What do you do with the 104 acres of unimproved land where Houston’s former Astroworld amusement park once stood? The land owners are still trying to figure that out, but in the meantime their property tax bill will be substantially reduced, thanks to a decision their attorney recently won for them in Houston’s 1st Court of Appeals.
The background to the 1st Court’s Nov. 8 decision in Harris County Appraisal District v. Houston 8th Wonder Property d/b/a Six Flags Astroworld is as follows.
In 2006, Houston 8th Wonder bought the land where roller coasters for the former Astroworld once stood for $77 million after the park shut its gates for good. The Harris County Appraisal District appraised the property at a value of $74.6 million for the 2006 tax year.
Houston 8th Wonder protested the appraisal under §41.44 of the Tax Code, alleging the “value is over market” and the “value is unequal compared with other properties.” An appraisal review board lowered the appraisal from $74.6 million to $48 million. Both 8th Wonder and the appraisal district appealed that decision to a Harris County district court. The district court eventually rendered judgment in favor of Houston 8th Wonder, ruling that the appraised value of the property was $31.9 million for the 2006 tax year.
The appraisal district appealed that decision to the 1st Court, alleging that the trial court abused its discretion by admitting the testimony of Houston 8th Wonder’s property expert Gerald Teel, alleging that Teel’s testimony was unreliable because of flawed methodology and that he failed to produce certain documents upon which he relied, among other things.
The 1st Court rejected that argument, noting the trial court did not abuse its discretion by permitting Teel to testify based on the comparable values he used in analyzing the value of the former Astroworld location.
“We conclude that Houston 8th Wonder met its burden to show the reliability of Teel’s testimony, and we hold that the trial court did not abuse its discretion in admitting his testimony. In addition, we further hold that Teel’s testimony was legally sufficient to support the trial court’s judgment,” wrote Justice Michael Massengale in an opinion joined by Justices Terry Jennings and Jane Bland which affirmed the trial court’s judgment.
Robert Myers, a partner in Fort Worth’s Myers ★ Hill who represents Houston 8th Wonder, says his client was trying to make the best out of a bad situation by protesting the tax evaluation after the 2007 financial crisis limited the value of the property. His client had plans for a mixed-use development for the property, but that’s never happened.
“It is a unique property and I don’t know how you would appraise it. But number one, my client overpaid for it. And that’s the seminal reason that it was never developed,” Myers says. “The first thing about real estate: If you overpay for the land, whatever you’re going to put on it is never going to work. And that’s why he had trouble attracting financing for it.”
But Kenneth Walls, a partner in Houston’s Olson & Olson who represents the appraisal district, says his client will likely appeal the decision to the Texas Supreme Court. The appraisal district takes exception with the Court’s ruling for a couple of reasons, Walls says.
“One thing is that the property owner’s expert witness lost his work file and we weren’t able to see that,” Walls says. “And the appraisal district’s position is that none of the comparables used were comparable to the Astroworld property.”