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UNITED INVESTORS REALTY TRUST, Appellee On Appeal from the 80th District Court
Harris County, Texas
Trial Court Cause No. 98-43435
O P I N I O N
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Then, pursuant to section 42.212 of the Tax Code, United Investors filed a timely appeal to the district court.3 United Investors argued to the district court that it was entitled to relief for the 1998 tax year pursuant to section 42.26(d) of the Tax Code because HCAD’s appraised value for Mason Park Centre was unequal to the appraised values of several comparable properties.
Section 42.26(d), which became effective on January 1, 1998, provides that "The district court shall grant relief on the ground that a property is appraised unequally if the appraised value of the property exceeds the median appraised value of a reasonable number of comparable properties appropriately adjusted." TEX. TAX CODE ANN. § 42.26(d) (Vernon Supp. 2000).
At trial, United Investors called Ron Little, who was qualified as an expert valuation witness. He testified that HCAD appraised Mason Park Centre at $85.13 per square foot. In contrast, the median appraised value of a reasonable number of comparable properties 4 Little testified that, in order to appropriately adjust the properties’ appraised values, he made adjustments downward and upward based on location, closeness to traffic volume, age, depreciation from cost schedules, and access to the shopping center. For instance, if the comparable property was older than the subject property, Little would make an upward adjustment to the comparable property’s appraised value, to compensate for the comparable property’s age. Little determined what would be a reasonable number of comparable properties, in this case 7, based on characteristics which would tend to most influence value, like location, age, and physical characteristics.
5 The trial court held as much in its written conclusions of law. It stated, "The methodology employed by Plaintiff results in a tax value that is not based upon or [sic] has any relationship to the reasonable market value of the subject property." However, we interpret this to mean that the tax value the court determined United Investors should pay is at a rate which is less than market value.
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appropriately adjusted4 was $62.71 per square foot. He argued that this discrepancy entitled United Investors to relief under section 42.26(d). By multiplying $62.71 by the square feet of Mason Park Centre, Little determined that the appropriate appraised value for the property in question in the 1998 tax year was $10,239,163.00.
Little also testified that he did not make a determination of Mason Park Centre’s market value, did not consider market value, and did not compare Mason Park Centre’s market value to the market value of any of its comparables. In short, in his analysis, Little did not make any independent findings of market value.5 Nevertheless, Little did testify that he compared appraised values as prepared by HCAD. The Tax Code requires that "all taxable property is appraised at its market value as of January 1 [of the tax year.]" TEX. TAX CODE ANN. § 23.01(a)
(Vernon Supp. 2000). Thus, when Little compared appraised values, he compared, HCAD’s determination of market value.
The district court determined that United Investors’ interpretation and application of section 42.26(d) was correct, and rendered judgment in favor of United Investors.