Point Austin: The Appraisal Scam ... Updated
TCAD disputes the city's numbers, but the challenge marches on
The Travis Central Appraisal District has fired back.
In a report titled "Commercial Valuation Analysis" (released May 26), TCAD analysts have responded to the report ("An Analysis of TCAD's Commercial Valuations for City of Austin") prepared for the city by consultants George Gau of UT-Austin's Dept. of Finance and Robert S. Radebaugh of the Aegis Group. The TCAD analysis is not exactly laudatory; it sharply questions the report's purpose and design, its methods, and even its arithmetic. "After reviewing the analysis," write TCAD Chief Appraiser Marya Crigler and her colleagues, "it became apparent that several items in the statistical analysis were vague, potentially misrepresented, and painted a picture that wasn't what was being described by the Council, County Commissioner [Brigid Shea], and Mayor [Steve Adler]."
As Crigler, et al., see it, the numbers flying around speculating about the extent of commercial "undervaluations" – ranging from 40% overall to more than 90% for unimproved land – are way off the mark, and may be encouraging unrealistic expectations about the amount of untaxed commercial value just waiting to be accrued (thereby lightening the load on residential homesteads). Based on their review – admittedly, pending access to the consultants' data on sales prices – they say they've winnowed the apparent "undervaluations" to about 16%, and that by accounting for the apparent arithmetical problems, the differences shrink to about 10.5%. Crigler told me Wednesday, "That's within the standards allowed for commercial appraisals."
Not Plug 'n' Play
Since I was among those welcoming the apparent discrepancies in Travis County commercial valuations identified in the Gau/Radebaugh report ("Point Austin: The Appraisal Scam," May 22), it's only fair to acknowledge that the TCAD response (fairly blistering, in its bureaucratic way) has made me much more cautious about just how much additional value will be revealed by the city's current challenge petition, and whether – as former state Rep. Glen Maxey liked to say – "the squeeze will be worth the juice." The Appraisal Review Board is scheduled to hear the challenge on June 22, and Crigler says, "We've never had one before, so I don't know how long it will take."
For his part, Mayor Adler is optimistic, saying that once the city and TCAD begin actually "sharing the data" (instead of just reading each other's summary reports), there will be meeting in the middle. He's convinced that the challenge process can be completed without disrupting the calendar for adopting the city budget and (hand-in-hand) the property tax rate; several of the smaller Travis County jurisdictions that depend for their budgets on a TCAD-certified property tax roll have expressed nervousness that the challenge will delay certification. Earlier this week Adler told me, "Because we're doing this together [with TCAD], and not in an adversarial way, my hope and expectation is that it can be done within the existing budget calendar." (See also "This Is the Box We're In," p.22.)
Crigler was somewhat less optimistic. She said she couldn't speak for the ability of the taxing jurisdictions to adjust to an accelerated budget timeline, but she anticipates that if the challenge proceeds (the city could decide to withdraw at some point), it would delay certification from the standard mid-July at least to late August. Since Austin (for example) is generally doing final budget prep in late August (with formal approval in September), it certainly sounds like a potential rush job. As for the mayor's corollary speculation that given the actual data, TCAD would simply have to plug updated numbers into its existing valuation models and – voilá – print out the answers, Crigler said: "We will try to work as cooperatively as possible, but ... commercial appraisal is extremely complex, and it's not as simple as an easy plug-and-play. ... One size doesn't fit all."
Pennies From Heaven
I also spoke briefly with the city's consultants, Gau and Radebaugh. Alas, the city's attorneys had beat me to it, and they said they'd been advised not to comment on the pending matter just yet, in particular not to make any comments on TCAD's response to their report. And neither felt they had any basis on which to speculate how long the challenge process might take.
That's a useful reminder that once the attorneys are involved, looming is at least the possibility that matters could proceed beyond the Appraisal Review Board into litigation, and Adler told the Statesman last week that he favored legal action if necessary. That would also mean, Crigler said, that TCAD would have to certify non-disputed valuations by its existing calculations, and disputed valuations by either last year's values or this year's – whichever is lower. The local commercial real estate market did not exactly freeze in 2014. All in all, I suspect it will be some time before we see the return from commercial "undervaluations" raining down on local taxpayers like manna from heaven.
Posted with this column are the Gau/Radebaugh report ("Analysis of TCAD Commercial Valuations for City of Austin," May 11), and TCAD's response ("Commercial Valuation Analysis," May 26).