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REAPPRAISING THE GOVERNOR Rick Perry’s private tax protest. by Andrew Wheat Long before he got national attention for secessionist foreplay at Tax Day “tea parties,” Gov. Rick Perry quietly launched a personal tax revolt. In March 2001, Texas’ new governor bought an exclusive lot on Lake LBJ’s Horseshoe Bay. Horseshoe Bay Republican state Sen. Troy Fraser sold Perry the Hill Country tract six months after Fraser bought it, along with an adjacent one, in the ritzy Peninsula development. Horseshoe Bay Resort’s Web site calls the Peninsula its “most prestigious address,” adding, “Only 10 legacy waterfront estates lie behind its magnificent gated entrance and the Italian fountains with their distinctive lion head statuary.” When Perry received his first property-tax assessment for this “prestigious address;’ the lion in the Governor’s Mansion shook his majestic mane and issued a roar of protest. The Burnet Central Appraisal District had pegged the lot’s value at $414,700 for tax purposes. After Perry protested, the district slashed its appraisal to $313,762, the price the governor said he paid to Fraser. The district stuck to this appraisal for six yearsduring the now-notorious real estate bubble. The governor had coveted waterfront property. Connie Barrington, who has sold Horseshoe Bay real estate for 25 years, told the Observer, “We are running out of waterfront!’ According to Burnet appraisal district Chief Appraiser Stan Hemphill, attorney Colleen McHugh of the defense filed a protest on the governor’s behalf in November 2001. At the time, McHugh was Perry’s chair of the Texas Public Safety Commission. The protest argued that Perry’s lot was worth $100,000 less than the appraised value. In December 2001, days after Bracewell announced it had recruited Perry Chief of Staff Barry McBee as a lobbyist, the district agreed to reappraise Perry’s lakefront lot at the stated purchase price. That first year, the devaluation lowered Perry’s tax bill from $8,418 to $6,308. Over its six-year life, the lower appraisal kept more than $14,000 in the governor’s pocket that he otherwise would have payed as taxes to local government entities. \(More than 6o percent of the district’s tax money goes to the Marble Falls Independent Burnet District Appraiser Tammy Ribera says that a sales price is widely regarded as the best indicator of a property’s valueprovided the sale is “arms-length:’ The term usually means a deal made by two parties with no special ties with The entrance to the Horseshoe Bay Resort. one anotherfinancial, familial, politicaland no incentive to stray from market value. The Texas Tax Code, the authoritative source on this issue, defines “market value” as the price a property would sell for if “both the seller and purchaser seek to maximize their gains and neither is in a position to take advantage of the exigencies of the other!’ The arm that separated Perry from Sen. Fraser was stubby at best. The two politicians have been friends since they were high-schoolers, when they met through Future Farmers of America. When Fraser made his successful first run for the state House in 1988, he did so at the prompting of thenDemocratic Rep. Rick Perry. During the two years preceding their land deal, then-Lt. Gov . Perry tapped Fraser to chair a special Senate Subcommittee on Technology and Business Growthincreasing the political clout of Fraser, who now chairs the Senate Business and Commerce Committee. A Burnet district appraiser says tax protesters typically don’t volunteer information indicating that a purchase may not have been arm’s length. Chief Appraiser Hemphill says he does not recall any arm’s-length concerns about Perry’s purchase. He says appraisers typically work with limited information. Briefed on the relationship of Perry and Fraser, Hemphill declines to discuss the specifics of the case. “If I knew a lot of information about something [like that], it could question whether that’s an arm’s-length sale. Was it or was it not? I don’t know,” he says. Art Cory, who heads the Texas Comptroller’s Property Tax Division, says, “Most appraisers aren’t going to have this [kind of] information. There’s nothing there that would strongly indicate that it wasn’t an arm’s-length relationship;’ Cory says. Typical flags, he says, are sales by parents to children, or sales by parent companies to subsidiaries. From when he worked at the Travis Central Appraisal District, Cory recalls a politicianhe declines to name the namewho filed a tax protest containing a questionable sales price. He says the district rejected the price because it was markedly lower than what comparable properties fetched. “If there’s some suspicion that a relationship caused the sale MAY 29, 2009 THE TEXAS OBSERVER 23