Council member had a homestead exemption on his entire house, including two rental units
Investigative Report by Ken Martin
Updated Thursday, August 21, 2014 10:25am to add additional document links
In January 2002, Council Member Chris Riley bought a house at 1310 San Antonio Street in downtown Austin. For 11 years he enjoyed a homestead for the entire property—despite the fact that two upstairs units have been rented for most if not all those years.
An anonymous complaint filed with the Travis Central Appraisal District June 20 resulted in removal of the homestead exemption for the 46 percent of the property that is rented. Riley retains the right to claim 54 percent of the property for his homestead.
Yesterday Riley responded to an inquiry from The Austin Bulldog and provided a copy of an e-mail he sent to the Travis Central Appraisal District (TCAD) June 19, 2014, the day he found out about the complaint.
“I was made aware of this issue via a constituent letter received by my office on June 19, 2014,” Riley stated in his response to our inquiry. “I immediately called TCAD about it, and based on their instructions I sent the following e-mail that night.” (A copy of Riley’s e-mail received by the appraisal district is linked at the bottom of this story.)
The Travis County Tax Office billed Riley for $7,294.87 for back taxes for the tax years 2009 through 2013. Riley paid that amount August 15, said Susan Zavala, tax supervisor for property tax collections in the Travis County Tax Office.
Although Riley paid back taxes for the years 2009 through 2013, he was not billed for $1,208.21 that he would otherwise have owed for the tax years 2003 through 2008, because the law permits removal or reduction of a homestead exemption for only five years.
When asked by The Austin Bulldog if he would voluntarily pay the back taxes for the additional years, Riley stated in an e-mail, “If we can determine the right additional amount going back to when I bought the house and a process for paying it, I’ll be glad to do that.”
The Austin Bulldog provided to Riley a copy of the calculations obtained from the Travis County Tax Office that show the additional amount is $1,208.21.
The tax office requested guidance from the Travis County Attorney’s Office as to whether the additional payment can be accepted and how payment might be processed. The result was that, because the exemptions for prior years 2003-2008 legally cannot be removed, the tax office can neither bill Riley nor accept payment, said Monica Rutt, associate deputy for collections in the Travis County Tax Office.
How did this happen?
Zavala said Riley was initially billed for back taxes July 8. In response, on Riley’s behalf, tax attorney Lorri Michel of the Michel Law Firm PC called the tax office.
As a result of that call, the tax office consulted with the Travis Central Appraisal District to obtain a revised calculation of the amount of taxable property value that can be increased each year, due to a law that caps such increases at a maximum of 10 percent per year. (Taxable value is the assessed value. Market value reflects the full value assigned by the appraisal district.)
Once recalculation of the cap was accomplished, the final bill for back taxes was issued August 6.
The larger question concerns why Riley’s property was given a 100 percent homestead exemption in the first place.
Riley points out that the exemption application form contains no question or space on the form to indicate that the owner is requesting a partial homestead exemption.
“When I first moved in, I was told that the house was eligible for a regular homestead exemption, so I applied for one, and answered all questions on the application truthfully,” Riley’s June 20 e-mail to the appraisal district states. “There was, and still is, no question on the application form about allocating space to apartments. TCAD approved the exemption, and I assumed TCAD was making any necessary adjustment to account for the presence of apartments.”
Riley further noted that the online record for the property, in the space labeled “Improvement #1,” the record clearly states that the home is a “fourplex.”
“I’m sorry for any misunderstanding about the allocation of space in my house. If any back taxes are owed, please let me know. I will be glad to pay any amounts due,” Riley’s June 20 e-mail states.
Both Michele and Riley contend that the Application for Residence Homestead Exemption, Form 50-114, which is designed by the Texas Comptroller of Public Accounts, should be revised to include space to designate portions of a home that do not qualify as being part of the homestead.
The annual Statements of Financial Information that Riley filed with the Austin City Clerk for the years 2008 through 2013 indicate that he reported renting portions of his house as far back as 2008.
No public records exist to indicate whether Riley rented portions of the house in earlier years. The Austin Bulldog notified Riley that his sworn financial statements covering the years 2008 through 2013 indicated he rented portions of his home to tenants, and asked when he began renting.
Riley replied that an artist was already living in the house when he bought it. The artist stayed during renovations and was to pay rent during months in which the house had electricity and water service. He has had tenants since renovations were completed, he said.
Appraisal district actions
Riley bought the house from Jimmy Nassour January 31, 2002, according to the deed record.
He filed an application with the Travis Central Appraisal District for a homestead exemption May 13, 2003, and requested that the exemption include the prior tax year of 2002.
The appraisal district granted the homestead exemption for tax year 2003 and denied the exemption for 2002 because he did not own and occupy the property as of January 1, 2002, as required by law to qualify for a homestead exemption for a tax year.
On June 19, 2014, the appraisal district received an anonymous complaint about Riley’s homestead exemption.
The next day the district’s Exemption Department mailed a letter to Riley notifying him that his exemption for the tax years 2009 through 2013 had been reduced to 54 percent and the change would affect his tax liability for the affected years.
Chris Riley’s Sworn Financial Statements 2008-2013 (less 2012) (37 pages)
Travis County Tax Office Calculations 2002-2013 (Excel file)