Taxpayer group CUT FAT challenges local appraisals

By Katherine Eissler

High property appraisals vex Laredoans. A community not-for-profit organization doing business as Citizens United Toward Fair Assessments and Taxes (CUT FAT) is trying to better understand recent adjustments to tax appraisals made on their properties.

CUT FAT, which organized a few days after property owners got word that this year's appraisals were, in some cases, up 300 percent, has held a number of meetings to inform citizens of their rights as taxpayers.

Dr. Xavier Cantu, a family physician, is heading the organization's battle against what he feels is an economic disaster. He strongly believes that only united, informed citizens could defeat the problem by legislative and legal avenues.

According to Cantu, if enough property owners file complaints the Appraisal District will have no way to comply with the bureaucratic procedure to deal with every one of them, resulting in a proverbial wrench in the gears of the district.

If nothing is done, the effect of increases in tax rates will be felt all the way from the poor to the wealthy, Cantu said, adding that although the unemployment rate in Laredo has been low, the needle that will burst the “unemployment bubble” will be property taxes.

Employers will no longer be able to afford to remain open because they are being taxed out of business. “Multiply that by 100 small businesses in Laredo and you will see unemployment like we have never seen,” he said.

“Hearing all the horror stories of what is happening sometimes gets old, but sometimes that's what it takes to cause action,” said Cantu. “We can't let apathy get in our way.”

The deadline for filing complaints on property value increases was June 14.

The Appraisal District appears to be unfazed by the influx of protests.

“People are coming in and sitting down with staff and getting their concerns taken care of very efficiently and professionally,” said Chief Appraiser Sergio Delgado, adding that the Appraisal District usually only gets a 10 percent protest return on the appraisals they mail out.

Delgado said the taxpayers have been misinformed because the Appraisal District solely reflects the real estate market.

Property values in Laredo have steadily been on the rise, according to Delgado, so as a result, the department has had to review the market on an annual basis. What has happened, he said, is that the district has not been able to get a good feel of the market due to deficiencies in staff and equipment and the public's failure to respond to the District's request for the appropriate information about their properties. Therefore the Appraisal District has had to raise values to reflect the market, said Delgado.

Over the last year, the District has improved its system and shifted staff to make up for a lack of analysts and computer technicians. They have also been working on depreciation/ appreciation schedules over the past two years to try to make things fair and equal, said Delgado.

Schedule changes affect every home that is similar in type and construction, he said. The system mandates that the District look at individual characteristics of a property, such as add-ons, leaking roofs, or cracked slabs, to name a few.

“If one home is closer to market value than another home of the same type, then the first home will be adjusted less because it is already close to value,” Delgado said. “For people to say everyone was treated unfairly is not a fair statement to make. We are just trying to create balance, and you can't do that by imposing a ‘blanket' appraisal on homes.”

CUT FAT has cited cases in which values went up 300 percent, but Delgado said those are unique cases in which old schedules had not been updated and there is a 10 percent cap on residential property values.

“CUT FAT can't get around the law,” he said. “Some statements made by that group have been misleading, which people automatically hear and think is true.”

The Appraisal District was established by the state to ensure that people are paying their fair share in taxes, said Delgado, but that does not mean the District sets tax rates. They simply reflect the market, and people are willing to spend more for a house, which creates the market. The issue is not the market value; it is the impact that taxes will have on the community, he said.

Market prices have risen considerably, according to a June Pro 8 News report, with some homes selling for $40 thousand more than when they were purchased. The report also called high housing costs a sign of a healthy economy and a healthy market.

The District simply reflects that trend, said Delgado.

“If house values and construction costs are going up then our job is to reflect that,” he said. “The trend is not set by the appraisal district.”

During the 2003 legislative session, new laws were enacted to put more pressure on the Appraisal District to meet market value.

This series of laws requires businesses to render furniture and fixtures as taxable property. Delgado noted that there was a feeling that many people were not reporting accurate information. The law will soon be imposing penalties on those who fail to report this information correctly. Another law, extending the powers of the state comptroller, requires the District to report all data to the state, which was previously done but was not mandated. The final law in that series requires the Appraisal District to reach market value, or local value, which is within 96 percent of what the state believes the value should be in Laredo . For example, if a school district is in jeopardy of losing funds, the comptroller has the power over the District to perform a more extensive audit.

An annual audit is regularly performed, said Delgado, but if the District fails to do its job it could go into receivership and would be under the control of an independent board.

“That would mean someone from Austin would come into Laredo and tell us how to do our job, which puts pressure on us,” he said. “It's a double-edged sword for the Appraisal District; either upset the people or have the people and the state upset.”

The passing of these laws has reinforced the fact that the current process is the system they are going to use, said Delgado, adding that the extended rendition period has had an adverse effect on when the District can complete its work properly.

Joe Botello, local business owner and CUT FAT organizer, is not targeting his dissent at the Appraisal District, but at the people who will raise taxes. He believes the system is flawed and may possibly be unconstitutional.

His main concern is for the senior citizens of Laredo, who face the probability of losing their homes due to increasing tax rates.

“We didn't create this organization over this single issue; we are not going to solve it and then go away,” said Botello. “We are going to become a factor in how our officials do business.”

The city has recently informed property taxpayers of their 2003 delinquent property tax accounts in a public service announcement titled “The Price of a Civilized Society.” The City of Laredo Tax department is assessing a 15 percent penalty and interest as of July 1, in accordance with the Texas Property Tax Code. One percent interest will be added on the first of each month thereafter, and further actions against those who fail to pay their taxes include: seizure of property, issuance of tax warrants, and filing law suits for the collection of funds.

Delgado said that as people want services, monuments, entertainment, water, roads, etc., there is a fee that they have to pay to get them, and there are going to be expenditures and taxes.

The Appraisal District is trying to maximize state funding in order to relieve the burden from the taxpayers. According to Delgado, the state uses the appraisal district concept as a piece of the funding formula for schools. As long as the District is at local value -- 96 percent -- then schools will receive 100 percent of their state funding.

Texas Comptroller Carole Keeton Strayhorn is also trying to allay burden from the taxpayers by sending June sales tax allocations of $221.3 million to Texas cities, a 7.7 percent increase compared to June 2003.

As far as protesting property tax appraisals, people can fill out the forms sent along with their appraisals, but, said Delgado, “People are voicing their anger to the wrong people. They have the right to go to City Council but they won't be able to do anything.”

New higher tax appraisals are not, however, just a local problem. All over Texas there are angry taxpayers.

The focus should be in Austin, but people need to be fair to the taxing entities and to the process as well, said Delgado.

“People have to be realistic,” he said.

But CUT FAT and Cantu disagree and said governmental bodies have the power to elect or recall board members and accept or deny appraisal values, and the “question remains whether these bodies have the courage to act.”

For further information about CUT FAT, call 727-0444 or visit their web site at www.cutfat.org. To reach the WC Appraisal District, call 718-4091 or visit www.webbcad.org.