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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

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

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

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]

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

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

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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