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• HBA MAX Awards Gala • WCREALTORS East Side Bus Tour • CRS Bi-Monthly Meeting • Blackburn Communities Gardens at Mayfield Grand Opening • and much, much more!
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MAY 2017 • VOLUME 22 • ISSUE 1 Details on page 11
THE
PENINSULA AT
ROUGH HOLLOW
A PRIVATE LAKESTYLE NEIGHBORHOOD
The Hidden Tax:
Appraisal hikes pricing out area residents By Riki Markowitz
I
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n January, Mayor Steve Adler gave the annual State of the City speech, titled “The Spirit of Austin.” It was an 80-minute salute to Austin’s growth and how the community is coping well with an unprecedented population explosion. While the majority of the speech was hopeful, there were hints of darkness, specifically relating to property
tax issues and the lack of affordable housing. Mayor Adler warned that “If we don’t change” and “If we stay on the path we’re on, we’ll end up like San Francisco.” Seemingly, the strategy for keeping property taxes from skyrocketing and housing affordable is to study everything San Francisco has done in reaction to its growth and do the opposite.
Cautionary tale San Francisco is the cautionary tale for how a city can get enmeshed in an irreversible housing crisis. But we may already be there. Texas is tied in second place for having the highest average annual property tax bill in the country, according to an article published in USA Today this past April. Of all Texas’ metro areas, Austin has the highest average property tax at $7,012. On a list that ranks states’ average effective tax rate, California is number 35. The average cost to buy a home in San Francisco – just over $1 million – may be far out of reach of housing prices here, but whether buyers are priced out of a million dollar home or a $300,000 home, the outcome is the exact same. Tax cuts or reform are practically election promise clichés. But in the case of Texas’ property tax
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issues, reform is crucial. Texas Association of Realtors (TAR) believes that for far too long, local taxing entities have been permitted to operate in the shadows and clearly have no intention of providing the transparency that people want. While homeowners have a right to appeal their appraised value to the Appraisal Review Board (ARB), a body made up of specially appointed local citizens, those who have appealed say the process is time consuming and the guidelines can be confusing.
Annual tax bill Each year, after property values are assessed, homeowners receive a bill. Based on recent trends, property values are going up and as a result, property taxes also go up – several percentage points. To be clear, says Jack Stapleton, broker and owner of Realty Texas, that is a hidden tax. But thanks to semantics, local elected officials can proudly declare how seldom actual property taxes are raised. And some years, taxes have even been rolled back slightly, all while appraisal values go up. There is a name for what’s happening – it’s called the Hidden Property Tax. In a bid for transparency and honesty, the Texas Association of REALTORS is campaigning to stop local taxing entities from misleading citizens. Anyone can go to HiddenPropertyTax. com for information on the hidden property tax and watch a short video explaining how it works. There are a whole slew of problems here, says Stapleton. According to TAR, the money collected by the appraisal district, “the largest single funding source for community services,” is bookmarked for schools, infrastructure, fire and police departments and many
other programs. Most taxpayers agree that as citizens, it is our responsibility to help fund city services. But there is no valid reason why there can’t be transparency in how tax rates are determined. To calculate the amount of revenue needed by the city, “the taxing authority decides how much tax they need to fund their budget that year by multiplying the current property values by the tax rate,” says Stapleton. However, when property values increase, homeowners’ tax rates are supposed to be rolled back. That has not been happening. Increased property taxes are the main reason why Travis and Williamson County residents are getting squeezed out of their homes and the market. Recently, Mayor Adler recommended raising $600 million over 10 years and using those funds to preferentially house those displaced by gentrification. To raise that amount of money, according to one popular proposal, housing developers would incur a linkage fee on new construction, at about $2 per square foot. If a bill like this passes, it’s almost certain that cost will get passed down to buyers. So the city would be looking at a wave of new homes at an even higher price point, which won’t be a feasible option for the very buyers that the funds are being raised to house. Instead of displacing lower income buyers, those firmly in the middle class will be disenfranchised with this plan. The populations that have it the worst right now are young families and anyone on a fixed income, like seniors and the disabled. Within hours of hitting the market, agents are seeing anywhere from 15 to 26 bids on affordable
Front Page: Continued on page 28
Features of the Month Column: ABoR—Zillow Feed, HBA Parade of Homes Realtor Days & More.. . . . . . . . . . pg. 3 Column: WCAoR—Taxes and affordability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . pg. 7 Column: WCR—Up, up, up go property taxes. . . . . . . . . . . . . . . . . . . . . . . . . . pg. 13 Column: HBA—HBA Parade of Homes is here. . . . . . . . . . . . . . . . . . . . . . . . . . pg. 15 Associates in Progress: Axia Mortgage. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . pg. 25 Special Feature: Million dollar model home wins two MAX awards. . . . . . . . . . . . . pg. 34 Upcoming Events. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . pg. 38