💡 Houston CRE: Watch Out for Hidden Tax Increases 🔍

🌪️ Houston Disaster Funds: What It Means for CRE 🏢

Hey, Houston CRE owners, we dodged a bullet! 🚨 It looks like we avoided a hefty property tax increase after the state announced it would deliver $50 million in disaster relief funds to help recover from May’s derecho and July’s Hurricane Beryl 🌪️. For a moment there, commercial property owners were staring down a potential tax rate increase of at least 3.2 cents per $100 of assessed value! On a $10 million property, that could have meant a whopping $3,200 more in taxes per year. 😳

But here’s the kicker: just because we avoided a tax hike this time doesn’t mean we’re in the clear. Some experts are saying that the $50 million relief isn’t enough to cover Houston’s financial struggles, and with a negative outlook from two major credit rating agencies, there could still be challenges ahead. 🧐💼

The Legislative Rollercoaster 🎢

Let’s break it down. Houston City Council members considered raising property taxes by 5% to help fix the budget gap. But thanks to the disaster relief fund, that proposal got pulled… for now. Some of us in CRE are breathing a small sigh of relief 😅, but experts are urging caution.

Texas property owners don’t just pay taxes to the city—they pay to multiple entities, and the state legislature has been trying to keep local jurisdictions from overspending. Since 2019, any tax raise over 3.5% requires voter approval… unless there’s a disaster declaration. That’s where things get tricky. 🤔

In fact, Harris County just took advantage of this disaster declaration loophole, raising the tax rate by the full 8% without voter input. Yikes! 😬 That translates to a 7-cent increase per $100 of assessed value, which adds $7,000 to the tax bill for a $10 million property. 🏗️💰

Property Appraisals and Tax Shifts 🏙️💵

Here’s another thing to keep an eye on—appraisal values. While some Houston office and multifamily properties saw their values drop this year (thanks to appraisers utilizing cap rates), retail and industrial properties weren’t so lucky 📈. Many saw increases, and since triple-net lease agreements often pass those costs to tenants, they’re the ones footing the bill.

And it doesn’t stop there. Texas schools, one of the biggest tax burdens on property owners, saw some relief when the state cut school property tax rates. For a $10 million property, that’s a savings of around $10,700 a year. But watch out—school districts are always looking for more funds and might come knocking with bond proposals. 💡

CRE Owners: Time to Stay Vigilant! 👀

So, what’s the bottom line? Even with the $50 million relief fund, Houston’s still got a $200 million budget hole to fill, according to City Comptroller Chris Hollins. Mayor John Whitmire says he’s against raising property taxes and is bringing in outside help to find budget cuts. But with financial pressures mounting, commercial property owners need to stay on top of their tax bills and maybe even think about hiring a tax consultant. 🧑‍💼

We’ve avoided one crisis, but make sure to stay vigilant as we head into 2025. The legislative and valuation dangers are still lurking around the corner! 🔍

I’m an experienced Commercial Real Estate Mortgage Broker, please feel free to reach me at 281-222-0433.

#HoustonCRE #PropertyTax #CommercialRealEstate #HoustonBusiness #CREOwners #HoustonDevelopments #PropertyAppraisals #TaxConsulting #RealEstateInvesting #BudgetChallenges

https://medallionfunds.com/bill-rapp/

https://www.billrapponline.com/

https://houstoncommercialmortgage.com/

https://findamortgagebroker.com/Profile/WilliamRappJr28883

https://doctorvideo.billrapponline.com/

https://veteransvideo.billrapponline.com/

https://mortgageviking.billrapponline.com/

https://fha203h.billrapponline.com/

https://renovationvideo.billrapponline.com/

https://www.smartbizloans.com/partner/vikingenterprisellc/bill

https://www.fastexpert.com/loan-officer/bill-rapp-95119/

https://billrapponline.com/financingfuturescre-houston-katy

https://www.smartbizloans.com/assist/partner/medallionfunds/bill

https://billrapp.commloan.com/

© 2023-2024 Bill Rapp, Medallion Funds LLC, Director of Capital Advisory