84(R) - 2015
Relating to the award of attorney's fees in a judicial appeal of certain ad valorem tax determinations.
A fiscal note dated April 21, 2015 anticipates no fiscal implication to the State. It adds that in certain instances the bill's provision that would require the calculation of taxpayer tax liability based on the settlement offer rather than on a higher taxable value would result in savings related to attorney's fees. These savings could reduce costs for the taxing units that pay for the appraisal district's budget.
An amendment has been introduced and adopted on the Senate floor that would change the date when an appraisal district or a chief appraiser would have made a written settlement offer to the property owner from on or before the 45th day before the date the trial to on or before the 135th day before the trial.
The House Ways & Means Committee introduced a committee substitute that make several changes, including some that substantially change the purpose of the bill.
CSSB 593 would require that the request for pretrail settlement discussions be made in writing and delivered to the other party before the date of the trial. The court would be able, as a consequence, to change a deadline to designate experts. The settlement discussions would have to take place on or before the 120th day after the date the written request is delivered. CSSB 593 adds provisions regarding the designation of experts if the appraisal district is unable to attend the settlement discussions. If the property owner is unable to attend the settlement discussions, Section 42.23(d) of the Tax Code would not apply to the parties.
CSSB 593 would remove the provision that would use a written settlement offer made to a property owner to calculate the amount by which the tax liability of the property owner would be reduced, and hence to calculate the amount of attorney's fees owed to a property owner who prevails in an appeal to a court.
First chamber analysis:
Senate Bill 593 would amend Chapter 42 of the Tax Code regarding judicial review related to the property tax to add a section on pretrial settlement discussions.
It would require that when a motion by a party to an appeal under the chapter, for which a discovery request is made, the court would have to enter an order to require parties to engage in settlement discussions before the trial. The motion would have to be made no later than the 210th day before the date the discovery period in the appeal ends.
In case such a motion would be made, the settlement discussions would have to be conducted no later than the 90th day after the date the motion is made. The court could provide how the settlement discussions should be conducted. Both parties would have to make a good faith effort to resolve the matter under appeal during the discussions.
Senate Bill 593 would also amend Section 42.29 of the Tax Code related to attorney's fees. In cases when the appraisal district or the chief appraiser would have made a written settlement offer to the property owner on or before the 45th day before the date the trial and a record of the offer would have been submitted to the court, the written settlement offer would be used to calculate the amount by which the tax liability of the property owner would be reduced, which is also used to calculate the amount of attorney's fees owed to a property owner who prevails in an appeal to a court (Section 42.29, Tax Code).
Senate Bill 593 would not preclude a provision that would waive attorney's fees or a refund of interest from being included in a settlement offer.
Vote Recommendation Notes
The committee substitute for Senate Bill 593 makes substantial changes to the bill as passed by the Senate.
While the purpose of Senate Bill 593 was to encourage both parties to enter into pretrial settlement discussions and particularly appraisal districts to make a good faith effort to reach a settlement with a property owner so that both parties avoid a trial, or at least to reduce the cost to appraisal districts of attorney's fees when a property owner prevails, CSSB 593 mostly clarify the process of entering into pretrial settlement discussions. Although the bill weakened, we continue to support it, as it still provides a clearer process in statutes.
The second chamber sponsor is Representative Drew Darby.
First chamber recommendation:
Senate Update: We supported this bill in the House. The bill was amended in the House but not in a way that changes our original view of the bill. Our original analysis is below.
Under current law, an appraisal district must pay a property owner's attorney's fees if the property owner prevails in court and the property owner's tax liability is reduced. The amount of the award for attorney's fees can be based on the total amount by which the property owner's tax liability is reduced as a result of the appeal (Section 42.29 of the Tax Code).
Senate Bill 593 would encourage appraisal districts to enter into settlement discussions ahead of an appeal, to make a settlement offer and to submit a record to the court. This offer would be the basis on which the reduced tax liability of the property owner would be calculated, in cases when the property owner would prevail in court.
As a consequence, Senate Bill 593 would encourage appraisal districts to make a good faith effort to reach a settlement with a property owner, that could either stop the trial, or at least reduce the cost to appraisal districts of attorney's fees when a property owner prevails. Senate Bill 593 would encourage a limited government by trying to reduce the costs appraisal districts are exposed to when a property owner appeals in court in matter of property taxes. We support Senate Bill 593.