Travis Central Appraisal District

Homestead Exemptions a Tax Loophole

Appraisal district processing relies mostly
on homeowners statements, not scrutiny

Investigative Report by Ken Martin
Part 2 of a series
Data Research by Brandon Roberts
© The Austin Bulldog 2014
Posted Thursday February 27, 2014 7:52pm

Two hundred eighty eight thousand dollars.

And counting.

That’s how much homeowners have been charged for back taxes so far as a result of The Austin Bulldog’s investigation of improperly granted residence homestead exemptions.

As important as it is to collect these back taxes, in the long run it may be more important to staunch the bleeding of tax dollars that would’ve gone on unabated had it not been for this investigation.

This investigation has spurred numerous actions by the Travis Central Appraisal District to validate existing homestead exemptions, but numerous significant barriers exist that prevent more effective screening of new applications. (More about that later.)

Homestead residence exemptions lower the taxable value of a home. (The amount of exemptions granted by local taxing entities were published in Part 1 of this series on December 20.) When improperly granted, these exemptions cause the homeowner to be under-billed for property taxes.

Texas law entitles homeowners to have a residence homestead exemption on only one home per tax year. The exemption is authorized for the home that is the owner’s primary residence on January 1.

Although nearly $300,000 has so far been billed for back taxes owed by homeowners who have managed to obtain more than one exemption, correcting the mistakes exposed by this investigation is very much still a work in progress for the Travis Central Appraisal District and Travis County Tax Collector’s office.

As reported by The Austin Bulldog December 20, 2013, several hundred homeowners have obtained homestead tax exemptions on more than one residence—and thus avoided paying the full amount of property taxes that would otherwise be due.

Some 165 of these property owners had more than one home located in Travis County that enjoyed a tax exemption. Additional taxes billed to these homeowners as a result of this investigation totals $143,716 to date. (For details, click on: Homeowners Who May Have an Improper Residence Tax Exemption in Travis County.) As indicated by the questions inserted in “Remarks” (Column Z of this database), not all of these improper exemptions have been removed. Even in those cases where improper exemptions have been removed, it appears that not every homeowner was billed for the correct number of years for back taxes.

Another 120 homeowners dodged taxes by obtaining exemptions in both Travis County and another Texas county. (For details, click on: Homeowners Who Had an Improper Residence Homestead Exemption in Travis County or Another County.) The Travis Central Appraisal District eventually removed the inappropriate exemptions and initiated billing for back taxes totaling $144,367 for these properties.

Appraisal District corrective action

Homestead Exemptions Rife With Abuse

Honor system applications and inadequate scrutiny
for hundreds of homeowners not billed for full taxes

Investigative Report by Ken Martin
Part 1 of a series
Data Research by Brandon Roberts
© The Austin Bulldog 2013
Posted Friday, December 20, 20135:48am

Pablo Ornelas Jr. is being hit this month with a sudden increase in property taxes totaling more than $18,000 that he must pay by January 31 or face stiff penalties and steep interest charges.

Still, it’s hard to complain when he enjoyed an improper tax break for 15 years on one of the homes he owns.

For Ornelas, it’s actually good news that the law restricts the collection of back taxes to just five of those 15 years (2008-2012).

While that adds up to a lot of money, he will not have to repay the additional $21,000 in taxes he was under-billed for in tax years 1998 through 2007, according to calculations provided by Renea Deckard, associate deputy for collections in the Travis County Tax Office.

The bottom line is that a single oversight by the Appraisal District has so far cost taxing entities some $39,000 in revenue that was due on a single house. As stated above, Ornelas is being billed for only $18,000 (46 percent) of that amount.

If not for this investigation—which triggered the Appraisal District’s action to initiate collection of back taxes from Ornelas, and upped the taxes for 2013 as well—this hemorrhage would have continued for the foreseeable future.

Not an isolated case

The Board of Directors of the Travis Central Appraisal District last night picked a new chief appraiser and adopted a new policy to end the longstanding practice of suppressing public records in TCAD’s online searchable appraisal roll for anyone who asked.

“The board opted for maximum transparency,” Board Chairman Dick Lavine said today, in a follow-up interview. “It’s the appraisal district’s job to evaluate property and its records should be open to anyone to see how their own property and any other property is valued for tax purposes.”

The Austin Bulldog’s November 18 investigative report included spreadsheets listing nearly 1,400 properties that have been purged from the TCAD website at the request of owners who do not appear to qualify for confidentiality. Some two dozen of these properties are owned by businesses and 34 are commercial properties. The Austin Bulldog obtained the data through a Texas Public Information Act request.

By the end of this month the property owners listed in the spreadsheet should receive a letter inviting them to apply for confidentiality under Tax Code Section 20.025. Property owners will have until mid-January to reply. Those who do not apply or do not qualify will have their property records integrated into the searchable appraisal roll by the end of January.

Tax Code Section 20.025 offers to protect certain home address information for judges, police, victims of family violence and others who apply and qualify for confidentiality. Appraisal records for those who qualify under Section 20.025 are not listed on the TCAD website and will not be provided in response to a request filed under the Texas Public Information Act.

Billionaire Michael Dell, actress Sandra Bullock, U.S. Senator John Cornyn, and Tax Assessor-Collector Nelda Wells Spears are among the property owners whose records have been suppressed on the website but who do not qualify for confidentiality.

Investigative Report by Ken Martin
© The Austin Bulldog 2011

Billionaire Michael Dell does it. Actress Sandra Bullock does it. U.S. Senator John Cornyn does it. And so do a large number of high-wealth individuals, trust funds, and ordinary homeowners. Even Tax Assessor-Collector Nelda Wells Spears does it.

These individuals—plus some two-dozen business organizations—have taken advantage of a standing offer available to any Travis County property owner to have their appraisal records removed from the Travis Central Appraisal District’s online searchable appraisal roll.Actually, the standing offer, posted in the agency’s Frequently Asked Questions, offers only to remove the names of property owners. But in actual practice the entire record is removed.

While Texas Law provides confidentiality of the home addresses for specified individuals, none of these suppressed records fit the criteria. These public records are being hidden, without legal justification, from a public online database. (This paragraph added at 4pm November 18.)

Nearly 1,400 records of properties located in Travis County have been purged from the website for owners who do not qualify for confidentiality. While the numbers of records being suppressed now make up only a tiny fraction of the records maintained by the agency, the numbers would no doubt be far higher if more property owners were aware of this option.

Were enough people to opt for the same privilege, it would seriously undermine the usefulness of the appraisal district’s website.

The searchable records on appraisal district websites are critical resources for property owners to use in finding comparable properties when protesting the valuations set by appraisal districts. The work of fee appraisers, mortgage companies, real estate companies, and tax agents is also impeded when public records are suppressed.

Dan Birchman, owner and senior appraiser for BAS/Austin Appraiser, said he has been doing appraisals in Austin since 1983. The company provides a variety of appraisal services in seven Central Texas counties.

“Everyone doing appraisals has learned pretty much to use Travis Central Appraisal District or other appraisal district websites to confirm the owner, legal description and address, and determine which lot it is. I do that online. I use it as a preliminary source of data to start the research,” Birchman said.

“I happen to value privacy from a personal standpoint,” he said, “but we would prefer to have easier and more accurate access to information.”

Dell Inc. Chairman and CEO Michael Dell, who clocks in as the 18th richest American on the Forbes 400 list, and wife Susan Dell have 18 properties valued at a total of $29.5 million that do not appear on the TCAD website.

6D Ranch Ltd., a Dell-controlled entity, owns another eight properties valued at a total of $81.5 million, that are not listed on the searchable appraisal roll.

Actress Bullock has starred in dozens of movies including the popular Speed and Miss Congeniality series, The Proposal, and the locally shot Hope Floats. She won a Best-Actress Oscar in 2010 for her performance in The Blind Side. Bullock owns a $1.67 million home located on Spyglass Drive, near the Barton Creek Greenbelt Trail.

Senator Cornyn, when not attending to the demanding duties of a high official in the nation’s capital, and here enjoying a respite in our own state capital, can stay in a cozy condominium that he owns in the upscale Austonian high-rise at Second and Congress. You won’t find that property listed on the TCAD website.

There is no provision in law for confidentiality of appraisal records based on holding elective office. The appraisal records for most every other public official checked in this project, except for Spears, were available online.

Longtime Travis County Tax Assessor-Collector Spears, who also happens to be a member of the Board of Directors of the Travis Central Appraisal District, owns a house on Amaranth Lane in northeast Austin that is not listed on the publicly accessible website.

In fact, the appraisal records for 34 commercial properties have been purged from the website, including apartments, industrial property, offices, and retail properties. Eleven of those properties are owned by businesses, three are held by trustees, the rest are owned by individuals.

Dozens of doctors, lawyers, and investors, as well as many hundreds of other property owners, also have their appraisal records suppressed on the TCAD website.
The Austin Bulldog obtained a spreadsheet listing all appraisal records suppressed by TCAD through an open records request. To access a spreadsheet listing these suppressed properties:

Sorted by owner’s names, click here.

Sorted by property type, click here.

Sorted by market value, click here.

In a phone interview yesterday, TCAD Chief Appraiser Patrick Brown said the policy of suppressing appraisal records was established by his predecessor, Art Cory. Brown, who started as chief appraiser January 1, 2008, and who will be leaving the job in mid-January, said he has not been intimately involved in carrying out the policy of suppressing appraisal records on the TCAD website. He said he has talked to only one property owner who wanted to have this done.

“My only interaction with this in last four years was a gentlemen who came in and asked that his property be withheld from the Internet. I wasn't aware of our policy. ... He said he had served a prison term and he was concerned. That's been my only interaction. I did not suppress his records.”

Brown said he has not talked with any tax agents or other property owners who wanted to withhold records from the website. The suppression process is normally initiated when property owners submit a request that goes to the agency’s records management officer. An e-mail link and mailing address are provided in the website’s Frequently Asked Questions (See: “How do I remove my name from the TCAD website?)

What happens if TCAD receives hundreds, or even thousands, more requests to suppress records on the website? “I think ultimately in the big scheme of almost 400,000 parcels, we would have to look into it,” Brown said.

Asked why website records are being suppressed for commercial properties and for other properties owned by businesses, Brown said, “I cannot answer that. In my opinion that doesn't make any sense. It would be my recommendation to the board that we not do that.”

Brown agreed it would be helpful for TCAD to post a disclaimer on the TCAD website’s searchable appraisal roll to state the reasons that the records listed there are not complete.

Brown noted that some rural appraisal districts do not have websites and added, “I would remind you that that a public information request for the appraisal roll, or access to the records of the appraisal district, is still available. To my knowledge, we are not in violation of the Public Information Act but there is a question of what one can expect to get on our website.

“We want to be transparent and provide as much information as we can, so we need to look at our policy on publishing information on our website, and I thank you for bringing it to my attention.”

As a result of the interview, Brown said he will post an agenda item for Monday’s TCAD Board of Director’s meeting to discuss whether the policy of suppressing records on the website needs to be changed.