COMMON MYTHS

• You should expect to pay property taxes based on a recent purchase price or based on a perceived value of what your property would likely sell for.

• All appraisal districts are alike.• All appraisal districts are the enemy.• Lawsuits are a nasty word and should

never be considered when contesting property taxes.

DFW Tax Rates for 2015

Select Texas City Aggregate Rates

DFW Area Select Cities AggregateTax Rates for 2015

Texas Important Property Tax Dates

Appraisal Process

REAPPRAISAL

• Mass appraisal is the systematic appraisal of groups of properties as of a given date using standardized procedures and statistical testing.

• Texas Property Tax Code requires appraisal districts assign a January 1 value to all property.

• Mass appraisal provides the ability to accomplish such a large task.

• Annual reappraisal effort is where the mass appraisal process occurs.

COMMERCIAL REAPPRAISAL• Undertaken January 15th – April 15th • Land Market Areas (LMA)• Improved Market Areas (IMA)• LMA and IMA targeted for reappraisal• Insure accurate and equitable values• IMA

Office Buildings Multi-family Property (Apartment Complexes) Retail Property Industrial Property (Warehouses)

COMMERCIAL APPROACHES TO VALUE

• Mass Appraisal Records System (MARS)

• Three approaches to value Cost Approach Sales Approach Income Approach

Why Use A Tax Consultant?

Reasons To Thoroughly Evaluate Your Property Tax

Assessments

Everyone in the industry has a basic understanding of the traditional

approaches to market value. However, it’s the nuances of these techniques

and how they are utilized to formulate the most effective property tax appeal

strategy

The impact of these assumptions on the resulting value indication plays a crucial role in understanding the appraisal district’s value position. For this reason, Cantrell McCulloch obtains a digital version of the appraisal district’s commercial worksheets and exports the data to a proprietary software application for comparison to the subject’s actual operating history. The unique insight gained from this data provides a benchmark from which all negotiations begin. It not only identifies inaccuracies relative to the subject’s actual operating performance, but also allows us to seek common ground on any appraisal district assumptions deemed favorable to our client’s tax position.

Income Capitalization Approach – This is the most common valuation approach utilized by appraisal districts in a mass appraisal of multi-family properties. The basic elements of this approach include: estimating the potential gross income on a stabilized basis; estimating a proper allowance for vacancy and collection loss; estimating anticipated fixed and variable operating expenses (including a reserve for replacement of depreciable components); and capitalizing the income stream into an indication of value by using market-derived capitalization rates.

The data necessary to complete the preceding steps is delineated on the appraisal district’s commercial worksheet as follows: • Potential Gross Income (PGI)• Vacancy Allowance (%)• Operating Expense Ratio (%)• Net Operating Income (NOI)• Capitalization Rate (OAR) 

Cost Approach – Although utilized exclusively during the construction phase of a new apartment project, appraisal districts become less reliant on the cost approach upon completion and stabilization of the property.  

• Sales Comparison Approach– Very seldom used in our recent multifamily cycle.

• Uniform and Equal Protest – Allows for value corrections to be made “if the appraised value of the property exceeds the median appraised value of a reasonable number of comparable properties appropriately adjusted.” When a recent sale has occurred, this often is the only line of defense in the appeal process. If a conflict exists between taxation at market value and equal and uniform taxation, equal and uniform taxation prevails. The uniform and equal protest puts taxpayers on equal footing regardless of market value or sale price.

Remedy forUnequalAppraisal

Remedy for Unequal AppraisalBy: Robert A. McCulloch, CMI

Sec. 42.26. Remedy for Unequal Appraisal

Recent Apartment Unequal Appraisal Protest Results

Benefits of Using

a Consultant

Benefits of Using a Consultant

• Timing of presentation to Appraisal District.• Comparing Final values versus Notice values.• Understanding of how the process works and knowing

the Appraisers on more of a personal level.• Working with Senior Appraisers that have more decision

making authority versus less experienced Appraisers.

3 Steps to theAppeal Process

3 Steps to the Appeal Process1. Informal Hearing. Where Consultants attempt to settle “informally”.

Most appraisal districts make a good faith effort to reduce many protests at the informal meeting. This is successful 90% +/- of the time. Approximate timeframe: May 1 – July 1.

2. Formally. Through the Appraisal Review Board (ARB). Typically the more respected consultants have hearing dates that are usually later in the process allowing them to compare “settled” values vs. comparing to “notice” vales. Results can vary depending on the board members at your hearing. Approximate timeframe: July 1 – July 15.

3(a) Judicially. With a lawsuit. You must file within 60 days of receipt of ARB value. Appraisal Districts are highly reluctant to take a market value or an equity case to court. Almost all cases that end up in court are a result of a law or a procedural situation. Success rate is high when settling a value during this process. Approximate timeframe: October – January.

3(b)Arbitration. Must file within 45 days of receipt of ARB value and overall value must be less than $3 million. Results are binding and if taxpayer is successful, minimal cost involved. This appeal process has not been used often but with recent changes to the law, will become more prevalent.

Property Tax Binding Arbitration for Property Owners