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TAX EQUALIZATION IS FIRM’S WORK Banker Hall’s Tax Project ing, several bathrooms, hardwood floors, and the other one not. There might be $5,000 difference in the two houses, and if you don’t get the complete information, and put it on the card, you’re not gonna equalize, and ,.hen you don’t equalize, you’re not gonna have satisfied taxpayers. “When the taxpayer knows that has been done, a big percentage of ’em are satisfied to pay their taxes,” Pritchard said. “That’s true of the oil companies, too.” For example, he said, if a scientific assay of the amount of the oil in a given reservoir is correctly related to what the oil will sell for on the market, companies will not object. Oil. and industrial valuations, said Judge Pritchard, “require technical engineers to get on the witness stand and prove them.” Oil companies might argue two or three days before a board of equalization that a lot of the oil in the county is in transit, “although it isn’t.” Pritchard says if there is doubt about some oil, his firm removes it from the valuations. “We know what it’s worth. We know we can sustain it in court.” Other County Studies In the last five years, Pritchard said, his firm has completed thorough county revaluations in Midland, Ector, Howard, Mitchell, Taylor, and Ochiltree counties, and a partial county-wide revaluation in Crockett County. It also has county-wide projects underway now in Haskell and Knox counties and is starting one in Rusk County. In each of the named counties where this work has been completed, Pritchard said, “the county courts backed us up 100per cent. This court right here \(in Gal’What does Mr. Wilson recommend?’ ” But in one county he would not name, the county court did back down, Pritchard said. “The backbone that backs us up entirely is the guts of the county commission or the city commission,” Wilson said. “Before we accept employment,” Judge Pritchard said, “we first become convinced that the courts are going to back us up on this. If not, we tell ’em we’ve got too much business now.” Pritchard said the firm’s valuations have resulted in ‘hundreds of protests before boards of equalization, but that only about a dozen of these cases have gone to the courts as lawsuits, and Pritchard & Abbott has never lost a one. He recalled one recent suit. Pritchard & Abbott had revalued properties from which the Pasadena schools draw their revenues. The Sinclair Refinery took the school board of Pasadena into court and asked that they be enjoined from setting a value on the refinery. “The court dismissed the case, and they paid their taxes,” Pritchard said. Truett Pritchard said that “usually it’s not a heavy load for an official to carry” to insist on fair tax equalization. “All he’s got to do is the right thing,” Wilson agreed. Judge Pritchard said one county official in Galveston told him he had planned to retire, but he was going to run for re-election on the strength of the revaluation program. In Taylor County, he said, every county official was re-elected because of the revaluation program. Truett THE TEXAS OBSERVER Page 2 September 25, 1959 Pritchard said, “You’d be surprisedno politics backfired on it” in Galveston. “A big part of our success in Galveston has been due to a splendid court that backed us up till it was over. Without that, a court can give it away,” Pritchard said. Can’t ‘Count Termites’ In an earlier separate interview, Wilson, who has been assigned, with 20 or 25 other P&A men, to the Galveston County program since it was started in 1955, said: “I believe that properties in Galveston County are now as closely related in equality from one to the other as possible, considering the time and money involved in a program.” He said an analytical appraisal of every piece of property, “when you go in and count the termites,” using market, rent capitalization, and reproduction cost approaches, and writing a report on each item of property, would be “impossible.” Then what is done? A physical inventory of taxable assets is taken, he said. Buildings are measured, their materials classified, their construction evaluated, and depreciation of all types allowed. In Galveston two-men field crews asked homeowners pertinent questions about the insides of their homes and sought permission to measure dimensions from the outside. \(When this permission was denied, “We would stand in the street and On residential property, P&A has a base schedule, Wilson continued, computed from the costs of building in a known area \(Houston for the Gulf coast, for termined for the area where the appraisals are being made, and then “we factor one to the other,” taking the base area as 100 percent. Four classifications are considered: the ratio of square footage to lineal feet of wall, location, architectural design, and functional and economic obsolescence, he said. Evaluating land worth, he said, is “simply a matter of using aerial photographs, existing maps, known sales, and valuing the land on acreage, square feet, front feet, as the case may call for.” Wilson, who was educated at Arkansas Polytechnic and had a chemistry major, ,says the best training for this kind of work is “experience.” On industrial properties, he said, P&A runs “a nut and bolt inventory.” Considerations include reproduction cost less depreciation, production from the facilities, economic considerations, and the market. “The degree of inspection depends an awful lot,” he said, “on the cooperation of the company owner. In a chemical plant, say, many things can be hidden from inspection. Most companies in Galveston were most cooperative they assigned staff engineers to our boys, and the inspection was made in conjunction with them. In most cases we were supplied with blueprints and technical information.” It is important that the work be “on the table” and the files on each piece of property available for public inspection, Wilson said. “All property is comparable to other property if you use the same factors,” said P&A’s principal appraiser. “There’s a factor that can be derived to compare any property.” \(Continued from Page life of a successful banker for his three small towns, Alvin, Dickin son, and League City. His banks serve areas in which about 20,000 people live; his customers among them deposit a total of about $20 million. in his banks. He, his col leagues, and his son, Walter Hall, Jr., have a hand in many of the business projects of the towns. He has an insurance agency, a real estate business, a small life insurance company, and is inter ested in a shopping center now. He and Mrs. Hall “hold forth,” alternately entertaining and living quiet private lives, at their country home in League City. They run a few head of cattle on adjoining acreage. Their two-story white-frame house is large, unpretentious, and traditionally serviceable and has been the scene of such political events as a triumphant dinner for loyal Democrats after they won control of the state party in 1944. As a banker Hall every year gives barbecues for all the high school sports coaches in his banks’ areas, and for all the volunteer firemen. Mrs. Hall works as a teller in the Dickinson bank and does a lot of civic work. Weekends the Halls usually spend some time’ on their 34-foot yacht, which they keep moored at the Lakewood Yacht Club in Seadrift, or they speedboat up and down the muddy bayous of this swampy country of mossdraped thickets, where they and some of their children went swimming before oil wastes polluted the water, and where they both used to hunt and shoot alligators when they were younger. The Meanings Of a Poll AUSTIN The meaning of the latest Belden poll tracking the current popularity of possible gubernatorial candidateshas undergone widely varying interpretations in the capital city. The state-wide survey made in the latter part of August showed Daniel the first choice of 41 per cent of the voters with former Congressman Martin Dies a distant second with nine per cent, Lt. Governor Ben Ramsey and Attorney General Will Wilson each with eight per cent, and former Highway Commission chairman Marshall Formby with one per cent. Second place choices: Daniel, seven percent; Dies, 14; Ramsey 19, Wilson 11, Formby 2; undecided, 47. Texas Businessman, the weekly newsletter, called Daniel’s margin “decisive” and a “shock.” Said the advisory: “Daniel clearly can have third term in a walk. Nobody else is close. That’s the shock: lack of strength among other hopefuls.” As for the other candidates with eight to nine percent support, the newsletter advised, “Since polls began, Texas has elected no man Governor who was that far back nine months before vote.” On the other hand, poll-taker Joe Belden concluded the survey “reveals no overwhelming sentiment in favor of any of the prospective S candidates … No t e that Governor Daniel, with whom practically all of the voters are familiar, received less than a majority of first and second place votes combined. This indicates a reluctance of most voters to support him for a third term,” said Belden. Austin Report, giving the poll three lines in its weekly advisory, concluded Daniel “looks pretty unbeatable.” As a political figure Hall takes a lot of razzing from his banker colleagues, and he gives back as much. Ralph Yarborough’s undeviating supporter through the senator’s various campaigns, he has enjoyed seeing some of his wealthy friends come around of late. He is one of Lyndon Johnson’s few all-out defenders in the counsels of Texas liberal Democrats. At the 1959 “Democrats of Texas” convention, at which he delivered the keynote address, for example, he rose during an evening banquet to defend Johnson at some length, with somewhat chilly results. Acknowledging no inconsistency, and with as much enthusiasm as he has manifested toward Yarborough and Johnson, he shares the admiration of Texas liberals for Mrs. R. D. Randolph, the Democratic national committeewoman, and could be expected to be found attempting to conciliate Johnson forces toward her should certain evident political hostilities, active and mutual, lead to an open fight in 1960. His conspicuous position as a liberal Democrat in Galveston County, confounded by his status as a banker, gave a certain body to everything he did on the tax question. County officials and major interests knew he might convert the matter into a political issue at any time. They knew, also, they were receiving letters from leaders of organized labor, a strong political , force in the county, demanding complete equalization of property values, in which their members had an obvious personal interest. ‘The Far Larger Thing’ One day at noon the Observer gathered with Hall and two lawyers for his banks, Cecil Palmer of Dickinson and Ralph Crawford of Galveston, to discuss the county’s tax program. “When you handle GI or real estate loans,” Hall said, “you come across information on taxes paid. Among GI homes which I knew were comparatively equal. in value to each other I found a wide discrepancy in assessed values. I was of course in a quandry as to why that was. I began a more or less casual investigation. The more I investigated the more convinced I was that there was simply no rhyme or reason in the assessed valuationsthat there were wide discrepancies in every type of property.” Hall went to his directors and asked them to approve necessary expenditures to start a campaign to reform the county tax rolls. He warned them the costs might run into many thousands of dollars, he recalls, but he argued the bank had a duty not only to its customers, but to its area. The directors backed him, and he hired George Byess, a Houston CPA, to make a study of the tax rolls. “When the results of our survey were revealed to our board of directors,” Hall said, “they without exception took the position that not only in justice to our stockholders, but also because of the far larger thing that we owed a duty to the people who were ‘banking with us, the people of this community, we should use the resources that were available to us to rectify the obvious inequities of the tax structure.” “We found properties valued at around two percent all the way up to 127 percent,” lawyer Crawford said. “Those reports,” said Hall, “did show a general condition of homes being taxed at from 25 to 40 percent of value, whereas business properties were being taxed at just a fraction of that from five to 12 percentof those amounts.” But Hall did not feel he was in a position to say whether the big industries were not pulling their weight, he says, “because there was no accurate information as to what they were really worth.” “I set about doing what I could to find out who in Texas had a sufficiently large organization of sufficient skill and professional ability, and a background of experience and integrity,” Hall said; “there was one that stood out above all others, and that was Pritchard & Abbott of Fort Worth. “My interest, then, was to have Galveston County enter into a proper contract with the best qualified firm to do this work.” Crawford said that Hall decided the average county valuation was about 15 percent of value, “so Walter assessed his bank at 15 percent of value.” “It’s supposed to be 100 percent,” Palmer remarked. The tax assessor refused to accept this value. In a hearing before the board of equalization, Palmer, Crawford, and Hall “raised a lot of hell,” Crawford recalls, but the board refused the valuation, too. Thereupon, said Palmer, the bank brought an injunction suit to enjoin the county judge and commissioners court from placing the bank’s property on the delinquent rolls. The suit also contained a general charge against unfair and unequal taxation. “We had the stage lighted and we walked into court.” After much disconcerted byplay the court granted the injunction against the county officials. “They just finally folded up and accepted the taxes we offered,” Hall Said. The three believed that the county did not want to have to defend against a lawsuit which asked for a court order that they equalize county taxes. The County Gives In The next year the bank reported only ten percent of its true value. “It was utterly ridiculous,” said Hall. “Incidentally,” Palmer said, “some of