The HCAD Commercial Protest Evidence Packet: What to Include and When

The clock: notice, protest and hearing

Under Tax Code §41.44(a)(1), a notice of protest is due by May 15 or the 30th day after the appraisal notice was delivered to the owner under §25.19, whichever is later. HCAD applies the postmark date to mailed protests. The protest can be filed on the Comptroller's Form 50-132 (Notice of Protest) or online through HCAD's iFile system, and a consultant acting for the owner needs Form 50-162 (Appointment of Agent for Property Tax Matters) on file. Statutory windows of this length are typical nationally (30 to 45 days), and a missed date locks in the value for the year.

Check both grounds on the protest: value over market value and unequal appraisal. Checking only one limits what you can argue at the hearing, and §42.26(b) later lets a court apply whichever ground produces the lower value.

Once the protest is filed, the ARB must give at least 15 days' notice of the hearing. Under §41.461(a), the chief appraiser must, at least 14 days before the hearing, deliver the Comptroller's taxpayer pamphlet and the ARB's hearing procedures and tell the owner that the district's evidence is available on request. HCAD also lets owners review district evidence and upload their own documents through its online portal once the scheduling notice issues.

Request the district's evidence first

Section 41.461 entitles the owner or agent, on request, to a copy of the data, schedules, formulas and all other information the chief appraiser will introduce at the hearing. Make the request with the protest, in writing. Section 41.67(d) then does the work: information the owner requested that was not delivered at least 14 days before the scheduled or postponed hearing may not be used as evidence, except to rebut the owner's evidence or argument.

Read the district's package as the opposing case. For commercial accounts it usually shows the cost and income models behind the value: the rental rate, vacancy, expense ratio and cap rate the district applied to the property class, plus any sales or equity grid. Every input you can source differently is a line in your rebuttal.

Burden of proof shapes the packet. Under §41.43(a), the district has the burden of establishing value by a preponderance of the evidence, and under §41.43(a-3) the standard rises to clear and convincing evidence when the value was lowered in the prior year (other than by written agreement) and the owner files the required information at least 14 days before the first hearing day. If last year's protest won a reduction, file that information early.

What a commercial packet contains

Panels see dozens of protests a day. The packet should lead with the answer and put the support behind it, in the order the panel will ask for it.

• Cover summary: account number, property description, HCAD value, the owner's opinion of value, and the indicated value from each approach on one page.
• Data corrections: building area, year built, quality class, land area and condition, with the source for each (survey, rent roll, permit file, inspection photos). Correcting square footage is often the fastest relief available.
• Income approach: rent roll, three years of operating statements, and the stabilized pro forma. Income and expense data an owner gives the appraisal office is confidential under §22.27, which removes the usual objection to sharing it.
• Sales comparison: arms-length sales with adjustments for size, age, condition, location and market conditions. Texas does not require sale price disclosure, so document the source and verification of each price.
• Unequal appraisal grid under §41.43(b)(3): comparables' appraised values, appropriately adjusted, with the median marked.
• Physical and functional issues: photographs, roof or structural reports, and contractor bids for deferred maintenance a buyer would price.

A worked example: a Northwest Houston warehouse

Westbelt Distribution Center is a 184,000 sq ft Class B warehouse with 28-foot clear height, noticed by HCAD at $21,160,000, or $115.00 per sq ft. The income approach uses market NNN rent, a stabilized vacancy allowance and the owner-paid costs a buyer would underwrite on a NNN building.

The income approach indicates $18,928,000 ($102.87 per sq ft). Four adjusted sales of comparable warehouses indicate $105.00 per sq ft, or $19,320,000, and the median adjusted appraised value of nine equity comparables is $103.50 per sq ft, or $19,044,000. The packet reconciles to $19,000,000, a reduction of $2,160,000 (10.2%). At a 2.2% combined rate, that is about $47,520 a year in tax.

Hearing mechanics that affect the packet

Texas law requires each side to give the other a copy of the written material it plans to offer, so print enough sets for the panel and the district's appraiser. HCAD panels hear many commercial protests in person or by video; under §41.45, an owner who asks in the protest notice or in writing at least 10 days before the hearing gets a telephone or video hearing.

If no one can attend, §41.45(b) lets the owner offer evidence by affidavit, but the affidavit must be sworn before an officer authorized to administer oaths and must reach the board before the hearing begins, and the panel may consider it only if the owner does not appear. An owner without an agent gets one postponement without showing cause, and §41.66(i) entitles the owner to a postponement if the hearing does not begin within two hours of the scheduled time.

Before the formal hearing, HCAD usually meets with owners and agents informally and may make a settlement offer. Bring the same packet. A well-supported packet often settles here, and anything the district's appraiser rejects shows you where to reinforce before the panel.

After the ARB order

If the panel does not move enough, the order opens three routes: a petition for review in district court within 60 days of receiving the order (§42.21), regular binding arbitration for property valued at $5 million or less by the order, or, for property valued above $1 million, an appeal to the State Office of Administrative Hearings filed within 30 days of receiving the order. Westbelt, at $19 million, is too large for arbitration but qualifies for SOAH or district court.

ATALI ELECTRIC's Petition Generator assembles the HCAD packet in this order, from the cover summary to the equity grid, and the Deadline Tracker holds the protest deadline, the §41.461 request date and the 14-day evidence cutoff for every account. The consultant or attorney reviews and presents it.