Texas Register Preamble
Two individual arbitrators, Michael Jacobs and Loretta Higgins, commented on questions of agent authority arising under §9.4253 and the current use of Form 50-791. Ms. Higgins commented that she had experienced a few instances where the "property owner is adamant that they did not hire the agent who is representing them." Arbitrator Michael Jacobs reported a similar issue. He commented: "I have received numerous calls in the 2017 tax year from Owners stating to me that they did not appoint the named person (who is an attorney) to be their agent. Because there is currently no documentation on file with the Comptroller (or with the appraisal district) by which the Owner has appointed an attorney as their agent, there is no means for the Arbitrator to verify that the purported attorney is in fact the Owner's agent." Mr. Jacobs suggested "that attorneys should be required, in the adopted Rules, to be included in the Appointment of Agent Form process on Form 50-791 and in the Rules." Mr. Jacobs commented there was no practical reason to treat attorneys any differently from the other categories of agents. He also commented that unless property owners are required to designate all qualified individuals, including attorneys, as agents on Form 50-791 and sign this appointment form, the comptroller, appraisal districts, or arbitrators have no means to verify either that the property owner authorized the filing of a request for binding arbitration or appointed the person who appears before the arbitrator to act on the property owner's behalf. Mr. Jacobs stated: "If the adopted Rules do not require the Owner's signature to be on file if an agent is an attorney, then the adopted Rules will allow the arbitration process to be susceptible to irregularities, including fraud and malfeasance, particularly when the Owner's Deposit is to be refunded to an attorney-agent and there is no Owner signature on file with the Comptroller authorizing the attorney to receive the Deposit refund."
The agency agrees with the reasoning and suggestion of Mr. Jacobs' comments. Proposed §9.4253 is revised to require that Form 50-791 be completed and signed by the property owner when attorneys are appointed as agents in binding arbitration. Several additional changes were made to proposed §9.4253 and existing Form 50-791 in response to the questions or concerns these comments raised regarding agent authority. To avoid staleness of the appointment, Form 50-791 expires three years from the date the property owner signs it and the appointment may be revoked by appropriate written notice under adopted subsection (h). Requirements for a valid owner's signature on Form 50-791 have been added to adopted §9.4253(c). Contact information for the property owner or authorized individual is required and if a concern arises regarding the authority of the agent, the arbitrator shall contact the owner directly to resolve the matter under adopted §9.4253(g). Under subsection (i), agents certify, in accepting the appointment, that they are acting as a fiduciary and agree to undertake the duties authorized; that a copy of the specific ARB order being appealed was provided to the property owner before filing the request; and that the property owner knowingly authorized the agent's representation. The agency declines Ms. Higgins' suggestion that a copy of the hearing notice, final decision and withdrawals or dismissals be mailed to the property owner to address the agent representation issue in light of the other revisions made to the rule.
The Tarrant Appraisal District commented that it supports proposed §9.4252(d) and the right of property owners "to be fully aware of their agent representation" as well as proposed §9.4253(e) and (f) which require the agent appointment form identifying a specific individual to be submitted with the request for arbitration as "an effort to offer the property owner full disclosure and transparency between the owner/agent." As no change was requested, no change was made in response to these comments. The new Form 50-791, titled Appointment of Agent(s) for Binding Arbitration, which is consistent with the terms of adopted §9.4253, is the only agent appointment form that will be recognized and effective when submitted with any requests for arbitration filed after the date this rule takes effect.
With regard to proposed §9.4254, the Harris County Appraisal District commented that the 10-day deadline for districts to complete the processing of requests for arbitration and send them on to the comptroller was increased slightly under proposed §9.4254(b) for districts that had 500 or more arbitrations in the previous year. It asked, however, that "another tier be added to allow those districts that processed 3,000 applications or more to have 20 calendar days to complete the tasks in subsection (a)." It stated: "HCAD had over 7,700 in 2016 and over 6,000 so far for 2017 and many other CADs saw large increases in the number of applications this year. Reviewing these applications is a time-consuming process and we often receive them in batches of several hundred at a time. Ten business days is not adequate." The Tarrant Appraisal District commented on §9.4254(a) and (b) and asked that the proposed deadline of ten business days "be changed to 14 calendar days due to the overwhelming increase in requests[s] for binding arbitration, and lower the 500 or more arbitration requests to 300." Arbitrator Loretta Higgins suggested that the deadline under proposed §9.4254(b) be extended to 14 business days for those CADs that process more than 3,000 requests during the previous year. Ms. Higgins commented: "The reasoning behind this is certain appraisal agents will partake in 'slamming' the appraisal districts with large volumes of requests in a very short period of time. The appraisal districts are required to re-allocate resources to meet the state mandated deadlines, thus causing an increased burden upon taxpayers." The agency responds that the ten-day deadline cannot be changed by rule because it is set by statute under Tax Code, §41A.05(a). The agency further responds that it has eliminated proposed §9.4254(b) which provided for ten business days rather than calendar days, leaving the ten calendar-day deadline for §9.4254(a) in place because the new online arbitration system calculates deadlines on a calendar-day basis only. The agency further responds that it has eliminated one of the five tasks appraisal districts are to complete within the ten-day period and shifted the responsibility to the property owner or agent to provide a copy of the ARB order being appealed. As a result, proposed §9.4254(a)(3) has been deleted and §9.4252(f)(9) has been added to require the property owner or agent to submit a "copy of the ARB order being appealed" with "request Form AP-219" or to scan and upload it to the online arbitration system when initiating the request for arbitration. The agency further responds that with the implementation of the new online arbitration system, together with other changes to the proposed rules being adopted, the situation created by the ten-day deadline is expected to improve.
The Williamson Central Appraisal District suggested that proposed §9.4254(c), which requires the appraisal district to reject a request for arbitration if the required deposit is not provided, be moved to the beginning of the rule under subsection (a) and add a reference to the deposit amounts in another rule, §9.4252(h). The appraisal district stated: "It is easier to train staff if it follows the actual process. If there is no deposit attached, then there is no reason to review the items currently under item (a). In addition, it is easier to point out to the property owner that we cannot proceed without the correct deposit." The agency agrees with this comment and proposed §9.4254(a)(1) has been revised to include review first of each request for binding arbitration to determine if the deposit in the amount required under §9.4252(h) has been provided.
Arbitrator Michael Jacobs commented with regard to proposed §9.4254(c) "that if the Comptroller rejects the owner's request for arbitration, then it follows that the Appointment of Agent is also rejected; thus all forms are to be returned to the Owner, along with the deposit." Mr. Jacobs further states: "This comment is being made because the Proposed Rule provides for the Comptroller to return the request and deposit back to the Agent, but doing so would be an illogical impossibility, because the purported agent is not the true 'agent' until the Request for Arbitration is accepted by the Comptroller." The agency disagrees with Mr. Jacobs comments. The appointment of agent form and the request for arbitration form are two separate legal documents, each of which stands on its own. As a result, no change was made in response to this comment.
With regard to proposed §9.4254(e), the Harris County Appraisal District commented: "With many arbitrators, property owners, agents and CAD's looking to use as little paper as possible, we believe that the copy of the completed submission sent back to the property owner or agent should have the option to be sent by electronic mail. This would save time, money, and create a record of delivery." The agency agrees with this comment and has amended §9.4254 to permit delivery by electronic mail and, further, to provide that the appraisal district may complete its tasks under subsection (a) by using the online arbitration system which provides for the delivery and exchange of materials electronically.
With regard to proposed §9.4255 titled "Comptroller Processing of Request," it has been revised to accommodate the implementation of the Texas Comptroller Online Arbitration Center and to make other changes in response to the many comments to the proposed rules. Adopted §9.4255 provides for the "45 Calendar-Day Settlement Period," to which its title refers, which has been built into the new online arbitration system. Adopted §9.4255(c) provides that the comptroller shall notify the property owner or agent and the appraisal district after the request for binding arbitration has been accepted that the "parties shall have 45 calendar days from the date on the comptroller's letter or notice of such acceptance in which to try to settle the case or otherwise determine that the request for arbitration should be withdrawn. If the property owner or agent promptly notifies the comptroller's office in writing received before the expiration of this 45 calendar-day period that the request for arbitration is withdrawn, no arbitrator will be assigned to the case and the deposit will be refunded, less the $50 administrative fee due the comptroller's office. If the property owner or agent does not notify the comptroller's office in writing received before the expiration of this 45 calendar-day period that the request for arbitration is withdrawn, the comptroller shall select and appoint an arbitrator to the case pursuant to §9.4256 of this title" and "the arbitrator shall be entitled to the fee pursuant to §9.4264(g) of this title." Adopted §9.4255 effectively replaces the 14 day test for timeliness of a request withdrawal with a 45 calendar-day period during which the matter may be resolved before an arbitrator is appointed who will be entitled to the fee. In revising proposed §9.4255, the agency deleted proposed subsection (b) as duplicative after incorporating its standard for determining whether to deny a request into subsection (a), as well as subsection (d) as previously stated, and re-lettered the remaining subsections accordingly.
In commenting on proposed §9.4255(c) and (d), the Tarrant Appraisal District stated that an additional 10-day grace period for requests that had been filed without an opinion of value or for property owners to supply appointment of agent forms should not be provided due to the overwhelming increase in requests for binding arbitration and the challenge to CADs to process the increased caseload. The agency responds by agreeing to delete proposed subsection (d) which permitted owners an additional 10 days to provide appointment of agent forms. With respect to proposed subsection (c), additional language has been added as follows: "If the online arbitration system is used, the filer will be unable to complete the online request for binding arbitration if he or she fails to provide an opinion of value or to click on the "accept" or similar button in response to a statement, certification, or attestation to demonstrate the user agrees the responsive action is the legal equivalent of the filer's hand-made signature."
In response to comments, several new subsections were added to proposed §9.4255 to address and accommodate issues arising out of the implementation of the new online arbitration system. As noted previously, adopted §9.4255(c) provides a 45-day settlement period that begins on the date shown on the comptroller's letter or notice of acceptance of the arbitration request for a property owner or agent to settle the case with the appraisal district and receive a refund of the deposit (less the $50 administrative fee) before an arbitrator is assigned. Adopted §9.4255(d) contains new language to provide that compliance with Subchapter K is required whether the paper-based method or the online arbitration system is used. Adopted §9.4255(e) describes required signatures as "a hand-made signature" or its equivalent for the online arbitration system, which is "an 'accept' or similar button which may be clicked in response to a statement, certification or attestation, to demonstrate the user agrees the responsive action is the legal equivalent of the user's hand-made signature." Adopted §9.4255(f) provides the terms applicable to email addresses. Adopted §9.4255(g) requires all appraisal districts, arbitrators, and agents to use the online system when it is made "generally available," and provides that if a property owner does not choose to use the online arbitration system, "appraisal districts and arbitrators are to communicate and deliver materials using first-class mail or any other method acceptable to the property owner, appraisal districts, and arbitrators." Adopted §9.4255(h) provides that to the extent issues or questions arise regarding the proper use or access to the online arbitration system, including the date by which it is made "generally available," the comptroller's office "may provide written guidance on its website or within the online arbitration system itself or through other available means." Adopted §9.4255(i) provides that arbitrations appealing ARB orders issued for the 2018 tax year and subsequent tax years shall be governed by the applicable provisions of Subchapter K, and arbitrations appealing ARB orders issued for the 2017 tax year and previous tax years shall be governed by the terms of §9.804 of this title. In a separate filing, the comptroller is proposing that §9.804, the arbitration rule previously proposed for repeal, be amended in several respects, including that its title be changed to "Arbitration of Appraisal Review Board Determinations Issued for Tax Year 2017 and Previous Tax Years" and its terms apply to appeals of ARB orders for the 2017 tax year and earlier.
With regard to proposed §9.4256, Comptroller Appointment of Arbitrators, the Williamson Central Appraisal District and arbitrators Al Cannistra, Loretta Higgins, and Salli Smith each commented that notice should be provided electronically and not by mail which is costly and may be slow, especially during the holidays. The agency agrees and has revised not only §9.4256 but the entire subchapter to provide for communication by electronic mail and to require the use of the new online arbitration system by appraisal districts, agents, and appraisal districts. The Collin Central Appraisal District requested that the comptroller notify the property owner or agent and the appraisal district once an arbitrator has been appointed to a case. The agency agrees and responds that this notice of appointment of the arbitrator will be provided with the implementation of the new online arbitration system to those using it. The agency further responds that adopted §9.4256(d) provides additional days - a total of ten (10) calendar days from the date on the comptroller's notice or letter of appointment - for the arbitrator to respond whether he or she accepts or refuses the appointment for any reason." The arbitrator is to "deliver notice of his or her acceptance or refusal of the appointment to the comptroller using the online arbitration system when it is generally available, or by electronic mail, by facsimile transmission, or by regular first-class mail until the online arbitration system is generally available." Adopted §9.4256(d) also provides that whether the arbitrator timely accepted the appointment is "solely within the discretion of the comptroller."
Arbitrator Michael Jacobs commented on proposed §9.4256(f) which provides that the comptroller may not appoint an arbitrator for good cause if the person is found to have engaged in repeated bias or misconduct while acting as an arbitrator. Mr. Jacobs suggested that this provision not be adopted because other proposed rules address the removal of an arbitrator from the registry rendering this rule duplicative and may create confusion and ambiguity with the other rules on the same subject. The agency responds that §9.4256(f) addresses the standard under which an arbitrator may be appointed to an arbitration not when an arbitrator is to be removed from the registry. The agency further responds by revising proposed §9.4256(f) to add a sentence to address an appointment in those situations in which a removal action is pending. The sentence reads: "If a request for removal or complaint against an arbitrator has been filed under §9.4262 of this title and is pending, it is in the discretion of the director of the Property Tax Assistance Division of the comptroller's office whether to appoint the arbitrator who is the subject of the request or complaint to a particular matter until the complaint or request to remove is resolved."
Arbitrator Donna Harris commented on the "interpretation of the new law about the Arbitrator being in the county" and that after one arbitrator in the county refused the appointment, then arbitrators throughout the state should be included in the pool for selection rather than contacting the other arbitrators in the same county first before going statewide. Arbitrator Salli Smith commented that proposed §9.4256 "regarding only selection of arbitrators in their county of residence encourages use of personal knowledge of a specific market and limits the property owner's pool of arbitrators. In the case of counties with numerous arbitrations it will in many cases cause arbitrators to be severely backlogged and unable to hold a timely arbitration." The Tarrant Appraisal District commented that it supported proposed §9.4256(f) through (i). The commenters did not request any specific changes and no changes were made in response.Cont'd...
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