Texas property owners become upset when their assessed value and thus their property taxes are increased. Even if they know the proposed assessed value is less than market value, they are often upset, frustrated and angry that their property taxes are increasing. However, Texas property owners become irate when they believe they are assessed unfairly. They might say something like the following: "my house is smaller than my neighbor's house, they have a pool and I don't, and their house in better condition than mine, but assessed value is 15% less than mine! How can that be? It's just not right!!" The intensity of their emotion and frustration is palpable.

Conversely, appraisal district appraisers believe appeals on unequal appraisal are illegitimate. They do not think unequal appraisal should be a lawful basis for appeal. There are many exceptions with appraisers who feel deals on unequal appraisal are reasonable and appropriate. However, most Texas appraisal district appraisers are displeased to see appeals on unequal appraisal.

Because of the nature of the working relationship between appraisal district appraisers and appraisal review board members, the attitude of the appraisal review board members towards unequal appraisal is often inconsistent with the Texas statute. Appraisal review board members are hired by the board of directors for the appraisal district. They are supervised by members of the appraisal to strict staff and paid by the appraisal district. Appraisal review board hearings typically occur in the appraisal district's building. Appraisal review board members are supposed to be impartial and independent. However, the process for hiring, paying and supervising appraisal review board members makes it difficult for them to the completely impartial.

The Texas statute regarding unequal appraisal was added in 1997. The wording was slightly different for the statute regarding administrative appeals (appraisal review board hearings) and judicial appeals (lawsuit in state district court). Unfortunately, due to imprecise language regarding unequal appraisal appeals at the administrative hearings, most appraisal district and appraisal review boards chose to not consider appeals on unequal appraisal for 1997 through 2003. It is horrible public policy to not consider unequal appraisal at the administrative hearing but to consider it at the judicial appeal level. This would cause large numbers of property tax appeals to have only a perfunctory hearing it the administrative level before proceeding to a judicial appeal. It is inconceivable that the Texas Legislature would've intended property owners only be able to appeal unequal appraisal at the judicial appeal. The decision by many appraisal districts to disregard unequal appraisal at the administrative hearing process is illustrative of their contempt for the concept of appeals on unequal appraisal. However, the Texas Legislature clarified the statute regarding unequal appraisal appeals at the administrative level in 2003. Following is the statute regarding appeals on unequal appraisal at the appraisal review board:

Sec. 41.43. Protest of Determination of Value or Inequality of Appraisal.

& the appraisal district has the burden of establishing the value of the property by a preponderance of the evidence presented at the hearing. If the appraisal district fails to meet that standard, the protest shall be determined in favor of the property owner.

(b) A protest on the ground of unequal appraisal of property shall be determined in favor of the protesting party unless the appraisal district establishes that:

(1) the appraisal ratio of the property is equal to or less than the median level of appraisal of a reasonable and representative sample of other properties in the appraisal district;

(2) the appraisal ratio of the property is equal to or less than the median level of appraisal of a sample of properties in the appraisal district consisting of a reasonable number of other properties similarly situated to, or of the same general kind or character as, the property subject to the protest; or

(3) the appraised value of the property is equal to or less than the median appraised value of a reasonable number of comparable properties appropriately adjusted.

Most appeals on unequal appraisal focus on 41.43 (b) (3). The essential language in this section is as follows: the appraised value of the property is equal to or less than & the value of a reasonable number of comparable properties appropriately adjusted.

There is no requirement that the selection of comparables be representative or obtained using a sampling methodology. If you can find five or 10 comparables which indicate your property is unfairly assessed, you are entitled to a reduction unless the appraisal district can present more compelling evidence.

Notice that the first sentence (which is intelligible to people who aren't attorneys) is that the appraisal district has the burden of proof by a preponderance of the evidence presented at the hearing.

Unfortunately, many appraisal districts do not consider unequal appraisal at the informal hearing and many appraisal review boards do not consider unequal appraisal at the appraisal review board hearing. For example, Harris County Appraisal District appraisers typically will not consider unequal appraisal at the informal hearing. Most of their appraisers will tell you to proceed to the ARB hearing if you want to appeal on unequal appraisal.

Evidence presented at the appraisal review boards by taxpayers receives no consideration to modest consideration at most Texas appraisal districts. Some appraisal review board members simply state that they will only consider appeals on market value. These ARB members could come somewhat irate when presented with an appeal on unequal appraisal. In other appraisal districts, the ARB members routinely assume that the evidence presented by the appraisal district (regarding unequal appraisal) it is impeccable and above reproach. If the appraisal district's evidence supports a reduction, they reduced the value. If it doesn't support reduction, they don't reduce the value, and in some cases they will raise the value. In other appraisal districts, the appraisal review board appears to ignore evidence on unequal appraisal if evidence is presented regarding both market value and unequal appraisal.

Travis County Appraisal District presents a grid with adjustments and information on assessment comparables at the appraisal review board hearing for appeals on unequal appraisal. While there may be exceptions, my personal experience last summer was that the Travis County Appraisal Review Board did not consider any evidence other than the grid presented by the appraisal district.

The situation is similar in Tarrant County. In Tarrant County the appraisal district presents a summary of the ratio studies for each of the school districts for each grade of house. In other words, if you are in the XYZ school district and have a house with a grade of eight, they will refer to the Tarrant Appraisal District's median level of assessment for grade 8 houses in that school district. No other evidence was considered at Tarrant Appraisal Review Board hearings on unequal appraisal that I attended. Picture the scene: You compiled information regarding eight or 10 properties within the same neighborhood which had the same quality of construction and condition as your home. You present this information to the Tarrant Appraisal Review Board. The ARB then asks the appraiser what information he has regarding unequal appraisal. The appraiser will then quote a ratio for this neighborhood. (The ratio study is not presented; the appraiser simply quotes a number with no supporting documentation.) One or more of the appraisal review board members will then simply multiply the value determined for market value times this ratio. Based on my experience, the Tarrant Appraisal Review Board gave absolutely no consideration to evidence presented by the property owner regarding appeals on unequal appraisal.

In effect, it appears the taxpayer does not need to prepare any evidence on unequal appraisal for appraisal review board hearings in Travis County and Tarrant County. Based on my personal experience, the appraisal review boards in these counties simply adjusted the value based upon the evidence presented by the appraisal district.

Detail is provided for two counties. Unfortunately, these counties are representative of the attitude of appraisal review boards towards unequal appraisal. There are exceptions, but appraisal review boards more often flout than follow the law on unequal appraisal. The Bexar Appraisal Review Board does a good job of conducting hearings on unequal appraisal. They bifurcate the hearing into two sections (market value conclusion followed by an consideration of evidence on unequal appraisal). They consider the evidence presented by both parties.

Does this really happen?

Yes, unbelievably it does. Should it happen - absolutely not! It is outrageous that appraisal review boards in many counties shamelessly disregard the law regarding appeals on unequal appraisal. They disregard the law with impunity since they believe no one can or will address the problem.

Discussion questions:

If you have appealed on unequal appraisal at Montgomery Central Appraisal Review Board, what was your experience? Did the appraisal review board appear to consider and act upon the evidence you presented?

What remedy should be available to taxpayers when the appraisal review board ignores the law at the appraisal review board hearing?

 

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