Travis County Tax Protest – My Formal Hearing Results

Like many other Travis County residents, I found myself staring at property tax appraisal bills this year that were over-valued. In September, the Travis County Appraisal District (TCAD) unilaterally offered a lower adjusted value for one of the properties before I even attended the informal hearing. I signed off on that and mailed it back in, which dropped the home from $196K to $172K.

But that left a couple of 1+ acre lots I own, which I purchased at the peak of the Austin real estate market in 2007, valued by Travis County at 63% more than I paid. At the informal hearing, I explained to the tcad representative that the lots in the subject neighborhood are not homogeneous, and therefore the comparable sales being used were apples and oranges. I also questioned the “size and shape” adjustment they were applying, which added 35% to their “base” lot value for the neighborhood.

When the developer rolled out this neighborhood in 2006, the lots were all sold to custom builders. Some are high up on a ridge with mature oak trees and distant views. Others are down in old meadowland, no oak trees, and with waterway and floodplain issues. The two that I purchased were the two cheapest lots sold in the subdivision. The runts of the litter. The leftover lots that none of the custom builders wanted because they were in the floodplain and only had 70ft and 90ft widths at the front while the rest of the neighborhood has 100ft to 150ft lot widths. I won’t go into the strategy or thinking that lead me to purchase these “problem” lots, but the fact is, they were the cheapest sold for a reason and now I was sitting in front of a TCAD bonehead who was telling me they were “better than average” for the neighborhood and therefore priced at a premium. He offered a token adjustment, which I declined.

So a month later, two days ago, I attended the Formal Hearing. This is a panel of three incompetent older people. More on them in a minute. How they are selected I know not. And a TCAD representative who was as equally unskilled in understanding facts and data as the informal hearing representative. Bottom line, I prevailed, but not to the degree I had hoped. Here’s how it went.

First, as the property owner, I stated my case and laid out my facts and assertions, backed with data and information. Next TCAD rep states the case for Travis County. Then I had a rebuttal. Then the panel made a decision.

What I found most remarkable was the lack of any critical thinking skills on the part of the panel. It’s as if the case I presented wasn’t even heard. They asked not one intelligent question of either me or the TCAD rep. The body language of one panel member in particular was very unprofessional. She squirmed in her chair, and actually rolled her eyes during my presentation of facts. I paused and asked if she had a question – she said “not at this time”, and I continued with my presentation.

The other two looked like they were just doing their best to stay awake. My appointment was for 4PM. They were running behind. I didn’t get in until after 5PM and I walked out of the building at 6:10. I’m sure they’d had a long day, but if they can’t stay focused and alert and do their job, they should quit.

Next the TCAD rep stated his case, which was the same set of reasoning as the informal hearing guy. They were basing everything off of four lot sales in the neighborhood. Of the four sales, three had been overpriced by TCAD by 25%, 10% and 6% over the final actual sold price. One of the four had been undervalued by 12%. The largest variance between TCAD and an actual sold price was $42,500. I pointed out that this very data proved my point, that the lots in the neighborhood vary wildly in actual market value and that TCAD has trouble getting the value correct, as was irrefutably plain to see in TCAD’s own data, where three of their four own comps were over-appraised.

The lot TCAD had undervalued was one of the trophy lots in the neighborhood, sitting on a high ridge with a great building site and a spectacular stand of tall, mature oak trees and no surface water issues. It sold for the same amount as the appraised value on mine. The others were all fairly standard lots in the neighborhood, but all valued by TCAD lower than my appraised values but still higher that their actual sold values. I think a 5th grader could figure this out.

I can’t say I was feeling confident, but in the face if this data, I nearly fell out of my chair when the TCAD rep concluded his presentation by saying that he felt the values on my lot were correct and should remain unchanged.

Then he and I got into it.

I asked pointed questions, such as “describe to me exactly how you conclude that my lots earn a ‘size and shape’ premium. What specifically is it about the skinnier frontages, the creek that bisects the middle of both lots, the flood plain, the lack of oak trees and views, the existence of a drainage spillway on the west side of one and a flag lot driveway on the east side of the other that you think adds value, and how do you square that with the fact that these two lots were rejected by all builders in the initial release and both sold for less than any lots in the neighborhood, including your own comparable sales?”

Like a broken record, he just kept repeating the same irrelevant nonsense until finally he conceded that perhaps the “size and shape” adjustment could be removed and the lots valued at the “base price” for the neighborhood, but not lower.

At the conclusion of the presentation, the panelists are suppose to ask questions and make a determination. Two did not ask any questions. The other one asked stupid questions that were bizarre. Then one made a motion that they accept the TCAD adjusted recommendation, someone seconded, they voted and it was done. I thanked them and left.

The panelists at TCAD appear to all be older people, perhaps part timers or volunteers. None seemed to me like the deep thinkers or smart people you’d want as a “phone a friend” lifeline for Who Wants to be a Millionaire. My panel of three did not actively challenge the TCAD representative’s assertions, or even ask, “what about that? What about these points Mr. Crossland is making? What is your response? Why is this particular shape of lot deserving of a 35% value increase? Do you have market data that validates your assertion that cone-shaped lots in a flood plain with no trees sell for more than square lots with big trees and no floodplain?”

None of them asked the TCAD rep, “what about the fact that three of the four comparable sales you are using are valued less than Mr. Crossland’s appraised values, and that 2 of the 4 are valued below the base value for the neighborhood even though they don’t have any of the negative attributes existing on Mr. Crossland’s lots?”

These are the  kind of questions one would expect from sharp people digging for the truth. Yet these panelist could not come up with even one good question. Instead they sat there like dead wood, silent dummies without a clue.

Nevertheless, I achieved a total $75K reduction, which translates to a reduction of about $1,400 in property taxes that I’ll have to pay next month, but that still leaves me short about $35K in reductions, and my lots are still over-valued.

Next, if I want to push it, I can either sue in Travis County District Court (which would be too costly) or request Binding Arbitration.

Binding Arbitration is explained well at this website, which explains:

The property owner files a request for binding arbitration within 45 days after receiving official notice of the appraisal review board’s decision. The property owner completes a form, remits payment of a $500 deposit and lists a requested value. The appraisal district forwards the request for binding arbitration to the Comptroller. The Texas Comptroller facilitates selection of an arbitrator who holds a binding arbitration hearing.

There is an exchange of evidence prior to the hearing. Both the property owner and the appraisal district have an option to present evidence at the hearing. The arbitrator will make a final decision regarding the assessed value for the year.

If the value is less than the value set by the appraisal review board, the assessed value for property taxes will be reduced. The assessed value for property taxes will not be increased as a result of the binding arbitration hearing. The Comptroller retains $50 for facilitating the binding arbitration process.

If the arbitrator selects a number closer to the property owner’s value, the appraisal district pays for the cost of the binding arbitration and the property owner receives a refund of $450 from the deposit. If the value selected by the arbitrator is closer to the appraisal district’s value, the property owner does not receive a refund of any portion of the deposit. If the value is less than the value set by the appraisal review board, the value is reduced.

Since the best case scenario of winning at arbitration would be another $638 reduction in my property tax bill this year, I have to decide if that’s the highest and best use of my time even if I knew I’d win. I don’t know if the arbitrator is going to be a person of intelligence or just another dummy. I assume he or she would be of higher caliber than the drones I encountered at TCAD, perhaps even an attorney or trained mediation expert, but one can hardly count on it.

As with everything in life, we pick our battles. But when our County is incapable of listening to reason and interpreting facts and data, and that incompetence leads to property owners being over-billed for property taxes, something needs to be fixed.

As I mentioned in my last blog article about this topic, I have contacted Senator Kirk Watson’s office and suggested a law be passed that would forbid a Texas County from increasing the appraised value on a property that has been over-valued by 10% or more for three years. In other words, now that I’ve had to spend time going down to fight for a reduction in value of 35%, I don’t want to be doing it again next year, and the year after, as some property owners are forced to do after the price gets jacked back up again the following year, for the same reasons that were argued against the year before. It’s ridiculous.  Instead, TCAD should now have to wait three more year before reassessing my property values. I think that’s fair.

Remember, if you have a tax protest coming up and need market data to take with you to justify your price, Sylvia and I offer Free CMAs for tax protesters. Anything we can do to help others “fight the Man”, we’re happy to do.

Posted by Steve
6 years ago

Steve is a Real Estate Blogger, Husband and Dad, UT Austin Grad, Runner, Real Estate Broker and owner of Crossland Team and Crossland Real Estate in Austin TX.

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