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Chapter 4
Focus on Appraisal Review Boards

Appraisal review boards (ARBs) are separate entities appointed by CAD directors to handle taxpayer protests and taxing unit challenges. Additionally, they correct clerical errors in the appraisal records, correct appraisal rolls, determine whether an exemption or a partial exemption is improperly denied and whether land is improperly appraised and take any other action or make any other determination authorized or required by the Tax Code.

While ARBs are independent of the CAD, only 14 ARBs have a separate budget. In 2008, 244 CADs appropriated $7.6 million for ARB operations, slightly more than 2007's $7.5 million. The average annual CAD expenditures for ARB operations are $31,170.

The average ARB has seven members, with 1,374 ARB members reported statewide by 207 CADs. Forty-six CADs did not report information on ARB members. Two hundred thirty-seven CADs reported reimbursing ARB members for time and expenses; 13 did not. One hundred eighty-eight CADs reported reimbursing ARB members for an average of $102 per diem to attend protest hearings.

Ten CADs indicated they provide the ARB with full-time support staff totaling 17 employees. This is down from 13 CADs in 2007. The 243 CADs that do not provide the ARB with a full-time staff assigned 542 CAD employees to assist the ARB during the protest period.

Sixty-one CADs provided in-house training to the ARB, while 149 did not. PTAD provides training to new ARB members via seminars offered at multiple sites throughout the state. One hundred fifty-two CADs said that a PTAD-produced training video would be a good alternative to the on-site training seminars. Fifty-one CADs disagreed with this idea.

One hundred seventy-four CADs provided the ARB with liability insurance, and 64 – down from 81 in 2007 – also provided the ARB with legal counsel. Fifty of the ARB law firms also represented the CAD.

Thirty-three ARBs had procedures that required property owners to file evidence with the CAD prior to their protest hearing; 172 did not have this procedure. On average, ARBs that required owners to provide the CAD their evidence before the hearing required it be done 10 days before the hearing. The CADs reported that only 40 percent of property owners complied with this procedure. More than half of the ARBs had procedures that provided for scheduling protest hearing individually for protesters (Exhibit 20).

Exhibit 20
Scheduling of Protest Hearings

 Scheduling of Protest Hearings

Source: Texas Comptroller of Public Accounts, 2008-09 Appraisal District Operations Survey.

On average, ARBs scheduled 342 hearings daily from May through July, with property owners waiting, on average, 18 minutes for the hearing to begin. Many smaller districts only require one day of hearings.

In 2008, 1.2 million notice of protest hearings were filed by taxpayers with ARBs. Three-fourths of these protests were filed in 10 CADs (Exhibit 21).

Exhibit 21
Number of ARB Protests Filed, 2008

CAD Protests
Filed
Informal Hearings Percent
Informal
Hearing
Formal
Hearing
Scheduled
Percent
Formal
Hearings
Failed
to
Appear
Percent
No
Shows
Harris 394,180 196,395 49.8% 197,785 50.2% 61,266 31.0%
Dallas 108,329 40,557 37.4% 105,555 97.4% 12,549 11.9%
Bexar 78,089 56,168 71.9% 78,089 100.0% 67,702 86.7%
Tarrant 73,764 19,671 26.7% 52,831 71.6% 7,004 13.3%
Travis 62,165 31,476 50.6% 31,476 50.6% 7,277 23.1%
Fort Bend 54,164 48,713 89.9% 29,309 54.1% 5,451 18.6%
Collin 38,015 17,892 47.1% 38,015 100.0% 10,257 27.0%
Denton 36,837 23,590 64.0% 8,471 23.0% 4,601 54.3%
El Paso 30,471 10,893 35.7% 20,114 66.0% 5,815 28.9%
Galveston 21,067 18,495 87.8% 435 2.1% 37 8.5%
Total Top 10 897,081 463,850 51.7% 571,063 63.7% 169,410 29.7%
Total All CADs 1,189,181 645,512 54.3% 723,423 60.8% 220,109 30.4%
Percent Top 10 75.4% 71.9% 78.9% 77.0%  

Source: Texas Comptroller of Public Accounts, 2008-09 Appraisal District Operations Survey.

A little more than half, or 51.7 percent, of property owners agreed to attend an informal meeting with the CAD. Not all of these informal meetings resulted in a satisfactory value for the property owner, resulting in scheduled formal hearings for nearly two-thirds, or 63.7 percent. The property owner did not show up in nearly one-third, or 29.7 percent, of scheduled formal hearings.

Not all CADs tracked the number of protests filed to get a property value reduction or against an unequal appraisal; those that did track these types of protests reported that 849,384 asked for a property value reduction and 511,997 complained about unequal appraisals. Many protested both points.

Arbitration

Under provisions of Tax Code Chapter 41A, property owners can appeal an ARB's decision to binding arbitration. In 2008, 806 such appeals took place in 55 counties. Nearly half, 43.3 percent, were filed in Harris County (Exhibit 22).

Exhibit 22
Number of Arbitration Appeals Filed, 2008

  CAD Prevailed Property Owner Prevailed Withdrawn Rejected Other[17] Total Percent Filed in County
Harris 149 101 22 44 33 349 43.3%
Bexar 26 19 9 17 3 74 9.2%
Dallas 19 9 29 7 2 66 8.2%
Travis 13 6 29 3 5 56 6.9%
El Paso 11 5 11 3 2 32 4.0%
Tarrant 9 4 6 5 5 29 3.6%
Comal 9 4 5 1 2 21 2.6%
Fort Bend 2 4 9 1 2 18 2.2%
Montgomery 4 5 3 2 2 16 2.0%
Williamson 6 3 4 1 14 1.7%
Total Top 10 CADs 248 160 127 83 57 675 83.7%
Total Statewide 284 194 173 87 68 806 -
Top 10 Percent of Total 87.3% 82.5% 73.4% 95.4% 83.8% 83.7% -

Source: Texas Comptroller of Public Accounts, 2008.

The top 10 counties account for 83.7 percent of arbitration appeals. In 284, or 59.4 percent, of the 478 decided appeals, arbitrators ruled in favor of the CAD and in 194, or 40.6 percent, arbitrators ruled in favor of the property owner.

A CAD is considered to have won if the arbitrator's value is closer to the ARB value. Conversely, if the arbitrator value is closer to the owner's value, the owner is said to win. While the arbitrator may rule in the CAD's favor, he or she may still award the owner a reduction; the reduction, however, is closer to the ARB value so the CAD wins. In 76 of the 284 appeals decided in favor of the CAD, the arbitrator returned the ARB's value, but in 209 decisions that were decided in favor of the CAD, the property owner still received a reduction in value. To put it in another way, in 73.6 percent of the arbitrator rulings favoring the CAD, the owner still walked away with a reduction in value. In only 16 percent of all decisions did the property owner not receive a reduction in value.

Arbitration decisions involved a potential loss in value of $62.7 million, but actual loss in value due to arbitration was $27.8 million (Exhibit 23).

Exhibit 23
Analysis of Value Loss Due to Arbitration[18]

Action Value Percent of ARB Value
ARB Value $206,291,081 100%
Property Owner Value Request $143,567,770 69.6%
Potential Loss in Value ($62,723,311) 30.4%
Arbitrator's Value $178,519,267 86.5%
Actual reduction in Value ($27,771,814) 13.5%

Source: Texas Comptroller of Public Accounts, 2008.

The value of the decisions that favored the CAD was $114.5 million or 64.1 percent and the value of decisions that favored the property owner totaled $64 million, or 35.9 percent. Still, CADs lost $9.4 million in value as a result of the arbitrators' decisions, while property owners realized $18.3 million in reductions. All told, the owners received $27.8 million in value reductions, or 13.5 percent of the initial ARB values that went to arbitration.

Appeals to District Court

In 2008, 6,890 property owners appealed ARB decisions to district court involving $82.2 billion in appraised value. Nearly two-thirds of the lawsuits (63.5 percent) were filed in Harris and Dallas counties, and 93.5 percent were filed in 10 counties (Exhibit 24).

Exhibit 24
Top 10 Counties for Appeals to District Court of ARB Decisions

Appraisal District Lawsuits Filed
Harris County Appraisal District 2,883
Dallas County Appraisal District 1,491
Tarrant County Appraisal District 659
Bexar County Appraisal District 489
Travis County Appraisal District 323
Collin County Appraisal District 178
Fort Bend County Appraisal District 138
Denton County Appraisal District 122
El Paso County Appraisal District 89
Williamson County Appraisal District 72
Lawsuits Filed in Top 10 CADs 6,444
Total Lawsuits Filed 6,890
Percent of Lawsuits Filed in Top 10 CADs 93.5%

Source: Texas Comptroller of Public Accounts, 2008-09 Appraisal District Operations Survey.

Harris and Dallas CADs account for 62.5 percent of the value in litigation and the top 10 CADs involved 95.2 percent of the value loss potential (Exhibit 25).

Exhibit 25
Property Value Involved in Lawsuits to District Court

Appraisal District Contested Value
Harris County Appraisal District $28,713,887,537
Dallas County Appraisal District $22,666,219,000
Bexar County Appraisal District $7,092,229,058
Tarrant County Appraisal District $6,279,330,918
Travis County Appraisal District $4,095,624,039
Collin County Appraisal District $2,652,831,718
Jefferson County Appraisal District $2,450,282,050
Denton County Appraisal District $1,543,581,648
Fort Bend County Appraisal District $1,461,228,463
Galveston County Appraisal District $1,321,440,550
Total Value Top 10 Counties $78,276,654,981
Total Value $82,227,417,406
Percent Value in Top 10 Counties 95.2%

Source: Texas Comptroller of Public Accounts, 2008-09 Appraisal District Operations Survey.

Lawsuits were filed in 93 CADs, while 160 CADs had no contested court cases over ARB decisions.

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