The city of Shenandoah’s property tax rate has dropped by more than 35 percent over the past 10 years, a decrease that is attributed to the growing number of commercial properties easing the tax burden on its citizens.
City residents pay less than 25 cents per $100 of property valuation, a rate that is among the lowest in the area. New commercial and residential entities have contributed to lowering the property tax rates, City Administrator Greg Smith said.
In 2010-11, Shenandoah’s sales tax revenue was $4.3 million, and by 2013-14 that amount grew to $5.4 million.
The city is earning more revenue because of sales tax, which in turn can lower the property tax rate, Smith said.
In addition the city is not dependent on property taxes for regular city operations, Finance Director Jennifer Calvert said.
“We’ve had several new commercial properties: Memorial Hermann [The Woodlands Hospital], Ethan Allen is opening up [a new furniture store], all of our new homes, Sunningdale Apartments and Courtyard Marriott,” Smith said. “All of those businesses—in addition to regular valuation increases—helps the city.”
Yet the city is careful not to let its property tax rate drop so low that the city is unable to keep operations running normally when there are retail disruptions affecting sales tax, Smith said. City operations include providing water, police and public safety services and code enforcement.
“You have to have an ability to raise money in an emergency,” Smith said. “If some catastrophic natural disaster shut down our retail business for any period of time, that would put the city at a financial disadvantage. Fortunately we have enough reserves to take care of most of the foreseeable future in those type of disasters.”
The construction of the Hwy. 242 flyover at I-45 has affected area businesses, Smith said.
“We’ve been able to handle a decline [in sales tax revenue] without any hiccups in service,” Smith said. “We’ve been able to keep up with our normal operations even though we have had a reduction in sales tax.”