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Challenge to Commercial Property Tax Appraisal

Overview

In 2013, an organization called Real Values for Texas began a public relations campaign asserting that commercial property values are routinely undervalued, shifting an undue tax burden on residential property owners and in 2014, Brigid Shea, a Travis County Commissioner candidate, petitioned both the Austin City Council and the Travis County Commissioners Court to challenge the 2013 commercial appraisals. Both bodies elected not to challenge the 2013 tax rolls. In response to this public outcry over commercial values, the Harris County Commissioner’s Court hired a consultant to review the county’s commercial values in April 2014 but no major discrepancies were found. In June 2014, the Travis County Commissioners Court instructed staff to form a citizen task force to look into the issue. RECA volunteers gave staff and commissioners input on subject matter experts who could serve on this task force.

In 2015, the City of Austin challenged commercial appraisals by filing suit against the state, against TCAD and against thousands of commercial property owners. Again, RECA argued that there really is no huge disparity between commercial and residential property appraisals in Travis County. RECA conducted our own study focusing exclusively on comparing current appraisals and sales, in the current market. Between January 2014 and March of 2015, the median residential property was assessed at 96.24 percent of its market value while the median commercial property was assessed at 93.10 percent of its market value.

In November 2015, District Judge Tim Sulak dismissed the city’s case against TCAD and commercial property owners in Travis County, ruling that the city did not have the legal authority to challenge the appraisal system. Following the ruling, Austin City Council unanimously affirmed its commitment to a lawsuit despite RECA's statement that it's not in the best interest of the City to continue persuing action:

RECA is pleased with the judge’s ruling that the City of Austin does not have standing to bring its lawsuit against the Travis Central Appraisal District and owners of commercial and vacant properties before the court. RECA believes in fairness as a value, and we also believe in honesty. The City of Austin’s ill-conceived lawsuit ignored the fact that higher commercial property taxes would also be paid by Austin’s working families — through higher rents, higher prices and lower wages. It would be in the community's best interest if the city does the right thing and opts not to appeal this decision.

RECA's Position

It is important to remember that property appraisals are only one piece of the property tax equation. By themselves, they lead to zero tax money being assessed. Tax rates are the most significant factor in the equation. Our local taxing entities, such as the City of Austin, AISD and Travis County, have the power and the obligation to reduce tax rates in the face of increasing property values.

Read more in our blog on this topic:
Fair Share Argument on Commercial Appraisals Doesn't Add Up