This Houston Press cover story on the Harris County Appraisal District is provocative, to say the least.
A months-long investigation by the Houston Press finds that Brookfield isn’t the only mega-dollar company that’s sitting pretty with a momentous tax break.
According to a June 2012 Service Employees International Union report, corporate giants such as Chevron, Exxon and Hines Real Estate Investment Trust successfully protested the appraised value of 350 large commercial office properties in Harris County. The impact: a total reduction of more than $2.4 billion in tax base on which tax liability is calculated.
Critics of HCAD — which is responsible for valuing a complex mix of 1.4 million parcels in no-zoning Houston that includes Baytown’s ExxonMobil, the largest refinery chemical complex in the country — say the agency has purposely and knowingly shifted the tax burden from the filthy rich onto folks who own homes that cost under $150,000.
That’s “a false issue,” according to Jim Robinson, HCAD’s chief appraiser since 1990. Guy Griscom, HCAD’s assistant chief appraiser, also fervently denies the claim.
“No. There’s no truth in that,” says Griscom, who adds that in 2013, HCAD has increased the value of 12.2 percent of the homes in the $80,000-to-$150,000 range.
Instead, HCAD, the third-largest appraisal district in the country, points a finger at the Texas Legislature. In 1997, a provision was added to the Texas state tax code that cripples the ability of appraisal districts to hold the true market value of high-end commercial property, Griscom explains.
“Not only do they have to be valued at market value, but the value has to be uniform and equal. But the measure of equity that’s in the tax code is really junk science [because] it isn’t statistically based,” says Griscom. Texas is one of the few states that don’t require sales-price disclosure on taxable property, which means appraisal districts around the state rely on private contracts to compile sales data that are often incomplete.
“[The tax code] says the median value of a group of comparable properties properly adjusted, whatever in the world that means. Obviously, you can have major disagreements over what are comparables,” explains Griscom, who thinks that a bill filed recently in Austin aimed at changing the equity provision might not have any traction.
In the meantime, lawsuit-prone corporations and their attorneys are beating up HCAD and taking its lunch money. “When you’re talking about major commercial or industrial properties, those property owners have deeper pockets than the appraisal districts,” Griscom says. Vinson & Elkins and Fulbright & Jaworski are two Houston-based international law firms that have represented class A property owners in successful property-tax protests and lawsuits.
Due to the manipulation of the system by the rich and powerful, in 2011 alone, the City of Houston and Harris County lost out on $15.4 million and $9.4 million in tax revenues respectively, while the Harris County Hospital District was deprived of more than $4.6 million in revenue. Local school districts, including Alief, Spring Branch and Katy, were shorted $29.1 million in property-tax revenue.
The thesis of the story, which is worth your time to read, is that HCAD rigs the appraisal process to over-value low-end houses, while big dollar office towers routinely knock millions off their assessments via the appeals process; they also win a greater percentage of their appeals than homeowners. All of this shifts a lot of the tax burden for Houston, Harris County, HISD, and other taxing entities from the high end to the low. HCAD blames the Legislature for tying their hands on commercial appraisals; having discussed this issue before, I have some sympathy for that argument. I don’t have enough information to evaluate the claim about screwing homeowners – I wish that the Press had published the data they collected during their months-long investigation so we could play with the numbers ourselves. Whatever the case, I don’t expect to see a sales price disclosure bill to get passed out of the Lege, so nothing will change anytime soon. Anyway, read the story and see what you think, then go visit George Scott’s blog for more.