Real Life: Property Tax Swindle

Attention, homeowners: by now you’ve received the letter from the appraisal district with the proposed value of your property enclosed. Chances are, you’re not happy with what you see. But you don’t have to sit back and take it. Two of our editors fought

How to Fight and Win

The authorities count on the percentages. They know most homeowners won’t protest assessments on their property. Here are the legal guidelines for filing a protest along with our tips on how to beat the system.

  • Pay attention to the change in the total market value assessed by the appraisal district. Because of the recession, in most neighborhoods there should be reductions, not increases, in property values. Compare your property value with neighbors by checking them out at

  • To protest your assessment, you must fill out and mail the form provided at the bottom of your Notice of Appraised Value by midnight, May 31.

  • Once you have decided to protest, prepare a simple, well-organized presentation to stress the facts of your case. Include comparative sales in the neighborhood from a Realtor, photographs, plat surveys for lot size, any documentation from attempted sales of property, any current loan papers containing certified appraisals, and land surveys. If your house is in comparatively poor repair, take photos to prove it.

  • In some cases it might pay to hire a Realtor or real estate professional to help you with your case. Do not go the easy route by signing up with one of the firms that mass-mails into your neighborhood. Instead, ask a friend in the business for a recommendation.

  • Test out your case in an informal hearing with a district representative from the DCAD offices at 2949 Stemmons Fwy.

  • A hearing before an appraisal board panel is conducted like a court case. After the formal introduction, you will have 15 minutes to make your case. Stay focused on the facts, present them in a logical order, state them clearly and slowly, have a paper version, and be prepared to substantiate every fact you present.

  • If the district representative throws out some phrase or argument you’ve never heard of (“front footage”), ask for a definition. Then ask for a postponement so that you can reconsider your case. Do your own research so you can present your case on his terms.

  • The panel will confer and probably ask if a 10 percent reduction is fair. Say no. Tell them you are willing to leave the room if the district representative will also leave while the panel discusses your case.

  • If you don’t agree with the final result, sue. If a few thousand D Magazine readers sued the appraisal district, the ensuing logjam would clog up the system so badly that officials—or a judge—might consider reforming it. As it happens, we provide a good list of lawyers in this issue of D Magazine. Or, if you like to do things yourself, feel free to use the original pleadings filed by Haynes and Boone on behalf of Nancy Nichols and Tom Pauken on behalf of his father. 

  • The three members of the citizens review panel shuffled through my evidence and whispered among themselves. When all was said and done, they reduced my value by a scant 10 percent (which seems to be a routine gesture). It was obvious whose opinion the panel valued more. I left feeling exhausted and deflated.

    Later, I reached the district’s spokeswoman, Cheryl Jordan, to ask about the method of assessment. Her answer was, word for word, “It’s a phenomenon, but that’s the way it works.” She confused me even more by adding, “The mass appraisal used by the district is not A+B=C. We really rely on Realtors to establish the values.”

    If they rely on real estate agents, I could rely on real estate agents. I called Karen Fry, a Realtor with Briggs-Freeman, whose face is on 80 percent of the “For Sale” signs in my neighborhood. She was sympathetic.

    “The tax rolls aren’t always correct,” she said. “I’ve worked with several clients to help them reduce their taxes—especially when lot sizes are irregular. The district doesn’t look at property as closely as Realtors do. I consider expanded front footage as an element, but only when that number is a positive aspect of the property—more like how suitable the lot is to a builder. When I determine value, I look at all the ingredients, not just one value.”

    The panel that dismissed me so handily was appointed by the appraisal review board. Several three-person panels composed of private citizens hear protests and resolve disputes. Citizens are paid a per diem and expense money for serving on the panels. From what I could tell, most of what they do is rubber-stamp the appraisal district’s findings.

    Last year, after the appraisal district had raised the tax base by an astounding 17.6 percent, more than 31,000 residents protested in informal hearings and another 25,896 demanded formal hearings before the board. If this hearing fails to solve the problem, the only recourse a taxpayer has is to file a lawsuit. In 2001, only about 500 people proceeded to that stage. No wonder. Just to file the paperwork for a lawsuit averages about $1,500. Because I was still fuming at my treatment by the appraisal district, I decided to sue. I felt even more sure of my case when D Magazine’s law firm, Haynes and Boone, said it would support my lawsuit pro bono.

    Once we filed, I was barraged with paperwork. To reduce the workload of our law firm, I tackled most of the research myself and only used our attorney to answer the novella of interrogatories that took a four-hour ($600) session to fill out. Several weeks after receiving our filings, the district sent a letter asking for a “number that I would be happy with.” Of course, with that letter came another “request for production” (more documents and calculations), along with four pages of interrogatories to support it. Those papers were hand-delivered in late January.

    At the attorneys’ regular rates, I would have spent $5,700 so far. I figure it may cost another $3,000 to get in front of a judge. That’s $8,700. My economic justification—forget the emotional satisfaction, because there is none—is that if I erase this unreasonable $2,500 increase and if I live in my house another 10 years, as I plan to, I would save $16,300, not including the interest I would make by putting that $2,500 in the bank instead of giving it to the government.

    But let’s face facts. I don’t have $8,700 sitting in my bank account to spend on lawyers to appeal unjust appraisals. If Haynes and Boone hadn’t volunteered its services, I wouldn’t have gotten this far. No matter how unfair, I would have had to take whatever the appraisal district gave me. That’s why they say you can’t fight City Hall. The system is stacked.

    But I have hope. One day a lawsuit will throw a constitutional wrench into the whole illegally biased and shamefully constructed works. With any luck, it will be mine.

    Tom Pauken’s Case: “Mass Appraisal”

    Nearly 50 years ago, my father bought a lot on Meaders Lane near Preston Road in what was then Far North Dallas. The lot cost $2,500, and he took out a $17,500 mortgage to build a family home. The good news is that he still lives there. The bad news is that in 2001, the Dallas Central Appraisal District notified him that the assessed value of his property was now $316,610.

    What happened to my father has been repeated all over town. Other than the two lots on the corner, which for some reason stayed at their old assessment of $110,000, all of the other homeowners on my father’s block saw their valuations shoot up from an average of $150,000 in 1999 to an average of $275,000 in 2000. What authorities refer to as “mass appraisal” method of residential real estate valuation, I prefer to call the “drive-by shooting” method for those property owners unfortunate enough to be in the appraisal district’s line of fire. The Dallas Central Appraisal District raised the tax base by 17.6 percent in 2001 to $134 billion.

    Fortunately the tax consequences to my father were negligible because he is a senior citizen, and his property is his homestead. Under Texas law, taxing authorities are prohibited from raising school taxes on the homesteads of senior citizens. But he considered the increase unfair and decided to fight the district as a matter of principle.

    The appraisal district’s position was that on the next block over, expensive, million-dollar homes were being built on comparable lots. In their minds, that justified the huge jump in land values on my father’s street, even though his block was still overwhelmingly populated by modest homes built many years ago. And he is not alone: the land values of other taxpayers have shot up dramatically, simply because they happen to live in neighborhoods where people are tearing down homes and building much larger spec houses. And, as you might imagine, they are having trouble resolving their disputes with the appraisal district at the administrative level.

    The first step, of course, is to appeal to a panel appointed by the district board. But looking at the composition of the board, it’s easy to see that they’re not institutionally inclined to lower taxes. The members in 2001 were Hollis Brashear, DISD board member; Dr. Sam Thompson, Duncanville school system; Dr. Ralph Poteet, former Mesquite school superintendent; Joe Mills, former Dallas County Auditor; and Missy Vanderbilt, a Dallas real estate broker. Except for Vanderbilt, all are associated with the entities that benefit from higher taxes.

    My father drew a panel whose members adamantly refused to listen to his arguments that his property wasn’t even close to the asserted value. He pointed out, correctly, that the condition of his 50-year-old house made it likely that any prospective buyer would tear it down. So, effectively, all he had to sell was a lot not worth $200,000 for someone to build a house on. Not surprisingly, the panel sided with the appraisal district. They wouldn’t budge from the $316,610 figure.

    At this stage of the game, most people would give up. Litigation is expensive, and it’s difficult to see the payoff in lower taxes when you’re paying legal fees. But sometimes it helps to have a lawyer in the family. I filed a lawsuit on his behalf contending—with evidence—that my father’s house was worth $190,000, not the $316,610 assessed by the district. The outside counsel for the district offered $278,440. I declined the offer and pointed out that comparable sales on that block justified a property valuation of less than $200,000. He referred me to a district representative who was professional and reasonable. Once he reviewed my evidence, we settled at $200,000.

    What this amounts to is a shell game of backdoor taxation. The fact that, when challenged, the district dropped its assessment on my father’s home $116,000—almost 40 percent—only shows the arbitrariness of how it makes its appraisals. Basically, the appraisal district does the dirty work for the local authorities by using mass appraisals to generate the highest possible tax base. Meanwhile, local politicians can brag that they didn’t raise our taxes. And both can count on the fact that most citizens can’t afford to challenge the district in court. Not every father has an attorney for a son.



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