As officials embark on the annual process of assigning new property values for the more than 1.7 million parcels of land located in Harris County, the damage caused by Hurricane Harvey in August looms large.
About 16,000 homes were damaged in the Lake Houston area as a result of Harvey, according to the Small Business Administration. The damage will result in lower values assigned to many of those properties when owners receive their appraisals this spring, officials said.
The appraised value of a Harvey-damaged home will depend on how close the residence is to full recovery, said Jack Barnett, spokesperson for the Harris County Appraisal District, the entity that conducts the reappraisal process each year.
“We are sending an appraiser to every property that we know had been damaged, whether it was flooding or roof damage from wind, and we will determine the current condition as of Jan. 1 so that we can put an accurate value on that property,” Barnett said.
Local taxing agencies are also bracing for a drop in property tax revenue. In addition to Harris and Montgomery counties, Kingwood’s Tax Increment Reinvestment Zone 10 and local school districts are expecting their budgets to be affected.
“Harvey will deal a financial punch to us extremely hard next year because we primarily receive our operating budgets and funds from property taxes,” Harris County Budget Chief Bill Jackson said. “Many of these homes will not be restored to their original values for a long time, especially not by Jan. 1.”
For Kingwood’s TIRZ 10, the decline in property values is expected to lead to less revenue, which could cause local projects to be delayed, TIRZ consultant Ralph De Leon said.
The TIRZ board of directors announced in January that the entity will not have the capacity to borrow $32 million to fund Phase I of the expansion of Northpark Drive, which was expected to break ground in 2018.
“Whenever you’re going to borrow money, you always want to look at all of your options and you want to make sure you get the best terms,” he said.
Although New Caney ISD officials said more than 500 properties were damaged within its boundaries, including several along Sorters Road in Kingwood, the effect on the budget should be negligible, a spokesperson said. New Caney ISD garnered 38 percent of its
173 million in revenue from local sources, such as property taxes, according to the 2017-18 budget.
“There is likely to be an impact on the district’s budget,” Executive Director for Public Relations Scott Powers said. “However, the district is conservative in its revenue projections during the budgeting process, so that potential impact should be manageable.”
Several neighborhoods and commercial developments within Humble ISD’s boundaries endured flooding, such as major portions of Kingwood, Belleau Wood in Atascocita and Summerwood. About 44 percent of HISD’s budget is funded through property taxes.
Counties address property owners
More than 3,500 homes in Montgomery County, totaling more than $950 million in value were damaged during Harvey, said Tony Belinoski, Montgomery Central Appraisal District chief appraiser.
The county is providing relief to distressed property owners, despite expecting a dip in property tax revenue in 2017 and 2018, County Judge Craig Doyal said.
Montgomery County Commissioners Court passed a resolution in September calling for the inspections of residential property damaged as a result of flooding from Harvey in late August.
The appraisal district will complete reappraisals of homes damaged by Harvey during the first week of February, Belinoski said.
Property owners who qualify could see a tax refund before the end of February, he said.
“We’re going to get the changes out to the property owners so they can get the relief from the property taxes,” Belinoski said.
The Harris County budget department is bracing for a decrease in overall property tax revenue that could come if appraised values take a hit, county officials said. About 80 percent of revenue in Harris County’s fiscal year 2016-17 budget came from property taxes.
Property values increased by an average of 5 percent in between 2016-17 in the Lake Houston area, according to HCAD data.
Jackson said it is not yet known what the full effect of the drop in appraised value will be. He said some county departments will likely have to pass flat budgets, and some could see their budgets cut by as much as 5 percent.
“Even if we keep [budgets]flat, a lot of these departments have building costs that go up every year, so elected officials and department heads are going to have to work on managing that,” Jackson said.
The reappraisal process
Properties in counties across Texas are typically reappraised each year beginning Jan. 1 by appraisal districts that operate within each county. In larger counties—like Harris and Montgomery counties—appraisers are unable to appraise each individual property and instead use a formula that takes several factors into account, including home sale prices and sales volume.
Barnett said homeowners can report damage by contacting the appraisal district through phone, email or its app.
HCAD has also taken on additional efforts of its own to make sure homes are being appraised accurately in light of Harvey, Barnett said.
HCAD appraisers were sent out in the community after Harvey as soon as it was safe and will continue to work around the county throughout the reappraisal process, he said.
“I think the main things [homeowners]should know is, once they have reported any damage to us, they basically don’t have to do anything,” Barnett said.
He said property value notices are sent out to homeowners around the end of March and beginning of April, Barnett said. Property owners who feel they have received an inaccurate assessment have the opportunity to file a protest by May 15.
The damage caused by Harvey is expected to make an already complex process even more challenging, said Debbie Cartwright, an attorney who heads the property tax initiative with the Austin-based Texas Taxpayers and Research Association.
“Property owners who have experienced disaster or damage to their homes should take photos, get damage estimates from experts and should provide that information to the appraisal district as soon as possible so the district can use it to fill their models and properly appraise that property,” she said.