Some flooded homeowners get tax relief
Certain school districts have approved reappraisals for properties that were damaged by Harvey’s deluge
Facing enormous home repair bills after Hurricane Harvey flooded their Katy home, Cynthia and Gene Krueger received a pleasant financial break.
Earlier this month, the Katy ISD school board voted to reappraise all storm-damaged properties in its district, including the Kruegers’ two-story house.
With their $311,000 home value certain to be lowered to reflect the damage incurred during Harvey, the Kruegers can expect to pay hundreds of dollars less in property taxes this year — money that can now go toward renovating their gutted first floor.
“That will, for us, be a big help,” Gene Krueger, 52, said Wednesday during a break from sanding kitchen tile adhesive.
The devastation that
was wrought by Harvey and subsequent flooding has school boards across the Houston area debating whether to follow Katy ISD’s lead in ordering reappraisals, moves that could bring tens of millions of dollars in tax relief to property owners as they recover from the storm. The boards in the Spring Branch and Conroe school districts have already approved reappraisals, and the Lamar Consolidated board voted late Thursday to approve reappraisals. Houston ISD and others are contemplating the move.
“This is the right thing to do,” Spring Branch ISD Trustee Katherine Dawson said recently. “I think it really just reflects our core values, because we’re all about collective greatness and being there for our community.”
Most would save hundreds
For the average homeowner, a property reappraisal would likely save hundreds of dollars, while owners of larger residences and businesses could save thousands. In Houston ISD alone, a reappraisal could provide tax relief to an estimated 105,000 property owners, many of whom lost countless personal items and remain unable to return to their homes.
Property appraisals are typically issued at the beginning of each year, but state law allows taxing authorities, such as school districts, to reappraise stormdamaged properties immediately after a natural disaster. Using the new, lower post-storm valuation, taxing authorities then prorate the amount of property taxes owed in 2017.
School districts levy the largest local taxes in the state, accounting for roughly 40 percent to 60 percent of property taxes, depending on location. Several other local taxing authorities have ordered reappraisals, including Fort Bend and Montgomery county governments. The city of Houston and Harris County have not voted on whether to reappraise.
The Texas House and Senate unanimously passed separate bills earlier this year that would have required reappraisals following natural disasters, but the bills stalled and never became law.
Not without cost
For school districts, the reappraisals carry two significant costs — which could prevent Houston ISD from providing its property owners with tax relief.
A reduction in property values means less tax revenue for school districts, some of which are already financially strapped because of a decline in state funding and rising employee costs. Houston ISD, for example, used $106 million in “rainy day” funds to balance its $2 billion budget this year.
School districts also have to cover the cost for county appraisal districts to reappraise storm-damaged homes. In Harris County, each property reappraisal is expected to cost $25 to $30.
Rene Barajas, Houston ISD’s chief financial officer, told state legislators last week that the district “probably won’t do a reappraisal” after initial projections showed it would cost $40 million in lost property taxes and $10 million in appraisal district bills.
But district officials said Thursday that Barajas’s initial estimates were high, and further research shows the cost to perform appraisals would actually be $2.6 million to $3.2 million. An estimate on the property tax loss wasn’t immediately available.
Houston ISD Board President Wanda Adams said trustees haven’t made a final decision on whether to order a reappraisal. She plans to meet with district officials Friday to discuss the topic.
“Until I hear from them, I really can’t say what we’ll do,” Adams said.
State stepping in?
Houston-area districts that have already ordered reappraisals said they expect the Texas Education Agency to reimburse them for much of the costs.
Katy ISD officials said they’re planning for the state to cover two-thirds of lost property taxes. As a result, the district expects to pay $1.5 million to $3.5 million out of its own pocket, Superintendent Lance Hindt said.
Conroe ISD board members expect state help as well, reducing the estimated out-of-pocket cost from $1.4 million to $350,000.
Houston ISD officials said they didn’t know yet whether the state would help the district financially with reappraisal costs.
For some districts, the loss in property values could reduce the amount of funds owed to the state under the so-called “recapture” law, which is designed to balance funding between property-wealthy and property-poor districts.
Jack Barnett, spokesman for the Harris County Appraisal District, said it’s too still early to provide an estimate of the storm’s impact on property values. He advised property owners to take photos of storm damage and keep repair estimates and invoices in case local school districts order reappraisals.
“We’re still trying to gather information and still have appraisers out in the field looking at properties,” Barnett said. “This is something new for us. We have never done a disaster reappraisal.”