Tuesday, September 8, 2015 by Jo Clifton

Homeowners challenge city on TCAD suit

Six Travis County homeowners last week filed a motion to intervene in the city’s lawsuit against the Travis Central Appraisal District. Representing those homeowners are three attorneys experienced in representing property owners who believe their property has been overvalued. Attorneys Lorri Michel and Bill Aleshire of Austin and attorney Joseph M. Harrison of Floresville filed the plea in intervention claiming that if the city wins, everyone challenging their property valuations in court will lose.

The homeowner intervenors are seeking to contest the city’s challenge to two sections of the Texas Tax Code. According to the city’s petition, Section 41.43(b)(3) “forces the appraisal district to reduce individual property appraisals from market value to the median value of ‘a reasonable number of comparable properties.’ This reduction is compelled by the threat of attorney’s fees for any protesting property owner who prevails by showing that a market value appraisal is greater than the median value of selected comparable properties.”

Michel said, “Our main concern is keeping the equal and uniform requirement for taxation as set forth in the tax code, a requirement that appraisal districts must comply with. That affects every single property owner. Over 60,000 homeowners in Austin this year protested their values based on equal and uniform.” But if the city wins that section of the lawsuit, she said, property owners will not be able to protest any of that particular section of the law.

Mayor Steve Adler told the Austin Monitor, “Property taxes should be based on market value and only market value. The people that are challenging our challenge are explicitly trying to support a law that allows some properties to be valued at something other than market value. This is fundamentally not fair.”

Both Michel and Aleshire noted that the appraisal district’s attitude toward the lawsuit seems to be one of cooperation. That is one of the reasons the lawyers for the homeowners decided to intervene.

The city says that one of the best ways to determine market value is through sales information, but the state does not require disclosure of sales prices when real estate is sold. “The lack of disclosure has created an imbalance in the amount of information available when appraisal districts determine market values for different categories of properties,” according to the lawsuit.

Although it is relatively easy to find sales data for residential properties, it is much more difficult to get that same data for commercial properties. “The lack of sales disclosures has made it nearly impossible for appraisal districts to comply with their statutory and constitutional duty to appraise all properties at market value so that taxation is equal and uniform,” the city says. This theme is central to the lawsuit the city filed.

Michel, however, said, “The appraisal district has many, many means of obtaining sales prices.” The state comptroller “has concluded that TCAD is appraising at market value. So there really isn’t a problem … and the city needs to drop its lawsuit.”

Aleshire, on the other hand, does not contend that everything is fine with property appraisals. “There are, unlike homeowners, certain commercial properties who have tried to compare their properties to properties, some of which are out of state,” he said.

Aleshire pointed out that in the most recent session of the Texas Legislature, there were attempts “to kind of surgically fix some of the things that are wrong. If the city was just challenging the commercial values, these homeowners would not have been in the case.” Those attempts failed.

“They’re trying to accomplish by judicial fiat what they failed to get done at the Legislature,” Aleshire said.

Adler did not disagree. He said, “That’s what courts are for, right? If you think the Legislature has passed a law that is not constitutional, first you ask the Legislature if it’s inclined to change it on its own. The Legislature said no. So then you go to court. It’s just like the school finance law.”

Aleshire represented Brian Rodgers, a consumer advocate who pointed out several years ago that many commercial properties were undervalued on the tax roll. As a result of some of Rodgers’ recommendations, TCAD improved its methods over the past couple of years, Aleshire said, so the appraisal district has raised values of those properties, many of them very substantially.

Aleshire also pointed out that the city has sued all owners of vacant land and commercial real estate in Travis County because the tax code requires that all those property owners be named in such a suit. State law also requires a plaintiff to serve the lawsuit on all defendants, and Aleshire says the city has not done so. He estimated that there are tens of thousands of such property owners on the city’s 603-page list.

The six homeowners – Stanley Thomas Ford, Elizabeth Halley Ginsberg, Ariel Dvorin, Rose A. Hayden, Louise C. Truehardt and David Henry Alsmeyer – are now also parties to the lawsuit. But either the city or TCAD could file a motion to strike them as intervenors. A spokesperson for the city declined comment.

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Key Players & Topics In This Article

Travis Central Appraisal District: The tax appraisal district for Travis County.

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