Texas Disposal Systems’ 344-acre landfill is located southeast of downtown Austin on bucolic rolling hills. Animals from six continents wander behind fences as visitors ferried in safari-style vehicles view them. A sprawling events pavilion has been a popular location for the Texas Senate’s private parties.
It’s also a dump that is destroying part of the land.
The difficulty of finding comparable properties dominated oral arguments Thursday as the Texas Supreme Court weighed the landfill’s property valuation appeal. The case asks whether the trial court had subject matter jurisdiction over a lawsuit brought by the Travis Central Appraisal District after the Travis Appraisal Review Board determined the appraisal was unequal to similar properties and reduced the landfill’s 2019 valuation from $21.7 million to $2.8 million.
District Judge Catherine Mauzy dismissed the district’s market-value claim, finding the court did not have jurisdiction. The Third Court of Appeals reversed.
The case raises legal and policy issues central to the state’s ad valorem tax system, including whether real estate owned by large entities is valued at the same levels as those of residential taxpayers.
It has attracted a large number of amici, including several major corporations, along with business, trade and policy organizations. In recent days, the court received briefs from appraisal districts in Harris, Denton, Bexar and Gillespie counties.
The landfill argues that because it did not base its tax protest on fair market value, the Tax Code does not give the appraisal district a right to judicial review of a protest issue not raised by the taxpayer.
The appraisal district argues that a trial de novo is not limited to the issues raised before the appraisal review board.
The arguments featured powerhouse advocates Wallace B. Jefferson for the landfill and Mark Trachtenberg for the appraisal district. A recurring theme concerned the difficulty of finding and evaluating comparable properties for appraisers to evaluate.
Jefferson referenced the unusual nature of the landfill in his appearance before the court where he formerly served as chief justice
“The TDSL property here, it’s a unique feature,” said Jefferson, asking Justice Rebeca Huddle whether she had ever been out there. “It’s got all of these rolling lands and exotic animals, and it’s a beautiful place.
“Right, that’s what you think of, but the property that we’re talking about, the taxing entity, is the smaller portion of the landfill.”
He said TDSL has the right under its license to pollute, adding that “putting waste in the land destroys the value of the land.”
Jefferson, of Alexander Dubose & Jefferson, parried questions from Justice Jane Bland about appraisers’ duty to assess comparable properties.
“There is a fight about whether these properties that are being used in the set are comparable and whether they have been appropriately adjusted,” Bland said. “And the only way you can look at that are generally accepted appraisal concepts, which would include whether you are comparing properties apple-to-apple fair market value.”
“Well, when we get back down to the district court they will attempt to insert evidence of market value, we can anticipate that,” Jefferson responded. “We will have objections based on the relevance to an equal and uniform determination. That’s a fight that is going to be reserved, I think, for the trial court. The question here is do we say that the district court has jurisdiction over their market value protest in their pleadings.”
Justice Jimmy Blacklock asked if there is any provision in the Texas Constitution about “how you break that logjam when equal and uniform is pointing you to one number and market value is pointing you to another number.”
“I don’t know if there is constitutional text, but I think there is an answer,” said Jefferson. “The next time they assess properties, not only TDSL but other landfills, that they make the right determination. If the market value is actually $22 million, the comparable property should be. Hike everyone up.”
Trachtenberg disagreed. “It would be a race to the bottom because these appraisal districts are all operating individually,” said the Haynes Boone lawyer.
He focused on the court’s 2018 decision in Willacy County Appraisal District v. Sebastian Cotton & Grain where the court said WCAD’s allegation of fraud is not waived by its failure to raise it before that county’s review board. “An appeal of an ARB determination to the district court is a trial de novo, and the district court ‘shall try all issues of fact and law raised by the pleadings in the manner applicable to civil suits generally,’” the decision said, quoting Section 42.23 of the Tax Code.
Trachtenberg pointed to laws granting the chief appraiser the right to appeal an order of the review board determining a taxpayer protest in cases where the property valuation is over $1 million.
“Had the legislature wished to limit the scope of the district challenge in the manner Texas Disposal suggests, it could have easily done so by adding the phrase ‘on the grounds the taxpayer raised before the appraisal review board,’” he said.
Blacklock wanted to know why the district needed to raise a separate claim regarding market value when it might be able to introduce market value evidence related to the equal and uniform issue.
“Say here, for example, TCAD was able to show that this landfill is such a unique property that there aren’t sufficient comparable tables,” Trachtenberg said.
Blacklock asked what valuation would be justifiable.
“We’re going to be attacking both numbers,” said Trachtenberg. “We’re starting from scratch, trial de novo. If we can show that there’s no proper comparable analysis for [equal and uniform], then the district judge has to, under [Section] 42.24, enter a judgment for the appraised value put on the roll.
During rebuttal, Bland asked Jefferson about a chart in the petition for review that showed the landfill appraised at about $1.4 million for the years 2009-2013. He said appraisals since that time were not included because they are currently in litigation.
The case is No. 22-620.