MESSAGES --TAX PROTECTION FUND
THE
ASSOCIATION PRESIDENTS INITIAL MESSAGE ON THE NEED FOR A TAX
PROTECTION FUND
The Association is asking for
your financial contribution to the PKLOA Tax Relief Legal Fund. For the
past six months our Tax Committee has been reviewing Palo Pinto
Appraisal District practices and benchmarking their practices against
other Appraisal Districts in surrounding Counties. It is the opinion of
the PKLA Board, tax professionals and legal counsel that the PPAD has
been using the wrong appraisal methodology to assess our BRA land
values for tax purposes. Land Values have been inflated some 100 to 200
% and could increase more if the current appraisal method is continued.
To date, the PPAD has refused to acknowledge their flawed methodology.
Time is of the essence for all 1600 BRA
Lessees to unite their
collective efforts to achieve the following goal:
Demand that the PPAD use the proper
methodology to value our BRA
Land or pursue the matter through litigation as a Class Group.
Understand that BRA Lease Rates are tied
to the escalating land
values assessed by the PPAD. This means that your BRA Lease rate will
more than Double, if and when the BRA Board uses the 2004 Land Values
assessments of the PPAD. This escalation would continue if the PPAD
continues its erroneous taxing methodology.
It’s time that BRA Lessees unite their
efforts, and quit negotiating
as individuals with the PPAD, and use their financial group strength.
Your check should be made out to the PKLOA Tax Legal Fund and sent to:
Possum Kingdom Lessee & Owners
Association
P.O. Box 492
Graford, Texas 76449
STATUS REPORTED IN THE ASSOCIATION
NOVEMBER 2007 NEWSLETTER
The
case is progressing.
Donna Rhodes, chief appraiser, deposition has been taken. A new
court date is
pending.
STATUS
REPORTED 23 JUNE 2007
AT
ASSOCIATION ANNUAL M,EMBERSHIP MEETING
A status report was made
by
Scott Wheatley
and Greg Fitzgerald. Approximately five lawsuits have been
consolidated into
one case which is set for trial on November 12, 2007. A
deposition of Donna
Rhoades will be taken next week. Both Mr. Wheatley and Mr.
Fitzgerald expect
an appeal to the Court of Appeals by the losing party at the trial
level.
SOME BASIC CONCERNS:
Taxation of Land Values. The
Appraisal District has for a number of
years been taxing the lessees the value of the real estate. The
Brazos River Authority (BRA)is a state
chartered and state sanctioned entity, and is therefore, exempt from
the
payment of ad valorem taxes on real estate owned. As
a result, the Texas Tax Code authorizes the Appraisal District
to list the lessees of the subject exempt properties on the tax roles
as the
responsible parties for payment of the taxes on the property. It
is the Association’s position that since
the real property is tax exempt, the lessees are only responsible for
the
payment of taxes which may be attributed to their respective leasehold
estates.
Texas law provides that “ so long as the property is exempt in the
hands of its
owner (in this case the BRA), a lessee should only be taxed on its
possessory
interest,.i.e. the leasehold estate”.
Gables Realty Limited Partnership v.Travis Central Appraisal
District,81
S.W.3d 869,873 (Tex.App.-Austin 2002).
However, it appears that in many instances the Appraisal
District has
been taxing the lessees as though they are the owners of the subject
real
property rather than as lease holders who merely have a possessory
interest in
the real property.
Taxation of “Use” Values. It also
appears , based on review of certain
valuation assessments made by the Appraisal District, that lessees are
being
taxed for the “use value” of the property, rather than the fair market
value
based upon an evaluation of the assets located on the property. An example of the “use value” assessment
occurs when the county appraisal district imposes a tax upon a lessee
who has
the right to use, only through a ground lease agreement, a vacant lot. Technically, the vacant lot has no tax value
to the lessee, although a lessee paid for certain rights in the lot
pursuant to
a transfer or assignment of a lease, in effect purchasing the right to
use the
property. Clearly, a vacant lot has no
fair market value to the lessee if the fair market value is assessed
only on
the existence of tangible property located on the real estate.
Given
the assumption that these Appraisal Districts has no right to tax the
real
estate value to the lessees because there is no title ownership (the
real
estate being owned by the BRA), it is the Associations’ position that a
lessee
who purchases the right to use a vacant lot should not be taxed.
Inflated Valuation Assessments. Finally, it
appears that in many instances
the appraised values being assessed by the Appraisal District are
inflated. Of the three disputes the
lessees may have with the respect to the Appraisal District
assessments, this
third issue, being a valuation assessment on the improvements, is
largely
dependant upon the particular facts relating to specific property. The valuation assessment will depend in
large part upon the lease terms and improvements relating to the
subject
properties.
The
foregoing information is furnished to assist you with your evaluation
of the
Appraisal Districts appraised value of your property.
No opinion is made as to whether a protest is warranted in your
particular case. The Association
strongly encourages each of its members to investigate the appraised
value
attributed by the Appraisal District and to make their own
determination of
whether a protest is warranted.
11/9/2007
kwm
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