Residential and commercial appraisals help provide boost to city budgets

Residential and commercial property values in Cedar Park and Leander have increased 3 percent to 32 percent overall during the past five years, according to data from Travis and Williamson counties' central appraisal districts.

The value increases in 2013 allowed Cedar Park and Leander to slightly lower their tax rates in September, yet many property owners will owe more in taxes compared with 2012 because of the value increases.

In the city of Cedar Park, the average homestead value increased from $199,711 to $206,620 between 2012 and 2013, according to data from the Williamson County Tax Office. In the city of Leander, the average homestead value rose from $161,872 to $171,395 in the same time period.

Williamson County Chief Appraiser Alvin Lankford said new construction and higher appraisals led to property tax gains, which are expected to continue next year.

"About 74 percent of the properties countywide increased in value in 2013. And from 2009–2012, less than half of the properties in the county increased in value," Lankford said. "Everything we've seen so far this year in 2013, as far as sales transactions and the number of homes being built in our area, is increasing. I anticipate you'll also see an increase in values in 2014."

Budget planning

Cities work nearly year-round to align their budgets with anticipated incoming tax revenue, which is in part supported by the property tax rate. Leander's 2013 property tax rate of $0.66792 per $100 of valuation funds about 57 percent of the general fund and debt service budgets, Finance Director Robert Powers said.

"The property tax is a much more stable revenue source year after year than things like building permits and sales taxes," Powers said. "The market can go up and down, but it doesn't swing as wildly as retail sales taxes and building permits. So you need to have a really solid tax base that is enough to keep most of your critical services going."

Leander has a large residential tax base, while Cedar Park has significantly more commercial properties, which typically generate more property tax revenue. Rising property values enabled the city of Cedar Park to slightly lower its tax rate to $0.4925 per $100 of valuation and still fund four new police department positions, among other budget additions.

"With new growth typically comes new service demands. We can use the new property value increase created by new growth to mitigate the demands on service levels so there is minimal impact to current residents," Assistant Finance Director Aaron Rector said. "With the certified value being higher than expected, the council was able to approve a lowered tax rate."

The appraisal process

The central appraisal districts in both counties use mass appraisal systems to establish residential market values. Travis County Chief Appraiser Mayra Crigler said appraisers take into account the cost of reconstructing the home, land value and comparable home sales in the neighborhood when establishing a home value.

"We try to make sure we capture the appropriate property characteristics, that we have the right square footage and construction on the home," she said. "Then we look also at the comparable sales that have occurred to try to determine appraisal using a mass appraisal model."

Crigler said the appreciating values and new home construction in Cedar Park and Leander could spur increases in overall market value.

"The development itself doesn't move the appraisal, but it's the sale of those properties being developed that contributes," she said. "The strongest growth we see in Travis County is in the urban core, but I would say probably after the urban core, the Leander and Cedar Park area is the next strongest market that we have."


The Williamson-Travis county line along the western edges of the cities of Cedar Park and Leander is no barrier to property value and real estate trends. Lankford said in Williamson County, home sale prices and property values are trending upward.

"There have not been enough homes to satisfy the appetite of the buyers in the area, so therefore the supply of homes has been really limited," Lankford said. "We've had under a two-month supply for quite some time this year. With the limited supply, we are still seeing the increased demand and increased values."

More than 1,000 homes were sold in Williamson County in July 2013, a record-setting month for the region, according to the Williamson County Association of Realtors.

The organization's president, Stacey Rider, said more homes are being sold this year and at higher prices compared with 2009–12.

"What's happening now is people are trying to catch that wave. We were in such a down market that nobody wanted to put their house up for sale," Rider said. "Then the market became hot. We had issues early on where some of the houses were not appraising high enough because they didn't have the [comparables]. Now we've gone through the summer, and it seems the appraisals have caught up to the market, aligned with contract price."


Commercial property values, and subsequently property taxes, are large contributors to the tax base. The 1890 Ranch shopping center in Cedar Park is the city's top taxpayer with more than $89.5 million of assessed value in 2013, according to the WCAD. In 2011, the property was valued at $59.6 million.

The appraisal method for income-earning commercial properties differs from the formula used for residential properties. Appraisers determine market value based in part on how much rent the property generates, and commercial broker Alan Rust of Retail Solutions said investor interest in Cedar Park's and Leander's existing commercial properties is high.

"The challenge for Leander and Cedar Park is the supply does not come anywhere near the demand for investment property. And this is true about the Austin metro area as a whole, too," Rust said. "Property that's leased up with good tenants would have a very large response from buyers across price ranges."

Inventory is also relatively low for rented retail space in the area, Rust said. This is in part because of limited speculative construction and higher prices—about $25 per square foot—for new space.

"The rates are demand-driven because we haven't seen new [speculative] construction almost anywhere in the Austin market," he said. "We are still close enough to the time when developers who were caught in the wrong phase of construction and leasing during the downturn really struggled and went under. We just haven't seen that leap in the tolerance for risk on the developers' side."