August 18, 2009

From the desk of Rep. Allen Vaught

Legislation Passed in the 81st Legislative Session
This article continues the series of articles looking at new laws passed during the 81st legislative session. In this article, I would like to specifically discuss new legislation affecting property appraisals, both residential and commercial. We passed a series of bills this session dedicated to controlling appraisal rates and simplifying the appeals process for Texas residents.

Consistent Appraisal Practices
House Bill 8 allows the Comptroller to conduct the Property Value Study (PVS) every other year, rather than every year as require by current law. This change will allow the Comptroller to perform a thorough audit in the off year that will review appraisal districts’ procedures, methodology, governance, and how they treat taxpayers. The goal of this audit is to increase accuracy and improve standards and practices of property appraisals in Texas. Under current law, there is no state oversight beyond the property value study, and the current system does not exert enough pressure on appraisal districts to produce accurate and professional valuations. This legislation, however, will take one step forward in ensuring appraisals are fair and transparent.

Market Value Based on Residence
One of most significant pieces of appraisal reform legislation we passed in Austin mandates that the land of a residence homestead be appraised as a residence and not be appraised based on the highest and best use of the property. Across the state, several residences were being appraised based on what the land would be sold for if it was converted to commercial property. House Bill 3613 will protect Texas homesteads, especially those in neighborhoods serving as transition zones from residential to commercial. Although this legislation was passed and signed by the Governor, it will only go into effect if approved by the voters as a constitutional amendment this November.

Mandatory Training Courses for Appraisers
Many Texans have expressed their concerns about local appraisal review boards and their ability to handle appraisal appeals. House Bill 2317 establishes a mandatory training course for all appraisal review board members that includes information on the comparison methods of appraising property, the requirements regarding the equal and uniform appraisal of property, and regarding the independence of an appraisal review board from the board of directors and the chief appraiser, among other issues. The legislation also encourages the board of the directors of the appraisal district to select a chairman who has a background in law and property appraisal. Hopefully, these measures will promote uniformity in the appraisal process throughout the state.

Requirement of Substantial Evidence for Appraisers
Prior to this legislation, there was no set standard for appraisal districts for evaluating property values that had been successfully appealed and protested the year before. Unfortunately, this often resulted in property owners receiving an initial value that was the same or higher than the value that was the subject of the preceding year’s protest, even if there had been little or no change to the property. Senate Bill 771 requires chief appraisers to present substantial evidence for increasing the appraised value of property whose value was reduced on successful appeal in the prior year. Furthermore, the legislation provides expedited arbitration as an additional means to appeal decisions by the Appraisal Review Board.

Pilot Program for Commercial Property Appraisal Appeals
House Bill 3612 creates a six-county pilot program for owners of commercial property valued at $1 million or more to appeal local Appraisal Review Board decisions to the State Office of Administrative Hearings. The six counties include Harris, Tarrant, Bexar, Travis, Cameron, and El Paso Counties. The program is limited to 3,000 appeals statewide. Currently, the only appeals option for property at this value is to appeal to the district court, which can be costly and time consuming. This pilot program provides a less expensive option in a more expedited setting. Dallas County was unfortunately one of the counties removed from this bill during the final days of the legislative session at the request of the city, but should the pilot program prove successful, expect legislation affecting Dallas County to be filed next session.

The next article will continue to highlight major legislation which passed during the 2009 legislative session.

As always, please feel free to contact my district office at (214) 370-8305 or my capitol office at (512) 463-0244 if you have any questions regarding state matters. I look forward to hearing from you.