The average appraised home value in McKinney increased by approximately 13.4 percent from 2016-18,  according to the Collin Central Appraisal District, leaving residents with a higher tax bill than previous years and more reason to protest their appraisal value.

The CCAD received nearly 63,000 residential property protests this year—up from nearly 59,000 in 2017. Of those homeowners who protested, approximately 11,000 came from McKinney residents, according to the CCAD.

“I think historically anytime you see values increase you’re going to see an increase in protests,” CCAD  Chief Appraiser Bo Daffin said. “So, things went flat protest-wise when the housing bubble burst back in 2007 … but once the market started to recover and values started to increase again then [we] have seen a natural incline in protest counts.”

From 2015-17, appraisal protests in McKinney have risen from 12.47 percent of all residential property owners protesting to 22.21 percent. The county, while less dramatic, has seen a nearly 9 percent increase in the number of protests during the same time period, according to the CCAD.]

Why protest?

Sean Nance, owner and real estate agent with Team Nance Homes in McKinney, has helped about 150 residents gather information needed to protest their appraisals this year.

“To me, there’s really no disadvantage to protesting,” Nance said. “[The CCAD] cannot raise your taxes; they can only lower it or say, ‘We’re going to hold to the evaluation.’ So, if you were successful, then it would lower your taxes, and you would save a little bit of money.”

McKinney resident Nick Ataie, for example, was able to decrease the appraised value of his home after going through the protest process.

Ataie moved to downtown McKinney in December and purchased his home for $508,000. When he received his appraised value from CCAD in April, his property was appraised for more than $10,000 above the purchase price.

When appraising a property, the CCAD looks at actions of buyers and sellers in the neighborhood over the past six to 12 months.

“We are trying to reflect what buyers and sellers are doing based on their transactions; that’s it,” Daffin said. “We are looking at sales transactions in a neighborhood.”

McKinney homeowners Peg and Bogdan Djurdjulov also protested their appraised value this year. The Djurdjulov’s have lived in McKinney’s Tucker Hill neighborhood for 10 years and said two of the four comparable market sales the CCAD used to determine their home’s value were new homes built in the neighborhood.

Kelly Lintner, deputy chief appraiser of appraiser operations at the CCAD, said it is important to have a true representation of home values.

The Djurdjulovs said they have protested their appraisal value each year. Since their first protest in 2009, their home’s appraised value has increased by 36 percent or $138,110.

The CCAD uses a comparable grid that allows the appraiser to find similar home sales in the same neighborhood, including new homes and old homes, but make adjustments to the value given the property’s age, physical characteristics, location, quality and other amenities, Daffin said.

“If it’s a 10-year-old house, I’d love to have the same house, on the same street, with the same amenities that’s built by the same builder in exactly the same month of the same year, in a perfect world,” he said. “But the appraisal of real estate is not a perfect world.”

Homes in historic districts, such as Ataie’s, are often harder to appraise due to the lack of adequate comparable sales in the neighborhood. During the appraisal review board hearing, Ataie brought five comparable property overviews to protest lowering his total appraised value.

“I noticed that the assessed value of my property was significantly higher than other homes, [including] same geographic location, same size, same build year and quality,” Ataie said in an email. “When I presented this evidence at my [appraisal review board] protest hearing, the CCAD appraiser had zero evidence to support their appraised value. … Luckily, because of this the ARB had no choice but to modify the valuation of my property based on the evidence I provided at the hearing.”

Ataie was able to lower his original appraised value by approximately $78,500.

Increasing values

As property values, like that of the Djurdjulovs and many other Collin County residents, increase and taxing entities lower their tax rates, cities and counties are still receiving more revenue from property taxes and an increase in the number of properties added to the region. However, homeowners are often paying more in taxes.

The preliminary 2018 average homestead market value in McKinney is $340,100 as of April 23, according to the CCAD. In 2016, the average homestead market value was $299,986.

Given the fiscal year 2017-18 tax rates in McKinney, including the city, McKinney ISD, Collin College and Collin County tax rates, the average resident will pay $8,271.23 in taxes this year—$827.70 more than he or she would have paid in 2016 given the fiscal year 2016-17 tax rate.

According to the CCAD’s 2018 estimate of taxable value, McKinney ISD’s tax revenue will be 7.2 percent more this year as compared to 2017, and the city of McKinney’s tax revenue will be 9.84 percent more. Meanwhile, Collin County’s and Collin College’s tax revenues are estimated to be 10.65 percent and 9.72 percent more this year, respectively.

City offering to help

Many residents and city officials are worried about the rising cost of living and financial burden increasing home values are putting on people.

During a June 19 City Council meeting, McKinney City Council members increased the homestead exemption for fiscal year 2018-19 from $60,000 to $65,000 for residents ages 65 and older and an individual who is disabled.

“Sustainable tax relief is the only reasonable tax relief,” McKinney Mayor George Fuller said during the meeting.

For every $5,000 increase in the homestead exemption, eligible homeowners will pay $27 less in taxes, and non-eligible homeowners will pay $3.46 more in taxes given the current tax rate of $0.540199 per $100 valuation, according to a presentation given at the meeting.

Fuller said the city needs to increase its commercial tax base before it provides a tax decrease to all residents.

“It is not just about cutting or maintaining or increasing services; it’s about identifying our long-term strategy to reduce property taxes,” he said. “… We have to make investments today for the benefit of tomorrow.”

Homeowner relief

Some Texas lawmakers have tried to slow rising property tax revenue increases as appraisals continue to climb.

During the 2017 legislative session, Senate Bill 2 was brought to the table. Under the proposal a special election would be called whenever the local property tax collections increase more than 5 percent year over year.

SB 2 did not pass during regular session or during a special session called by Texas Gov. Greg Abbott. However, Abbott unveiled a plan in January to limit local governments’ property tax revenue growth to 2.5 percent—half of the proposed limit in SB 2.

McKinney City Manager Paul Grimes said City Council will finalize its legislative agenda later on this year, which will inform residents about the city’s position on many issues related to McKinney including property taxes.

“Local communities are always concerned when the state legislature applies a one-size-fits-all solution to the very diverse cities across the state,” Grimes said in an email.

State law already allows citizens to petition for a rollback election—which is a referendum on the proposed tax rate—when annual tax collection increases exceed 8 percent.

“We are supportive of discussing options that would address lowering property taxes that have the biggest impact for taxpayers,” Grimes said in the email. “We believe the state’s focus on reforming the school finance system in Texas would have a much greater impact on lowering property taxes since local school property taxes make up the largest portion of local taxes.”