Five local government agencies collecting property taxes will have to refund taxes already paid, plus interest

What’s the true value of acreage used as a landfill?

That was the basis for three lawsuits filed against the Travis Central Appraisal District (TCAD) by Texas Disposal Systems Landfill Inc.

The first of those lawsuits (Cause No. D-1-GN-09-003040) was filed way back in 2009 and recently settled at an estimated cost to taxpayers of nearly $1 million.

The lawsuit protested the valuation Travis Central Appraisal District (TCAD) had assigned to 345 acres of landfill for tax years 2009, 2010, 2011, and 2013.

Austin attorney Lorri Michel of Austin-based Michel Gray LLP represented the plaintiff and brought the matter to a close June 6, 2019, with a final judgment.

“This was an equal and uniform case in which TCAD had unequally appraised our landfill in comparison to other landfills,” Michel told The Austin Bulldog.

When the parties announced ready for trial June 3, instead of proceeding with voir dire to select a jury, TCAD’s attorneys stipulated to appraised values for tax years 2009, 2010, 2011 and 2013 based on what the expert witnesses for Texas Disposal Systems Landfill would have testified the land was worth, Michel said.

TCAD was represented by attorneys Karen Evertson Kocks and Mary Sanchez of the Austin-based firm Evertson & Sanchez PC.

Big refunds ahead

Local government agencies that derive tax revenue from the landfill include Austin Community College, Central Health, Del Valle Independent School District, Travis County, and Travis County Emergency Services District #11.

Those government agencies will end up refunding the taxes they previously collected from the landfill for those four tax years, plus interest.

TCAD tax rolls that have been adjusted for two of the years involved in this litigation show huge reductions in taxable valuations:

Taxable value for 2011—Originally assessed at $4,012,159 and lowered to $908,456.

Taxable value for 2013—Dropped from $13,713,285 to $1,430,769.

The refund with interest will total an estimated $800,000, according to calculations provided by plaintiff’s attorney.

In an email responding to The Austin Bulldog’s public information request, Joe Hernandez, tax supervisor for the Travis County Tax Assessor-Collector’s office, said, “the refund amount owed to the plaintiff is going to require additional time to calculate. TCAD will update our records in August with the changes to the 2009 and 2010 tax years, so currently the refund amount is unknown for those two tax years. The current refund will also require some time to calculate because of the interest that has to be paid as part of the agreement.

“There are two parts to this refund,” Hernandez wrote, “the refund portion, which is the difference from the original tax paid and the adjusted tax, and the interest portion. The interest will be paid directly from the taxing entities that collect tax for this property. We will have to contact each of the taxing entities and make them aware of the amount they have to pay, to whom they should refund the interest portion, and where to send it.

“The refund portion will be paid from current collections that are specific to each of those taxing jurisdictions… Ultimately, the refund portion, and the interest portion are paid by each of the jurisdictions that collect ad valorem tax on this property.”

Per Tax Code Section 42.29 the parties also stipulated that the plaintiff was entitled to attorney’s fees totaling $105,000. TCAD paid TDSL that amount with a check dated June 17.

TCAD’s other expenses for the lawsuit include $87,702 for its own attorney fees and expert witnesses, according to information obtained with a public information request.

Plaintiff pleased with result

Bobby Gregory, chairman, president and principal owner of Texas Disposal Systems, told The Austin Buldog that TCAD had erroneously valued the landfill acreage “at more than $90,000 an acre.” But when the case went to trial “they agreed to the lowest amount our experts were ready to present to the jury.”

“It’s a whale of a fight and a whale of an expense but people now know that TCAD can be challenged,” Gregory said. “It’s a shame we have to go that far to start dealing with reason.”

Michel said TCAD erred by appraising the entire landfill business enterprise, including its contracts, permits, and landfill compaction processes.

She said the Tax Code does not permit appraising “intangible property” but TCAD was doing so and thus “shooting our appraised values way above other landfills.”

“Contracts cannot be appraised and taxed under the Tax Code in Texas,” Michel said. “You pay for contracts through the franchise tax, not property tax.”

Gregory said, “Cities that have landfills don’t have taxes at all. Williamson County owns a landfill and Waste Management operates it and pays no taxes. It’s very unlevel and it was getting out of hand.

“It was a very important victory for us and it was the first of three lawsuits over the same issue,” Gregory said.

Michel elaborated saying that Texas Disposal Systems Landfill has two more cases pending against TCAD. The second case had been set for trial but at TCAD’s request it was given a continuance to March 2020, she said.

The two TCSL lawsuits still pending are:

Cause No. D-1-GN-04-004240 for tax years 2014, 2015 and 2016.

Cause No. D-1-GN-17-003382 for 2017, 2018, and likely 2019.

Links:

2011 & 2013 Tax Bills (2 pages)

2011 Supplemental Roll (1 page)

2013 Supplemental Roll (1 page)

TCAD Check for $105,000 payable to TDSL for attorney fees (2 pages)

Final judgment in Cause No. D-1-GN-09-003040, June 6, 2019

Related Bulldog coverage:

New offices for Travis Central Appraisal District, July 15, 2019

Deputy chief appraiser abruptly resigns, July 10, 2019

Appraisal Review Board heads off lawsuit, June 12, 2019

New procedures undermine appraisal process, June 6, 2019

Lawsuit Seeks Property Tax Hearings, December 17, 2018

Homestead Exemptions a Tax Loophole,” February 26, 2014

Homestead Exemptions Rife With Abuse, December 20, 2013

Chris Riley Nailed for Back Taxes, August 20, 2014

Appraisal District to End Records Suppression, November 22, 2011

Appraisal Records Hidden from Public View, November 18, 2011

Are Austin’s Property Taxes Fair and Equitable? July 30, 2010

Trust indicators:

Ken Martin has been covering local government and politics in the Austin area since 1981. See more on Ken on the About page.

Email [email protected].

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