To this day, about four years removed, property tax agent John Osenbaugh recalls the battle he led on behalf of Southwest AC Supply in binding arbitration against the Harris County Appraisal District (HCAD) as one of the absolute worst examples of the abuse via misleading data that he has seen in his entire career.  “Ghastly,” he said.

“Once the facts of the case were argued before a comptroller-appointed arbitrator, the decision was made quickly, concurring 100% with our value, in a decisiveness that should have been the total personal humiliation of everyone at HCAD that “touched” the file,” Osenbaugh said.

This would include the commercial modelers, any “appraiser” that conducted an informal conference (if one occurred), the “appraiser” that attended the original ARB hearing, the so-called independent Appraisal Review Board from the panel members that heard the original protest, the full ARB that ratified the findings of the panel, but particularly the “appraiser” presenting this case before the arbitrator, Osenbaugh said.

“This protest dealt with what appears to be a fairly small strip center (see related picture) in which the company that owned the property could not lease any portion out as “retail space” under the building ordinances of the City of Houston,” Osenbaugh said. “The owner’s company only sold products to licensed professionals, sales tax exempt, at wholesale.”

“While this was a worst-case example of misleading data, it nonetheless represents virtually everything that can and too often has gone wrong with the protest process in the State of Texas,” Osenbaugh said. “Everyone in the system but the binding arbitrator failed to protect the genuine due process and constitutional rights of this property owner.”

“Everyone that could have made a difference at the front end to treat this property owner with equity and justice didn’t,” Osenbaugh said. “They looked the other way, didn’t look at all, or refused to acknowledge reality when they saw what they saw. There simply was no excuse for this institutional misconduct by the property tax system.”

“To my knowledge, no one “on the other side” is ever held accountable in a meaningful way because the process that forced this property owner to pursue the costs of binding arbitration remains intact.” Osenbaugh said. “The lack of any professional licensure of ARB panel members effectively means that they are immune from the consequences of their own incompetence or indifference in matters such as this.”

Osenbaugh says that this property housed a wholesale business with a rather small & modestly finished storefront yet bare walls ‘warehouse’ for the bulk of the structure.

The process abuse here almost makes the numbers secondary, Osenbaugh said, adding that the fight was technically over several hundred thousand dollars of value but in reality it was a fight over the operational integrity of the system.

If one picture is worth a thousand words, a few pictures are worth a million words or more, Osenbaugh said. There are photographs in the video that accompany this story in the post immediately below this one.

He says to artificially justify a higher property value on the modest property which could “not even qualify for a retail permit by the City of Houston because it did not meet parking space requirements, HCAD basically “ignored” that reality and treated it like it was a higher grade & quality structure in a better economic area.”

“One of HCAD’s “dirty tricks” is the masking of actual property locations & features in one-liner summaries used for any commercial property account. This ignores major factors such as road frontage, off-street parking, surrounding influences, etc. The ARB panels then obediently pretend all’s well with the evidence even when this oversight is argued,” Osenbaugh said.

“HCAD’s arbitration witness/”appraiser” checked several accounts on the sales page of the evidence package for which I then located the actual account card & platting on HCAD’s website, following up with “Google Map” aerial images to reveal shocking results!” Osenbaugh added.

In order to pretend that HCAD’s value had any credibility, the central appraisal district traveled over 20 miles to Katy to a “Charmin Charlie’s” pad site in a larger shopping center. If that wasn’t good enough, they then traveled over 20 miles to Deer Park to cite a restaurant in a new strip center on the ‘main drag’ of the city fronting a new limited service hotel, such as is now common place along thoroughfares & highways, he added.

“HCAD had the audacity to think it could get away with comparing a local, small scale wholesale/warehouse operation to a ‘AAA-rated, nationwide retail chain’” Osenbaugh said. “And far too often they do get by with this. What happens when the property owner can’t afford the costs of arbitration or litigation?” he posed.

“This is a property owner for whom everyone in the system but the arbitrator and the tax agent failed miserably to do their jobs,” Osenbaugh said. “I guess I could trust this system if I didn’t know that this misrepresentation is commonplace rather than a rare circumstance.”