Erath County property taxes see large increase in some places

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The Erath County Courthouse in Stephenville. || RUSSELL HUFFMAN photo

By AMANDA KIMBLE
TheFlashToday.com

ERATH COUNTY (May 10, 2017) – Some Erath County property owners are experiencing a sense of sticker shock.

A man who owns a small collection of duplex-style rental units in Stephenville turned to online records, performing an “across the board search” and took his findings – and concerns – to Facebook this week.

“From what I’m seeing, property valuation and taxes are literally more than double on the majority of these properties that I checked, in spite of the sagging economy in Stephenville,” Kelly Mason, owner of College Farm Road Apartments said.

Looking at the College Farm Road property, the total assessed value was a little more than $253,000 last year. This year, the proposed value is more than $516,000. The total estimated taxes, divided among Erath County, Erath Road & Bridge, the city of Stephenville, Stephenville ISD and Middle Trinity Ground is more than $11,000 in 2017.

Erath County Appraisal District (ECAD) representatives said some property owners have received their valuation notices and others can expect them arrive within the next few days.

Meanwhile, Chief Appraiser Jerry Lee said the mailings are the first step in the process, and values are uncertified and are not final.

“These are preliminary numbers that we go off of to make adjustments,” Lee said. “Basically, the notices reflect the fact that we have gone through and gathered information locally on individual rental rates and made an estimates of expenses.”

He said the income approach is one way appraisers determine value, and the numbers are subject to change.

According to Lee, there are three approaches for finding the proposed value on an income-producing property such as apartment complexes and townhomes.

“We can use the market, income or cost approach,” he said, adding since there are not a lot of apartment market sales to base calculations on and the cost approach is usually the highest, those methods are not typically used locally.

“From what I’ve observed, the smaller 5-12 unit complexes are valued at about one-and-a-half to two times what they would actually sell for in Stephenville for 2017,” Mason said.

And, online records show other rental properties have a proposed value that’s much higher than last, as is reflected in the following information obtained from swdata.com.

Complex Name Proposed 2017 Value Final 2016 Value Number of Units
The Grove $24,028,820   $9,460,950 192
Mustang Ranch $23,807,490   $1,575,190 198
Bluebonnet Apts.    $3,882,610   $2,221,060 80
Texas Terrace    $2,218,490      $633,440 40
Oaktree East    $4,083,790   $2,005,060 74
Summit    $6,402,810   $1,515,710 75
Bosque Crossing $20,711,880 $10,000,000 173
Lillian Street $1,895,650      $916,830 39
Columns $4,638,420  $2,627,460 84

 

It’s important to note that three of the surveyed complexes offers dorm-style living, in which multiple tenants occupy a single unit. The maximum occupancy at The Grove and Mustang Ranch is 504, according to information provided by the city and Bosque Crossing has a potential occupancy of 344.

Meanwhile, Lee said appraisers take rental income for an individual complex and apply that information only to that property, adding the assessment could be better or worse from year to year.

“Older complexes tend to rent for less and a newer complex may be getting $900 per month and be half empty,” he added. “Vacancy and collection losses are included in the calculation. We may be starting at 100-percent potential, but if the units are only renting at 70-percent, we knock it down.”

The occupancy rates at the aforementioned complexes was not readily available at the time of this report.

In surveying properties, Lee said appraisers call rental complexes directly, ask about rates and estimated occupancy, but he understands error could have occurred on either end of the conversation.

“It (a discrepancy) could come from several things, maybe we did not have a number correct,” he said. “It could also be that rents have gone up – if rental income increases, the value of the property goes up. It could also be that some of the property owners brought in actual income and expenses last year and had their values adjusted.”

Lee explained that if protests are filed within the 30-day time frame, values will be adjusted when there is evidence to support the change.

“If the owner of a complex gets estimate of value and thinks we are way off base, they can bring in actual numbers, rent roles and expenses,” Lee said. “We understand a complex may advertise one rate but get paid various other amounts. In those cases, there are adjustments we can make.”

Addressing comments made on social media, Lee said the idea that ECAD appraisers look at the amount of money local taxing entities need to meet their budget and set values accordingly is “ridiculous.”

“That is not how the system works,” he said. “Anyone who has been in a rental income-producing business for any number of years should know how this works.”

Meanwhile, Lee said single-family assessments work differently.

“When it comes to single family homes, we appraise all of those per schedules,” he said. “We are taking it and putting into schedule based on how big and to some degree how old the residence is and making comparisons to the schedules we have. Almost all of those schedules should have gone up in value this year, but not to the extreme of The Grove.”

He also said as with most things – electricity, insurance, groceries – property owners are also impacted by a certain amount of inflation.

“The cost to buy a home increases every year to a certain degree,” Lee said. “We look at properties sold for, find another comparable to those schedules and increase maybe three or five percent. Typically, those properties do not have rental income, so we work off of a sales approach.

“If anyone has paid any attention to media in regard to property taxes, taxes and values have been increasing everywhere. Things are selling for more. We are in a pretty hot market right now, it’s definitely a seller’s market for houses that are within the general population’s income range. This is not isolated to Erath County. In fact, from what I have heard, we have probably gone up less than most counties around us. Tarrant and Hood counties were looking at (single-family housing value) increases approaching double digits.

Lee also said while he hasn’t examined the numbers, he expects an average five-percent increase on single-family homes locally.

For information on your individual property values, protest or payment information, call ECAD at 254-965-5434. The office is located at 1195 West South Loop in Stephenville.


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