News

Motel GM sues MCAD over appraisals

300 to 1,000 percent jump for firms involves 'income tax'
By MIKE BROWN Reporter Editor

Mitul Patel, general manager of Best Western Rockdale Inn has filed a lawsuit against the Milam County Appraisal District (MCAD) over appraisal which saw motel's taxes more than double. Mitul Patel, general manager of Best Western Rockdale Inn has filed a lawsuit against the Milam County Appraisal District (MCAD) over appraisal which saw motel's taxes more than double. This year's appraisal increases for Rockdale motels by the Milam County Appraisal District (MCAD) didn't surprise the general manager of the Best Western Rockdale Inn.

In fact, Mitul Patel is already taking the MCAD to court over last year's appraisal values and he wouldn't mind if some of his fellow owners and operators joined in.

Patel filed suit this spring in 20th District Court seeking to lower the valuations imposed last year by the MCAD.

This year has brought more "sticker shock" for Rockdale motel owners with appraisals increasing between 300 and 1,000 percent.

Taxes double

What happened to trigger costly litigation, usually a last resort for any business owner?

"In 2007 we paid $18,000 in taxes," Patel said. "When we prepared for the next year, we knew there was going to be a big increase and I thought I was prepared for it. I budgeted $25,000.

That year's tax bill was $38,000.

"It was more than double," he said. "And it was because the appraisal district used a formula I think is unfair. It's something that might apply to a big city like Austin but I don't think it should be used in Rockdale."

Chief Appraiser Pat Moraw noted for the past two years MCAD appraisers have used an option which allows appraisers to use motel income over a past year, instead of the condition of the physical plant, to calculate taxable value.

She strongly defends the use of income-based appraisals for motels.

"That's the only method where there's enough documentation to support an appraisal figure," she said.

Appeal

Patel sent representatives to MCAD tax protest hearings last summer.

"I did not attend them but my representatives told me the MCAD's representatives didn't seem very interested in hearing what we had to say," Patel said. That process led to his decision to file a lawsuit.

"I understand attorneys are expensive but this has been such a big jump (in appraisals and taxes) that I can still see coming out ahead after paying attorney's fees," he said. "And if we totally win, the county could end up paying our attorneys."

But it's a long, drawn-out process.

"First, we had to wait, I think 140 days, before we could file anything," he said. "That's why the suit, even though it's over last year's appraisal, wasn't filed until this spring."

"We heard the MCAD's first response and now we're in another waiting period before we can respond," he said.

What happened to the taxes in the interim?

"We h ad to pay t hem, of course," he said. "We're still paying on them."

Patel estimates his tax burden will go up another $2,000 this year.

Settlement

What if the MCAD offers to negotiate a settlement?

"I think that's a possibility," he said. "We'd have to look at it. I can't believe the county/MCAD wants to be in court."

Whatever happens will have implications for Rockdale's other motels.

"I'd like to see other owners get involved," Patel said. "They're welcome to join us."

Moratorium

Patel expresses concern about the future of the motel business in Rockdale, pointing out the Sandow 5 construction business spike is rapidly fading.

There's another motel going in within eyesight of Best Western Rockdale Inn. It will be the third motel on, or virtually on, the US 77 off-ramp onto US 79.

Patel has unsuccessfully sought a moratorium on new motel construction in Rockdale.

"I know some cities have already done that," he said. "Copperas Cove is one. It can be done. You can declare no construction permits will be issued in five years, or some other period of time."

Bottom line

What's the bottom line, so far as Patel's lawsuit.

"I just don't understand why motels have been singled out as an industry," he said.

"It's motels, not gas stat certainly not duplexes. I own some duplexes here. Their appraisals actually went down," he said. "What's so different about motels?"


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The burn ban for Milam County has been lifted. Burning is always prohibited in the county's municipalities.


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