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GRCC Bay Area Houston Economic Partnership
Guidry News Forum
George Scott
News Release
Tuesday, April 22, 2014

Average property value increases for Harris County homeowners and small to medium range businesses owners that hit 16% to19% and often significantly more in major areas throughout the county are expected to produce record numbers of protests during the 2014 property tax season, according to two aggressive property tax agents who have decades of experience in the industry.

In contrast, the Houston Realtors report that home values increased 8 to 10% between the 4th quarter of 2012 to the 4th quarter of 2013, or about half of HCAD’s 2014 increase, independent analysis of the data indicates.

Most property owners will have until June 2, 2014 to file a formal protest with HCAD. The exception to that are those property owners who do not receive a notice of value from HCAD 30 days or more before June 2. In these circumstances, the deadline will be 30 days after the formal notice is provided.

“There is no question that residential property values have increased in Harris County; however, there are serious questions regarding the Harris County Appraisal District’s selective use of sales activity to justify such dramatic, one-year increases,” Patrick O’Connor, president of O’Connor & Associates says.

O’Connor and independent tax agent John Osenbaugh both predict that based upon their decades of experience following these matters that HCAD will likely confront a minimum of 400,000 protests in 2014 but that the number could easily rise to 500,000 or more once the general public focuses upon how overly aggressive HCAD has been in determining values this year.

Both agents represent homeowners and small to medium range businesses of a wide variety including commercial property owners.

Both agree that HCAD’s decision to dramatically boost property values will be a financial ‘windfall’ for tax jurisdictions who will have the luxury of obtaining cumulatively hundreds of millions of dollars in additional revenue without having to pretend they actually raised taxes. O’Connor estimates the one-year increase in property taxes for all of the hundreds of Harris County tax entities will be $1 billion, a record windfall in additional taxes in one year.

“The fact that so many of the value of homeowners have risen above the 10% annual increase for taxable purposes makes it all the more important than homeowners exercises their right to protest this year,” Osenbaugh said. “While the governments can only tax on 10% of this year’s increase, those governments will get the rest of their value in the following years.”

“Both residential and commercial properties should understand that HCAD uses a mass appraisal process to produce its values,” O’Connor said. “In the real world of HCAD, mass appraisal means massive mistakes that can serve to make a home or business owner’s property appear more valuable than it is.”

O’Connor, who also holds an MBA from the Harvard Business School, says HCAD’s mass appraisal system is too often riddled with inaccurate information regarding the subject property and comparable sales which are exacerbated by a computer valuation process which is a guess at best.

 “The notion that HCAD has reliable and accurate information on over one million homes and hundreds of thousands of commercial businesses is not credible,” O’Connor said. “The process used by HCAD to produce such huge one-year assertions of increased value is deeply flawed. Flawed processes produced unreliable, inaccurate results. This one year increase is not credible. Either HCAD was wrong last year or they are wrong this year. Either way, it undermines the credibility of their estimated values.”

Osenbaugh, who has operated his own independent company for decades representing home and business owners, says he is often “startled at the level of wrong information that HCAD has in its system that is uses to unfairly raise property values way beyond what the actual real estate market can justify.”

Osenbaugh, also a licensed real estate broker, believes HCAD has taken full advantage of a “hotter than usual overall real estate market” to unfairly and dramatically raise property values “across the board in a way that the real market will not support in neighborhood and after neighborhood throughout Harris County.”

In that regard, his independent assessment mirrors that of O’Connor.

“I have spent a full career fighting cherry-picked by a computer HCAD data that seeks to impose higher property values that simply cannot be justified,” Osenbaugh said. “Whether it involves a homeowner or a business owner, the fact of the matter is that HCAD’s records are very often wrong and it most often requires an aggressive protest to gain a fair property value.”

O’Connor has led the effort on behalf of small to medium range business and commercial owners to fight what an outside, independent expert has now labeled as an “unconstitutional and illegal” practice by HCAD to overpraise commercial property by denying the owners of such property an honest, credible assessment based upon equity.

That expert, attorney and property tax code expert Ted Whitmer, has now been retained by Harris County government to conduct a ratio study of 2014 commercial values.

“Whitmer’s findings proved beyond any doubt that HCAD has established policies and practices that have the major effect of forcing property owners to pay taxes that are higher than justified because HCAD’s computers produce predetermined values,” O’Connor said.

Osenbaugh and O’Connor both stress that HCAD has two obligations when it asserts the value of homes and businesses.

The first obligation is to establish a property’s true market value. The second, equally important burden is to value all property equitably in comparison to other property. The law mandates that a property owner can only be taxed on the lower of the two calculations, Osenbaugh notes.

“When one evaluates what HCAD has done in Harris County in 2014 by its dramatic, across the board value increases, it is hard to believe based upon past experience that home and business owners will not be the victims of significant levels of inequity,” O’Connor said.

Osenbaugh concurs that the only way for a property owner to get access to all the facts and to protect their interests in fair and equitable taxation is to protest the values that HCAD has assigned their property in 2014. “This is one of the most important times in recent years for property owners to take aggressive steps to fight these higher than justified property value increases,” he said.

“Texas law requires that home owners who protest are allowed obtain the evidence HCAD has used to defend the value for their home. In most cases, HCAD’s evidence supports a reduction in value,” according to O’Connor.

“The real estate market in Harris County is ‘hotter’ than it has been in recent years, but there is no way the magnitude of the property value increases that HCAD wants to impose on property owners in 2014 can be justified,” Osenbaugh said. “This is the year property owners need to fight back aggressively. Tables

Remembering Jim Guidry

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