Southeast Texans hammered by Hurricane Harvey are still muddling through insurance company paperwork and federal disaster recovery questionnaires, while scores of local property appraisers are scrambling to assess the full scope of Harvey’s damage.
Annual property appraisals have started going out, and Harvey’s floods have made things a lot more complicated this year.
Thousands of property owners along the coast could see their property values — and their taxes — decrease because of wind and flood damage. How much values drop depends on the amount of damage and where owners are in the rebuilding process when their property is assigned a new value.
It’s a daunting task for county appraisal districts, which have to determine those values before they can calculate property taxes for tens of thousands of homes, apartments and businesses.
Local governments rely on property tax revenue to pay for everything from police officer salaries and fixing potholes to educating public school students. The system that determines the amount each landowner owes was complicated and confusing long before Harvey entered the picture.
“I’ve dealt with [disaster] areas that are much smaller in scale, but this is massive,” said Glen Whitehead, chief appraiser for Fort Bend County, which includes many Houston suburbs.
And when it comes to having flood-damaged property reassessed, not all Texans are being treated the same. Under Texas law, taxing entities — mainly cities, counties and school districts — have the option to reassess property values immediately after a disaster. In Harvey’s case, some have and some haven’t.
Harvey’s aftermath has also reignited bickering between Republican state lawmakers over this year’s failed attempts to pass legislation that would have required disaster reassessments — and given tax breaks to all property damaged by Harvey.
But as legislators point fingers and some local officials take criticism for not moving faster on disaster reassessments, a bigger financial debacle looms. Local officials are already predicting that many cities, counties and school districts are facing big financial hits once Harvey-related property damage is fully assessed.
“The impact next year is going to be severe,” Rockport Mayor C.J. Wax said this week at a Texas Tribune event in Victoria featuring officials from coastal cities hit by the storm.
Complicated and confusing
By state law, each property in Texas is assigned an assessed value on Jan. 1. Appraisal districts don’t evaluate every property each year to determine that value. Instead, they use a variety of data, observations and processes to arrive at the figure. That includes voluntary surveys from people who recently bought a home, data from businesses that monitor real estate markets and advertisements for houses.
The appraisal districts then apply estimated values to homes and other property based on other sales, their age, the neighborhood they are in and any recent improvements. Texans can protest the value they are assigned, which is a popular way to fight rising property tax bills. As protests wind down each year, local governments set the tax rate that people pay per $100 of assessed value.
From there, tax assessor-collectors send out tax bills, usually in early fall. Taxes are due when the bills arrive, but a taxpayer isn’t considered delinquent until Jan. 31. Once tax assessor-collectors receive payment, they divvy up the revenues to local governments.
Across the state, tax bills have been going out for weeks already. But for Texans living in jurisdictions that ordered disaster reassessments, what’s listed on their tax bill may not be what they end up owing after local appraisal districts finish their disaster reassessments.
The appraisal districts are now sending workers into neighborhoods, looking at satellite images of this year’s flooding and pulling building permits. Some are also reviewing 311 and 911 calls to get a sense of the location and level of damage caused when Harvey dumped as much as 50 inches of rain on some areas in late August and early September.
They’re also asking homeowners to self-report damage and provide photos, insurance paperwork, repair receipts and copies of federal disaster aid applications.
“We want them to be a part of this process because they have better information than we do,” said Whitehead, the Fort Bend County chief appraiser.
But taxpayers will only get a break from taxing entities that asked for disaster reassessments. That means homeowners could wind up paying city taxes based on their home’s pre-Harvey value and school district taxes based on the post-Harvey value.
And the reassessed value doesn’t apply to the entire year — only the last four months or so since Harvey hit.
Officials in taxing jurisdictions that haven’t called for reassessments — including the city of Houston — have said that there simply wasn’t enough time between the storm and the due date for taxes to tackle such a massive undertaking. Entities that call for reassessments must shoulder the cost of performing them and notifying taxpayers of new values.
State Sen. Paul Bettencourt said last week that the cost shouldn’t be the main factor when local officials decide whether to act. “Taxing entities should worry less about their own revenue streams and more about getting off the backs of homeowners who are trying to rebuild.”
The Houston Republican is among several lawmakers who unsuccessfully tried in this year’s regular and special legislative sessions to overhaul the property tax system. State Rep. Sarah Davis, R-Houston, and State Sen. Van Taylor, R-Plano, each wrote bills that would have made disaster reassessments mandatory, in an effort to lower affected Texans’ tax bills.
“Whenever their home has been totally destroyed, they should not be taxed as if there is nothing wrong,” Taylor said this week.
Those bills and a similar property tax provision never made it to Gov. Greg Abbott’s desk earlier this year. Lawmakers and top state officials have bickered over whether the Senate or the House is to blame. Davis says automatic disaster reassessments got lost in a bigger fight between Lt. Gov Dan Patrick and House Speaker Joe Straus, both Republicans, over what the party’s priorities should be and how far to the right state officials should govern.
“Anyone paying attention could see how there was just this huge clash between the two chambers,” Davis said this week.
‘You can’t do that’
While many Texans with damaged homes won’t get tax relief on this year’s bills, all of them are likely to see their assessed values drop next year. And the appraisal districts are already gearing up to figure what those new values should be.
They’re applying the same methods they’ve used for disaster reassessments. But because the value is supposed to be based on the condition of the property on Jan. 1, tweaks will have to be made since some people will be farther along in the rebuilding process.
In Galveston County, though, Chief Appraiser Tommy Watson plans to value the homes based on their condition immediately after the storm. He said he’s trying provide relief to struggling residents. That will mean less tax money for the city, the county and local schools, he said, but “I’m not having any pushback from that.”
Whitehead, the Fort Bend County appraiser, estimates that the value of property affected by Harvey was $638 million before the storm and could fall to $324 million. But those figures are likely to change as new values are assigned, he said.
Harris County and Houston officials say it’s still too early to estimate the impact on assessed values on next year’s tax base.
But officials in coastal towns hardest hit when Harvey came ashore say massive drops in property values — and tax revenue — are coming.
Wax, the Rockport mayor, said his city’s tax base is expected to drop from $1.9 billion to $1.4 billion after taking a direct hit from Harvey. He said the state and federal governments are going to have to contribute a lot toward his town’s rebuilding. Raising the property tax rate on Rockport’s 10,000 residents after being hit by a Category 4 hurricane isn’t an option, he said.
“That’s unconscionable,” he said. “You can’t do that to a community.”
Source: Texas Tribune Economy