May 23, 2012

DFW cities optimistic about growth in property values

Property values are up 2.5 percent across Tarrant County from a year ago, a jump of $3 billion, giving some hope that the market is on the rebound.

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Property values are up 2.5 percent across Tarrant County from a year ago, a jump of $3 billion, giving some hope that the market is on the rebound.

"It kind of tells me the economy has at least flattened out or is up a little bit," Tarrant County Judge Glen Whitley said.

But the bounty didn't fall evenly, according to preliminary assessments from the Tarrant Appraisal District.

In the largest cities, including Fort Worth, Arlington and Mansfield, taxable property values increased more than 3 percent. Grapevine's values rose 6.5 percent and North Richland Hills' rose 5.4 percent.

Among smaller cities, Westworth Village saw an 11 percent jump, primarily from previously tax-exempt properties being added to the tax rolls.

But Haslet and Blue Mound saw steep declines: 10.7 percent and 8.7 percent, respectively.

The results for individual properties were a mixed bag as well.

About 15 percent of residential and commercial properties -- 77,400 in all -- increased in value for fiscal 2012, according to the appraisal district.

However, 25 percent, 129,900, declined in value, and 59 percent, 304,300, had no change.

New taxable construction represents 5,833 properties, or about 1 percent.

Yet new construction lifted the county's property values by more than $1 billion, according to preliminary statistics from Chief Appraiser Jeff Law.

New residential properties added $840 million to the county's net taxable value, accounting for about 1.2 percent of the taxable value of all residential properties, he said.

About $608 million in commercial taxable property was added, or 1.7 percent of all commercial properties' taxable value, Law said.

"There are some properties out there that have been constructed that are part of the commercial sector that are exempt," Law said. "That could be something like schools or something that the city or county owns."

But "we were never going to tax those to begin with," Law said.

Officials caution that the numbers are preliminary and will likely be adjusted as property owners appeal their valuations.

Rebounding values

Fort Worth's property values rose $1.4 billion, or 3.5 percent, to $42.8 billion.

That is exactly what the city expected when it told the City Council this month that its budget gap would be $23.7 million next fiscal year.

Budget officer Horatio Porter expects about a 2 percent gain after protests are heard.

"I believe we've seen property values hit bottom," Porter said. "We won't see double-digit gains like what we saw in the '90s, but it has stabilized and I think we will see slow, steady growth."

The gains won't be enough to prevent difficult budget decisions.

"The revenue just can't grow fast enough to keep up with all of the needs we have in the city," Porter said.

Arlington's preliminary values rose to nearly $18 billion, up 3.8 percent. Budget Manager Mike Finley said that if the values hold until the tax rolls are certified in July, Arlington's property tax revenue for next fiscal year will be $2.1 million higher than projected.

"It's better than we were expecting," Finley said. "We were expecting to be flat."

Finley attributed the bump in valuations to factors such as commercial development and the transformation of a former Trinity River flood plain into residential lots for the Viridian community.

The project, under construction in far north Arlington, is expected to eventually add 15,000 residents and more than $2 billion to the property tax rolls, city officials have said.

Arlington's sales tax revenue for the first six months of this fiscal year is up 5.3 percent. That's good news for the city, which is working to erase a projected $4 million budget shortfall for fiscal 2013, which starts Oct. 1.

In Grapevine, where attractions like the Sea Life Aquarium and Legoland brought in revenue, values increased $394 million.

John McGrane, Grapevine's director of administrative services, said that he hasn't analyzed the appraisal values but that the city expects improvements from last year.

In North Richland Hills, preliminary values increased $197 million, slightly higher than expected. Even taking into account the post-appeals drop, Assistant City Manager Karen Bostic said, the appraisals could put the city back at 2008 levels -- before the recession.

"Hopefully it will mean we won't have to make further reductions like we did in recent years," she said.

Tough times for some

For Haslet, where preliminary values fell by $86 million, the biggest factor was a drop in the value of mineral leases, from $182 million to $103 million, City Administrator Ashley Stathatos said.

One of the more unusual decreases was in Blue Mound, where Mayor Alan Hooks said residents' high water bills are driving down property values. The city's water and sewer system is owned by Monarch Water Utilities.

"People are not going to come out here and buy unless it's a cheap, cheap deal," Hooks said. "That's what's happening -- people are dumping these houses. It's going to be a tough budget next year. It's going to be pencil-sharpening time and time to get out our red pens."

Increases in property values mean little to struggling school districts, many of which are looking to cut staff and programs amid multimillion-dollar shortfalls.

A complex state school finance system, which is being challenged in court this fall, essentially funds schools based on a weighted per-student formula. If a district's property tax revenue improves, the state reduces its aid. If tax revenue drops, the state makes up for the loss.

The Fort Worth school district, for example, had the largest increase of taxable property value, about $945.8 million. If not for the state funding system, that could have meant $9.8 million more for schools. The district is facing about a $40 million shortfall next school year.

"We are happy to see growth in the tax rolls," said Hank Johnson, the district's chief financial officer. However, "it will have little impact on the current funding situation."

In the Grapevine-Colleyville district, the overall taxable value had one of the highest percentage increases in the county, improving 4.6 percent, or $485.2 million.

Grapevine-Colleyville, Fort Worth and many other local districts are among the hundreds suing the state over how schools are funded.

Staff writers Eva-Maria Ayala and Susan Schrock contributed to this report.

Bill Hanna, 817-390-7698

Twitter: @fwhanna

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