- Photo illustration by Chuck Kerr
But now they might be about to lose again. And it could also impact ordinary taxpayers in Texas’ most populated counties.
On Wednesday, the Texas Supreme Court heard oral arguments in Valero Refining-Texas L.P. vs. Galveston Central Appraisal District. The San Antonio-based oil conglomerate is seeking to overturn a lower court’s decision in a drawn-out court fight that started five years ago.
In 2011, GCAD, during its annual property-tax evaluation, appraised Valero’s Texas City refinery at nearly $1.05 billion. Valero responded by protesting the evaluation in front of GCAD’s internal appraisal review board and then took GCAD to the 56th Judicial District Court jury in Galveston.
In February 2013, after a four-hour deliberation, the state district court jury ruled that Valero’s complex commercial property had been unequally appraised under the state’s dizzying equal-and-uniform law and reduced the refinery’s value by $189.38 million. As a result, the Texas City school district would be forced to repay $2.45 million, Galveston County $1.16 million, Texas City $805,000 and College of the Mainland $439,000.
GCAD appealed the decision to the Fourteenth Court of Appeals in Houston, and in March 2015, the appellate court reversed the trial court’s decision and remanded the case for a new trial. However, the appellate court stopped short of issuing a judgment, which opened the door for Valero to file a petition for review with the state’s high court in Austin.
In September, the Texas Supreme Court agreed to hear the dispute, leading to Wednesday’s oral arguments that centered on the application of the equal-and-uniform (often called equity) law during mass appraisal proceedings. According to Texas Supreme Court records, another court case event has yet to be scheduled in Valero Refining vs. GCAD.
The equal-and-uniform provision in the Texas state tax code has allowed owners of some of the state’s priciest commercial properties to score huge discounts on their tax bills.
The statute forces appraisal districts to “appropriately adjust” a property’s value based on comparable properties. When there’s not a readily available comparable property (which is often the case with refineries and specialty office towers), the legal standard with the vague law has been to side with powerful property owners and their hired-gun experts.
The result: millions lost to school districts, hospital districts and city workers such as firefighters. In the San Antonio area, following successful protests from commercial property owners, $19 billion of taxable value was deleted from the local tax base in 2015, according to the Bexar County Appraisal District.
In order to try and adjust, appraisal districts in Texas’ major metropolitan areas have shifted some of the burden to everyday residential property owners in the form of higher values, which, of course, leads to a heftier property-tax bill.
If the Texas Supreme Court overturns the 14th Court of Appeals decision and sides with Valero, appraisal districts fear that the already wide-open floodgates might as well be like ditching flood protection altogether.
In September, while reporting on the dark-store theory, a new tax avoidance strategy that’s supported by the equal-and-uniform provision, Mary Kieke, BCAD deputy chief appraiser, felt as if there’s no end to the manipulation of equal and uniform, which is pretty much super glued into the Texas Constitution.
“It’s taking a quantum leap into worseness,” said Kieke.