DALLAS -- Battle lines are forming once again on the issue of whether commercial property in Texas is undervalued for taxing purposes, setting the stage for another showdown in the Legislature next year.

At stake in Dallas County alone are tens of millions of potential tax dollars – money that could ease homeowners' tax burden or provide new services in revenue-strapped cities, counties and schools.

In Dallas, the controversial sale of property for a downtown convention hotel has renewed the debate about the difficulty taxing entities and chief appraisers have in determining accurate commercial values. In Arlington, a state House committee heard varying opinions on the matter during a recent daylong hearing on appraisal reform.

Businesses and real estate professionals dispute appraisal executives' conviction that commercial property in Dallas County and across the state is undervalued.

But Ken Nolan, chief appraiser of the Dallas Central Appraisal District, and other chief appraisers say the lack of a law requiring public disclosure of real estate sales prices makes it impossible for them to accurately appraise commercial property.

"We are literally required to do our job with one hand tied behind our backs," said Jim Robinson, Harris County's chief appraiser and chairman of the Texas Association of Appraisal Districts.

The net result, he said, is an "undue shift of the tax burden onto homeowners."

Texas is one of only a handful of states without a disclosure law.

Commercial property owners and real estate professionals oppose a disclosure bill, saying sales price isn't the only factor in determining the market value of commercial properties.

The dispute gained renewed vigor this spring, when the city of Dallas purchased an 8-acre downtown tract for about $40 million to build a publicly owned convention hotel. The price tag was almost five times the value set by DCAD. The appraisal district boosted the tax-assessed value after receiving sales data from city-acquired appraisals that Mr. Nolan said showed DCAD's initial value was too low.

Mr. Nolan said it was a good example of commercial property owners hiding sales price information from his appraisers in an attempt to limit their tax liability.

Unlike homes, commercial buildings are valued based on how much income they produce. As a result, appraisers must consider lease rates, occupancy rates, expenses and other factors in a complex process to come up with market value.

Even when chief appraisers have sales data, they don't always accurately appraise commercial property, according to sales disclosure opponents.

Mr. Robinson agreed that sales price is a "starting point." Owners can bring in other information to help with the appraisal process, he said.

The state comptroller's office conducts its own study of school district property values every year by law as part of the state school-funding process. The Texas Education Agency uses the estimates to distribute state funds to school districts. That study suggests Dallas County's commercial values are well below market value.

Commercial property in the county's 14 school districts was valued at $46.76 billion last year by the Dallas Central Appraisal District. But the comptroller's property tax division estimated the total value was 11 percent higher – at $52.12 billion.

If the study is accurate, it would indicate that commercial property in the county's school districts was under-appraised by $5.4 billion last year. That would translate into a loss of $90 million in potential revenue.

The difference between the state and county's value of single-family homes was, by contrast, less than 1 percent. DCAD has access to most home prices through the Multiple Listing Service.

Mr. Nolan and other chief appraisers agree, however, with the real estate industry that the comptroller's figures are inaccurate. They believe the state's annual value studies should be scrapped – an idea the House committee is considering.

The reason: the comptroller sends one person to Dallas, for example, every year to reappraise DCAD's values using a statistical analysis and a random sample of properties.

Mr. Nolan said the state's expert doesn't have access to better information than he has. And he questioned how one person could in a few days come up with a better number than what his team of appraisers culls over a period of months.

The goal of the Select House Committee on Property Tax Relief and Appraisal Reform is to give property owners relief from growing appraisals that increase their tax bills despite tax rate cuts. The committee made a stop in Arlington on July 8as part of a statewide tour to gather ideas for appraisal reform legislation next session.

Gov. Rick Perry's task force on appraisal reform held similar hearings in 2006, but none of its key recommendations became law. Sales disclosure was one of those recommendations, but critics said it was watered down. Sales disclosure bills have died in the Legislature during the past several sessions.

Rep. John Otto, R-Dayton, the committee's chairman, said he would support sales disclosure if he could be certain all 253 appraisal districts would use the sales data appropriately.

"I cannot say all appraisal districts are uniformly applying the law," said Mr. Otto, an accountant. He wants the committee to come up with a set of standards that appraisal districts should meet.

The state's chief appraisers get criticism from both sides.

Cities and counties say commercial property is undervalued because of lack of sales disclosure. But commercial property owners argue their values are too high, saying their annual successful protests and lawsuits are proof.

Chief appraisers note that owners of properties that are overvalued can get the values reduced through the protest process.

But there is no way, they said, to adjust commercial values that are too low for a given tax year. If or when chief appraisers finally get the correct information, they have to wait until the following tax year to adjust the value upwards.

Their point is: why not give us all the relevant information so we can accurately appraise it in the first place?

Commercial property owners respond that even when chief appraisers do get sales information, they sometimes don't get the value right.

Mr. Nolan said most commercial sales prices are eventually disclosed – either in newspaper articles, trade publications, lawsuits or elsewhere. The problem, he said, is that there is usually a lag time of at least a year.

"We get it. But we get it later," he said. "We want it sooner rather than after the fact. Is it fair for them [commercial property owners] to get a discount for a year?"

He thinks that despite some undervalued properties, his office does a good job with commercial appraisals based on all the lawsuits they generate.

"You don't do that by undervaluing property," he said.