Chapter 4
Conducting Hearings
A simple majority of ARB members constitutes a quorum that must be present to conduct business. Hearings must be conducted according to ARB procedures. ARB members must act professionally and ethically as discussed earlier in this manual.
ARB ex parte contacts and affidavit
An ARB member must be very careful to maintain an unbiased approach to each property under protest. An ARB member may not communicate with another person about a protest, including evidence, argument, facts or any merits of the case except during the hearing on the protest. An ARB member is also prohibited from communicating with another person concerning a property that is the subject of the protest, except when the property is discussed in another protest or used before the ARB as a comparison or sample property in another protest or proceeding.[90]
The affidavit form prescribed by the Comptroller's office states that the member has not communicated about the property under protest in the ways discussed above (Exhibit 18). If the member cannot sign the form, he or she cannot participate in the hearing. The removed member may not hear, discuss or vote on the protest. The appointing authority can temporarily replace an ARB member who must be removed from a protest hearing. [91]
Exhibit 18
Affidavit for Protest Hearing
Form 50-133, Affidavit for Protest Hearing (PDF, 118 KB)
An ARB member who communicates with the chief appraiser or an appraisal district employee concerning a taxpayer protest outside of the hearing may be penalized. The chief appraiser or appraisal district employee is also subject to a penalty if they communicate with an ARB member about a protest. Both offenses are punishable as a Class A misdemeanor.[92]
The same penalty, however, does not apply if an ARB member talks to a property owner outside of a hearing. However, the ARB member cannot sign the sworn affidavit and cannot participate in that property owner's hearing.
The ex parte prohibition does not apply to discussions between the ARB and its attorney, or with the chief appraiser or another employee of an appraisal district and a member of the ARB if the communications are limited to and involve the following:
- administrative, clerical or logistical matters related to the scheduling and operation of hearings;
- processing of documents, the issuance of orders, notices or subpoenas; or
- operation of the ARB.[93]
Appearance at the protest hearing
As a matter of procedure, the ARB chair calls the cases in the order scheduled and makes certain each party takes an oath promising the accuracy of the party's testimony. All testimony must be given under oath.[94]
Most property owners will represent themselves at the protest hearing. Some property owners, however, may designate a lessee or agent to present the protest and perform other required actions.[95] An attorney may represent a client without filing an agent designation, as can most mortgage lenders and authorized corporate employees. Other agents should not be recognized by the ARB unless a properly executed form is filed at or before the hearing on the motion or protest. If the ARB designates a time and place for appearance before a hearing, an agent authorization is considered to be timely if a copy of the authorization is filed at the time and place designated.[96] Agent appointments must be filed with the appraisal district before an ARB can take any action.
The ARB should examine the form to ensure the owner or someone authorized by the owner signed the form and that it was not signed by the agent on the owner's behalf and to determine whether the agent is authorized to receive all ARB communications. An individual exempt from registration as a property tax consultant who files a protest with the ARB on behalf of the property owner is entitled to receive all notices from the appraisal district regarding the property subject to the protest until the authority is revoked by the property owner.[97]
The law requires a person who provides property tax consulting services for compensation to be certified and registered with the state.[98] If a consultant who is not registered as required by law appears before the ARB, the ARB should seek legal advice on how to decide the best method to report noncompliance with the registration act. For more information about the licensing act, an ARB member can call the Texas Department of Licensing and Regulation at (512) 463-6599 or (800) 803-9202, or visit their Web site at www.license.state.tx.us.
A property owner may choose not to attend an ARB hearing and appear by affidavit. In this case the owner must file a notarized affidavit before the ARB hears the protest. The chief appraiser has a right to study and copy the affidavit.[99] The property owner may use Comptroller-prescribed Form 50-283, but is not required to use this form.
The owner may submit a notarized letter that includes the owner's name, a property description and evidence or argument. A statement specifying the chief appraiser, appraisal district or ARB's determination from which the owner seeks relief constitutes a sufficient argument.
An ARB should consult with its attorney to determine what to do if the property owner does not appear. It should develop procedures on how it will respond in such a case.
Hearing procedures
Most property owners are not represented by attorneys in ARB hearings. The law requires that ARB hearings be as informal as possible.[100] Nonetheless, the ARB must follow its written hearing procedures. Property owners are entitled to expect that the hearings will be conducted as described in the procedures. The procedures should be complete and include matters addressed in this manual.
Evidence
Either before or immediately after the hearing begins, the protesting party and the chief appraiser must provide each other with copies of any written materials that will be submitted to the ARB as evidence during the hearing.[101] As the ARB listens to the evidence, members should keep in mind the evidence presented by both sides and the fact that the appraisal district has the burden of proof regarding protests related to appraised value or market value, as well as unequal appraisal.[102] Generally, the appraisal district must prove by a preponderance of the evidence that its value is correct.
The law prohibits the ARB from considering any evidence unless the evidence is presented at the protest hearing. The ARB may not consider any evidence presented by the appraisal district that was not made available to the property owner at least 14 days before the hearing. If copies of the information are requested in writing prior to the hearing, it must be provided – although not necessarily within 14 days – in order to be used as evidence at a hearing.[103]
The protesting party does not have 14 days to study the records made available by the appraisal district. However, if the owner could not gain access to the appraisal district's evidence 14 days before the hearing, the ARB must exclude the unavailable evidence. For example, suppose the owner appears at the appraisal district two days before the hearing to inspect the evidence and it is made available. The evidence is admissible at the regularly scheduled protest hearing, even though the owner may not have had time to study the records. On the other hand, if the owner appears 14 days before the hearing to inspect the evidence and some of it is not made available, then the appraisal district cannot use that evidence at the hearing. The property owner may choose not to inspect the evidence during the 14 days before the hearing.
The ARB is required to postpone a hearing if the property owner requests additional time to prepare for the hearing and establishes that the chief appraiser failed to provide requested evidence. The ARB is not required to postpone a hearing more than one time.[104] The ARB is not required to postpone a hearing if requested by the appraisal district; however, its hearing procedures may permit the practice.
Few issues are more contentious and difficult than evidence, its presentation and its weight. The appraisal district has the duty to provide available information that it plans to use at a hearing as requested by a property owner. The ARB should adopt clear procedures about its consideration of this information, rebuttal testimony and taxpayer evidence. In addition, the ARB should seek legal advice concerning this complicated issue.
Presentation of evidence
ARB procedures should establish the order of presenting evidence. Even though the appraisal district generally has the burden of proof, property owners may prefer to start with the presentation of their evidence and argument and can do so by agreement of the appraisal district or in accordance with ARB procedures. The ARB should allow rebuttal testimony, and the parties may cross-examine each other and any witnesses.[105] Values from prior years or the decisions of previous ARBs do not bind the current ARB as each year and property must be considered individually.
Testimony and evidence may address the following:
- property's legal description and location;
- type of property and its use;
- property's appraised value and the way it was appraised;
- description of any improvements to the land and their age, condition and appraised value;
- methods used to appraise improvements;
- total value for each type of property considered;
- information on sales of comparable properties in the neighborhood or elsewhere in the area;
- information about other appraisal methods considered;
- appraisal ratios and median appraisal levels of comparable properties, appropriately adjusted;
- reasons for denying exemption or special appraisal; and
- reasons for the decision by the chief appraiser concerning other matters under protest or challenge.
Relevant evidence
Evidence is information that helps the ARB decide what is factual. Evidence may include data, schedules, formulas and other information. It may include appraiser and owner opinions of value. The ARB should consider only relevant evidence, which is information that has particular meaning in the hearing in which it is introduced. The ARB should disregard any irrelevant evidence.
For example, a homeowner may introduce information such as recent sales of comparable properties to demonstrate a home value is too high. This is relevant evidence. A complaint that taxes are too high because a certain taxing unit's governing body spends money carelessly is irrelevant. The ARB should disregard it because it does not pertain to the subject of the protest.
Burden of proof
In a protest on appraised or market value or unequal appraisal, the law states that the appraisal district has the burden of establishing the property's value by preponderance of the evidence or, in certain protests, by clear and convincing evidence presented at the hearing.[106] Appraised values are not presumed to be correct in protest hearings. If the appraisal district fails to meet the burden of proof, the ARB must determine the protest in the property owner's favor.
In a protest of unequal appraisal, the ARB must determine a protest in favor of the protesting party unless the appraisal district establishes one of the following:
- the property's appraisal ratio is equal to or less than the median level of appraisal of a reasonable and representative sample of other properties in the appraisal district;
- the property's appraisal ratio is equal to or less than the median level of appraisal of a sample of properties, consisting of a reasonable number of other properties similarly situated to or of the same general kind or character; or
- the property's appraised value is equal to or less than the median appraised value of a reasonable number of comparable properties appropriately adjusted.[107]
The unequal appraisal provision deals with a property owner not necessarily claiming that his or her value is incorrect, but that comparable properties are not appraised similarly, after adjusting for differences such as size, location, condition and other relevant factors. Unequal appraisal protests require considerable attention to requirements of law in the calculation of median level of appraisal.
In a protest on a property with a market or appraised value of $1 million or less, the appraisal district has the burden of establishing the value of the property by clear and convincing evidence, as opposed to the weight or preponderance of the evidence, when the following evidence is present:
- the property owner or agent delivers an appraisal report to the chief appraiser at least 14 days before the hearing;
- the appraisal was performed within 180 days of the hearing date;
- the appraiser is certified under Occupations Code Chapter 1103;
- the appraisal is attested before an officer authorized to administer oaths; and
- the appraisal includes the certified appraiser's name and address, the property description and statements that the appraised or market value, as applicable, was as of Jan. 1, was determined using appraisal methods authorized by Tax Code Chapter 23, and that the appraisal was performed in accordance with the Uniform Standards of Professional Appraisal Practice (USPAP).[108]
If a required rendition – a property report or information requested by the chief appraiser – is not delivered prior to the date of an ARB hearing, the property owner has the burden to prove the property's value to the ARB rather than the appraisal district.[109] When the property owner has the burden of proof under this circumstance and fails to provide sufficient evidence that convinces the ARB that the value should be adjusted, the ARB should determine the protest in favor of the appraisal district.[110]
ARBs must also consider the issue of substantial evidence when a protest is brought concerning certain value increases. The chief appraiser is prohibited from increasing the appraised value of property in the year following a final determination of value resulting from a protest before the ARB, a lawsuit or binding arbitration, unless the increase is reasonably supported by substantial evidence.[111] The substantial evidence "must be based on all of the reliable and probative evidence in the record considered as a whole." If an ARB or a court makes a determination of value based on unequal appraisal claims, this substantial evidence requirement may be met by presenting evidence showing that the inequality has been corrected with regard to the properties that were considered to be comparable in determining the value of the subject property. The burden of proof is on the chief appraiser to support an increase in the appraised value of property under these circumstances.
Witnesses
Witnesses should have personal knowledge about the facts of the protest or should provide opinions concerning appraisal issues. Persons designated as experts must have credentials and/or specialized knowledge of the subject property in order to give opinions of value. Property owners are considered eligible to provide opinions of value as experts.
Appraisals often require a high degree of specialized knowledge and training. Both sides may present the testimony of expert appraisers, both about value and about methods of appraisal. Often these are matters of opinion based on specialized knowledge rather than firsthand observation of the facts.
The ARB should ask about the experts' qualifications and experience and be sure it understands the facts on which the experts base their opinions. Admissible expert testimony may concern appraisal theory and methodology and opinions on theory.
Above all, the ARB should ask expert witnesses whether they have any reservations about or qualifications to their opinions. The ARB can believe all, some or none of an expert's testimony.
Hearsay testimony
Firsthand observation and expert testimony will have the witness testifying, "I saw it," "I measured it" and "I did it." When the witness says, "I heard it from someone else," the testimony is hearsay. Hearsay is secondhand testimony. For example, in a protest over denial of a residence homestead exemption, the chief appraiser testifies, "The property owner's neighbor told me the owner does not live in the house." The statement is hearsay. Ideally, the neighbor should be at the hearing and under oath to substantiate the statement.
There may be cases where common sense tells you to consider hearsay testimony. The fact that the evidence is hearsay may affect the weight the ARB gives it.
Appraiser testimony and evidence
Since an appraisal often requires special knowledge and skills, appraisers are usually key witnesses in ARB hearings. Remember that such testimony is informed opinion, not necessarily verifiable fact. The ARB should ask about the witness's qualifications, and it should have access to the data used in the appraisal. Ultimately, the ARB must consider all relevant testimony and documentary evidence and give weight to the most credible information to arrive at an opinion.
Appraisals by chief appraiser and relatives
The Tax Code places a special restriction on appraisals made by the chief appraiser in a private capacity on behalf of a taxpayer or taxing unit. The ARB may not consider such an appraisal as evidence in a protest or challenge.
Similarly, if a relative within the second degree of the chief appraiser makes an appraisal, the ARB may not consider that appraisal as evidence.[112]
Documentary evidence
Documents and papers are important items of evidence before the ARB. A party must submit the original of a document unless the ARB determines that it is not readily available.[113]
If a copy of a document is used, any party has the right to compare the copy with the original. Documents submitted in evidence become a permanent part of the hearing record. As a result, copies of the required originals should be accepted into the record.
Official notice
As a general rule, the ARB must make its decision only on the evidence brought by the parties. However, the ARB may also consider certain kinds of basic facts that neither side presents as evidence. This is called "taking official notice" of a fact.[114]
The ARB, like a judge, may take official notice of any fact that is reasonably certain, either because it is generally known in the community or capable of being easily confirmed by sources whose accuracy cannot reasonably be questioned. For example, an ARB may take official notice that a house is located near a landfill, a fact which may affect its property value. If it takes official notice of a fact, the ARB must inform both parties and give them an opportunity to argue against this action.
Subpoenas and records
The ARB and the parties involved in a hearing should gather all evidence relevant to the case. The property owner or a challenging taxing unit has a right to know the basis of the appraisal district's determinations. Similarly, the appraisal district has a right to know relevant facts in the taxpayer's possession.
To ensure these rights, the Tax Code gives the ARB the following powers to:
- subpoena witnesses, books, records or other documents;[115]
- inspect the records or other materials of the appraisal office that are not made confidential under the Tax Code;[116] and
- request the Comptroller to assist in determining the accuracy of appraisals or to provide other professional assistance, in certain cases.[117]
The ARB may subpoena witnesses, books, records or other documents only after holding a hearing to determine whether good cause for issuing the subpoena exists. A subpoena for books, records or other documents may only be issued if a property is under protest and may be issued only to a party to the protest.[118] The ARB may not subpoena books, records or documents that belong to persons other than the property owner or the appraisal district involved in the protest.
The ARB may inspect the records or other materials of the appraisal office that are not made confidential under the Tax Code. On demand of the ARB, the chief appraiser must produce the materials as soon as practicable.[119] There are numerous provisions creating confidential status and the related grounds for releasing the information. The ARB should consult its attorney when questions about the need for a subpoena arise.
An ARB may not issue a subpoena unless it holds a hearing to determine that good cause exists for issuing the subpoena. The ARB must establish a procedure for a good cause hearing for issuing a subpoena. The procedures must require the ARB to deliver written notice not later than the fifth day before the date of the hearing to the party to be subpoenaed.[120] The party has the right to be heard at the hearing. Exhibit 19 is a sample subpoena.
Exhibit 19
Form of Subpoena
Form 50-219, Form of Subpoena (PDF, 129 KB)
Weighing evidence
The ARB must consider the evidence presented by the property owner and the appraisal district. The evidence can be testamentary or documentary. The most convincing evidence should support the ARB's determination of value or other appraisal matter. The ARB cannot develop its own valuation or consider matters not presented to it as evidence at the hearing. The ARB cannot testify for either party, develop its own calculations, create appraisals or develop theories not part of the hearing record.
Sample hearing script
Exhibit 20 provides a sample script that the presiding officer may use for guidance in conducting a protest hearing. Please keep in mind that this is a generic sample to provide presiding officers an idea as to how a hearing may unfold. This sample assumes that a property owner is appearing in person and not represented by an agent or filing a response via affidavit. Different types of protests will require different approaches. The script is not intended to address all situations and should not be considered to be mandatory.
Exhibit 20
Example of Hearing Script
Exhibit 20 (cont.)
Example of Hearing Script
Postponement of hearings
Under certain circumstances, the ARB may postpone a protest hearing. A property owner who has not designated an agent under Tax Code Section 1.111 is entitled to one postponement without showing cause. In addition, a property owner or his or her agent is entitled to an unlimited number of postponements if they show good cause for the postponement or if the chief appraiser consents to the postponement. Good cause means a reason that includes an error or mistake that was not intentional or the result of conscious indifference and that will not cause undue delay or other injury to the person authorized to extend the deadline or grant a rescheduling.[121] If these conditions are met, the ARB chair or his or her representative must postpone the hearing for five to 30 days. The chief appraiser and the property owner may agree to a shorter or longer postponement. A property owner may request a postponement in writing, including by fax or e-mail, by telephone or in person to the full ARB, a panel of the ARB or the chair of the ARB.[122]
A property owner who is not represented by an agent who fails to appear at a hearing is entitled to a new hearing if he or she writes to the ARB, not later than the fourth day after the date the hearing occurred, a statement showing good cause for the failure to appear and requesting a new hearing.[123]
The presiding officer or his or her representative may take action on a postponement without the necessity of action by the full ARB if the hearing for which the postponement is requested is scheduled to occur before the next regular meeting of the ARB. The ARB is not required to send the property owner additional written notice when a postponement is granted.[124]
In addition, the ARB must postpone an ARB hearing if either the property owner or owner's agent is scheduled for an ARB hearing in another appraisal district on the same date. To qualify for the postponement, the owner or agent must show that the postmark on the other ARB's hearing notice is earlier than the postmark on the hearing notice delivered by the ARB in which the postponement is requested.[125]