With regard to proposed §9.4257(b)(6), arbitrator Michael Jacobs commented that this provision "is narrower in scope than Proposed Rule Section 9.4260(b), and if both are adopted, the adopted Rules should be consistent with each other in scope." The agency agrees and has revised proposed §9.4257(b)(6) to provide the notification to the comptroller of any change in the applicant’s information is to be undertaken as required by §9.4260(b). Tarrant Appraisal District commented that it supported proposed §9.4257 and no changes were requested so none were made in response.

With regard to proposed §9.4258(b), arbitrator Salli Smith commented on the Texas residency requirement: "This is very personal for me. I have been a Texas Property Tax Arbitrator for over 11 years and only moved out of Texas a few years ago. I do not believe this impacts my ability as an arbitrator at all." Ms. Smith also commented that the residency requirements are unfair and her "solution is to grandfather current arbitrators and make it all statewide." The agency responds that the residency qualifications in the proposed rule are mandated under Tax Code, §41A.07(e)(1) and (2), and therefore no change can be made. The Llano Central Appraisal District commented on proposed §9.4258(c)(2)(A) that only licensed real estate brokers and not real estate sales agents should be qualified to be arbitrators. The agency responds that this qualification in the proposed rule is mandated under Tax Code, §41A.06(b)(1)(B)(ii)(a), and therefore cannot be changed. The Tarrant Appraisal District commented that "any individual that has represented any person or entity for compensation in any proceeding, in any County, under [the] Property Tax Code should not qualify for inclusion in the registry of arbitrators." The agency responds that the qualifications for inclusion in the registry set out in the proposed rule are mandated by Tax Code, §41A.06 and §41A.061, and therefore cannot be changed.

With regard to the educational requirements in proposed §9.4258(d)(4), arbitrator Salli Smith commented that attorneys should be required to have training before being qualified and arbitrator Michael Jacobs commented that attorneys should not be required to have training for renewal qualification to be continued in the registry. The agency responds to both comments that the training requirements for qualification for the registry in the proposed rule are mandated under Tax Code, §41A.06(b)(1)(A) and §41A.061(b)(3), respectively, and therefore cannot be changed. Arbitrator Tammie Moore commented that proposed §9.4258(d)(4) and the statute upon which it rests, Tax Code, §41A.061(b)(3), which provide that qualifying continuing education hours be "offered by a university, college, real estate trade association, or legal association" be interpreted to include hours "approved" by these organizations. The agency responds that this interpretation of the statute appears to conflict with its express terms, and therefore, no change was made to the rule which is based on the statute. Arbitrator Loretta Higgins commented that the following language should be added to proposed §9.4258(d)(4): "Continuing education in excess of eight (8) hours may not be carried forward to a future renewal period." The agency responds that it does not allow continuing education credit hours to carry forward from one two-year period to the next, that an arbitrator must have the required eight hours of training every two years, and that the continuing education training must have occurred within the two years prior to renewal. As a result, no change was made in response to this comment. Ms. Higgins also commented that arbitrators should be required to complete each year the four-hour training required under proposed §9.4256(h). The agency responds that requiring this training annually would appear to conflict with Tax Code, §41A.06(c), which contemplates that this training is to be completed on a one-time basis, before conducting a hearing involving an equal and uniform appeal. As a result, no change was made in response to this comment. However, the agency did revise proposed §9.4258(c)(2) to require that no more than three hours of the 30 hours of required training may be self-study or homework.

With regard to proposed §9.4259(b) (as well as proposed §9.4256(b)), the Tarrant Appraisal District commented that "if an arbitrator within the county of the subject matter is not available an arbitrator in a contiguous county should be appointed." Arbitrator John Passero commented: "Consideration of eligibility for appointment has to be given those arbitrators that reside in the abutting counties to that county where the subject issue property is located." The Llano Central Appraisal District commented: "The selection method of an arbitrator should be changed to be the nearest eligible arbitrator to the subject property and/or the county which subject property is located, not from a State-wide pool," and alternatively, "set out geographical regions where property has some commonality." The comptroller responds to these three comments that these proposed changes to the system introduce a level of complexity and subjectivity into the selection process which may give rise to disputes regarding the county from which an arbitrator is to be selected. As a result, no change was made in response to these comments. The agency further responds that to the extent these proposals conflict with the eligibility standard for appointment set out in Tax Code, §41A.07(e), the proposed changes to the rule cannot be made.

With regard to proposed §9.4259(c) and (d), the Harris County Appraisal District supported the clarification made regarding what association with a tax agent an arbitrator can have. The Tarrant Appraisal District commented that it supported §9.4259(d) because an individual that received compensation for representation is more likely to be biased in their determination. No changes were suggested and none were made in response to these two comments.

With regard to proposed §9.4259(d)(1), arbitrator Salli Smith commented that arbitrators "should only be limited to not being able to arbitrate a case that has a party that they have represented before." The agency responds that the eligibility for appointment requirements involving previous representation of another in a property tax matter set out in the proposed rule is mandated by Tax Code, §41A.07(f), and therefore cannot be changed. The Williamson Central Appraisal District commented that under proposed §9.4259(d)(1), "agents that remain eligible as an arbitrator in other districts, may still appear as an agent while representing property owners in binding arbitration." The appraisal district asked about limitations on evidence or presentations made by agents in one county who are arbitrators in another county and whether these agents may refer to their arbitrator training, background, or materials when appearing as an agent. The agency responds that when conducting an arbitration, the arbitrator is to hear and weigh the evidence, determine the credibility of the witnesses, and the appropriateness or persuasiveness of argument that is presented. The appraisal district also inquired whether "an arbitrator is prohibited from accepting an assignment if they received their training on binding arbitration from the agent representing the property owner." The agency responds that, depending on the facts of the situation, §9.4259(g) may apply.

With regard to proposed §9.4261(a), arbitrator Michael Jacobs commented that it "does not address the situation of the Owner or Agent or appraisal district refusing to sign, or failing to sign, the Arbitrator's written agreement concerning provision of arbitration services." In response to this comment, the agency notes that the purpose of the arbitration rules is to provide a uniform set of terms under which all arbitrations are to be conducted. Permitting agreements that may set out terms that are in addition to or inconsistent with the rules conflicts with the rules' purpose. As a result, proposed §9.4261(a) has been revised to eliminate any reference to written agreements and provides that arbitrators are to provide their services pursuant to the terms of §9.4261. Adopted §9.4261(a) also addresses the commencement of an arbitration and the ways in which it may be concluded to provide a definitive beginning and end point for the proceeding.

With regard to proposed §9.4261(b), the Harris County Appraisal District commented that "the default for the format of the arbitration be by teleconference, and that only by written request of the property owner can the arbitration be held in person or by written documents only." The appraisal district stated: "One complaint from many arbitrators is that we do not have enough resources to schedule the arbitrations when they want to hold them. Part of the reason for this is that we must consider that some of our arbitrations during the day will be off site. This adds hours to the process. If we are truly trying to get arbitrations done in a timely fashion for the property owners, then having the proceedings by phone is far preferable. If a property owner wants their arbitration in person then we should all accommodate. The truth is, most arbitrations are represented by agents and both parties would rather make this a streamlined process. The arbitrators are in control of where the proceedings are held and this leads to less technologically savvy arbitrators requiring they be in person, instead of having to adapt to new technology." The agency responds by first noting that with the introduction of the 45 calendar-day settlement period under adopted §9.4255, the volume of arbitrations for which a hearing must be scheduled is expected to be significantly decreased. In addition, the agency responds, as all arbitrators will be required, under adopted §9.4255(g), to use the new online arbitration system once it is generally available, all individuals included in the registry will have to adapt to new technology. The agency further responds that proposed §9.4261(b) is changed to provide that the property owner or agent may indicate on the request for binding arbitration form that the hearing be conducted by teleconference only in addition to in person.

Arbitrator Michael Jacobs commented that proposed subsection (b) regarding the selected location for an arbitration be changed to an office-type "or any other" setting generally open to the public "or to the arbitrator" such as "a conference room facility in a hi-rise office building, apartment building, or condo building." The agency agrees to clarify this subsection by revising it to provide that the selected location must be in an office-type setting generally open to the public "or to the arbitrator and includes conference rooms in an office or residential building." The Harris County Appraisal District supported the provision requiring the location of the arbitration hearing having to be in an office type setting as other less desirable locations had been used in the past such as hotel rooms and bar parking lots.

Arbitrator Michael Jacobs commented on subsection (c) of proposed §9.4261 that the comptroller's office should provide arbitrators with the owner's mailing address, email address, phone number, and fax number, and the same information for any agent appointed by the owner or a copy of the request for binding arbitration which contains this information on it. Arbitrator Rex Harris commented similarly that email addresses and contact phone numbers be provided in the appointment letter to facilitate communication with the parties. Arbitrator Salli Smith commented to request that contact email addresses be provided.

In responding to these three comments, the agency notes that its current arbitration computer system is unable to provide this information. The agency further responds that it agrees with these comments and all of the information Mr. Jacobs, Mr. Harris, and Ms. Smith are requesting will be available to arbitrators through the new online arbitration system that will be used when available.

With regard to the required use of certified mail, return receipt requested in connection with providing notice of the arbitration hearing under proposed §9.4261(d), the 35 arbitrators and Patrick Mahoney provided the following comment: "We understand that the Comptroller's office is not responsible for mandating the continued use of registered or certified mail. Service of the initial hearing notice is governed by Texas Tax Code §41A.08(a), which incorporates by reference the mandate set forth under the Texas Arbitration Act (specifically, Tex. Civ. Prac. & Rem. Code §171.044(b)). The Legislature enacted the applicable portion of Section 41A.08 in 2005, and until such time as it sees fit to either modify or withdraw the provision, the Comptroller has no choice but to accept it as controlling law. That being said, it is also abundantly clear that registered or certified mail is more costly and time-consuming for the sender, while e-mail by comparison is orders of magnitude faster with at least equivalent reliability and proof of actual receipt. Indeed, the United States Post Office (USPS) has proven increasingly unreliable in recent years, so much so that CMRRR can take up to a week for in-town delivery, with the "green card" sometimes taking an additional week or more to be returned to the sender. Also, postal employees occasionally forget to obtain a signature, and more frequently obtaining a signature from the addressee is simply not an option because the claimant's agent uses a private mailbox storefront instead of providing an actual office address. The Comptroller's office should use its influence to have Section 41A.08 amended during the next legislative session, but until then it is both appropriate and desirable to create a workaround for this issue. We suggest a simple and elegant solution would be to offer claimant's agents a choice: either agree to receive notices of hearing by e-mail, or some additional portion of the amount deposited for arbitration (say, $100) will be withheld to defray arbitrator time and expenses in the event of withdrawal. We know of no obstacle to such a provision, and it seems to us entirely consistent with the spirit of the Legislature's enactments, the need to ensure that parties receive actual notice of hearings in a timely manner, and the general goals of preventing waste and recognizing the parties' ability to modify the arbitration process by agreement."

Arbitrator Michael Jacobs commented that subsection (d)(1) of proposed §9.4261 "should be modified to require certified mail and to not provide for electronic delivery" on the grounds that "Tax Code Section 41A.08 provides that hearing notices be given in the manner provided by Civ. Practice and Rem. Code Sec. 171" and this tax code section "provides for certified mail not electronic delivery." Arbitrator Rex Harris commented on this same issue that "[a]t the current time, the postal service is simply incapable in many jurisdictions within the state, of delivery certified mail and obtaining the required signatures." Mr. Harris further commented: "Therefore, I suggest doing away with the certified mail requirement altogether, or allowing alternative tracked delivery methods such as UPS or FedEx." Arbitrator Salli Smith commented that "arbitrators and everyone else should be able to [electronic mail] for everything. Please get rid of the certified [mail]. We need a more streamlined process."

In responding to all of these comments from arbitrators regarding the use of certified mail, return receipt requested, to provide notice of the arbitration hearing, the comptroller notes first that Texas courts have held that where parties consent to certain arbitration rules, those rules govern the conduct of the arbitration, including notice, and not Chapter 171, the general arbitration statutes of the Civil Practice and Remedies Code. In Herriage v. BNSF Logistics, LLC, No. 05-16-01232-CV, 2017 Tex. App. LEXIS 10861 (Tex. App.â€"Dallas, Nov. 17, 2017), the court of appeals held in a memorandum opinion as follows: "Where parties consent to certain arbitration rules, those rules govern the notice requirement. See Tex. Civ. Prac. & Rem. Code Ann. §171.044(a) ("Unless otherwise provided by the agreement to arbitrate, the arbitrators shall set a time and place for the hearing and notify each party.") (emphasis added); see also Tan, 2007 Tex. App. LEXIS 1398, 2007 WL 582084, at *2 (where the parties agreed to proceed under the National Association of Securities Dealers Code of Arbitration Procedure that contained rules governing notice, compliance with those rules was sufficient)." The comptroller is authorized under Tax Code, §41A.13, to adopt rules necessary to implement and administer binding arbitration. In electing to request binding arbitration, each property owner or agent implicitly consents that the process will be governed by the comptroller's rules. In light of this analysis and in response to the comments above, adopted §9.4261(d) eliminates any reference to certified mail, return receipt requested, and instead requires service by uploading the notice to the online arbitration system or by email to all parties, and (instead of alternatively), by providing a paper copy to the property owner or authorized individual by first-class mail if the hearing date is agreed or through the U.S. Postal Service or a private third-party service such as FedEx or United Parcel Service (UPS) so long as proof of delivery is provided if an agreed date is not reached.

With regard to proposed §9.4261(c), the Tarrant Appraisal District commented that "an arbitrator should not schedule a hearing date without first contacting the property owner/agent and the CAD to propose 1 or 2 hearing dates" given the overwhelming increase in cases, because a failure to contact "causes endless unnecessary rescheduling that could be eliminated." Several comments were received with respect to the requirement under proposed §9.4261(c) that arbitrators contact promptly the parties regarding a hearing date and "should cooperate with the appraisal district and the owner or agent in scheduling the arbitration hearing." In connection with subsection (c), numerous comments also were received for proposed §9.4261(d), all of which indicated that the proposed requirements for scheduling and setting arbitration hearings are not workable. In addition to three appraisal districts and several arbitrators providing their own individual comments, 35 arbitrators including Patrick Mahoney set out their comments as a group regarding proposed §9.4261(c) and (d). In addressing these two proposed subsections, the group of 35 commented as follows: "The scheduling process set forth in Proposed Rule 9.4261 seems to be based on the belief that arbitrators as a group are unwilling to work with claimants and appraisal districts in setting reasonable dates for hearing. In truth, the problem lies almost entirely with higher-volume claimant's agents and appraisal districts, each of whom appears motivated to delay the proceedings as much as possible to compensate for self-imposed staffing Cont'd...