Greg Ajemian is prepared for a higher tax bill.
Although Mansfield’s tax rate is lower than it was in the early 1990s, the city has balanced its budget year to year on the back of its rising property values. Those values are up 7 percent over last year, among the heftiest increases in Tarrant County.
It matches the increase in Ajemian’s home valuation and others in his Heritage Estates neighborhood, where the average home value – about $180,000 – also is close to the citywide average.
But while some of his neighbors are protesting their assessed valuations – and Ajemian says he’s sympathetic – he chooses to consider his tax increase a fair contribution to parks, street maintenance and other city services, as well as a return on his investment in his home.
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“There is a pressure on the middle class, no matter what the Fed is doing to prop up the stock market. Both parents are having to work to be able to make it,” he said. “I would rather be in a situation where I have appreciating values.”
City officials agree.
Recent growth of the property tax base has helped the city make up for budget tightening – such as freezing staff positions and vehicle purchases and putting off street improvements -- during the lean years of the economic downturn.
The preliminary 2014-15 operating budget of $44.2 million, which is 5 percent larger than the current year’s budget, includes $1.7 million for capital expenses such as new public safety vehicles and equipment, expansion of the library parking lot and preparation for the city’s 125th anniversary next year. A 3 percent merit raise for staff also is in the tentative budget, which the council is set to vote on next month.
Officials expect the tax rate to remain at 71 cents per $100 of assessed valuation.
City Finance Director Peter Phillis said rising home values do more than bolster the residential tax base, they stimulate the commercial sector.
“It creates synergy in the community and improves long-term value in the community,” he said.
But some taxpayers argue that rising tax bills, whether by tax rate or valuations, still can tarnish a city’s image.
Former City Councilman Dick Littell said that can have an especially chilling effect on the commercial-retail climate.
“Businesses look at things a lot differently than homeowners do,” said Littell, 86. “Taxes are overhead. If you can’t control your overhead because someone says they want to build a water park, that can be very hurtful for you. So if your taxes go up, and theirs don’t, you’re no longer competitive.”
Because Littell is a senior citizen, the tax rate on his property is frozen, but he said he still pays more when his property value increases. As a former councilman, though, he doesn’t quibble much about how the city uses its revenues and believes the city’s growth has been well managed.
“It’s a very touchy thing when the council has to make these decisions,” he said. “Believe me, I was there. I became very anguished over them myself.”
Taxes generated by rising property values aren’t as clearly beneficial for school districts. While the revenues can be used for paying off debt, the state’s school funding formula offsets any gains for operating budgets.
But there are indirect benefits. Mansfield school officials hope to see some of that with the district’s 2011 bond program, a $198.5 million package that required a 3 percent tax rate increase, to $1.54 per $100 of assessed value. The program includes demolishing and rebuilding five elementary schools.
“In neighborhoods where you have a new school, that could be a deciding factor for families considering moving into an area – or, for that matter, staying in the area,” district spokesman Richie Escovedo. “So the financial benefit would be on student enrollment.”
Only once in the past two decades has the city reduced its tax rate, an effort to ease the impact of increased property values on the annual tax bills of its residents. The council dropped the rate by two cents to 69 cents per $100 of property value in 2005-06, but then the housing bubble burst, and three years later, the tax rate returned to 71 cents.
Scott Welmaker, the city’s economic development director, bought his home in 2008, on the brink of the recession.
“The next couple of years it was in a free fall, but now it’s back to where it was when I bought it,” Welmaker said, thanks in part to the 7 percent increase in his home’s assessed valuation, matching the citywide average gain.
“Even though I’m paying more in taxes, it’s showing a positive trend that values are up, and the school districts and cities have more revenues,” he added.
Average home taxable values have increased modestly over the past 11 calendar years, by about $30,000, or 20 percent, compared with the projected value of $183,606 for 2014. But the recession has taken its toll. Average values have increased less than $2,000 since the 2008-09 fiscal year.
Assessed values for new homes are up 61 percent, or $118,000, to a projected $310,000 over the same period. But they, too, were not immune to the downturn. New-home values posted annual declines three times in the last decade, increasing less than $8,000 overall since the 2010-11 fiscal year.
In existing home sales, what’s hot now in the Mansfield market are houses in the $150,000 to $200,000 price range, said Mansfield real estate agent Dee Davey. So far this year, 190 homes in that price range have sold, matching the total for all of 2012, and exceeding the 180 sales posted last year.
“We’re on track to sell 283 homes,” she said. “That would tell me that that is a very doable price range.”
Mansfield was a boomtown when the new millennium dawned. The city issued more than 1,000 single-family building permits in each of the four years through the 2004-05 fiscal year. But the issuances plummeted with the national housing market, to a low of 190 permits in 2011-12.
Officials say the permits are rallying, with 308 issued last year and projections of 350 by the end of the current fiscal year on Sept. 30.
“We think our estimate is conservative,” Phillis said.
Allan Saxe, associate political science professor at UT Arlington, said he believes Mansfield residents are getting a lot of value for their tax dollar, considering the city’s vast park system, attractive housing additions and the managed direction of its growth.
“I think they ought to praise the city for that, because people want to move there,” Saxe said. “If every community had the problems Mansfield has, they’d be in good shape.”