By now, Kendall County residents have received their new property tax assessments and bills from the Kendall Appraisal District. There is something all taxpayers should be aware of:
Kendall County assessment rolls have literally hundreds of lots owned by developers assessed at a fraction of their true market value .
Gary Eldridge (the chief appraiser) has stated the Texas Legislature allows him to value the property less because it is "inventory" held for sale. The method of valuing "inventory" is left up to the chief appraiser, therefore it varies from one appraisal district to another. Eldridge uses a formula of 30 to 40 per cent of market value.
The question needs to be asked if people here in Kendall County realize what a huge tax break is being given to developers; and to their detriment.
We were told that once the houses are sold, the assessed value will increase and be in line with the homes held by individuals. Let us just say, the inventory homes are on the market for one year (and many have been on the market for several years) . This is lost revenue to the city, County and school districts and by all means, unfair to those individuals who own homes; lost revenue that can pay for schools, roads and bridges, fire and law enforcement protection, etc, without having to raise taxes.
I think it is time individual taxpayers make their voices heard by contacting the chief appraiser and your state representatives. Not only should the residents of Kendall County get involved, but our local elected officials have a duty and obligation to help pass new legislation to prevent developers from getting special deals at the cost of taxpayers’ detriment and loss of tax revenues to the taxing entities (BISD, City, and County). Special attention should be focused on this issue by the BISD as they are the largest taxing entity.
In a San Antonio Express News article, "Senator Jeff Wentworth plans to look into local complaints that homeowners and taxing entities are being hurt by a state law that lets developers with unsold subdivision lots seek discounted appraisals." He also stated that he was unaware of the tax code provision.
Wentworth apparently plans to review the Property Code, which gives chief appraisers wide latitude; but said, "It's too early to say whether he would seek changes."
Considering Wentworth's comment that it is "too early to say whether he would seek changes," it is imperative that the residents of Kendall County contact him and/or our representative (to be determined in November) in support of changing the aforementioned Property Code.
Karen M. Wetzel
3 comments:
"Gary Eldridge (the chief appraiser) has stated the Texas Legislature allows him to value the property less because it is "inventory" held for sale."
Karen, am curious as to WHY Eldridge might want to do this. Beyond simply "being allowed", might there be some semblance of justification for this? Has he given any reason? What would be the possible negative side effects of appraising these properties as if they were no longer inventory?
Mark asks “What would be the possible negative side effects of appraising these properties as if they were no longer inventory?” Well, clearly there would be less profit for developers. The ramifications of less profit could translate into a longer development cycle. Depending upon ones point of view this could be positive or negative.
I believe this is more a matter of fairness. An individual taxpayer who owns a home certainly considers it to be an investment. He is holding “inventory” (his home)that he will surely sell sometime in the future. Why should he have to pay a 70% higher tax rate on his "inventory" than a developer does?
Another interesting layer in this issue is that the State laws regarding a lower tax for inventory justify or base this on the premise that the future sale of the inventory will generate tax revenue for the local governmental entity. So, for instance, if you are holding goods in a warehouse and they are later sold, then the local political entity will gain the sales tax revenue. However, in the case of Esperanza and residential properties, it is well established that residential development is actually a drain on the tax base, as it requires more in services than it produces in tax revenue (studies show for about every $1 in tax revenue, about $1.20 is spent in governmental services). Instead of a profit that later realized by the taxing entity, it is actually a net loss when it comes to residential development. If you then factor into this net loss the additional loss of a low tax appraisal over a long period of time (in the case of Esperanza, some areas won't be developed for 10 - 15 years), you really are losing a tidy sum of money.
Given this, I would not expect the holding of residential property/inventory to meet the criteria used for inventory breaks.
This is most likely a result of the very successful lobbying in Austin by developers/builders, etc.
Aside from this, even Eldridge's percentages are below other comparable counties- why did he choose such a low rate? The County is always complaining about not having enough funds for things...
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