Austin Council to file unprecedented commercial appraisal challenge

A year after the Austin City Council decided to gather evidence that would back up a challenge saying commercial properties are appraised below the market value, it’s on the way to finishing what it started.

The council voted 9-0 on Thursday to file a petition challenging Travis County commercial appraisals of more than $30 billion, a process that could prompt the reappraisal of all or some of those properties — and potentially delay the collection of property taxes along the way. (Council members Delia Garza and Sheri Gallo were absent for the vote.)

A council-commissioned study gave weight to the longstanding contention that Texas’ property tax system unfairly shifts the tax burden onto homeowners, finding that commercial properties in 2015 were undervalued by an estimated average of 27 percent, and commercial vacant and underdeveloped land was underappraised by 76 percent.

“I think everyone is seeking additional fairness, and that puts us all on the same page,” Mayor Steve Adler said.

It’s unclear how the council’s petition will move forward.

Council Member Kathie Tovo, the lead champion of the petition, said in an interview that she expects there to be a formal hearing in mid-June at the Travis Appraisal Review Board, which can either order a reappraisal or reject the petition. If the city loses, it could appeal in district court.

Adler said filing the challenge enables the city to share the data used in the study with the appraisal district — a notion the district’s attorney has contested, saying state law allows for other ways to share information — and there are multiple options the council could consider over the coming weeks.

In an interview, Adler said that 15 to 20 lawyers from local taxing entities — as well as lawyer Buck Wood, who first urged elected officials last year to file a challenge — are mapping out the different paths the council could take.

Adler pointed to the Harris County Commissioners Court, which last year withdrew a petition and instead reached a data-sharing agreement with the Harris appraisal district. There could also be a scenario, Adler said, where focus is placed on changing the Travis appraisal district’s practices for 2016 appraisals.

Representatives from the city of Cedar Park said the challenge could throw a wrench into their tax and budget adoption process, as well as their ability to hold a bond election this fall. The cities of Round Rock and Leander, as well as Central Health and Austin Community College, voiced similar worries Tuesday.

“To ask a long-term bond question when your current financial situation is not set, our bond attorney says that that would be irresponsible and possibly not compliant with the law,” Cedar Park Mayor Matt Powell told the council.

Another concern: If property tax bills are delayed, those who typically pay their taxes by the end of the year so they can get a deduction on their federal income taxes might be out of luck.

The Travis County Tax Office said it would accept estimated tax payments, and when tax notices are issued, send refunds to those who overpaid and send another bill to those who underpaid. Taxing entities wouldn’t receive tax revenue until after tax bills are sent.

The Travis County Commissioners Court is holding a special meeting Friday to discuss whether to file its own challenge or to direct the county attorney to assist the city with its challenge. The deadline to file a challenge is Monday.

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