City requests audit of Central Appraisal District

El Paso City Council voted Tuesday to request an audit of the Central Appraisal District (CAD) and to evaluate its methods for appraising commercial properties. The City is going to request the CAD board to allow city auditors to review its finances and to allow the State Comptroller to review its procedures when it sets values for commercial properties in El Paso County.

The move comes as commercial property owners, most visibly Western Refining, have publicly fought against valuations set by the CAD and won. The latest suit was filed last month by Western Refining, where the company states it’s been forced “year after year to pay excessive property taxes based on inflated values.”

Mayor Oscar Leeser said Council’s action did not stem from the issue with Western Refining. He said the City wants the CAD’s polices to be consistent and fair to taxpayers and residents.

El Paso CAD has about 250 pending lawsuits at any given time throughout the year, said Chief Appraiser and Executive Director Dinah Kilgore. That’s because lawsuits are the expected recourse for a commercial property owner to fight its valuation by the CAD.

Out of the 253 CADs in Texas, Kilgore said all of them have hundreds, if not more than a thousand lawsuits pending against them. Kilgore did not comment on the Western Refining suit but said CADs are often forced to settle lawsuits because of their limited legal funds. El Paso’s CAD has about $400,000 budgeted for legal costs, including lawsuits, she said. Some CADs who’ve won lawsuits against major companies and refineries have spent more than $1.3 million in legal fees, she said.

The City will request the audit but the CAD board doesn’t have to agree to it, said City Attorney Sylvia Borunda Firth. The CAD’s board of directors is made up of nine elected officials who represent the largest taxing entities in the County. They hire Kilgore and set a budget but have no say in the valuation of properties or in the methods used by CAD appraisers.

The CAD appraises properties for more than 30 taxing agencies but do not set tax rates or collect money.

Kilgore said the State Comptroller had already reviewed its methods and procedures for appraisals and had given CAD a high score.
“I have no problem with the comptroller coming back in again and answering your issues. We are above board, we’re very transparent,” Kilgore told Council.

She also pointed out the El Paso CAD had earned a certificate of excellence from the International Organization of Assessing Officers, a first for any CAD in Texas at the time.

Asked if she’d welcome a financial audit by city auditors, Kilgore did not comment.

Kilgore said there are several factors that go into the appraisals of commercial property, including the cost to build and/or replace the property, the income the property could be brining in, and the state of the market.

The State Comptroller requires the CAD to appraise properties at full market value. Kilgore said the Comptroller, through assessments of the CAD’s commercial appraisals, had determined the CAD has historically appraised commercial properties lower than their market value in the El Paso Independent School District and the Ysleta Independent School District. “So we have to look at, what are we missing here?”

Yet, while the Comptroller has determined the CAD’s commercial appraisals are too low, some El Paso business owners have said the commercial valuations are too high – sometimes increasing by more than 100% in one year.

City Rep. Cortney Niland, who sits on the CAD board along with City Rep. Ann Morgan Lilly, said there are two major issues of concern. “The homeowner bears the brunt of the burden and I’ve also heard lots of concerns that commercial properties at the same time are exorbitantly raised year after year”

Council voted 6 to 1 to request the CAD audit, with City Rep. Carl Robinson voting against the measure and City Rep. Lily Limon abstaining.