Listed below are 2016 decisions and opinions concerning various property tax issues. The list does not include all opinions and decisions concerning property tax. The summaries are provided by the Comptroller's office as a public service intended solely as an informational resource. The summaries are not intended as substitutes for or interpretations of the opinions and decisions summarized and should not be relied upon as such. The information provided neither constitutes nor serves as a substitute for legal advice. Questions regarding the meaning or interpretation of any information included or referenced herein should, as appropriate or necessary, be directed to an attorney or other appropriate counsel.
Cypress Creek Fayridge, L.P. v. Harris County Appraisal District, No. 01-16-00003-CV (First Court of Appeals – Houston) (memorandum opinion)
(December 8, 2016)
Cypress Creek sued the Harris County Appraisal District, contending the District had appraised its property at an excessive market value. The trial court found that the property's value was consistent with the District's appraisal, and entered judgment for the District. Cypress Creek appealed contending that the trial court erred by improperly placing the burden of proof on Cypress Creek to show that the appraisal was excessive; it also argued the evidence was legally and factually insufficient to support the trial court's judgment.
In affirming the judgment of the trial court, the Houston court of appeals cited numerous other cases in which Texas courts of appeals, including itself, had "assigned the burden of proof to the taxpayer in tax appraisal suits." The appellate court held that "[e]ven if we assigned the burden to the District, Cypress Creek has not demonstrated that no evidence supports the trial court's market-value finding." Rather, the appellate court concluded, the District presented competent evidence that was legally and factually sufficient to support the trial court's findings.
United Airlines, Inc. v. Harris County Appraisal District, No. 14-15-01014-CV (Fourteenth Court of Appeals – Houston), (motion for rehearing denied February 14, 2017)
(December 6, 2016)
In its original petition filed September 30, 2014, United Airlines sued under Tax Code section 42.25 (excessive appraisal), asserting that the appraisal district's valuation was in excess of the subject property's market value. In July 2015, United amended its petition to no longer assert the excessive appraisal grounds, and instead asserted the district's appraisal was unequal under Tax Code section 42.26 (unequal appraisal). There was no dispute that United had exhausted its administrative remedies before the appraisal review board for both protest grounds before filing suit in district court.
The appraisal district filed a plea to the jurisdiction arguing that the filing of the first amended petition operated as a nonsuit of the pending excessive appraisal appeal. It also argued that the first amended petition was in fact a different appeal and, therefore, untimely since filed outside the sixty-day deadline for judicial review. Before the plea to the jurisdiction was heard, however, United filed a second amended petition, switching its theory on appeal back to the excessive appraisal grounds under Tax Code section 42.25. United also filed a motion to withdraw its first amended petition or alternatively to reinstate its original petition. (United claimed it had filed its first amended petition by mistake.)
The appraisal district responded to United's motion to withdraw and supplemented its plea to the jurisdiction. It argued "that United failed to perfect its unequal appraisal protest because it was not part of the original petition for review and the Tax Code limits the scope permitted to amendments of pleadings." The trial court agreed with the appraisal district and granted the plea to the jurisdiction.
In reversing the trial court's decision, the Houston court of appeals reasoned that "nothing in either the Tax Code or the case law requires a party to include its grounds for relief in a petition for review in order to invoke the jurisdiction of the trial court." The high court noted "other parts of the Tax Code demonstrate that stating the particular grounds for appeal is not jurisdictional and need not be contained in the petition."
Parker County Appraisal District v. Bosque Disposal Systems, LLC, et al, No. 02-15-00343-CV (Second Court of Appeals – Fort Worth), (en banc opinion), motion to reconsider denied December 28, 2016
(December 1, 2016)
Four companies, each of which operates a salt-water disposal well on land it owns, challenged the appraisal district's assessment of their subsurface saltwater disposal wells separately from and in addition to the tracts of land on which the wells are located. The four owners, the court wrote, "contended that the value of the wells is subsumed within the value of their land; thus, the separate assessment and taxation of the income stream from the operation of those wells resulted in them being taxed twice on the same property."
In rejecting the owners' argument, the Fort Worth court of appeals held that "controlling authority compels the conclusion that Owners' real property interest in the saltwater disposal wells may be separately assessed and taxed." The trial court's judgment in favor of the owners, which had declared the disposal well accounts "void as illegal double taxation," was reversed.
In its suit in district court, the city of Austin challenged the constitutionality of the two "unequal appraisal" statutes in Texas, Tax Code sections 41.43(b)(3) and 42.26(a)(3). The city also sued the Travis Central Appraisal District under Tax Code section 41.03(a), challenging the level of appraisals for vacant land and commercial real property for the 2015 tax year. The trial court dismissed the city's claims for lack of subject matter jurisdiction.
The Austin court of appeals affirmed the dismissal on these grounds: (1) the city had no standing to pursue the constitutional claims; and (2) the city failed to exhaust its administrative remedies when it did not present evidence to the Appraisal Review Board to support its statutory claim challenging the level of appraisals. The appellate court did not reach the city's third issue: whether every owner of vacant land or commercial property was a necessary and property party to the city's level of appraisals claim.
Anheuser-Busch paid the $9,015,911.93 in taxes it owed on seven properties on February 21, 2013, three weeks after the default delinquency date, February 1. As a result, the county tax assessor-collector assessed Anheuser-Busch $631,114.08 in penalties and interest for untimely payment of its taxes. After paying "under protest and duress" the penalties and interest, Anheuser-Busch sued and requested a declaratory judgment that it did not owe the penalties and interest.
Anheuser-Busch claimed it was entitled to a postponed delinquency date under Tax Code Section 31.04(a), for at least 21 days, because the county tax assessor-collector "failed to timely send a tax bill to both Anheuser-Busch and its authorized agent for each of the seven properties at issue, as required by Texas Tax Code Section 31.01(a)." It was undisputed that none of the seven tax bills were mailed to both the property owner and its designated agent.
After reviewing the complicated facts regarding each of the tax bills and their payment, as well as various waiver arguments and the voluntary payment rule, the court of appeals agreed with Anheuser-Busch. It held this owner "was entitled to a postponed delinquency date for the properties" for which the tax assessor-collector "failed to send a tax bill to both Anheuser-Busch and its duly-appointed authorized agent." In reversing the trial's court ruling in favor of the county tax assessor-collector, the appellate court concluded that "Anheuser-Busch did not owe and is entitled to a refund of penalties and interest" on five of the seven properties. As there was a fact issue whether the appointment of agent on the remaining two properties was valid, those two accounts were remanded to the trial court for further proceedings consistent with the opinion.
Vick v. Floresville Independent School District, et al, No. 04-15-00437-CV (Fourth Court of Appeals – San Antonio), petition for review filed December 16, 2016
(August 31, 2016)
After turning 65, Larry Vick filed a notice to defer collection of property taxes on his residence homestead under Tax Code Section 33.06. About four years later, the appraisal district removed the exemptions and tax deferral status on the property without notice to the owners, Larry or Linda Vick (the Vicks). The law firm representing the taxing units then sued the Vicks to recover delinquent ad valorem taxes. The Vicks filed an answer, asserted they had applied for the tax deferral, and asked the court to maintain the deferral. They also filed an affidavit stating the facts to show their entitlement to the deferral, sought a declaration that the deferral be maintained, and moved to dismiss. Based on this filing, the Vicks asserted the Tax Code automatically abated the tax suit until the 181st day after the property was no longer their homestead.
During the abatement, the Vick's mortgage company paid the deferred taxes and the taxing units nonsuited their collection claims. The mortgage company then increased the Vicks' mortgage payments from $525.20 to $6,669.90 a month. The Vicks then filed suit against the taxing units, the appraisal district, and the lawyers representing the taxing units (the appellees) for declaratory relief and damages under various tort theories and for violations of three constitutional provisions.
The San Antonio court of appeals affirmed the trial court's granting of the pleas to the jurisdiction dismissing all the Vicks' claims. It held that the governmental entities' immunity was not waived: "Under the Texas Tort Claims Act, there is no waiver of immunity for tort claims 'arising . . . in connection with the assessment or collection of taxes by a governmental unit.'" Further, as agents of the taxing units performing the governmental function of tax collection, the lawyers for the taxing units also were entitled to immunity. Finally, because the Vicks were seeking money damages, and not challenging the validity of a statute or ordinance, the appellees' immunity was not waived under the Uniform Declaratory Judgments Act.
For tax years 2012 and 2013, National Church Residences (NCR) requested that it be exempt from paying ad valorem taxes as a charitable organization under Tax Code Section 11.18(d). After the appraisal district denied the requested exemption, NCR filed suit seeking judicial review of the denial. The trial court granted the appraisal district's motion for summary judgment which asserted that NCR was not entitled to the exemption because NCR was not providing housing or services without regard to the residents' ability to pay.
Contending that it was entitled to an exemption under Tax Code, Sections 11.18(d)(3) and (13), NCR appealed the trial court's ruling. The Houston court of appeals reversed the judgment of the trial court and remanded the case for further proceedings, concluding that HCAD did not show as a matter of law that NCR provided housing and related services to its residents based on the residents' ability to pay. The appellate court reasoned that the collection of a security deposit from its residents did not conclusively establish, as a matter of law, that NCR did not provide housing without regard to the residents' ability to pay, as required to receive the tax exemption. The Appellate court also reasoned that NCR's eviction policy did not conclusively establish that NCR considered its residents' ability to pay when deciding whether to admit or to retain a resident.
Heritage Operating, L.P. v. Barbers Hill Independent School District, No. 14-14-00187-CV (Fourteenth Court of Appeals – Houston) (opinion on rehearing)
(June 16, 2016)
In this factually complex case involving the collection of delinquent taxes which initially had been omitted from the appraisal roll, the Fourteenth court of appeals in Houston withdrew its previous opinion issued July 2, 2015, and issued an entirely new opinion with a different result on rehearing. The appellate court summarized the case in the opinion's introduction as follows:
In this suit to collect delinquent taxes for the 2004 tax year, the property owner both defended and counterclaimed on the ground that its personal property, which initially was omitted from the 2004 appraisal roll, was not added to the appraisal records within two years [as required under Tax Code Section 25.21(a)], and thus, the assessment is void. The taxing authorities responded that the property owner's failure to exhaust its administrative remedies under the Property Tax Code deprived the trial court of jurisdiction over the property owner's defense and counterclaim. The property owner challenges the trial court's ruling granting the taxing authorities' summary-judgment motion and implicitly denying the property owner's competing motion. Our disposition of the appeal turns on the answer to two questions.
First, did the property owner's failure to challenge the appraisal before the appraisal review board deprive the trial court of jurisdiction to consider the property owner's defense? We conclude that no competent summary-judgment evidence controverts the property owner's evidence that the chief appraiser failed to deliver a notice of appraised value. The property owner had no written notice of the appraisal or taxes until it received a demand for payment of delinquent taxes, by which time it was too late to file a protest. Because the Property Tax Code [then in effect] provided no administrative remedies for the property owner to exhaust, the property owner's failure to file a protest did not deprive the trial court of jurisdiction to hear the property owner's defense to the tax-collection suit.
Second, did the appraisal district add the property to the appraisal records for the 2004 tax year within two years as statutorily required? We conclude that the property owner rebutted the presumption that all persons involved complied with their respective statutory duties in appraising the property and assessing taxes. Because the taxing authorities failed to conclusively establish that all statutory duties were discharged and that the delinquent-tax rolls are correct, the trial court erred in granting their summary-judgment motion. The taxing authorities nevertheless produced evidence sufficient to raise a question of fact about whether the property was timely added to the appraisal records, and thus, the trial court did not err in denying the property owner's motion for summary judgment.
We accordingly reverse the judgment and remand the cause to the trial court.
For the 2012 tax year, Mustang Machinery Company had two accounts with the Harris County Appraisal District. The Appraisal District's original tax statements assessed about $307,000 in taxes for Mustang's business property account and about $105,000 for its dealer account. Mustang paid the full tax bill for the business property account, but rather than pay any of the taxes on the dealer account, Mustang filed a correction motion under Tax Code, Section 25.25(c) requesting to transfer property previously listed as taxable under the business property account to the dealer account to be taxed there. The motion also indicated that the total value of the property to be transferred was about $1.7 million more than originally assessed.
The Appraisal District granted the request and Tomball Independent School District then issued a refund of slightly more than $300,000 for taxes paid on the business property account and issued a new invoice for over $393,000 in taxes for the dealer account. Mustang contested the new invoice arguing that the invoice incorrectly included about $86,000 in penalties and interest as if Mustang did not timely pay over $300,000 for the originally-appraised amount of the property and did not pay taxes on the additional $1.7 million in value. The trial court granted Mustang's motion for summary judgement which asserted that it did not owe penalties and interest for the transferred amount.
The Houston court of appeals affirmed the trial court's order granting summary judgment for Mustang that it did not owe penalties and interest for the transferred amount, reversed the trial court's order that Mustang did not owe penalty and interest for the $1.7 million in increased value of its inventory, and remanded for calculation of the penalties and interest Mustang owed on the increased valuation. The appellate court concluded that that Mustang did not owe penalty and interest on the original appraisal amount because Mustang timely paid those taxes under a different account designation. However, the appellate court further concluded that Mustang did owe penalty and interest on the "additional amount" of taxes that it owes because of the property's increased value of $1.7 million.
Lower Colorado River Authority v. Burnet Central Appraisal District, No. 03-15-00724-CV
(Third Court of Appeals – Austin), petition for review filed September 20, 2016
(June 7, 2016)
The Austin court of appeals held that even though the LCRA's Sunset Point RV Park was leased to a private for-profit entity, LCRA did not forfeit the Park's tax exemption under article XI, section of the Texas Constitution and Tax Code Section 11.11(a) for government-owned property used for a public purpose. The court reasoned:
The trial court's grant of summary judgment denying the exemption was reversed, the appellate court concluded, because "the Lessee in this case is undisputedly operating the Park for the same underlying [public] purposes as LCRA would if LCRA were operating the Park itself."
At trial, the appraisal district successfully raised the issue of fraud surrounding the ownership of grain by Sebastian Cotton & Grain to void a settlement agreement that Sebastian had no tax liability for the grain under Tax Code Section 1.111(e). Thereafter, the appraisal district attempted to undo all the effects of the agreement by changing the appraisal roll under Tax Code Section 25.25(b) to reflect its initial determination of ownership – that Sebastian and not a subsequent purchaser as Sebastian had claimed – was the owner of the grain on the date of assessment. Sebastian appealed the trial court's judgment of fraud and argued as well that the appraisal district's correction of the appraisal roll was not proper under Tax Code Section 25.25(b).
The court of appeals held that, unlike some of its sister courts, a party's failure to raise an argument before an appraisal review board does not deprive the district court of jurisdiction to hear that argument in a trial de novo. Thus, the appraisal district could argue fraud to void the agreement. The appellate court also held, however, that the appraisal district did not have the statutory authority to change the appraisal roll at any time under Tax Code Section 25.25(b) to shift the determination of ownership from one party to another. Tax Code Section 25.25(b) permits only a correction of an inaccuracy "that does not increase the amount of tax liability." The appellate court held that "tax liability" under this section refers to a property owner's individual liability, and not the net tax liability owed on the property. The appraisal district's change to the appraisal roll was not proper. In reversing the trial court's judgment for the appraisal district, the appeals court remanded the case for consideration of the amount of reasonable attorney's fees for the property owner, an award that it held was mandatory under Tax Code Section 42.29.
Kirkwood v. Jefferson County, No. 09-15-00296-CV (Ninth Court of Appeals - Beaumont), no petition
(February 11, 2016)
In this case, the question was whether the owner may attack a tax sale of his property, independent of the provisions of the Tax Code, and sue the county to prevent denial of the owner's possession of the property, because the owner was entitled to notice of the tax sale. The court of appeals reviewed the facts surrounding the tax sale - which arose out of a default judgment against the previous owner to collect unpaid property taxes - and found the property owner's due process rights had been violated for lack of notice. The appellate court held that the property owner had standing to bring his case, and that governmental immunity did not shield the county from the property owner's equitable claims for possession.
HDSA Westfield Lake, LLC v. Harris County Appraisal District, No. 14-15-00180-CV (Fourteenth Court of Appeals - Houston), no petition
(February 11, 2016)
The question in this case is whether two CHDOs - low and moderate income community housing development organizations - were eligible owners under Tax Code section 11.182 to a continuation of the former owner's tax exempt status for the apartments each acquired. The appraisal district argued that the exemption continued only "upon a change in ownership when the property has been sold at a foreclosure sale and the purchasing organization shows the chief appraiser proof of its qualification for the exemption within 30 days of the sale." As the CHDOs acquired the apartments through a special purpose entity - and not directly - at foreclosure, the appraisal district contended they were not eligible owners.
In holding that the two CHDOs were "entitled to a continuation of the ad valorem tax exemptions under section 11.182," the court of appeals noted that the following facts were undisputed: (1) the two apartment properties had been purchased at a foreclosure sale; (2) each CHDO qualified as such under Tax Code section 11.182; and (3) both CHDOs held legal title to the apartments at the time they filed timely and complete applications for continuation of the exemptions establishing they were qualifying CHDOs. The court of appeals agreed with the two CHDOs' assertion that "[n]othing in the plain language [of the statute]. . . suggests that passing title through a special purpose entity will avoid an exemption."
Cameron County Appraisal District v. Rourk, No. 13-15-00026-CV (Thirteenth Court of Appeals - Corpus Christi-Edinburg) , petition for review denied by Tex. Sup. Ct. February 17, 2017
(January 28, 2016)
Owners of travel trailers and recreational vehicles sued the appraisal district and its chief appraiser under the Texas Uniform Declaratory Judgment Act (UDJA) seeking attorneys fees and a declaration "that the assessment of ad valorem taxes on their respective travel trailers and recreational vehicles" was illegal. The owners claimed the chief appraiser "committed ultra vires acts that do not merit the protection of the governmental or official immunity." The trial court agreed with the property owners, finding that the chief appraiser: (1) "acted without authority and in violation of statutory and constitutional provision in assessing the travel trailers and/or park models"; (2) "failed to perform a purely ministerial act"; and (3) committed the acts in "violation of Texas Tax Tax Code §11.14 (West 2008)". The trial judge also awarded the owners $70,848.48 in attorney's fees under the UDJA. The Court of Appeals reversed the trial court's judgment. It held that "applying the tax code's exemptions requires discretion" (and, therefore, is not purely ministerial); that the owners failed to state a valid ultra vires claim against the chief appraiser; and that the trial court lacked subject matter jurisdiction over the claims against the appraisal district.
Jack County Appraisal District v. Jack County Hospital District, No. 02-14-00188-CV (Second Court of Appeals - Fort Worth), no petition
(January 14, 2016)
The question in this case is whether an agreement between an equipment company and a hospital district (a political subdivision) to lease a CT scanner used for public purposes at a hospital is exempt from taxation under Tax Code Section 11.11 which applies to public property. Under this particular agreement, title to the scanner would remain in the company during the lease term; the hospital district was required to pay all property taxes on it. At the expiration of the lease term, the hospital district had the right to purchase the CT scanner for "Fair Market Value".
In April 2012, the company rendered the CT scanner to the appraisal district for tax purposes which appraised it for $571,560 and sent notice of the appraised value to the company. The appraisal district also sent two tax bills to the company. The company did not file a protest, but paid the taxes totaling $19,578.71. Thereafter, the company billed the hospital district for the taxes paid. This bill was the hospital district's first notice that the appraisal district had appraised the CT scanner for tax purposes. The hospital district filed a protest, which was denied; thereafter the hospital district appealed the county appraisal review board's decision to district court, which found for the hospital district.
The court of appeals determined that Tax Code Section 11.11(h) did not require that legal title to the property "automatically" pass to the governmental entity at the end of the lease term. Rather, so long as the political subdivision "is entitled to compel delivery of the legal property" at the end of the lease term, the political subdivision is considered the owner of the property for tax exempt purposes. It held that the hospital district had "established, as a matter of law, that it was the owner of the CT scanner as defined in section 11.11(h), and therefore, the CT scanner was exempt from taxation under section 11.11(a)."
Opinion No. KP-0101 (PDF)
(July 6, 2016)
Re: Whether the Rusk County school district tax violates article VIII, section 1-e of the Texas Constitution (RQ-0090-KP) (PDF)
The Attorney General set forth the following conclusion in his summary:
In Carrollton-Farmers Branch Independent School District v. Edgewood Independent School District, the Texas Supreme Court determined that an ad valorem tax imposed by county education districts was unconstitutional under article VIII, section 1-e of the Texas Constitution because the levy, assessment, and disbursement of revenue was so directed by the State that the tax amounted to a state ad valorem tax. A county equalization tax under former chapter 18 of the Education Code appears to provide a county school board operating thereunder meaningful discretion with regard to the tax such that a court could determine that the tax is not similarly constitutionally infirm under article VIII, section 1-e.
Opinion No. KP-0092 (PDF)
(May 27, 2016)
Re: : Ownership of interest earned on county taxes held by the appraisal district (RQ-0080-KP) (PDF)
The Attorney General set forth the following conclusion in his summary:
Interest earned on county taxes collected by an appraisal district pursuant to a contract under subsection 6.24(b) of the Tax Code belongs to the county and, as such, must generally be remitted to the county.
The accounting and remittance of funds belonging to the county from a particular tax year would depend at least in part on the terms of any contract entered into pursuant to subsection 6.24(b) then in place.
The personal liability of the tax assessor-collector for funds held in the custody of the appraisal district is ultimately a question of fact, dependent on various factors that cannot be ascertained in the opinion process of this office.
Opinion No. KP-0081 (PDF)
(May 3, 2016)
Re: Whether Tax Code section 33.06 authorizes ad valorem property tax deferral on mixed-use property (RQ-0067-KP) (PDF)
The Attorney General set forth the following conclusion in his summary:
A court would likely conclude that section 33.06 of the Tax Code impliedly authorizes a district to investigate facts recited in an affidavit for deferral, request additional information, and allow or deny a deferral as warranted by the law and facts. An appraisal district may grant deferral on mixed-use property provided that all uses are compatible with occupancy as a residence homestead. Whether an owner occupies an entire parcel as a residence homestead will depend on the particular facts.
Section 33.06 of the Tax Code does not authorize an appraisal district to require a property owner to provide a survey at the owner's expense in order to claim entitlement to tax deferral under subsection 33.06(a) of the Tax Code.
Opinion No. KP-0072 (PDF)
(March 17, 2016)
Re: Whether a school district, municipality, or county may reduce or repeal the local option homestead exemption from the amount that was adopted for the 2014 tax year through the 2019 tax year (RQ-0082-KP) (PDF)
The Attorney General set forth the following conclusion in his summary:
Subsection 11.13(n-1) of the Tax Code prohibits a school district, municipality or county from repealing or reducing the local option homestead exemption from the amount that was adopted for the 2014 tax year through the 2019 tax year.
Opinion No. KP-0066 (PDF)
(February 16, 2016)
Re: Whether land owned by the Texas A&M University System, and improvements on that land, are exempt from ad valorem taxation (RQ-0049-KP) (PDF)
The Attorney General set forth the following conclusion in his summary:
Property is exempt under Tax Code section 11.11 if a public entity holds legal or equitable title to the property and the property is used for public purposes. An owner who has the present right to compel legal title holds equitable title. A court is likely to determine that under subsection 11.11(e), property held or dedicated for the support, maintenance, or benefit of an institution or institutions of higher education that is leased to students or employees of such institution or institutions is tax exempt. If such property is leased to provide private residential housing to members of the public other than students and employees of the institution or institutions, the property may lose its exemption under subsection 11.11(e) of the Tax Code, in whole or in part.
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