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« Legislative News Rep. Otto Discusses Appraisal Process Ballot Measures
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The 81st legislative session resulted in several significant reforms to the appraisal process, most authored by Rep. John Otto of Dayton, vice chair of the House Ways and Means Committee and who led a series of public hearings about the appraisal process during the interim.
“We traveled around the state, held hearings in eight different cities and invited the public, invited the chief appraisers from the counties and surrounding counties where we were holding the hearings and basically sat and listened and questioned about what things people liked and did not like about the current system,” said Otto, who visited with county officials at the TAC Annual Conference. “And the legislation that was filed during the 81st session was the direct result of what we learned in having those hearings.”
House Bill 8 was the cornerstone legislation. Instead of appraisal review boards referring to its property value study annually, the boards will use the study – done on each school district to determine whether the property values arrived at locally are in line with the values arrived at by the Comptroller of Public Accounts Office – every other year. In the off-year, appraisal districts will go through a new “Methods and Procedures” (MAP) audit, which is meant to complement the Comptroller’s property value studies.
Instead of just looking at the end product – the property values – the MAP will look at how the appraisal district is arriving at its values, Otto said.
“The reason this bill was so important to me is again the accountability,” he said. “I would hear from school districts and appraisal districts when they failed the property value study…nobody was in there really trying to help them correct what they were doing so they could pass the property value study.”
Deborah Cartwright, with the Property Tax Assistance Division at the Comptroller’s Office, said the office will have information regarding the MAP process and evaluation on its Web site by Sept. 24, and the new process will be discussed at least during the Comptroller’s Property Tax Institute, which will be held Sept. 24-25.
“We’re going to be coming in, doing an initial draft of the report, coming in three months later and helping the appraisal district comply with the areas that we see there is non-compliance,” Cartwright said, adding that the Texas Department of Licensing and Regulation will be overseeing enforcement, but has yet determined its rules.
Cartwright said county commissioners courts may have to be prepared to increase funding to their appraisal review boards in order to have districts pass the audits and meet new annual training requirements. Some districts are not currently using appraisal maps showing parcels and deed records or are using out-of-date appraisal records, she said.
Other legislative changes made during the 81st session include Senate Bill 771, which requires appraisal districts to take owner-provided property specific information into account and places the burden of proof on the appraisal district if they want to increase a property’s value a year after the homeowner has managed to successfully appeal an increase.
Otto said the bill was drafted after one property owner said he had gone to district court to appeal his property’s value each year for four years. He had won his appeal each year, but district court is expensive.
“If you’re successful and you get your value lowered, that’s like low-hanging fruit out there now,” Otto said, but added that appraisal districts will have to work harder to fairly appraise property based on a variety of factors. “It may be in different locations, it may have a different quality of property.”
In addition to those bills, three of the 11 propositions that citizens will vote on come Nov. 3 have to do with amendments to the property appraisal process.
Otto encouraged county leaders to support the measures, saying they will make the appraisal process fairer for homeowners and result in needed property tax relief to homeowners without having to pass a tax cap.
Prop. 2 amends the state’s “highest and best use” laws and authorizes “the Legislature to provide for the ad valorem taxation of a residence homestead solely on the basis of the property’s value as a residence homestead,” according to the ballot language.
“I had a gentleman bring me his appraisal notice for 2007 and 2008 on his residence, his homestead. His 2007 appraisal notice showed his house was valued at $150,000 — $30,000 on his land and $120,000 on his home. His 2008 appraisal notice showed his value at $360,000 — $60,000 on the home and $300,000 on the lot. What that was saying was you’re better off if you bulldoze that house and sell it as commercial property,” Otto said. “Now something had happened in his area in his part of town to cause the chief appraiser to believe that that was the highest and best use and they were required by law to value property on its highest and best use. But we don’t do that for people involved in agriculture, as you all know, so why should we do it for someone’s homestead residence? …He shouldn’t be forced out.”
Otto said the change would not affect all residential properties, only homesteads.
Prop. 3 would establish procedures for providing uniform standards and procedures for the appraisal of property for ad valorem tax purposes.
“It’s going to allow the Legislature to make many changes in how appraisal districts conduct their work, how appraisal review boards conduct their work,” Cartwright said.
Otto said he would not support mandatory sales price disclosure until the Legislature has the authority to make sure all appraisal districts will use the information consistently.
“There has been no legislation enacted to need this type of enforcement power, but this (proposition) would allow the state to have that authority, should we determine later it is necessary,” he said.
Finally, Prop. 5 would allow two or more adjoining counties to establish a single consolidated appraisal review board, though the appraisal districts would remain separate.
“I did this primarily for rural counties,” Otto said. “You’ve just increased the pool of talent that is now available to you.”
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