Government budgets typically involve billions and/or trillions of dollars! Legendary Illinois United States Senator Everett Dirksen allegedly quipped “A billion here, a billion there, and pretty soon you’re talking real money.”
Whether apocryphal or not, Dirksen’s remark about real money versus government monetary, fiscal, and tax policy highlights the mind-numbing effects of large numbers. Ironically, it is the smallest government numbers that have the biggest impact on AATC members.
In Texas, school districts and local governments (cities, counties, hospital districts, community college districts, etc.) overly rely on property taxes to fund their operations and service their debt obligations.
Property taxes are expressed as “per $100” of value or “pennies on the dollar.” So, a property tax rate of “.75” means that for every $100 of value a property owner pays $.75 in taxes. Tax rates appear insignificant; however, do not be fooled. When applied to the appraisal district’s estimated value of your property, the amount of taxes assessed is big, too big.
For decades, Texas property owners have faced a never-ending dilemma: tax entities set the rates, but appraisal districts set the values. This heinous alliance enables the appraisal district and local governments and school districts to openly play the “blame game.” Governments and appraisal districts blame each other for the ever-increasing property tax burden. This duality enables local government officials to decrease their tax rate (thereby getting political kudos from their voters) knowing that the appraisal district has substantially raised property values; therefore, allowing the local government to increase tax revenues while simultaneously “lowering taxes”.
To calculate your property’s local government and school district tax burden, multiply the appraised value by the tax rate:
Appraised Value x Tax Rate = Property Taxes Owed.
For example, a $20 million asset with a $.75 municipal tax rate would pay $150,000 in city property taxes. Tack on county taxes ($50,000) plus school tax rates ($275,000) a typical AATC member property is paying more than $475,000 in property taxes.
For owners, the real hit is value: taxes drive down NOI which (depending on Cap Rate) drives down value. Property taxes are a double negative for owners!
A little tax here, a little tax there, and soon your talking real value.
AATC PAC GOLF TOURNAMENT – A great way to help address the property tax burden is to support our AATC PAC by participating in our Fall Golf Classic on Thursday, October 7th, from 8:00 a.m. to 2:00 p.m. at Texas Star Golf Club in Euless. This is a day of fun on a beautiful golf course, meant for networking with all golfers and sponsors throughout 18-holes of golf.
Suppliers, invite your clients or prospects to join your foursome. Owner/Managers, treat your team members to a day away from the office. No matter who you play with or what your skill level is, your participation is appreciated and helps AATC PAC continue to support local elected officials who give a voice to the multifamily industry.
ELECTED OFFICIAL MEETINGS – AATC members and staff proactively engaged with local and national elected officials in September. On September 8th, AATC and AAGD hosted a property tour for Congresswoman Beth Van Dyne(R – TX 24) at AATC member property The Silverlake Apartments in Grapevine. Big thanks to Cushman-Wakefield for hosting us. AATC Government Affairs Committee Chair John Gillespie and Industry Research Committee Chair Nicole Zaitoon met with Arlington City Councilmember Helen Moise to discuss industry data, affordable housing, and taxes. AATC staff met with Fort Worth Mayor Mattie Parker and Fort Worth City Councilmember Michael Crain, as well as attended an Arlington fundraiser for former Fort Worth Mayor Betsy Price hosted by County Judge Glen Whitley.
CRIME PREVENTION – Domestic violence and property crime continue to rise throughout Tarrant County. COVID stress and population growth mean an increase in drug-related criminal activity and violent crimes. AATC has a long-term, strong partnership with Tarrant County Crime Stoppers. Crime Stoppers is a very, very effective tool to reduce crime. Crime Stoppers allows individuals to anonymously report tips. Often those who witness a crime, see or hear suspicious behavior or talk, or suspect someone of wrongdoing won’t reach out in fear of “being involved” in a crime, of retaliation, or having to appear in court. Crime Stoppers’ system is set up to be 100% anonymous and confidential, giving every citizen the safety and freedom to make their community a better place to live. As always, if there is an active emergency at your property, call 911. To learn more, go to: https://www.469tips.com/
For additional information on AATCs advocacy initiatives, go to www.aatcnet.org/advocacy or reach out to the association’s interim CEO, Perry Pillow at ppillow@aatcnet.org.
