Commercial valuation baloney

This story about commercial property valuations rising is no surprise, but there’s a staggering piece of baloney in it that really needs a response.

Commercial property values in Harris County increased an average of 34 percent this year amid a strong local economy and pressure from the state comptroller to increase appraisals, Tax Assessor-Collector Paul Bettencourt said Tuesday.

The average appraised value of commercial property increased from about $981,000 to a little more than $1.3 million, Bettencourt said. Ten ZIP codes, including all of downtown Houston, saw average appraisal increases of more than 50 percent.

Bettencourt called it the highest one-year increase in at least a decade and said the cost will be passed on to consumers as businesses raise their prices to pay the bills.

“It’s a hidden tax that people don’t really understand,” he said.

OK, let’s mention again that taxes are always too high as far as Paul Bettencourt is concerned. If there is some level of taxation that is acceptable to him, he’s never specified it. It would be more honest for him to simply come out and say that he thinks property taxes should be abolished and not replaced by any other revenue source, since that’s the ultimate conclusion his logic leads to, but he knows that would never fly so instead he plays the tax cut game for all it’s worth. I don’t even know why anyone bothers quoting him on this any more; he could save himself and the reporters some time and effort if he simply recorded all his sound bites as MP3s and made them available for download whenever a tax-related story was in the paper. It’s not like he’s ever going to change his tune, after all.

But that “hidden tax” bit is such BS that it just takes your breath away. Given that we’re not living in Paul Bettencourt’s fantasy world, in which county government would stop spending vast sums of money on such frivolities as roads, drainage, the criminal justice system, and so forth, the money to fund those things has to come from somewhere. If it’s not coming from the “hidden tax” of commercial property taxes, where will it come from? Why, residential property taxes of course, where at least the amount you’re being chaged is right there for you to see. I’m sure that would be a great comfort to all of us every December when we get our tax bills.

Anyway. We can certainly argue about whether or not commercial properties are being taxed too little, too much, or just enough – I happen to think that despite that 34% hike in appraisals, they’re still being undervalued – but let’s not pretend that burden isn’t going to be placed on someone, one way or another.

Significant sales of downtown buildings, plenty of new commercial construction and a low vacancy rate among office buildings played a strong role in pushing values up, said Jim Robinson, chief appraiser for the Harris County Appraisal District.

But he also blamed some of the increase on the county’s ongoing tug of war with Comptroller Susan Combs, whose office studies property values throughout Texas to ensure school districts are receiving the appropriate amount of state funding.

Combs has argued that HCAD under-appraises commercial and apartment property in several area school districts, including Houston and Cypress-Fairbanks, shifting the tax burden away from businesses and onto homeowners.

Undervaluing commercial property also allows districts to capture more than their share of state aid, since districts with lower property values receive more funding than their wealthier peers.

HCAD contends the comptroller is not properly accounting for the values set by the appraisal review boards that rule on protests filed by taxpayers.

The comptroller’s office is expected to release its final report on 2007’s tax rolls in July after an administrative hearings officer rules on appeals from districts and taxpayers.

“It’s a difficult proposition,” Robinson said. “We’ve had significant increases each of the last two years, and they have not been enough for us to get a finding from them that we’re appraising commercial property at full market value.”

Robert Wood, director of local government assistance and economic development at the comptroller’s office, said it would be premature for him to comment on HCAD’s preliminary appraisals.

But he said the comptroller’s role is being vastly overstated. Instead, he insisted, the comptroller only wants to inform the Legislature of the values being assigned so it can determine whether school funding is being equitably distributed.

“That’s our goal,” he said. “It’s not to have a particular county or city or school district raise values or lower values.”

Bettencourt and Combs have had this argument, at least publicly, since last year – see here and here for some background. The dispute is over the interpretation of the relevant state law, and Combs has conceded that Bettencourt’s reading may be the correct one. In fact, this quote here makes it sound like they’re backpedaling some more. I hope that’s not the case, but as I don’t expect Susan Combs to be a crusader on this issue – she wants to be Governor some day, and this wouldn’t exactly be a winning issue in a GOP primary for her – I won’t be surprised to see the Comptroller’s office see things Bettencourt’s way when that report comes out.

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2 Responses to Commercial valuation baloney

  1. Charles Hixon says:

    Bettencourt is not talking to you. It is election year. He’s talking to his base which includes the Chron. – considering how they’ve handled their appraised value more recently. Trautman needs to have a populist rebuttal or Bettencourt will claim it.

  2. Greg Wythe says:

    According to Bettencourt’s logic, electricity dereg has been a hidden tax on us as well. Unless, of course, those rising costs don’t get passed our way somehow. Maybe an enterprising Chronicle reporter will ask Bettencourt to follow his logic a bit more conclusively and see if he wants to do anything about those costs.

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