Pilot program for property tax appeals begins in 2010
While our local Tarrant County economy continues to negotiate its way through a nationwide recession, property owners have seen a considerable decline in property values. According to the Real Estate Center at Texas A&M University, the average home sales price in the Fort Worth area during January fell to its lowest level in four years—$127,300. And we have all heard about the record number of first-quarter foreclosures filed in North Texas.
In light of the struggling market, many Tarrant County property owners were surprised to find the appraised value of their property had increased, according to their most recent tax appraisal notices. For property owners in Tarrant and perhaps other Texas counties, there is seemingly no correlation between a decline in market value and appraised value for property tax purposes.
On June 19, 2009, Governor Perry signed into law House Bill 3612 (“HB 3612”), which establishes a new appeals option for those with property valued over $1 million.
Chapters 41 and 42 of the Texas Tax Code set forth the current appeals process for owners to protest their appraised value.
Owners with property appraised at $1,000,000 or less may appeal the assessed value to the local appraisal review board (“ARB”). If still dissatisfied, they may appeal a decision by the ARB to district court. Alternatively, they may appeal by requesting binding arbitration under Chapter 41A of the Texas Tax Code. An arbitration award under Chapter 41A is a final determination of the appeal.
Whereas arbitration under Chapter 41A may well be quicker and perhaps less costly, the final decision is made by an arbitrator, who is typically a licensed or certified real estate broker or appraiser appointed by the Comptroller. The district court route allows for a trial by jury (or non-jury) and an award of attorneyÂ’s fees to a prevailing property owner.
The process is not quite the same for those with property appraised at over $1 million. An owner may appeal the assessed value to the ARB, and then on to district court. But, there is no option to require binding arbitration in lieu of a district court proceeding.
HB 3612 establishes a three-year pilot program, beginning January 1, 2010. Owners of real and personal property (not including industrial property or minerals) in Bexar, Cameron, El Paso, Harris, Tarrant and Travis counties can appeal ARB decisions to an Administrative Law Judge (“ALJ”) from the State Office of Administrative Hearings (“SOAH”), sitting in the county where the property is located. A determination is to be issued by the ALJ within 30 days of the hearing.
HB 3612 anticipates a more expedient and less expensive route for property owners to appeal ARB decisions. According to bill analysis by the House Research Organization, SOAH predicts the average cost of these hearings to be between $1,500 and $2,000. There is a “loser pays” provision, such that if the ALJ determines that market value is closer to the property owner’s opinion than that of the ARB, the property owner’s filing fee would be refunded and the appraisal district would pay the cost of appeal. If the ALJ determines the converse, the filing fee is retained and the property owner would pay the costs of appeal, minus the filing fee.
The determination of the ALJ will be appealable to district court, except not with a jury trial. So, an appeal to an ALJ just temporarily suspends the 45-day window for filing an appeal in district court.
Mary Colchin Johndroe and Toben Cocklin are attorneys at Cantey Hanger, LLP.
www.canteyhanger.com.
