Denton Central Appraisal District chief appraiser, Rudy Durham, apparently doesn’t want to be overwhelmed with property tax protests this year. Durham recently called out Watchdog Dave Lieber for encouraging everyone to file a protest, something every property owner is entitled to do under the Texas Property Taxpayers Bill of Rights.
Lieber is right that everybody should protest, but he’s missing the big picture. Homeowners should protest not just their valuation from the CAD, but the system in its entirety. Every homeowner in Denton County should protest an operationally corrupt system that bulldozes residential property owners across the state every year, under the comical ruse of uniform and equal appraisal. There’s nothing uniform or equal about what goes on in Texas’ two-tiered property tax system. In this regard, Denton County is a lot like other counties in Texas. It’s also a little different, but not in a good way.
Mr. Durham has a blatant conflict of interest operating as both the mayor of Lewisville and the chief appraiser of the Denton CAD. In the fictional town of Mayberry double-dipping in the government cheese is probably acceptable. In the real world, this arrangement smells like the conflict of interest that it is. It was notable that Mr. Durham referenced a statement from state senator Paul Bettencourt, someone who also is entangled with a conflict of interest in this incestuous system.
Apparently the dual role (aka conflict) is a “productive public use of his expertise”. Bettencourt, one of the chief architects in the state legislature of the property tax “reform” effort, operates a property tax consulting firm in Houston. Apparently there’s nothing wrong with pushing property tax legislation that perpetuates the annual churn of tainted appraisals, protests and kangaroo-court review board hearings while you profit from that annual churn.
The Texas state legislature is currently floating some ideas on ending these types of conflicts for appraisal districts, but nothing has been passed into law yet. The fact that such dual roles have even be considered legal to this point, tells you a lot about how the Texas property tax system has survived this long. Speaking of conflicts, don’t expect state legislators to pass a law prohibiting them from furthering their own interests via proposed legislation. It’s a Texas tradition that is not likely to go away anytime soon.
“It’s difficult to get a man to understanding something, when his salary depends upon his not understanding it.” Upton Sinclair
Many chief appraisers are reluctant to admit they are conducting a rigged system that is neither fair or transparent. To his credit, Mr. Durham does acknowledge that the system is not a level playing field. When addressing DRC staff Mr. Durham explained how the equity appeal is a “race to the bottom” which benefits commercial property owners and more expensive properties above the median. Durham is apparently not fond of the barrage of protests piling up and the appeals scams that erode the tax rolls. An easy solution to this problem would be to shut the appraisal district down. Unlike Mr. Lieber, I’m not just for overwhelming the system, I would prefer to see it shut down entirely and replaced with something else. If we’re going to admit the current system is not even a level playing field, why not scrap the system completely and start with something that is fair to all constituents?
A system can’t be fair when it allows the wealthiest property owners the opportunity to sue in district court for huge property tax savings while it leaves scraps and token reductions for residential homeowners. The formal protests, conflicted appraisal review boards, and tainted arbitration panels pale in comparison to the kind of due process you can buy under the uniform and equal statutes. Those statutes provide giant loopholes for wealthy commercial property owners and suppress commercial valuations every year. These are the district court cases where commercial property owners get to compare apples to oranges and actual market value is not even a factor.
The Razor Ranch Walmart was egregiously undervalued for years prior the recent adjustment higher. The valuation looks more reasonable now, but don’t be surprised if Walmart sues the Denton CAD to get the value reduced significantly. They have sued the Denton CAD before, and the company knows how to buy real due process at the appraisal district.
Apparently large commercial hospital complexes, some of Denton’s most expensive properties, don’t really appreciate in value. This is certainly news to most Denton homeowners who have seen their appraisals skyrocket during the same time frame. Apparently the value of the Texas Health Presbyterian campus missed the party when actual commercial property values across the country were jumping higher following the Great Recession, easily eclipsing the previous cycle highs.
To be fair, the Denton County Appraisal District is not alone when it comes to treating wealthy property owners with kid gloves. This is a feature, not a bug, of Texas’ two-tiered annual game of whack-a-mole. It was recently reported that the Dallas office tower at 1900 Pearl fetched a record $700 per square foot. Apparently you aren’t supposed to put two and two together to realize that equates to a price of roughly $175 million for this shiny new office tower.
This is notable, because the Dallas Central Appraisal district valued the tower at only $96 million. But hey, it’s just a rounding number right. The Dallas CAD only missed the actual market value of this trophy property by 82 percent! Doing some basic math we can see that the undervaluation by the Dallas CAD saved the property owner of 1900 Pearl over $2 million in property taxes for 2019, $2,238,768 to be exact based on a tax rate of 2.845% and a real-world market value of $175,718, 200 for the office tower.
Think this example of commercial undervaluation by the CAD is just an accident? Think again! Remember the article mentioning 1717 McKinney and the 2016 sale at an estimated $510 per square foot. That translates to a sales price of $195,319,800. Now compare that price to the Dallas Appraisal District’s valuation history…
This is how $millions in property taxes goes uncollected every year in the Dallas-Fort Worth area. It’s also how the property tax burden is shifted to residential homeowners every year across the state of Texas in a two-tiered system that favors the wealthy few at the expense of average homeowners who are a virtual ATM for the local appraisal district. And it all goes back to that critical issue of due process.
Remember that when you as a homeowner go to protest your valuation at the Denton Appraisal District, you are charged with the burden of proof when presenting your case to the CAD. The CAD may choose to evaluate your evidence and reduce your assessment. It might ignore your evidence entirely, and there is little you can do about it because there is little to no accountability for the officials running this system as it is currently structured. For you, the residential homeowner, the CAD normally serves as the judge and jury of your protest case. If you think I’m overstating the situation, just look at who pays your supposedly independent appraisal review board.
The game shifts entirely when you, as a wealthy property owner can sue the CAD in district court. If you are able to utilize the loopholes for the uniform and equal statutes which do not center on actual market value, you have much better leverage with the appraisal district. The local CAD might even be forced to pay your legal fees if you win your case. This can cause the CAD to lose tens of thousands of dollars in a single case. That, ladies and gentlemen, is what they call leverage! And this is why the local appraisal district, like others across the state, is often willing to cave to wealthy commercial property owners.
Be sure and file your property tax protest by the May deadline this year. If you really want to have some fun, take your case in front of the Denton appraisal review board. When you do, be sure to ask the appraisal review board members who signs the checks paying them for their service on the board. They probably won’t answer your question, but if by chance they do, follow up by asking them who signs the checks paying the chief appraiser’s salary.
Any honest chief appraiser will admit that the Texas property tax system is rigged. Bexar County’s chief appraiser, Michael Amezquita is one of the more professional individuals I have spoken with. Here’s the question I posed to him a few years ago, and his candidly honest answer…
Q: Does the current property tax system provide the same level of due process for the typical residential homeowner compared to what is provided to large commercial property owners?
A: It does, however, the financial implications and realities of the expense of litigation make the ultimate due process simply unaffordable except for the most valuable residential and commercial property. The Equity appeals available in chapter 41 and 42 of the Texas Property Tax Code were created by the Texas Legislature in 1997 to provide an easily verifiable appeal for the average homeowner to decipher if their home was equitably appraised with other similarly situated homes of like value size age and condition in their neighborhood. This homeowner Taxpayer friendly initiative passed by the Legislature has been abused by tax agents and tax lawyers to the point that I dare say no major commercial property, industrial, or multifamily will end up on the tax roll at anywhere near their actual Market value. Appraisal District’s are capable of appraising property at Market value or something resembling market value but we must always be aware of the equity appeal that will be forth coming and that it is NOT tied to Market Value.
“All animals are equal, but some animals are more equal than others.” George Orwell
As of this week, legislators in Austin, including Paul Bettencourt, were still fiddling with ridiculous ideas on how to tweak this broken two-tiered system. It would appear that Mr. Bettencourt’s productive use of his expertise isn’t really that productive at all. This should not be surprising, because he’s starting from the assumption that this rotten system can be tweaked without addressing the inherent flaws that make it unfair and abusive in the first place.
Have you heard Mr. Bettencourt calling for an end to the equity appeal scam eroding commercial values??? Of course not. He and his buddies in Austin are more than willing to toe the line for big business, even if that means higher property taxes on your Texas home. They may talk a good game, but when push comes to shove they like a steady paycheck more than anything else. It is important to keep in mind that the property tax consulting firms love this hamster wheel circus set up by the Texas state legislature, because it provides an endless stream of customers.
Dave Lieber has a good collection of information that can help you with your property tax protest. That being said, take it with a grain of salt. If you are a typical residential homeowner, you will likely find yourself back on the hamster wheel next year, a pawn in the larger game they call uniform and equal “appraisal”.