A Taxing Situation

When the tax assessor raises the value of one house on a block through the roof, the question is: Who's next?

Late one Monday morning in March of last year, Michael Lee was tending his vegetable garden when a stranger appeared at his fence. The man identified himself as Neil Swenson, an appraiser for Harris County. Swenson asked if he could take a look inside Lee's two-story brick house, but for whatever reason, Lee said no. Lee's hands were muddy, he was in the middle of finishing up in his garden and he thought to himself, does this guy really need to look through my house?

So Swenson had to content himself with looking at the exterior of the Lee's Riverside Terrace home at 5504 Ardmore. The house is second from the corner of Ardmore and MacGregor, just up from Brays Bayou. Ardmore is the northeastern boundary of Riverside Terrace, a mostly black residential area that, back in the 1930s, was designed to be an upper-class alternative for wealthy Jews and Catholics who couldn't get into the city's other plush residential area, River Oaks. Some of the neighborhood, which covers an area between Hermann and MacGregor parks, hit hard times through the late '60s and '70s, but now is on the rebound. Parts of it have bounced back better than others.

Lee says his house has "good curb appeal," but -- as he was to find after that March visit -- curb appeal can cut both ways. Curb appeal is fine if a prospective buyer drives by. But Neil Swenson was not looking to buy a house. He was looking to tax one. The appraiser was conducting a field check (a cursory once-over from the sidewalk) of the part of Riverside Terrace near Hermann Park. When his check took him to Lee's house, he liked what he saw.

Swenson liked it so much that he said Lee's house was worth twice what it was the previous year. Swenson and the appraisal district eventually judged Lee's house to be worth $173,000, a big boost from the previous appraisal of $82,860.

When Lee received the news of his reappraisal, he learned that the change meant his taxes would jump to $4,186.38 per year from $2,210.81 per year. Lee, a self-employed architect, says he didn't see how he could survive that kind of financial hit. So he appealed the appraisal. Lee had been down this road before, but this time it turned into a particularly unpleasant dead end. In 1986, the Harris County Appraisal District assessed his house at $102,000. Lee protested. The appraisal was dropped to $90,000.

In 1988, the property was appraised at $135,000. Lee protested. It was dropped to $92,000.

In 1989, the property was put at $114,320. Lee protested. This time it was lowered below the previous appraisal, to $82,860.

In 1990, the appraisal was $113,600. Another protest. It returned to $82,860.

Then came Swenson's $173,000 judgment, more than twice the previous price tag. Again, in an almost annual ritual, Lee protested. This time his protest failed to bring a nickel of relief, but he didn't give up. At this point, after going through a meeting with the appraiser and a hearing with an Appraisal Review Board panel, Lee decided to sue.

The Harris County Appraisal District -- the agency responsible for setting the property values used as the basis for calculating taxes by the city, the county, the school districts and other taxing bodies -- has been sued before. In fact, suing the district appears to be an increasingly popular activity. Lee's suit is one of 553 filed in 1993. A big increase occurred in 1992, when 654 suits were filed, more than doubling the 318 filed in 1991. District officials are quick to point out that '91 was a reappraisal year and some increase was to be expected, but that doesn't explain the continuing large number of suits in 1993. Legal fees for the district in 1992 were $477,742. Last year, the district spent $479,574 on litigation.

"Property owners have a enormous number of rights under this system," says Jim Robinson, chief appraiser and top executive for the district. "The most basic is the right to sue." Basic right or not, filing a lawsuit is the last resort for a disgruntled taxpayer. After receiving notice of what taxes are owed, the first option is to return to the district the "optional notice of protest" form included in the tax notice sent to the owner. The district then schedules an informal hearing, usually held in late May or over the summer, at which the taxpayer can present his case to a district appraiser. If that fails to satisfy, a formal hearing before a three-person panel of Appraisal Review Board (ARB) members is held, often on the same day.

About 100,000 protests are filed each year, and about 12,000 go to a formal ARB hearing, according to Robinson. Compared with the 1.3 million assessment accounts on the books, he says, that's a small number. And besides, he suggests, many suits are motivated by lawyers or tax consultants who have in mind something other than justice for all.

But others have a less sanguine, well, assessment of all this. The present property tax system, implemented in 1982, was intended to divorce property values from political pressure. Before the current arrangement, each taxing unit appraised property itself, a fractured setup that some saw as susceptible to political pressure.

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