 percent,” the lawsuit notes. “The study further determined that based on TCAD’s initial values, the (commercial and vacant properties) are 41 percent undervalued for the tax year 2015,” according to the city.

The city filed its initial challenge of commercial property valuations with the Appraisal Review Board, but in late June entered into an agreed order with TCAD to suspend the challenge, allowing TCAD to certify this year’s tax roll.

In addition to Adler, Tovo and Crigler, Travis County Judge Sarah Eckhardt and Dick Lavine, chair of the TCAD board, attended the press conference. Eckhardt has been supportive of the city’s efforts to bring commercial and vacant property valuations more in line with valuations of residential property.

“At the end of the day, be that at the end of this district court action or eventually before the Supreme Court or back at the Legislature with new information, we need better data and we need better procedures if the property tax system is to truly be fair,” Adler said.

Before the lawsuit was filed, TCAD released the certified tax roll that all taxing entities within Travis County use to assess taxes. If the lawsuit is successful, TCAD may very well end up revising those numbers. However, the taxing entities will use the current tax roll to set tax rates for the coming year.

TCAD plans to release the certified tax roll, which all taxing entities within Travis County use to assess taxes, around noon. The lawsuit will be filed after that because a premature filing would cause trouble for the county’s various taxing entities. If the lawsuit is successful, TCAD may very well end up revising those numbers. However, the taxing entities will use the current tax roll to set tax rates for the coming year.

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