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?

Indeed, most of the criticism of the appraisal process centers on the perceived cronyism between the appraisal district and the Appraisal Review Board. The 45-member ARB is appointed by the appraisal district's board of directors, paid by the district and trained by the district. Because of those relationships, many believe that the ARB's role as an impartial citizen review panel is compromised.

"It's a kangaroo court, with unbelievable conflicts of interests," says one tax agent who represents property owners in front of the ARB (and who asked that his name not be published). "They're very tight, the ARB and the district. It's always 'we.' 'We office here, we share an attorney, clerical staff, we're instructed by them, our budget is set by them, but technically we're not employees of them.' It's a total sham."

A study published in the current issue of the Journal of Property Tax Management found that of the five largest tax appraisal districts in Texas, Harris County had the highest ARB budget cost per member, the least accurate tax roll and the highest ratio of lawsuits to tax parcels. The study's author, Dallas tax consultant Paul Pennington, says that in 1992 the Harris County Appraisal District had 654 lawsuits filed against it -- more than twice as many as the second-place district, Dallas, which faced 277 suits. Harris County had a lawsuit for every 1,996 parcels assessed; the Dallas rate was one lawsuit per 2,806 parcels. Pennington believes that districts should view the number of lawsuits filed against them as a barometer of the effectiveness of the appeal process open to taxpayers before filing suit. In that view, Harris County has a problem.

Chief appraiser Jim Robinson dismisses much of the criticism in the appraisal district study and questions the motives of the critic. "The guy who wrote that thing is a paid advocate for property owners," Robinson says. "He works on a contingency. Those guys are in the business to make money. They're not necessarily in the business to bring about equity. They're in the business to make a living for themselves."

What Robinson can't ignore is continuing legislative attention to Texas' appraisal districts. The most extreme example occurred in 1991, when the Legislature passed a bill intended to force the Tarrant County (Fort Worth) Appraisal District and that county's ARB to move into separate buildings. The bill allows that neither party is required to break its lease, but that once the current lease expires in 1997, the two entities must be housed in separate buildings. "The situation in Tarrant County was so egregious it got a revolt started," one tax lawyer says.

"There's a pretty good line of thought of a lot of people that the appraisal review boards are too much in bed with the districts," says state Senator Don Henderson of Houston, who has supported or authored numerous property tax reform bills, including term limits for ARB members. "I've been trying to change that, or at least put safeguards on that." Last session he pushed a bill that would have prevented former employees of taxing units from being appointed to the ARB. "I'm absolutely in favor of that. That was in my bill in the last session. It's a revolving door. Somebody who just quit a taxing unit can end up on the ARB. The attitude I was trying to sell was that an appraisal review board is supposed to be an independent citizen review of someone's appeal."

Current policy prevents an employee of a school district, city, county or any other taxing unit from being a member of the ARB. No rule prevents former members from serving on the ARB.

"What happens is you end up getting a bunch of former appraisers and people who work in the industry and for the taxing units on the appraisal review boards," says Henderson. "That's not what they are supposed to be. They're supposed to be independent citizen reviews."

The $150 per day an ARB member receives while conducting hearings also leads to problems. "In too many instances you're an appraisal review board member and that's how you make your living," Henderson says. "That's not the way it's supposed to be. "

The chief appraiser of the district targeted for the most severe reform so far, Tarrant County, doesn't have any problems with Henderson's proposed elimination of the revolving door. "I don't have any problem with that," says John Marshall. "Any time there's a perception that there's a conflict, or favoritism, and they want to remove that, that's fine. Most appraisal districts wouldn't have a problem with that."

But one district that does appear to have a problem with such a restriction is Harris County. Robinson says he doesn't think the forced schism of appraisal district and ARB is something that ought to spread from Tarrant County. "I don't think the Legislature ultimately will mandate that statewide, because it would run up the cost of administration," he says.

Both the Harris County Appraisal District and the ARB are located in a ten-story building at 2800 North Loop West. Tom Bartlett, ARB chairman, now has his office on the second floor -- six floors below his old office, which was adjacent to Robinson's. They both make much of the move.

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