Hartman Triumphs In Tax Case Against HCAD

Hartman Income REIT has successfully fought a property tax valuation in the 127th District Court of Harris County. The lawsuit, which revolved around a Hartman warehouse property at 2300 Quitman, claimed the Harris County Appraisal District excessively taxed the asset in 2013 and 2014.

In 2013 the HCAD assessed the Quitman property value to be $6.4M, an increase from the 2012 valuation of $2.2M. The HCAD assessment for 2014 put the Quitman property value at $5.9M. The Quitman property has nine buildings; all are open-air warehouses that are approximately 100 years old. The disagreement in the lawsuit was that the increase in value was attributed to the improvements and not the land. Hartman brought the suit against HCAD arguing to separate the value of the land from the value of the improvement using the uniform and equal approach to property’s tax value from the Texas Property Code in Section 42.

Tax Recourse Inc.'s Mike Slevens convinced a 12-member jury that while the land value may be stable, HCAD's 281% increase in the assessment value of the buildings was excessive and did not meet the test for uniform and equal taxation of like and similar warehouse properties, particularly since there were no other 100-year-old open-air warehouse buildings that the Quitman property could possibly be compared against.

The jury awarded Hartman $1.7M for 2013 and $2.8M for 2014. The court also awarded Hartman $39k in attorney’s fees, believed to be the highest attorney fees award in a property tax case in Harris County. Andrews & Kurth represented Hartman at trial. 

“To see such inflated values for this property was unjustifiable. We are proud of our in-house tax team and their diligent efforts to ensure our properties, tenants and investors received justified taxes. We hope that our experience brings change to how HCAD’s system sets properties taxable value and other taxpayers don’t have the same problems,” said Hartman Income REIT CEO Al Hartman.

HCAD has been under fire from both commercial and residential landowners demanding an explanation of the rapidly rising tax rates. On Feb. 20, Lt. Gov. Dan Patrick will join state senators and county officials in Montgomery County to discuss the issue arising across the state.