Harris County Appraisal District

Transcription

1 Harris County Appraisal District Presentation to Houston ISD Board of Trustees 4/2/2015 1

2 Items covered Quick facts about HCAD Overview of the property tax process and timelines Roles and responsibilities How we appraise property Appeal process Litigation and budgetary impact Q and A 4/2/2015 2

3 2010 ISS Night Photo of Houston Metro Area

4 2010 ISS Night Photo of Houston Metro Area 1775 square miles of territory 4 th largest city in US Unincorporated population would be 5 th largest city 2 largest cities in US without zoning Busiest foreign shipping port in the US Nerve center of worldwide petrochemical industry Largest medical complex in the world 1.7 million parcels of property Reappraised annually Inspected once every ~three years

5 Third largest assessment entity in the U.S. 4.3 million citizens 1.7 million appraisals 300,000 inspections 336,000 protests 288,000 phone calls 2.6 million mailings 533 Jurisdictions 4/2/2015 5

6 Legal principles related to HCAD Independent political subdivision Appraise all property in the county for ad valorem tax One CAD per county One Appraisal Review Board per county Board appointed by taxing entities Budget funded by taxing units Chief appraiser appointed by board-chief administrator

7 HCAD Administration Board of Directors Appointed by jurisdictions Appoints chief appraiser Adopts CAD budget Sets general policy No influence on value Chief Appraiser and Staff Chief appraiser is chief administrator Chief appraiser employs staff Staff administers appraisal and exemption processes Provide clerical and logistical support to ARB Appraisal Review Board of Harris County Appointed by District Judge Funded through HCAD s budget Hears and decides protests 4/2/2015 7

8 The CAD s primary functions Keep ownership, address, and characteristic records of all taxable property Appraise all property in a consistent and professional manner Provide one-stop service for exemptions Provide administrative support for the appraisal review board

9 The Appraisal Review Board s part of the process Hear and decide complaints (protests) regarding value, exemptions, and taxability Approve the appraisal records 180 members appointed by Harris County Administrative District Judge Annual caseload of 330,000 plus protests almost the size of the entire US district court caseload Most cases disposed of within four months Frequently dispose of 3,000+ cases/day Must resolve 90% of the value under protest in the county before approving any jurisdiction s appraisal roll

10 HISD s relationship with HCAD HISD appoints one of 6 Directors Pays share of budget proportionate to tax levy Must use CAD values in assessing taxes Sets tax rates and optional exemptions Majority of units may veto CAD budget Majority of units may veto CAD board action Cannot become involved in protests May challenge level of appraisal or grant of exemption 4/2/

11 The Property Tax Process HCAD Appraise Determine Exemptions Property Records Appraisal Review Board Protests of values and exemptions Taxing entity Determines spending needs Sets tax rates Collector Sends bills Collects taxes Forwards to jurisdictions September May June August September October October - January 4/2/

12 This Year s Valuation Work HCAD s Timeline Notices sent Protest Deadline Roll Certified Timely Hearings finished Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Early meetings and hearings start Official value estimate released ARB hearings start Next Year s Valuation Work 4/2/

13 Market Value "Market value" means the price at which a property would transfer for cash or its equivalent under prevailing market conditions if: (A) exposed for sale in the open market with a reasonable time for the seller to find a purchaser; (B) both the seller and the purchaser know of all the uses and purposes to which the property is adapted and for which it is capable of being used and of the enforceable restrictions on its use; and (C) both the seller and purchaser seek to maximize their gains and neither is in a position to take advantage of the exigencies of the other.

14 Mass Appraisal Systematic appraisal of a large number of properties as of the same date, using standardized procedures, in a manner that allows for statistical testing. More than 300 appraisers Licensed by state Training equivalent to private appraisers Goal: Appraise all property in an accurate, equitable, and efficient manner.

15 Comparable Sales Approach 4/2/

16 Income Approach What s it Worth? 10x net rent 11x net rent 10x net rent 4/2/

17 Cost Approach 60% of Replacement Cost 80% of Replacement Cost What s it Worth? Replacement cost /2/

18 What s involved Locate the property Record its characteristics Determine its ownership Decide which entities can tax it Group property by economic characteristics Identify characteristics that affect value Develop and test appraisal model for each group Fit each property into the appropriate appraisal model Appraise it Send a notice Record and schedule a protest Prepare and post evidence Informal meeting/formal hearing Place the property on the appraisal roll for the entities

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20 Exemptions & Ownership Records Ownership Monitor deed transactions Research deeds and change ownership Update maps and property records Monitor returned mail for address changes Ensure addresses on the roll are as correct as possible Exemptions Publicize availability of exemptions Receive and process 150,000 exemption applications annually Investigate and process cancellations of exemptions Work with communities to better understand rights and requirements 4/2/

21 Workload in HISD by parcel count Property Use Category Units Category A (Real Single Family) 332,369 Category B (Real Multi Family) 9,510 Category C (Vacant Land) 47,474 Category F1 (Real Commercial), 25,175, 5% Category L2 (Commercial Real), 4,855, 1% Category L1 (Commercial Personal), 67,022, 12% Category F2 (Real Industrial), 627, 0% Other:, 42,388, 8% 123,113 inspections 123,422 protests 2,218 Lawsuits 25,000 exemption applications Category F1 (Real Commercial) 25,175 Category C (Vacant Land), 47,474, 9% Category F2 (Real Industrial) 627 Category L1 (Commercial Personal) 67,022 Category B (Real Multi Family), 9,510, 2% Category A (Real Single Family), 332,369, 63% Category L2 (Commercial Real) 4,855

22 HISD Market Value: $181 Billion G1 Oil and Mineral Gas Reserves, $9,620,400 F2 Real, Industrial, $2,797,252,750 L1 Tangible, Commercial, $6,394,333,227 HISD 2014 Market Value L2 Tangible, Industrial, $5,613,910,576 F1 Real, Commercial, $40,885,653,372 A1 Real, Residential, Single-Family, $70,149,667,693 D2 Real, Unqualified Agricultural Land, $209,306,249 D1 Real, Qualified Agricultural Land, $114,844,645 C Vacant land, 2,824,858,932 B Multifamily, 14,249,100,591 A2 Real, Residential, Mobile Homes, $23,701,773

23 HISD Taxable Value $139 Billion Category F2 (Real Industrial), , 2% Category L2 (Commercial Real), 6,763,079,797, 5% Category L1 (Commercial Personal), 9,211,872,788, 6% Category F1 (Real Commercial), 43,154,019,597, 31% 2014 Taxable Value $139 Billion Other:, 2,392,030,340, 2% Category A (Real Single Family), 56,691,981,157, 41% Category B (Real Multi Family), 14,665,530,445, 10% Category C (Vacant Land), 3,785,609,019, 3% Category A (Real Single Family) Category B (Real Multi Family) Category C (Vacant Land) Category F1 (Real Commercial) Category F2 (Real Industrial) Category L1 (Commercial Personal) Category L2 (Commercial Real) Other:

24 Who checks our work? 4/2/

25 Mass Appraisal allows for Statistical Performance Testing Ratio - Ratio of CAD estimate to actual market value Generally ratio of CAD estimate to sale price Key measures: Median ratio indicates accuracy Coefficient of dispersion (COD) indicates uniformity (real equity) Price related differential (PRD) indicates equity between higher and lower value property.

26 Statistical Performance Target Overall level of appraisal between.90 and 1.10 No more than 5% difference among category appraisal levels CODs between 5 and 15 for homes CODs of 5 to 15 for income producing property in urban area, up to 20 outside CODs of 5 to 20 for vacant land in urban area, 5 to 25 outside PRD between.98 and 1.03

27 State Oversight: Comptroller of Public Accounts MAP Review (even years) Governance Taxpayer Assistance Operating Procedures Appraisal Standards HCAD has achieved perfect scores on each of the last two reviews Property Value Study (PVS)-(odd years) Appraisal Accuracy and Uniformity Market value by category for each school district HCAD has achieved very good scores on each of the last two reviews 4/2/

28 2013 PVS For HISD Weighted Mean Appraisal Ratios Category Local Tax Roll 2013 WTD 2013 PTAD 2013 Value Value Mean Ratio Value Estimate Assigned A. Single-Family Residences 65,449,264, ,734,787,536 65,449,264,692 B. Multi-Family Residences 12,218,370, ,187,664,236 12,218,370,915 C1. Vacant Lots 3,317,414, ,486,510,393 3,317,414,639 D1. Rural Real(Taxable) 2,665, ,634,325 2,665,669 E. Real Prop NonQual Acres 346,185, ,757, ,185,011 F1. Commercial Real 38,949,734, ,593,782,425 38,949,734,237 J. Utilities 1,582,615, ,447,691,119 1,582,615,931 L1. Commercial Personal 9,489,692, ,712,099,110 9,489,692,040 Overall (Calculated) /2/

29 Independent studies International Association of Assessing Officers awarded HCAD its Certificate of Excellence in Appraisal Adminstration in 2014 Almy, Gloudemans, Jacobs & Denne Study of appraisal level of commercial property for 2014 found commercial overall at 99% of market value. Harris County study of appraisal level for commercial property for 2014 found improved property in acceptable levels, found vacant land to be underappraised 4/2/

30 CAD Litigation 4/2/

31 Appealing a Value Appraisal Review Board Arbitration District Court State Ofc. Admin Hrgs. Appellate Courts 4/2/

32 Two grounds for value appeal Excessive Appraisal REMEDY FOR EXCESSIVE APPRAISAL. If the court determines that the appraised value of property according to the appraisal roll exceeds the appraised value required by law, the property owner is entitled to a reduction of the appraised value on the appraisal roll to the appraised value determined by the court. Unequal Appraisal REMEDY FOR UNEQUAL APPRAISAL. (a) The district court shall grant relief on the ground that a property is appraised unequally if: (1) (2) (3) the appraised value of the property exceeds the median appraised value of a reasonable number of comparable properties appropriately adjusted. 4/2/

33 60 Billion 50 Billion 40 Billion 30 Billion Equal and Uniform changed litigation SB 841 (1997) added authority for the court to grant reductions on the basis of median appraised value. HB 1028 (2003, eff 2004) required reduction to the median and provided that this method trumps any evidence showing a higher value. Value in Litigation & E&U HB Billion SB Billion /2/

34 $45,000,000,000 Value at risk in Litigation B $40,000,000,000 $35,000,000,000 $30,000,000,000 $25,000,000,000 Commercial $20,000,000,000 $15,000,000,000 $10,000,000,000 Apartments $5,000,000, B Single Family $ SF Residence M M 1.6 B 1.2 B 1.1 B 1.1 B 1.3 B 1.3 B 3.4 B 1.4 B Apartment 2.9 B 3.4 B 5.4 B 6.7 B 7.6 B 4.7 B 5.0 B 7.5 B 10.6 B 11.5 B Vac Land 52.6 M M M M M M M M M M Commercial 2.7 B 7.4 B 11.6 B 18.9 B 17.3 B 12.0 B 13.7 B 17.1 B 35.9 B 41.9 B SF Residence Apartment Vac Land Commercial 4/2/

35 Litigation in HISD 4/2/

36 Litigated Value Heat Map 4/2/

37 Estimated Revenue Losses from Equal and Uniform Lawsuits in HISD Cumulative HOUSTON ISD (64,561,071) (79,692,732) (76,555,557) (57,531,084) (278,340,444) NFISD (504,316) (384,003) (388,574) (1,276,893) Totals ($65,063,376) ($80,074,723) ($76,942,118) ($57,529,070) ($279,617,337) Total Revenue loss for all Harris County Units $1.26 billion 4/2/

38 Important Cases in HISD 4/2/

39 Class A Office Project 140 Suits 190 Buildings Litigation Cost: Approx. $3 million to date Notice Value: $17.1 billion ARB Value: $15.8 billion Final Value: TBD 4/2/

40 Example: Heritage Plaza Sold December 10, 2010: $325 Million Sold January 15, 2014: $475 Million 2013 ARB Value: $307,796,099 Plaintiff Claims: $211,600,000 4/2/

41 Hess Tower Sold November 16, 2012: $442.5 Million 2013 Noticed Value: $391,241, ARB Value: $376,358,812 Plaintiff Claims: $261,597,758 4/2/

42 Chevron 4 Allen Center Sold June 24, 2011: $340 Million 2013 Noticed Value: $296,061, ARB Value: $284,909,313 Plaintiff Claims: $156,000,000 4/2/

43 One Example of Litigation Cost for Class A High Rise Crescent POC Investors (Post Oak Central 2012) Litigation Cost: $242,404 Notice Value: $202.6 million ARB Value: $175.2 million Potential Value Loss: $26.3 million 4/2/

44 Other High Stakes Litigation 4/2/

45 United Airlines, Inc. Personal Property: Allocated Airline Fleet, Ground Equipment, Spare Parts, Office Furniture Noticed Value: $674 Million ARB: $640 Million Plaintiff argues $438 Million 4/2/

46 Valero Refining Texas LP Houston Refinery Notice Value $404 Million ARB Value $397 Million 3 Years Value in Litigation Cost to date in excess of $400,000 4/2/

47 Galleria Mall Shopping Mall and Related Property Noticed Value $683 Million ARB Value $669 Million 4/2/

48 The Hertz Corporation Personal Property: Rental Cars 2013 and 2014 Litigation 2014 Notice Value $123 Million ARB $123 Million Plaintiff wants $70 Million 4/2/

49 Target Stores (Dayton Hudson Corp) 22 Properties 2014 Litigation Notice Value $201 Million ARB $206 Million 4/2/

50 As of February ,200 Lawsuits pending More than $80 Billion taxable value at risk More than 17,000 parcels involved Approximately $16.5 million budgeted Review appraisal staff $2.9 million In house legal staff $1.2 million Outside legal and expert witness $12.2 million 16,410,792, 18% Litigation as a Percent of HCAD's Budget Litigation Operations 76,577,504, 82% 4/2/

51 Questions? 4/2/