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City Hopes Lawsuit Will Effect Change to State's Property Appraisal System

Veronica Zaragovia/KUT News
Austin Mayor Steve Adler, flanked by council members and county officials, announced today a lawsuit arguing that TCAD has consistently undervalued Austin's vacant and commercial properties.

The City of Austin filed a lawsuit Monday against the Travis Central Appraisal District, arguing that the agency significantly undervalued Austin’s commercial and vacant properties in its assessments for the past several years. Mayor Steve Adler announced the suit today at a press conference, where he appeared along with Travis Chief Appraiser MaryaCrigler of TCAD. 

The mayor emphasized that, although the suit names TCAD as a defendant (along with commercial and vacant property owners in Austin, and comptroller Glenn Hegar), the agency and the city are actually working together in this, hoping to effect a larger change to the state’s policy that prohibits the use of commercial real estate sale prices in appraisals.

For appraisers, not having access to the actual selling prices of buildings inhibits their ability to accurately assign values to those buildings.

"It's like asking us to do our job with one hand tied behind our back," Crigler says. "We need full sale disclosure on all property categories."

The best indicator of market value, she says, is what properties are selling for. But Texas, along with a few other states, does not require that the sale prices of commercial spaces be released publicly. The lawsuit argues that the current statewide policy toward disclosure makes it significantly difficult for the Appraisal District to accurately assess the value of commercial properties. 

A report released in May showed that commercial properties in Austin were undervalued by an average of 47 percent between 2012 and 2014. By undervaluing commercial and vacant properties, the tax burden is shifted to other property owners, like home- and residential property owners.

Part of the reason a state would not require sales price information to be disclosed has to do with people’s fear that if prices were made public, there’d be a tax imposed on real estate transactions, says Dick Lavine of the Center for Public Policy Priorities.

This lawsuit is just the start to the dialogue. It could be extended to the next legislative session.