12:00 AM CDT on Tuesday, June 17, 2008 By TERRENCE STUTZ / The Dallas Morning News tstutz@dallasnews.com
AUSTIN – Dallas officials Monday urged a Senate panel to require disclosure of sales prices on real estate to boost the accuracy of appraisals used in collecting property taxes.
Dallas City Council member Angela Hunt argued that sales price disclosure would make the property tax system more equitable and eliminate the breaks that many commercial property owners now enjoy because their appraisals are often well below market value.
"Commercial property owners aren't pulling their weight," Ms. Hunt told the Senate Subcommittee on Property Appraisal and Revenue Caps. "And that has created inequities in our system."
"Commercial property owners aren't pulling their weight," Ms. Hunt told the Senate Subcommittee on Property Appraisal and Revenue Caps. "And that has created inequities in our system."
Citing an imbalance in appraisals that has forced homeowners to pay more in property taxes, Ms. Hunt said, "I am here today to ask for some fairness."
To illustrate her point, the Dallas lawyer cited negotiations for land that will be purchased by the city for a new convention center hotel. Although the land was listed on the tax rolls as having a value of $7.3 million, the property is expected to cost the city nearly six times that much – or $42 million.
Supporting her calls for reform was the chief appraiser for the Dallas Central Appraisal District, Ken Nolan, who said mandatory price disclosure would greatly improve the accuracy of his agency's appraisals and better ensure that all property owners pay their fair share.
"It's unrealistic to give someone a job and not give them the proper tools to do it," said Mr. Nolan, who is responsible for annually appraising all property in Dallas County. Those values are used by cities, school districts and other entities in Dallas County when they set property tax rates.
Mr. Nolan said arguments that disclosure of commercial sale prices is not workable don't hold much water given that 45 of 50 states require homeowners and businesses to disclose sales prices.
The five-member Senate panel is expected to make recommendations on property appraisals that will be considered by the Senate and House next year.
Lawmakers last year considered a series of appraisal reform measures – including mandatory sales price disclosure – but all except a few minor bills were killed. Business and real estate agent groups opposed the sales price disclosure bill.
A study by Texas Association of Appraisal Districts two years ago estimated that Texas public schools were losing about $4 billion a year in revenue because property appraisers are often unable to judge the true market value of property.
The study found that lack of sales price information has caused appraisers in urban areas to undervalue commercial property by an average of 40 percent and residential property by 15 percent. Multifamily property is undervalued by 25 percent, according to the study.
While Mr. Nolan voiced doubt that that such a large gap has ever existed in Dallas County, he said there is nonetheless a disparity that is the result of not having information on sales of commercial property.
Ms. Hunt said the sales price legislation – opposed by lobbyists for business groups – will be difficult to pass next year "until residents understand that they are getting a bigger tax burden because commercial property owners don't have to disclose sales prices and the real value of their property. Only if they get mad will we see something happen." Dallas City Council member Angela Hunt was among those testifying.
