In this tax
appraisal dispute, appellants Bertran T. Bader III and Judith K. Bader
(collectively Bader) seek reversal of the trial court's partial summary
judgment in favor of appellees, Appraisal Review Board of Dallas County (ARB)
and Dallas Central Appraisal District (DCAD), upholding the denial of Bader's
tax appraisal protest by appellees. That partial summary judgment was rendered
final and Bader brings three issues on appeal.
In the first
two issues, Bader contends the trial court erred in granting summary judgment in
favor of appellees because of an erroneous interpretation of Texas Tax Code
section 23.23 which, he says, caused the 2002 valuation of his residence
homestead to exceed the ten percent annual cap on valuation increases and,
thereby, caused him to be overtaxed. Specifically, Bader argues that appellees
have incorrectly applied the ten percent cap on appraised valuation of his
residence homestead to the aggregate value of the land and improvements. Rather,
according to Bader, appellees should have applied the ten percent cap on
increased valuation separately to the value of each of the discrete components
of his residence homestead, i.e., the land on the one hand and the
improvements on the other.
In a third
issue, Bader complains that the trial court erred in overruling his objections
to appellees' summary judgment evidence. For the reasons that follow, we affirm
the trial court's judgment.
FACTUAL AND PROCEDURAL
CONTEXT
Bader owns a residence homestead located in Dallas, Texas. In 2001, DCAD
valued the residence homestead at $217,000. The value of the land comprised
$75,000 of that total and the improvements comprised the remaining $142,000 of
the value. However, that 2001 valuation of the residence homestead was capped at
$181,500 due to the statutory maximum increase, or cap, of ten percent.
See Tex. Tax Code Ann. 23.23 (Vernon Supp. 2004). In its
appraisal notice for 2002, DCAD valued the residence homestead at $235,000. The
value of the land remained the same, $75,000, while the value of the
improvements was increased to $160,000. Based upon its interpretation of section
23.23, DCAD capped the taxable value of the residence homestead at $199,650,
rather than the appraised value of $235,000. This capped value represented the
2001 value of $181,500 plus ten percent.
Bader initiated
an administrative tax appraisal protest arguing that DCAD's proposed increase of
the capped taxable value of his residence homestead to $199,650, violated
section 23.23 of the Texas Tax Code. See Tex. Tax Code Ann. 23.23.
Bader complained that DCAD improperly applied the statute's ten percent cap on
annual valuation increases to a residence homestead because the separate value
of the improvements portion of the homestead was increased by greater than ten
percent from 2001 to 2002. ARB denied his protest and Bader sought judicial
review of the ARB decision in the trial court. Appellees moved for summary
judgment on the following grounds: (1) res judicata and (2) that DCAD properly
interpreted and administered the limitation on residence homestead valuation
increases set out in section 23.23. The trial court granted partial summary
judgment in favor of appellees on the issue concerning appellees' interpretation
and administration of section 23.23. The partial summary judgment was rendered
final and this appeal ensued.
APPELLANT'S INTERPRETATION OF TEXAS TAX CODE
SECTION
23.23
In issues one and two, Bader contends that DCAD's faulty interpretation
of section 23.23 violates the mandated ten percent cap. It is Bader's position
that when the appraised valuation of a residence homestead is increased, section
23.23 of the Texas Tax Code requires DCAD to apply the annual ten percent cap
separately to the land and to the improvements. According to Bader's view,
because DCAD did not change the value of the land, section 23.23 required
appellees to cap the taxable valuation of the improvements for 2002 by
increasing that sum no more than ten percent over the 2001 capped taxable
valuation. See
Footnote 1
He claims that if DCAD does not apply the cap separately, the appraisal district
can effectively manipulate the valuations of the separate components of the
residence homestead. According to Bader, this could result in a possible
valuation increase, of either the land or improvements, that exceeds ten
percent.
Bader's position focuses on the interpretation of the term property as
it appears in section 23.23. Bader argues that the term property as used in
section 23.23 encompasses two component parts: (1) land and (2) improvements.
Hence, Bader argues the ten percent cap must be applied separately to each
component. To support that position, Bader directs us to terms specifically
defined in section 1.04 of the tax code and suggests that we must interpret
section 23.23 in conjunction with those definitions. Next, Bader claims to find
support for this separate valuation of the land and improvements, for purposes
of applying the section 23.23 cap, in section 25.19(f) of the tax code. Section
25.19(f) requires the appraisal district to list separately the market value of
the land and the total market value of the structures and improvements.
See Tex. Tax Code Ann. 25.19(f) (Vernon Supp. 2004). Bader argues in
his brief, The only logical purpose is to facilitate application of the ten
percent limitation of section 23.23 by requiring the ten percent limit to be
applied separately to the land and improvements.
STANDARD OF REVIEW AND APPLICABLE
LAW
Statutory
interpretation presents a question of law subject to de novo review. Mitchell
Energy Corp. v. Ashworth, 943 S.W.2d 436, 437 (Tex. 1997). The Texas
Legislature has provided the Code Construction Act to guide our interpretation
of the Texas Tax Code. See Tex. Gov't Code Ann. 311.001 et seq.
(Vernon 1998) (the Act); Fleming Foods, Inc. v. Rylander, 6 S.W.3d
278, 283-84 (Tex. 1999). According to the Act, We must construe statutes as
written and, if possible, ascertain legislative intent from the statute's
language. Helena Chem. Co. v. Wilkins, 47 S.W.3d 486, 493 (Tex. 2001).
Even when a statute is not ambiguous on its face, we may consider other factors
to determine the legislature's intent, including the object sought to be
obtained; circumstances of the statute's enactment; legislative history; common
law or former statutory provisions, including laws on the same or similar
subjects; consequences of a particular construction; administrative construction
of the statute; and title, preamble, and emergency provision. Id. (citing
Tex. Gov't Code Ann. 311.023).
Additionally,
we must always consider the statute as a whole rather than its isolated
provisions. Id. We should not give one provision a meaning out of
harmony or inconsistent with other provisions, although it might be susceptible
to such a construction standing alone. Id.
APPLICATION OF LAW TO
FACTS
The section
of the tax code we are asked to interpret states that, for purposes of tax
assessment, the appraised value of a residence homestead may not increase more
than ten percent annually. See Tex. Tax Code Ann. 23.23. To determine
whether this cap applies separately to the land and to the improvements or to
the residence homestead in the aggregate, we must analyze the language of the
statute, which reads in pertinent part:
Limitation on Appraised Value of
Residence Homestead
(a) The appraised value of a residence homestead
for a tax year may not exceed the lesser of:
(1) the market
value of the property; or
(2) the sum of:
(A) 10 percent of the appraised value of the property for
the last year in which the property was appraised for taxation times
the number of years since the property was last appraised; . . .
.
Id. (emphasis added).
Bader claims
that the term property in section 23.23 refers to the land and improvements as
separate components. As stated above, Bader claims we must look to the
definitions in section 1.04 to find the meaning he urges that we adopt.
The definitions
in section 1.04 are instructive, but not controlling of the outcome of this
case. Section 1.04 defines property as any matter or thing capable of private
ownership. See id. 1.04. The meaning of property includes
both real and personal property. See id. 1.04(2)-(5). Real property
includes, among other types of property, land and an improvement. Id.
1.04(2)(A)-(B). Improvements include an exhaustive description of various
types of structures and fixtures. Id. 1.04(3). If we were to apply
these definitions to the term property as it appears in section 23.23, we
could conclude that the meaning of property clearly encompasses a unit of land
and improvements thereon which comprise a residence homestead. Nevertheless,
in the section 1.04 definitions, we can find no direction that requires separate
application of the ten percent cap to land and to
improvements.
Now, we address Bader's assertion that section 23.23 must be interpreted
in conjunction with section 25.19(f). Section 25.19(f) requires the appraisal
district to list separately the market value of the land and improvements
thereon in the notices of appraisal value it sends to property
owners. See
Footnote 2
Bader reasons that because the legislature requires separate listing of land and
improvements in the notice of appraised value, then, necessarily, the
legislature intended the cap required by section 23.23 to be applied separately
to the land and improvements components of a residence homestead. We disagree.
By its plain
language, section 25.19(f) applies to all real property, not just residence
homesteads. One who owns any character of real property, whether commercial or
residence homestead, must be able to identify the value set for the component
parts of one's real property in order to determine whether to contest an
appraised value set by the DCAD. That purpose, to give notice of the appraised
value, does not translate into a requirement that an appraisal district apply
the ten percent cap separately to the land and then to the improvements. We find
no language through which the legislature linked section 25.19(f) to the cap
in section 23.23.
We conclude that an analysis of section 23.23 itself is more relevant and
helpful than attempting to fit together parts of section 1.04 and section
25.19(f) with section 23.23. The term residence homestead is plainly the
subject of the statutory section since it appears in the heading and in the
first sentence of the section. Thereafter, section 23.23 refers variously to the
market value or the appraised value of the property. The term, the
property, appears seven times in section 23.23(a). The use of the definite
article the before property indicates that each repetition of property
refers back to the first mention of property in the statute, i.e., the
residence homestead. See Segal v. Emmes Capital, L.L.C., No.
01-01-00460-CV, 2004 WL 440900, at *13 (Tex. App.-Houston [1st Dist.] Mar. 11,
2004, no pet. hist.) (op. on reh'g). Residence homestead is the only
property to which section 23.23(a) refers. The language of section 23.23, even
if analyzed in light of section 1.04 and section 25.19(f), does not reflect any
legislative intention to require separate valuations of the land and
improvements components of a residence homestead for purposes of applying the
section 23.23 ten percent cap.
A comparison of
the use of the term residence homestead by the legislature in both section
23.23 and in section 11.13 respecting tax exemptions, gives us additional
direction in our analysis of section 23.23. Section 11.13 of the tax code
provides for exemptions from ad valorem taxation of certain enumerated
dollar amounts of the appraised or annual valuation of real estate which
qualifies as a residence homestead. See Tex. Tax Code Ann. 11.13
(Vernon Supp. 2004). See
Footnote 3
That section of the statute defines residence homestead as:
a structure
(including a mobile home) or separately secured and occupied portion of a
structure (together with the land, not to exceed 20 acres, and
improvements used in the residential occupancy of the structure, if the
structure and the land and improvements have identical ownership) that: (A) is
owned by one or more individuals . . . ; (B) is designed or adapted for human
residence; (C) is used as a residence; and (D) is occupied as his principal
residence by an owner . . . .
Id. 11.13(j)(1) (emphasis added).
Section 23.23
does not define the term residence homestead. However, the plain language of
section 23.23 dictates that the valuation cap is applicable only when property
qualifies as a residence homestead. See id. 23.23(c). Our research
reveals that section 11.13 provides the only definition of residence homestead
in the tax code.
Also, the subject of section 11.13, the designation of exemptions from
taxation on residence homesteads, and the subject of section 23.23, the
limitation on appraised values of residence homesteads, are closely related.
Each section serves to limit the ultimate taxation of residence homesteads under
the tax code. The language of section 23.23 gives no indication that the
legislature intended a meaning of residence homestead that differed from the
definition set out by it in another part of the tax code, section 11.13(j)(1).
Since the sections are in pari materia, we will read and construe them
together. Calvert v. Fort Worth Nat'l Bank, 356 S.W.2d 918, 921 (Tex.
1962); C.L. Bowling v. City of Pearland, 478 S.W.2d 143, 145 (Tex. Civ.
App.-Houston [14th Dist.] 1972, writ dism'd w.o.j.); see
also Tex. Gov't Code Ann. 312.005. Because of the relationship of the two
statutory sections described above, the term residence homestead in section
23.23 should be construed in a manner that harmonizes with the meaning given
that term in section 11.13(j)(1). See Argonaut Ins. Co. v. Baker, 87
S.W.3d 526, 531 (Tex. 2002); Helena Chem., 47 S.W.3d at 493.
Finally, we
presume that when the legislature enacted section 23.23 in 1997, it was aware of
section 11.13 and the definition of residence homestead therein established
for the purposes of limiting certain taxpayers' ad valorem tax
burdens. See
Footnote 4
See Argonaut Ins., 87 S.W.3d at 530-31; Acker v. Tex. Water
Comm'n, 790 S.W.2d 299, 301 (Tex. 1990) (A statute is presumed to have been
enacted by the legislature with complete knowledge of the existing law and with
reference to it.). Based upon these principles and the relationship of section
23.23 to section 11.13, we conclude the legislature intended that the term
residence homestead in section 23.23 have the meaning assigned to it in
section 11.13.
The definition of residence homestead provided in section 11.13
includes a structure . . . together with the land and improvements used in the
residential occupancy of the structure . . . . This conjunction of land and
improvements reflects that a residence homestead is a unit, and should not be
treated by its separate components of land and improvements. Accordingly,
section 23.23 should not be interpreted to apply the ten percent cap to the land
and improvements separately, but to the aggregate valuation of the unitary
residence homestead.
We conclude that the legislature intended the ten percent cap to apply to
the residence homestead as a single unit, i.e., the land together with
improvements. Accordingly, the trial court did not err in granting summary
judgment in favor of appellees. Issues one and two are resolved adversely to
Bader.
SUMMARY JUDGMENT
EVIDENCE
In a third issue, Bader contends that the trial court erred in overruling
his objections to certain portions of appellees' summary judgment evidence.
Evidentiary rulings are committed to the trial court's sound discretion.
Owens-Corning Fiberglas Corp. v. Malone, 972 S.W.2d 35, 43 (Tex. 1998)
(quoting City of Brownsville v. Alvarado, 897 S.W.2d 750, 753 (Tex.
1995)). A trial court abuses its discretion when it rules without regard for
any guiding rules or principles. Id. A reviewing court will not reverse
a trial court for an erroneous evidentiary ruling unless the error probably
caused the rendition of an improper judgment. See id; TEX. R. APP. P.
44.1. Assuming, without deciding, that the trial court erred, we conclude
Bader failed to show harm. In his brief, Bader asserts that an affidavit
proffered by appellees contained legal conclusions. However, Bader does not
explain how such statements caused the trial court to render an improper
judgment. Rather, he concedes that It is quite unlikely that this improper
evidence [led] the Trial Court into error. We agree and resolve Bader's third
issue adversely to him.
CONCLUSION
Having resolved Bader's three issues adversely to him, we affirm the
trial court's judgment.
Bader's interpretation of section 23.23
results in the following calculation which he described to us:
| $181,500 |
2001 capped valuation of Bader's residence
homestead |
| - 75,000 |
2001, 2002 land valuation |
| 106,500 |
Remaining value which Bader attributes to
improvements |
| x 10% |
Maximum capped increase on improvements
|
| 10,650 |
|
| + 181,500 |
Total 2001 capped valuation |
| $192,150 |
Bader's version of 2002 capped valuation for
residence homestead |
Footnote 2
(f) In the notice of appraised value for real property, the chief
appraiser shall list
separately:
(1) the
market value of the land;
and
(2) the
appraised value of the structures and other improvements on the
property.
Tex. Tax Code Ann. 25.19(f).
Footnote 3
For instance, among the exemptions to
taxation of a residence homestead are section 11.13(a), which provides for an
exemption from taxation of $3000 of the assessed valuation, and section
11.13(c), which provides a $10,000 exemption from the appraised valuation for
taxpayers who are disabled or 65 years of age or older.
Footnote 4
In fact, the legislature approved acts
concerning sections 23.23 and 11.13 on the same day, June 19, 1997.