Home sale prices in Collin County have nearly doubled in the past decade and property values are expected to increase anywhere from 8 to 11 percent this year, according to the Collin Central Appraisal District. News of rising home values, sale prices and property taxes has reached state legislators, who are trying to determine if state intervention is needed to curb the financial burden on property owners.

In a presentation to the Plano City Council at a May 23 preliminary meeting, CCAD Chief Appraiser Bo Daffin said the word he would use to best describe the local real estate market is “activity.” Aside from property values, new construction is also up as well as homestead exemption filings. Homestead exemptions remove part of a home’s value from taxation to help lower a homeowner’s taxes.

Daffin said he expects approximately $36 billion—27 percent of Collin County’s total market value—to be protested this year. About $33 billion in market value was protested last June.

Protests in Collin County could reach the 50,000 mark this year, up from 42,689 last year, according to the appraisal district. Formal protest hearings are heard by three-member panels and are open to the public.

Protesting property values

An appraisal cap helps keep values on homestead properties from going up no more than 10 percent each year. The cap does not protect against market value, however, Daffin said.

“Market value does whatever the market tells it to do,” he said. “What is capped is the appraised value that goes into the actual tax calculation.”

Protests must be written and signed by the owner or someone authorized to protest on behalf of the owner. Homeowners can also file an informal protest. This is similar to attending a formal hearing and helps the Appraisal Review Board offset the number of protests that must be heard in time for the CCAD to approve the appraisal roll in August, Daffin said.

Many residential properties are eligible for eFile protests. If the property is eligible, the homeowner’s appraisal notice will contain a PIN and instructions regarding protest filing via eFile.

“The informal process is very important. A lot people don’t realize that they can come in and have a face-to-face meeting with the appraiser [who] actually put that value on their property,” Daffin said.

Supply and demand

As the largest city in Collin County, Plano also has the lowest single-family home inventory compared to its sister cities, according to the CCAD. Cities throughout Texas are feeling the pinch from increasing property values and home prices due to the influx in population, said Steve Haid, chief operating officer for the CCAR.

“What we’re seeing is classic economics 101: It’s supply and demand,” he said. “Even though we’re seeing what we think of as [a big increase], compared to every place else, Texas is a very affordable place to own a home.”

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Despite the effect demand has had on real estate, the market is still susceptible to predictability, Haid said. Home prices fluctuate depending on the month, with sales typically spiking in June and dipping in January.

“Real estate is very seasonal,” Haid said. “When sales are high, prices are higher because there is much more demand. If you time [those trends] right, you can do really well.”

As to what the next couple of years have in store in terms of home sales, Haid said real estate market experts and economists seem to agree this upward trend is showing few signs of stopping. Today’s market is harder as a buyer right now, more so due to availability than pricing, Haid said.

“You need to be prepared to write a contract that day if you’re going out looking at homes,” he said.

State reform efforts

To gauge and address property tax increases across the state, Texas Lt. Gov. Dan Patrick last November appointed seven Senate members to the Select Committee on Property Tax Reform and Relief. The committee has since held several public hearings across the state and is expected to report its recommendations to the Finance Committee prior to the 85th legislative session.

Committee member Van Taylor, R-Plano, said he supported the Senate’s proposal to take tax relief a step further by making a homeowner’s exemption 25 percent of the state’s median home value. Taylor’s district includes Collin County and the city of Richardson and is also home to more than 60,000 businesses, the taxes from which help offset the growing demand for city services, he said.

“Just because home values go up, that doesn’t mean it costs [city] government any more to provide the same services to those same homes,” Taylor said. “Rapid growth of property tax rolls come not as the result of local officials campaigning on higher taxes and voters rallying behind their plea; rather, it is fueled by an appraisal system that offers a backdoor means to increase taxes and government spending.

“The notion that you can maintain a flat revenue for a city on a perpetual basis is ... shortsighted...” —Harry LaRosiliere, Plano mayor

The committee met with North Texas officials and residents in Arlington on April 27. Plano Mayor Harry LaRosiliere was given three minutes of testimony, during which he encouraged the committee to look into more effective tax reform alternatives.

LaRosiliere said Plano homeowners pay an average of $1,175 annually in city property taxes for city services. Police, fire, emergency medical and street maintenance services make up nearly half of Plano’s annual budget, LaRosiliere said.

Although legislators have not proposed a formal plan for reducing taxes, there has been talk of reducing the 8 percent rollback rate in revenue. The rollback allows cities to transfer up to 8 percent of its property tax revenue into its general fund to pay for services. LaRosiliere said tax reform should not adhere to a one-size-fits-all mentality since every city is different.

“If there is some type of reform that our legislators feel necessary on appraisal methodology and value, then I’m fully supportive of them reforming that in a fair and equitable manner,” he said. “But the notion that you can maintain a flat revenue for a city on a perpetual basis is … shortsighted if you do not correlate it with the level of service our citizens will receive.”

The Texas Municipal League contended cities are not the sole cause of high property taxes in Texas. According to the state comptroller’s office, cities collect 16 percent of property taxes levied in the state.  Most of the property taxes paid by Plano residents—about 69 percent—go to Plano ISD.

“School districts have been forced to raise property taxes because of the state legislature’s failure to adequately fund education,” TML Executive Director Bennett Sandlin said. “Politicians who blame cities for high taxes are just trying to divert attention from their own failures and avoid real solutions.”