- Houston Home Sales Dropped 8.8% in July with 7,204 Closings, According to HAR [Houston Chronicle]
- West Houston Added Nearly 1.6M SF of Sublease Space in June and July, Finds Savills Studley [HBJ; previously on Swamplot]
- Houston’s Urban Townhomes All About Front-Loading Driveways, First-Floor Living, Small Backyards [HBJ]
- Bearded Fox Brewing Co. To Start Construction on New Tomball Facility [Community Impact Newspaper]
- FreeRange Concepts Restaurant General Public To Debut Tomorrow in CityCentre [HBJ]
- Whiskey Bar Bosscat Kitchen & Libations Slated To Open Near River Oaks District This Fall [HBJ]
- Forthcoming Woodlands Shopping Center Research Crossing Adds 2 Restaurant Chains [Houston Chronicle]
- Renaming 8 HISD Schools Named After Confederate Loyalists Could Cost More Than $1,2M [Houston Chronicle; previously on Swamplot]
- How Houston Businesses Are Capitalizing on the Pokemon Go Craze [Houston Chronicle; previously on Swamplot]
- Harris County Commissioners Support Property Tax Increase or Reallocation of County Funds To Fight Flooding [Houston Chronicle]
- How Houston Racked Up $4B Pension Debt in 15 Years [The Urban Edge]
Photo of the Galleria: Russell Hancock via Swamplot Flickr Pool
Headlines
RE: Harris County Commissioners Support Property Tax Increase or Reallocation to Fight Flooding
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It is good that two of the commissioners have said “no” to an increase. Reallocation is the best way since increased property values across the county means that the County still hauls in more dollars with the same tax rate. They can take money from the Port since the Port squandered $108 million on the Bayport Cruise terminal – devote the next $108 million to flood control.
The problem with front loading driveways is these nice people don’t park their cars in them. And they are too nice of people to park in the street like the common folk so they park in their 15 foot driveway completely blocking the sidewalk. Which is odd since they want to live in walk-able neighborhoods. Urban living without the urban lifestyle, it’s the Houstonian dream.
Re: “How Houston Businesses Are Capitalizing on the Pokemon Go Craze”
What is the “Houston Museum of Natural History” that was mentioned several times in the article? A new offshoot of HMNS, perhaps?
I think our elected officials fail to acknowledge just how big a problem the unfunded pension liabilities truly are. This is something that, left unresolved, will bankrupt the city. As a taxpayer, I don’t want to give the city 1 more penny in tax dollars until they start behaving fiscally responsible. Raising property taxes is not a solution. If you have a boat with a hole in it and you’re taking on water, you plug the hole. Raising taxes is the equivalent of just pumping out the water faster but retaining the hole in your boat. Pension reform is a necessity and should be a top priority or else we’ll become the next Chicago within a decade.
Ah, yes, the old “a tax increase will solve our problems” play. I might be marginally more sympathetic to that idea if they were somehow able to tie it to properties inside flood zones, but I wouldn’t trust them to even get that right.
Reallocation sounds good, especially since this is a county growth plan created issue and not a city of Houston created issue. Of course, you know they’re just going to redirect funds from something like the county hospital district and not the port as alluded to in the article. The county will just cut existing services before reallocating funds tied to revenue & tax base growth, even if they waste $100MM here or there on failed projects.
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I don’t understand the way the property tax issue is constantly phrased though. How are residents already paying “enough/too much”. Who quantifies when enough is you know… “enough”? It’s surely not based on the quality and effectiveness of public resources. When I bought a house I didn’t want to pay “too much” in property taxes so I did the logical thing and didn’t buy “too much” of a house that would require substantial tax payments on. Last I checked everyone has a right to sell their house and downsize still.
Joel, the issue for many people concerning property taxes is that, while the rate hasn’t changed much, the appraisal values have skyrocketed in the last 5 years. So, the average homeowner’s tax bill has increased by 30-50%. That’s a hit to the wallet, when average incomes are only rising less than 5% per year. Even protesting my taxes, my reasonably priced home is now an expensive home in the eyes of HCAD. I have relatives up north, in what we tend to call ‘high tax” states, that are shocked by how much I pay in property taxes. Not to mention sales taxes that are in the top tier nationally.
I’m little bit disappointed that the headline didn’t coin the term: Pokénomics
Regarding the pensions, I really liked the article you could click at the bottom of the one linked above with potential solutions: http://urbanedge.blogs.rice.edu/2016/08/10/houstons-pensions-can-be-fixed-but-as-other-cities-show-us-theres-no-magic-bullet/#.V6yiyEE2LqV
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Offers plenty of sensible steps and shows where Houston is unique compared to some other cities massive pension shortfalls (our employees way under-contribute and growth has not been revised downwards to realistic levels like other cities have done). These are things that could have been implemented many many years ago, but have yet to be. Obviously employees will need to have their pensions trimmed and I’m sure the younger employees will take the brunt of the hit. If I was a young city employee I’d start going against the unions and threatening everyone for a 401k because the unions know whats up and that their own inactions will cause the young ones to get screwed.
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The stinging HAR report makes sense though. The big inventory jump is great news, but people like myself will have to stay on the sidelines regardless and wait for the worst of the oil & gas recession to hit next year because right now there’s still no turnaround in sight.
ShadyHeightster has hit it on the head: even if one bought a “modest” home, the annual increase in property tax valuation (usually the maximum 10% under the state Constitution) ends up taking a bigger chunk out of property owners.
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I’d love it if we could amend the constitution to make the annual maximum increase a more reasonable 3%. Compounding at 10% will double a tax bill in roughly 7 years. Ridiculous.
Joel,
ShadyHeightster hit the nail on the head. Seven years ago, I bought a modestly priced home in a decent slightly run down neighborhood. Now the appraisal district has decided that my home is worth twice what I paid. My taxes are about to do me in. Not even sure I’ll be able to continue to live in this neighborhood.
You couldn’t pay me to live in those new matchbox homes that Khan and other new home builders are constructing nowadays. I’ll gladly take my backyard oasis and portable grill over those tiny backyards and treasure my privacy when sitting out in cool weather reading or meditating.
joel, listen to Shady. Property taxes on our house in the heights have doubled in the past few years. The rate hasn’t changed, but the assesed value has. Effectively making it a tax increase. Is that enough? We also own a house in California appraised at TWICE the value of our home in the heights and pay HALF of what we pay annually to Harris County. But according to your logic since I can afford that much property and then some I should be paying more? Or if I want a more AFFORDABLE tax bill I should buy a shittier property? Maybe since I can afford so much property taxes I should be taxed more…. Turn it into an income bracket type scheme… Your comments are nothing more than the same old “Pay Your Fare Share” argument which holds no water when everyone is effectively paying the same property tax rate….
One major source of funding for flooding projects is the TIRZ system in Houston that controls billions of dollars over the next ten years. This is money that must go to infrastructure. By law, it cannot go to pensions or any other source.
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Even if you don’t live near a TIRZ, when that money is misallocated to bus lanes on Post Oak, hundreds of millions to improve Memorial Park (already a great park!), or otherwise given to developers as construction subsidies, that is money that flood control could exclusively deliver to non-TIRZ areas. Misallocation of
TIRZ funds hurts everyone in Harris County.
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Long story short, the answers are right in front of us. However, they require leadership which we aren’t getting. Who will stand up a lead? Has Radack’ recent debacle opened his eyes that leadership is needed? Time will tell. Better late than never! City Hall still refuses to act.
The other funny thing is, I seem to remember at least one recent bond election for $64 million to go to flood control that was approved, and yet they still talk about raising taxes….
I hope everyone complaining about the high appraised home values does the right thing and ignores them when it comes time to sell.
@Joel
Ah the old, if-you-can’t-afford-it-just-move-already argument. If only life were as simple as you would try to make it. It’s not a matter of “downsizing”. I cannot comfortably downsize to anything physically smaller than what I and my middle-class family live in now which is a small bungalow in the loop bought in 2003. The most sensible alternative would be to move to Kingwood or some other far flung suburbia, which I’m sure you and your ilk would be happy to see.
Memebag for dumb COTD. You make it sound as if everyone is on the verge of selling their house.
People, quit focusing so much on appraised value – it’s already limited to 10% annual markup so many properties are assessed at well below market value due to the recent runup in prices – and focus on the City Council, Commissioners Court, and other governing bodies of taxing jurisdictions that actually set the tax rates and approve the budgets. Not that I’m praising HCAD and other county appraisal districts for doing such a great job, but it’s the taxing jurisdictions that get off easy in the current system. Make them LOWER their tax rates when these kinds of windfalls occur; don’t do stupid Proposition 13 b.s. legislation that screws everything up. If you want a California system, move there.
@Jesus, I’m assuming this was a joke/troll post based on the namesake, but i’ll bite – WWJD? I of course completely disagree. My family rents in a duplex. While we’d be comfortable with more, it’s a bit rich/ignorant to say that we’re not already comfortable because we own too much junk to squeeze into 1100 sqft or that someone may have to share a room with another person/we don’t have our own private yard & garage, god forbid. In any other comparable sized metro in this country with similar access to amenities we’d be living with much lower standards of living, but families in those cities still continue to adapt and thrive because they’ve chosen to make certain sacrifices in order to access other services and amenities in their place.
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And yes, moving to Kingwood is a sensible solution for a middle class family. In most metro’s you can’t even find families within 5 miles of the downtown district.
While I understand everyone’s concerns I don’t think the responses broached the subject I was hinting at. What I’m saying is that any given individual’s financial burden for homeownership should not set the bar on funding for a city of millions. The level of revenue required to properly manage growth and maintenance should determine property and sales tax rates and would by nature limit the need for tax increases thereafter.
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Home valuations are just a function of supply and demand. In times of a supply crunch as we recently had tax payments will increase far quicker than income, but that’s just a side effect of living in a state with high property taxes and no income tax. Everything eventually shifts to sustainable norms and obviously the past few years was never sustainable no matter how much people wanted to believe so. The incomes gains are already gone and the energy industry still has further to fall. It does not signal a defect in the system or that we should bring the future health of the city to a standstill. In similar manner, a churn in homeownership because of a changing employment base with access to higher incomes does not mean we should cap the future potential of the city for the benefit of current residents. Neither is it a new or unique issue for large metropolitan areas. It just means we need to find ways to deal with the pain and allocate a part of that growing tax base to alleviate. Of course it doesn’t work like that in reality, but that’s a separate issue altogether. “Aging in place†without an inter-generational family for financial support is not a historical norm or a right.
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I get it, inflation makes things more expensive. I can assure you inflation is no prettier for the 38% of Houstonians that rent or the large majority of that percentage that will never have the incomes to own a home. We’re all in the same boat, but some suffer much more during times of revenue shortfalls (children and the elderly make up the three largest population groups living in poverty and are the first to feel the pain) or when services and infrastructure is not adequately maintained. And I too could care less how much any specific one of those people suffer because the end goal should be on maintaining the health and growth of the city so it can continue to provide the same standards of living for future generations.
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But yes, I’m a millennial so the harder property taxes bite the happier I am because it means valuations are unsustainable. The townhomers living either of side of me pay about the same in annual taxes as I pay in annual rent. To me that’s just insane, and the 2nd reason I can’t bring myself to buy in this current environment despite growing inventory.
@Local Planner, Thank you for the California comment. I stayed in Texas while everyone else left because I believe a simple system rather than a cobbled together set of handouts and restrictions for varying constituent bases can provide a city with better potential to adapt and thrive.
Isn’t the debate on county flood control improvements a bit like whether timing traffic lights better will eliminate traffic jams? The county only owns a tiny fraction of land and would need an unprecedented and massive eminent domain campaign to be able to acquire enough land to really end flooding problems. Why not work with the City to implement better development rules and offer some carrots to retrofit existing properties to help control runoff and better detain/retain storm water. Right now, everyone shoots storm water in to the storm sewer system as fast as they can. Walk down any suburban or urban street in the county and you will see PVC pipes poking out of every yard to help dump water from french drains and box drains into the storm sewers as fast as possible. And you will see commercial properties covered in concrete with giant drains flowing into huge sewer pipes to push water to the bayous as fast as possible. Why not require or give tax benefits for bioswales, semi-permeable paving, cisterns, native prairie grasses, green roofs and other runoff mitigation strategies? The county and city could and should do a lot more. But they do not have a silver bullet. The flooding problems are bigger than the county and city’s ability to implement new flood control infrastructure. The answer to Houston’s flooding problems are staring at us when we look in the mirror. As it was once famously stated: “Ask not what your flood control district can do for you–ask what you can do for your flood control district.”
joel you don’t know what the fuck you’re talking about….. and other dude, hcad caps at 10% annually only with homestead exemption….. get over yourselves… nuff said….. love this blog filled with amateaure socialist wanna be’s!!!!!
Joel, stick with bitching about plantings blocking site lines at intersections and leave your political crap for someone else. As soon as your beliefs start costing YOU money you’ll quietly protect yourself.
As several posters have mentioned, tax bills have skyrocketed across the city due to appraised value increases, even for homes that haven’t been improved. In addition to this, within the past decade an enormous amount of high-value infill development has occurred throughout Houston, multiplying the city’s tax take per acre of land in many areas.
The city should be swimming in money! I get that the revenue cap has forced the city to adjust its tax rate downwards, but it was stable from 2009-2014 before finally ratcheting down. Even with the lower tax rates, many folks’ total tax bills are still increasing thanks to higher appraisals.
Joel: Ayn Rand much?
Yeah, was just a long winded stream of thought before the miserable traffic yesterday anyhow. Drifted on the wrong topic, which was really market distortion, which makes me a socialist? And yes, damn the trees.
@joel: “And yes, moving to Kingwood is a sensible solution for a middle class family. In most metro’s you can’t even find families within 5 miles of the downtown district.”
What are you talking about???
If you’ve never owned property or can’t understand the economics of balancing a budget while paying property taxes then you’re disqualifying yourself from comments such as recommending to downsize in the event you can’t pay property taxes.
Ummm…okay, about that 10% cap on appraisal increases. Lets say that you’ve been fortunate enough to have the assets and good credit to have purchased a home in the first place and that its value subsequently, substantially, and disproportionately increased relative to the rest of the tax base. You are now wealthier and your rate of wealth accumulation has been substantially greater than other constituents in your jurisdictions. Your tax burden has also increased, however not in proportion to your share of the tax base. You are among society’s most fortunate AND you’re getting a tax exemption to boot.
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What that really means is that to make up the cost of the exemption, the entities whose levies comprise your total effective tax rate must set each of their tax rates at a higher rate than they would otherwise. These entities are distributing the exempted share of your tax burden onto people whose properties have not appreciated as much in value.
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With that in mind, honestly I have a very difficult time thinking of a sound basis in public policy for the appraisal cap. Perhaps an amount greater than 10% should result in some option to defer payment without a large penalty or something such as that, just to give a person ample time to get their finances in order or otherwise to cash in, but…fundamentally, any exemption to one person on the basis of their good fortune is a burden to another person on the basis of their bad fortune. It makes no sense!!!
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Now, honestly I would be very willing to entertain arguments that maybe Texas places too great a burden on property taxation and that that system should be reorganized or reformed. It is functional with some entities, but not with others and I’m certainly not married to it in principle. However, if we’re going to have it then equity in taxation should be *the* paramount objective and all exemptions should be implemented with extraordinary judiciousness.
Wow, one person called Joel a socialist and the other called him an extreme libertarian (at least I think that’s what the “Ayn Rand much?” comment was supposed to mean). I don’t see how the two could be any more different. You know the quality of discussion on this forum has gone down when people are just looking for ways to attack others without contributing anything to the argument.
“Your tax burden has also increased, however not in proportion to your share of the tax base. You are among society’s most fortunate AND you’re getting a tax exemption to boot.” ……………………………………………………………………… – can you explain this in laymans terms? how the hell does someone paying more property taxes get a tax exemption?
“fundamentally, any exemption to one person on the basis of their good fortune is a burden to another person on the basis of their bad fortune. ”
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I’m genuinely trying to understand this concept as I do not comprehend the argument presented as if life were a game of roullete or black jack in a casino… Sure some people are well more gifted in life than others but that doesnt mean that those who wish to make their lives more bountiful should be penalized by the misfortunes of others…. thats what i gather from this….
@ Toby: Imagine an economy of two houses at the end of a long road; they use property taxes to pay for this road, which they financed and are paying off in addition to putting money into a sinking fund for repair and maintenance. (I’m going to try and keep the math as simple as possible, not perfectly realistic, not adjusting for inflation.) To do this, they require $2,000 per year. The driveway is vital to the marketability of both houses. They each start at $100,000 in Year 0, so the tax rate is set at $1.00 per $100 of value. In Year 1, one appreciates to $105k and the other is $125k, so the total market value of the tax base is $230k but the tax base is only $215k. The effective tax rate is lowered to $0.93. The $105k house now pays $977 and the $125k house get assessed at $110k and pays $1,023. However, without the 10% cap, the effective tax rate would be $0.87, the first homeowner would pay $913, and the second homeowner would pay $1,086.
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Okay, now imagine that both homeowners bought and financed their homes in Year 0 and on the same terms. They are 80% leveraged; let’s figure that transaction costs are always paid by sellers and will amount to 8% of the value of a house if it is sold. After one year, the first owner had put $20k down and had an unrealized gain of $5k; but if he had to sell the house, then net of transaction costs ($8,400) he’d still be $3,400 in the hole. The second homeowner also put $20k down but had an unrealized gain of $25k; and if he sold the house, he’d pay $10k in transaction costs and also recognize a $15k gain, plenty enough to cover any tax increase. In fact, the more that his taxes increase relative to his neighbor, the better off he is; and for this, his less fortunate neighbor pays MORE.
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Again, I’m willing to consider that maybe a property tax wasn’t the best setup here, but that’s a different subject. If we’re just talking about the appraisal cap…yes, it is a kind of exemption which shifts a portion of the tax burden from those who are fortunate enough (or diligent enough or industrious enough, whatever) to have it to those who are least able to afford it. The math demonstrates it.
um yeah…. that still makes no sense….. 10-25k equity? really? come on dude…. you are way out of your league….. time to toss ya in the joel bucket fella!