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Changes to the home value appraisal process approved by the Tarrant Appraisal District this week may violate the state tax code, according to Texas Sen. Paul Bettencourt, a Houston area Republican who sponsored bills in the 2023 legislative session that created $18 billion in tax relief.
“Tarrant Appraisal District may not pass a resolution and change the property tax code in the state, that is the legislature’s responsibility,” he said in a statement to the Star-Telegram. “The Chief Appraiser must apply the property tax code fairly, as written, in Tarrant County just as the other 253 counties.”
The nine-year state senator from Houston served as Harris County’s tax assessor-collector from 1998 to 2008.
The changes approved by the TAD Board of Directors on Monday include recalculating appraisals every other year, instead of annually, and a freeze on appraisals for 2025. The board also approved a 5% “threshold” to market value increases on residential property, putting the onus on TAD to provide “clear and convincing evidence” to support an increase higher than 5%.
Section 23.01 of the Texas tax code states that “all taxable property is appraised at its market value as of January 1.” Elsewhere, the code states that “market value” means the price the property would sell for “under prevailing market conditions.”
Data from the Texas Real Estate Center at Texas A&M show that home prices in Tarrant County rose steadily under 10% annually from 2010 to 2019. Then in 2020, they increased 17.9% from the previous year. They were up 14.4% the next year, but slightly declined in 2022 as mortgage interest rates increased and cooled the housing market.
The three newly elected TAD board members campaigned on and fought Monday for stricter limitations — appraisals every three years and lowering the Legislature’s 10% annual cap on appraisal increases for tax purposes to 5% — but the initiatives ultimately failed.
The cap is designed to protect homeowners from big tax increases at a time of soaring property values.
Questions of legality plagued the campaign promises from the beginning. Chief Appraiser Joe Don Bobbitt told the Star-Telegram in May that capping annual appraisal increases for tax purposes at 5% would violate Texas law.
Bobbitt said Thursday that everything was done within the bounds of the tax code. That’s why the language was changed to “threshold” in the motion approved Monday, he said in a phone interview.
“What they instructed me to do with the reappraisal plan, as far as our interpretation, is all within the law,” Bobbitt said.
Bobbitt will use the approved changes as guidance for the annual reappraisal plan, which the board will vote on at its next meeting in August.
TAD Board of Directors Chairman Vince Puente said in an emailed statement that the changes are not an attempt to change the tax code, but rather “just clarification” for the chief appraiser on the board’s expectations with regard to market value increases.
Elected board member Matt Bryant said in an emailed statement that he is a fan of Bettencourt and appreciates what he has done to bring Texans property tax relief, but added that he believes Monday’s changes all had solid legal foundations.
“Based on legal advice, as well as a review of the tax code, nothing we passed on Monday violates Texas law or is prohibited by the tax code,” he said.
Appointed board member Rich DeOtte said he believes Bettencourt is correct that TAD cannot change the tax code, but said the board did not attempt to do so.
“I believe the Tarrant Appraisal District Board was careful to follow the law and the property tax code in all of the reform actions it took on Monday to benefit the property taxpayer,” he said.
Fellow appointed member Gloria Peña gave a similar statement citing the board’s work with its legal counsel to ensure the reforms do not violate the tax code.
The Star-Telegram also reached out to the other five members of the TAD Board of Directors. None immediately responded to a request for comment.
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The 5% threshold that the board approved unanimously likely isn’t illegal, but it is “trying to push the boundaries of what’s allowed,” according to Ryan Ray, a Crowley-based property tax consultant.
“Whether or not they’re allowed to do that, I don’t know, quite honestly, at this point, because it’s something that no one has ever done,” Ray said. “My sense is that these are things that are in the legislative purview. So they’re kind of trying to take over for the Legislature and it’s probably outside the scope of their authority to do that. But again, these are kind of untested things.”
The threshold does not apply to what is known as the homestead capped value, or the amount on which a residential property in which the owner resides is taxed, but to the market value, Bobbitt clarified in Monday’s session.
Rather than a hard cap, a threshold compels TAD to clearly prove that a home’s value has increased more than 5%.
TAD has what Dallas-based attorney John Brusniak described as the “impossible job” of appraising all the properties in a county as big as Tarrant. So, like other appraisal districts, TAD uses a mass appraisal system to estimate a property’s value based on others in the area.
“They will get as much sales data as they can on all the sales that happen in Tarrant County, and then break them down into groupings of similar properties, they throw the groups individually into a blender and homogenize the numbers,” he said.
Toss in some basic details of the individual house, like number of bedrooms and square footage, and the algorithm gives appraisers an approximate value.
“That’s how you get lots of properties that are overvalued,” Brusniak said.
To go over the 5% threshold, Chief Appraiser Bobbitt will have to prove each home’s value individually.
“I can’t even imagine how he’s going to do that,” Brusniak said, adding that he believes market values will largely be appraised within this 5% threshold.
As for the issue of the frequency of reappraisals, Texas law is somewhat ambiguous. Section 23.01(a) of the tax code states that “all taxable property is appraised at its market value as of January 1,” but does not specify that it must be done annually. Opponents of the move away from annual reappraisals took this statute to support their argument.
However, section 25.18 of the tax code states that a central appraisal district’s reappraisal plan “shall provide for the following reappraisal activities for all real and personal property in the district at least once every three years.”
“Those are the sections of the code that are in conflict with each other,” said Fort Worth-based property tax consultant and real estate broker Chandler Crouch.
Crouch pointed to other counties that already reappraise every other year as precedent. Parker County, for example, reappraises biennially every odd year .
“So we don’t have to debate this. It’s already figured out somehow,” he said.
Ray and Crouch, the tax consultants, said the freeze on reappraisals for 2025 might be on dicey legal ground, but attorney Brusniak did not agree.
“Nothing inappropriate with that, because as long as they’re reappraising once every three years, they’re OK,” Brusniak said.
All three, however, agreed that the freeze could cause problems in a number of ways, such as shifting more of the tax burden on taxpayers who aren’t homeowners by causing taxing entities to raise tax rates, according to Ray.
It could also tamper with TAD’s ability to pass the Texas Comptroller’s biennial evaluations that assess school funding distribution and appraisal district standards and practices .
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