Here is a reprint of a Statesman article that relates
to our upcoming meeting:
Travis County can expect higher
property appraisals
Double-digit increases required by state law
By Laylan Copelin
AMERICAN-STATESMAN STAFF
Saturday, February 11, 2006
The taxable values of Travis County's offices, apartments
and houses are going up dramatically as local appraisers try to comply
with a state law that demands that assessed property values catch up
to the area's sizzling real-estate market.
The increases will be historic and broad, said Chief Appraiser Art Cory
of the Travis Central Appraisal District. Property owners will be notified
of the new values beginning in mid-April.
"We're going to have the biggest reappraisal in Travis County history,"
Cory said. "At least in the 18 years I've been here."
On average, Cory said:
•Commercial buildings and apartments will experience a 20 percent
increase.
•High-end projects could experience 30 to 40 percent increases
for apartments and as much as 50 percent for some commercial buildings.
•Homes valued at $1 million or more could experience a 30 to 40
percent jump.
•Most homes will receive taxable values that are 15 to
20 percent higher. State law limits new taxation to the first 10 percent
of the reappraised value, but tax on the remainder is added in future
years.
There is no annual cap on increases for the taxable value of commercial
buildings, multifamily properties or rental houses.
State law requires local governments and school districts to lower their
tax rates so they do not raise more revenue just because of an appraisal
windfall, meaning the increase in tax bills could be buffered for some
properties.
The new appraisals will affect individual properties differently. For
example, taxes would escalate more on a $1 million home that suddenly
is valued at $1.5 million than a modest home that experiences only a
10 percent increase.
The reappraisal of Travis County property was prompted by the state
comptroller's annual review of local property values. That study, completed
in January, confirmed what Cory expected: Taxable values are badly trailing
sales prices in a market where the October sale of the CarrAmerica building
in downtown Austin set a state record at almost $300 a square foot.
Also, Austin has erased its glut of existing single-family homes on
the market with three years of record sales, and, finally, last year
prices began to rise. In January, the market set a record median price
of $164,000.
The largest increases in appraisals will be focused on the county's
core: all of the properties within a circle of Capital of Texas Highway
(Loop 360) on the west and U.S. 183 on the east, as well as the outlying
portions of the Eanes school district and Lake Travis areas.
Only property owners in the Pflugerville and Manor school districts
are likely to escape double-digit increases. Taxable values there, according
to the comptroller's study, are close to market rates. Also, the taxable
values in the larger school districts in Williamson and Hays counties
appear to be in line with the market.
Charles Heimsath, president of Capitol Market Research, studies real
estate trends. He said he is shocked by the prospect of such large increases.
"It seems very difficult to fathom that much rise in value in only
12 months," he said. Heimsath said the local office market has
an occupancy rate of only 85 percent. He said the area's apartment recovery
is nascent, with rents just beginning to go up the past six months.
"It seems to me the sale of CarrAmerica has more to do with the
irrational exuberance for the future of Austin as opposed to current
conditions," Heimsath said. "There seems to be a disconnect
between what's actually happening in the recovery and these unbelievable
increases." If higher property values translate into higher taxes,
Heimsath said some building projects could suddenly become unfeasible
and the construction industry could "grind to a halt."
Property owners still will be able to challenge their appraised values.
Schools would pay
Cory said he has no choice under state law. It requires local appraisers
to set property values at 95 percent of market value. The comptroller
is charged with checking the work of local appraisers. When they fail
to keep the taxable values near the market rate for two years in a row,
state law penalizes public school districts. The state reduces aid to
property-poor districts, and the tax money that wealthy districts must
share with the state increases.
"Our schools are going to be penalized if we don't do this,"
Cory said.
There are seven school districts in Travis County. The taxable values
in five of them are lagging behind the market. Those are Austin, Del
Valle, Eanes, Lago Vista and Lake Travis.
Austin is the largest. Its taxable value of $40.7 billion should be
$45 billion, according to the comptroller.
Lago Vista, however, faces a more immediate problem because, unlike
the other school districts, this is the second year that its tax roll
was less than the market.
The school district already shares 39 percent of its tax money —
$3.8 million — with property-poor districts. Unless the problem
is fixed, Lago Vista would be forced to share an additional $800,000.
Cory said he plans to appeal the Lago Vista values because he thinks
that the comptroller's study overvalued the thousands of vacant lots
in that lake resort district.
He has no hope of appeal for Austin, Eanes, Lake Travis and Del Valle
because there are plenty of sales, particularly for commercial property
and apartments, to confirm higher appraisals. "The market is very
easy to define," Cory said. "When we have this many sales,
that is the market, and you can't ignore it."
A burden for some
Debi Wehmeier, president of the Austin Apartment Association, said taxes
already represent 60 percent of operating expenses for a typical apartment
complex. "Owners are already shocked at the taxes in Austin,"
she said. "They'll be a whole lot of people fighting their appraisals."
With occupancy rates approaching 95 percent, the apartment market is
recovering, but Wehmeier said rents are rising slowly and remain below
2000 levels. Higher taxes would only add to the pressure on rents, she
predicted. She acknowledged that some apartment complexes sold last
year for more than their taxable value. She said the buyers are placing
bets that the recovery will continue but noted, "This recovery
is very slow."
Susana Almanza, director of the East Austin group People Organized in
Defense of Earth and her Resources, said she is not surprised by the
higher appraisals. She cited a small home in East Austin, 990 square
feet, that recently sold for $325,000. Families that cannot afford higher
taxes on higher appraisals are moving to the suburbs and smaller towns
near Austin. She said East Austin is losing the tradition of one generation
passing its home to the next. "When the elderly pass on, it's hard
to pass their legacy to their children," she said.
