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Judge pondering appraisal district suit

Thursday, October 8, 2015 by Jo Clifton

After a three-hour hearing Wednesday, Travis County District Judge Tim Sulak told approximately a dozen lawyers involved in the lawsuit between the city of Austin and the Travis Central Appraisal District, “I’m nowhere close to making a decision on the merits” of the case.

The city, represented by Assistant City Attorneys Andralee Lloyd and Michael Siegel, is seeking reappraisals for all commercial property and vacant land for 2015. It is also seeking to have part of the tax code declared unconstitutional and to make disclosure of properties’ sales prices mandatory.

Lawyers representing the city, the appraisal district, the Texas Association of Realtors, the Driskill Hotel, Lowe’s Home Improvement, Texas Comptroller Glenn Hegar, seven individual homeowners and a commercial property owner named Junk Yard Dogs LP argued over who should be allowed in the lawsuit and whether the city filed its lawsuit on time. They also argued over whether the city had pursued its administrative remedies before filing the lawsuit and whether the city was required to serve the approximately 11,000 unnamed owners of commercial and vacant properties in Travis County.

They also argued over jurisdiction, or whether the court may properly hear the matter. If Sulak decides that the court does not have that jurisdiction, it will be the end of the lawsuit, and the judge would not need to answer any of the other questions.

But perhaps the most dramatic arguments concerned the impact a decision in the city’s favor would have on property owners in the future. Mark Hutcheson, arguing on behalf of the Realtors group as well as the Driskill and Lowe’s, and Lorri Michel, representing Junk Yard Dogs LP and seven homeowners, predicted chaos if the city were to win the lawsuit.

If the appraisal district reappraised commercial and vacant properties, Hutcheson and Michel argued, it would change the total value of properties that the city, the county and the school district could tax. That would change the effective tax rate and have a ripple effect on everything involving taxes throughout the county.

Hutcheson said that could have a devastating impact on AISD because the state of Texas determines how much it will give to or take from each district based on appraised values of local properties and the revenue those properties generate.

Michel produced a letter from First American Title Insurance Company stating that there will be an exception related to the litigation placed “in every commitment or policy when ensuring vacant or commercial property in Travis County.” That is because it is not clear whether taxes would go up on any particular piece of property if the city were to win the lawsuit and properties were reappraised.

Sulak asked whether he, as the judge, could not issue an order that would not impact the 2015 values but would be in effect only for 2016 and afterward. He suggested that the intervenors, commercial property owners and homeowners, could request an injunction against the appraisal district to prevent it from changing the 2015 property values. He asked Michel whether she thought he had the authority to do that if he found that the current property tax law system is unconstitutional.

Michel said she did not think that he had the authority to do that under the tax code.

Attorney Todd Stewart, representing TCAD, told the court that it was absolutely not true that the city and the appraisal district were in cahoots, as alleged by Michel and the other attorneys representing the homeowners and Junk Yard Dogs. He then went on to say that the appraisal district agreed with one of the arguments made by the attorney for the Texas Realtors – that all owners of commercial and vacant property should be parties to the lawsuit and should be given notice. That assertion is contrary to what the city’s attorneys were arguing.

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