Skyrocketing county tax appraisals in Harker Heights and Killeen are more than just a heavy burden for affected property owners.
The sudden bump in property values and corresponding tax bills have the potential to wreak havoc on the Central Texas economy.
And there’s little that can be done about it, at least in the short term.
In recent weeks, dozens of property owners — many along the Farm-to-Market 2410 / Knight’s Way corridor, U.S. Highway 190 and Stan Schlueter Loop — have expressed anger and frustration over recent appraisals, which in some cases have jumped by more than 500 percent.
In one instance, a parcel of land on Knight’s Way east of Harker Heights High School had its appraised value soar from $16,000 last year to more than $850,000 without any improvements to the property— a jump of more than 5,000 percent, but more importantly, an increase in the owner’s tax bill of about $20,000.
The Bell County Tax Appraisal District — the independent entity that assigns the property values each year — claims these parcels have long been undervalued, and given the area’s growth and market activity, the new appraisals more accurately reflect reality.
The problem is, neither the affected property owners nor the market as a whole are likely to take these skyrocketing appraisals in stride.
Small-business owners hit with major appraisal increases may be forced to lay off employees, relocate their businesses or close them altogether. Owners of rental properties affected by large hikes may have to raise rents on tenants — many of whom will choose to leave.
Some local real estate brokers fear that if enough impacted landowners dump their parcels, the local real estate market will suffer — with the resulting glut in high-priced properties driving market values down.
Sadly, some property owners hit with dramatically higher appraisals may have no choice but to sell.
Whether these landowners are business owners, real estate brokers or individuals holding on to the property as an investment, they likely build property tax payments into their budgets. It’s unreasonable to expect them to pay up to five or 10 times the amount they paid last year without experiencing hardships.
And whereas the county’s chief appraiser justifies the sudden jumps by noting the affected properties have been undervalued for years, there’s simply no justification for making up the difference in one fell swoop.
The land values didn’t jump up overnight; neither should the taxes.
In a “mass appraisal,” as in this case, property values are assessed based on a process that assigns value to classes of property based on size, location and mathematical analysis of market data.
That sounds like a reasonable, somewhat scientific approach. But to those who find themselves on the receiving end of the revised appraisals, it likely seems arbitrary.
Certainly, the timing seems so. If the appraisal district didn’t view lagging land values as a major problem prior to this year, it’s hard to understand why it was necessary to make up the difference all at once — and without warning.
A staggered increase in valuation over several years, accompanied by statements advising the property owners of potential future increases, based on market trends, would have cushioned the tax blow for some landowners and helped them plan accordingly.
Under that system, some property sellers might receive less than what their real estate is worth in the short term, and some buyers might get great deals before the full appraisal amount kicks in, but since the land has been undervalued for several years, a phased-in appraisal seems like a reasonable option.
It all comes down to a conflict between what is legal and what is fair.
State law protects homeowners by capping increases in homestead valuations at 10 percent year over year. However, it is the only real estate category with a cap on appraisals.
State Rep. Hugh Shine, R-Temple, the sponsor of a Senate bill to improve transparency in property tax rates, said recent bills to cap appraisal increases at 10 percent for commercial and rental property have garnered little support from the Legislature.
As a result, commercial property owners in high-growth areas are at risk — and the fast-growing Killeen area is now feeling the repercussions.
In the short term, property owners who want to appeal their appraisals have the opportunity to file a protest, but time is drawing short.
According to Bell County’s chief appraiser, the appraisal district must receive notices of protest no later than Wednesday, preferably by certified mail. Property owners were sent a notice listing property value, a protest form and a date for the meeting of the Appraisal Review Board.
The chief appraiser said residents are also welcome to come by the appraisal district office in person to make their protest. He noted the board can more accurately assess the value of certain properties if others in the area also protest their appraisals, provided they furnish up-to-date sales information.
Still, that won’t solve the problem long term.
Dianna McConnell, a local advocate for landowners protesting the new appraisals, is calling for a mass appeal to Gov. Greg Abbott to order a special session to address the issue immediately.
If that doesn’t happen, impacted landowners may have to seek relief through the courts, perhaps in the form of a class-action lawsuit.
Long-term, the Legislature must address these appraisal issues — either through caps or other safeguards that will prevent property owners from being squeezed out through taxation.
Unfortunately, as long as high-growth areas rely on property taxes to fund infrastructure and provide services, there will be resistance to placing curbs on yearly appraisals.
While letting the market dictate property appraisals is reasonable in the abstract, it shouldn’t be the only consideration when assigning values.
Certainly, there must be a way to accommodate changing property values while taking property owners’ financial constraints into consideration.
If that can’t be done within the existing appraisal framework, maybe it’s time to change the system.