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Property Taxes
Merchants, Businesses, Landlords & Tenants of the Trinity Industrial District & The Design District New Proposed Zoning Information PD 621
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I have spoken with a number of Tax Consulting Companies and they have asked me to warn you that Tax Protests before the Review Board are a two-way street. Your assessed value can also be raised. Please understand that if you go in complaining about a 50% tax increase, and you've had NONE for the past three years, you might easily find yourself in a tight situation. Remember, they have computers and sale "comps" too. One person I know was going to protest a tax valuation on her building because they raised it to $30.00 per sf... but in the Design District, with building comps running as high as $50.00 per sf... I told her to be careful. -------------------------------------------------------------------------------------------------------------------
As Harvey Goff would say, "It's always something". Unfortunately, we are a part of the something. The "something" is Property Taxes. By all accounts I've heard they are up approximately 30% to 50% across the board. Why? Is really not the question. Everyone knows the City of Dallas needs revenue. The real question is, " How can they raise taxes so much in just one year? I thought there was some rule that said they couldn't be raised more than 10% in one year" There is such a rule, but it only applies to residential property. Is there anything we can do? YES! But first you need some information and then some strategies. Information first. You need to be aware that since the early 1990's, when buildings were very much controlled by the Resolution Trust Corp. (RTC) values have steadily inched up. But in a manner not necessarily detectible by the taxing authorities. The cheapest building I sold in 1991 sold for $7.45 per sf. The property tax appraisers didn't even start calling people up to verify "closing" amounts until the late 90's. Nor were they as organized or computerized as they are today. Then too, the prices of buildings rose the most in an almost perfect mimic of the stock market and internet dot-com. era. As late as 1995, prices were still quite low and even as late as 1998, we were still selling buildings outside the Design District below $25.00 per sf. However, as 1999 and 2000 came on, prices soared quickly and significantly. By 2000, some buildings in the Design District had sold for $70.00 per sf. While across Industrial Blvd. prices lagged but definitely crossed the $30.00 per sf level. Supply and Demand scenarios have done their jobs. So how can it be, then, in is this awful economic time, that property values continue to rise and along with them our property taxes. Probably the most direct answer is that as a group, the owners of buildings in the Old Trinity and Design District are the most informed and knowledgeable owners either district has ever seen. The "Stakeholder" meetings about the Trinity Lake Front and Toll Way alignments helped bring everyone together. The Railroad Land sale program helped people define the value of their buildings. And finally, the MU-3 Zoning process and subsequent changes have educated people about a future everyone is anticipating. Is anticipation the culprit? Well, yes, to a great extent it is. How so? If people were anticipating that the value of their buildings (not unlike the value of their stocks) were going to drop dramatically... there would be For Sale signs everywhere. You couldn't give the stuff away (like we did from 1990 to 1994). No, the anticipation is "positive" and property owners have a good feeling about their property's futures. Remember too, that about half of the total square footage of the Trinity Industrial District is Owner - Occupied. On the leasing front, rates have not dropped dramatically throughout the recent downturn. We are only now beginning to see Landlords lower their rates. Renewals are often carried over from whatever they were the last three years. But guess what... 9 out of 10 times, the first thing out of a prospective Lessee's mouth is... Can I buy it... Is it For Sale. ANSWER=No! Currently there are only four or five buildings "For Sale" in Old Trinity and in The Design District, virtually none. Nevertheless, this "state of the District" is not the reason taxes have shot up. Nor is it the MU-3 Zoning, anticipation about the Lake Front and Toll Way or even the owner's inherent knowledge about the values of their properties. Tax Appraise Values are going up because the system is finally catching up with itself. What does that mean? It means that if you look up your property's Tax History, you will see that for the last five or so years (I think that's all they go back to), much of the time, there was either no change in tax appraised value or minimal change in value. The gap between Tax Appraised Value and Street Value for properties sold had grown considerably. As long as the Boom lasted and sales tax revenues were up, it was not necessary to, shall we say, escalate people's property taxes... that makes citizens very unhappy. And that, along with the fact that the City and Taxing Authorities were behind in their "windshield" appraisal methods, made it easy to under-value commercial properties. Now the gap is trying to shrink and the pressure is killing us. And not only that... but it is the worst economic time in ten years to be hit with more taxes! I have poured over dozens of Property Tax Histories this last week as the calls came in and people were so angry. The numbers pretty much tell it all. I guess things are so bad for the City economically that they are looking everywhere to find taxable value and guess what, they've found us.
First, you need to find out about your tax history: www.dallascad.org will bring up the Appraisal District's web site. On the left go to Appraisals, then search by address, then scroll down to see your address in blue and click on it. Bam!... there you have it. Scroll all the way down to the bottom to see the five year history, note that 2002 is the most recent in that grid. You'll have to go back up to get your 2004 ESTIMATED TAX APPRAISED VALUE. Add that to the mix and you'll see the jump. Do a little math. Take your building's square footage and divide it into your 1999, 2000, 2001 & 2002 Appraised Values. That will give you an Appraised Value Per SF of Building. Do it also for the Estimated 2003 Value. If your 2000, 2001 even 2002 Per SF Value is say in the Low $20.00 per sf range and your 2003 Per SF Value is in the mid to high $20.00 per SF range, you can see how "closing the value gap" is effecting your taxes. It is unfortunate that such drastic increases have to come now. However, if you are still way below the free market value of say $30.00 to $35.00 per sf, that is where the % increase argument begins to fail. You cannot attack the reality of numbers below a fair market rate. So, what do you attack? Come to the meeting and find out! Well, come if you can, this will be a first! But also return to this website and watch here for more info. Send in your Blue Protest Certificates if you received your 2003 Blue Tax Statement in the mail and come back to this web site soon for more strategies and suggestions.
Questions Comments: mailto:Robert@TrinityAssociation.com
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