E ve rything Yo u Ne e d to K no w Ab o ut Pro pe rty T a xe s - - PowerPoint PPT Presentation

E ve rything Yo u Ne e d to K no w Ab o ut Pro pe rty T a xe s

Pre se nte d b y

2017 RE VI E W

KE L L I MORRISON

Value Increases

Values were up significantly for the 3rd year in a row

Property Type 2015 FINAL % Increase 2016 FINAL % Increase 2017 NOTICED % Increase 2017 FINAL % Increase Office 28.66% 20.99% 19.67% 13.15% Retail 30.70% 22.90% 25.20% 13.70% Apartments 11.44% 12.13% 16.31% 9.38% Industrial 39.90% 21.50% 14.34% 9.03%

Number of Protests Filed – 2015 - 2017

2015 2016 2017

Total Protests Filed 109,141 Total Protests Filed 116,655 Total Protests Filed 126,301 Portfolio % of Total Portfolio % of Total Portfolio % of Total

Residential 83.29% Residential 83.13% Residential 85.78% Commercial 11.73% Commercial 12.28% Commercial 11.28% Personal 4.98% Personal 4.59% Personal 2.94%

Commercial Litigation Stats – 2015 - 2017

2015 2016 2017

Overall Filed Lawsuits 503 Overall Filed Lawsuits 723 Overall Filed Lawsuits 881

Portfolio % of Total Portfolio % of Total Portfolio % of Total

Hotels 6.47% Hotels 4.70% Hotels 3.86% Industrial 10.92% Industrial 12.13% Industrial 13.87% Land 18.84% Land 12.34% Land 11.72% Misc. 0.97% Misc. 1.05% Misc. 1.14% Multifamily 19.23% Multifamily 25.11% Multifamily 22.67% Office 17.00% Office 16.20% Office 16.78% Office Condo 0.68% Office Condo 0.35% Office Condo 1.01% Retail 25.89% Retail 28.12% Retail 28.94%

TCAD Sources of Data

Costar, Austin Investor Interests, TREPP, Real Capital Analytics, Austin Business Journal, Austin American Statesman, CBRE, PWC, Fannie Mae, Freddie Mac, REIS, Korpacz, Capital Market Research, Weitzman, Brokerage Office Publications, RERC, JLL, SEC Reports, Internet, Owner Surveys, etc.

In 2017, TCAD had 95 appraisals commissioned over all commercial property types

TCAD performs annual inspections of many properties

Attendance at local real estate conferences

2018 PRE VI E W

KE L L I MORRISON

2018 is a Ratio Study Year:

 Every other year, the State Comptroller performs a study

• n the assessed values of properties compared to its

estimates of market value

 Appraisal District’s assessed value must be within +/-5%

• f the market value to pass the study

 If the Appraisal District fails the study, the State can

withhold funding from the impacted school district(s)

What is a Ratio Study?

2018 is a Ratio Study Year:

 The Appraisal District will likely argue for 100% of

purchase prices for any recently-sold properties through the administrative appeal (ARB) level

 The Appraisal District will be under more pressure to be

aggressive with its valuations and less willing to make changes

What does this mean for values?

“Top-lining”

 A process of “agreeing to disagree” to a value, while

preserving your right to further appeal (litigation or arbitration)

 Avoids the risk of going before the ARB, where the value

could be sustained or increased.

 ARB members often do not understand the complexity of

commercial appraisal, which puts the taxpayer at a disadvantage

 Has become a common practice

Binding Arbitration

 Lower-cost alternative to filing a lawsuit in District Court  Intended for owners with lower-valued properties where filing

a lawsuit may not be cost-effective

 Must be filed no later than 45 days after receipt of the ARB

Final Determination of Value

 Agent/Owner,

Appraisal District representative, and Arbitrator meet via teleconference or in-person meeting

 The value threshold for arbitration increased from $3 million

to $5 million, effective September 2017

 The filing fee ranges from $500 - $1,550, with all but $50

refunded (if successful)

How can you help us be the most effective in 2018?

 Client Meetings - we want to know everything--the

good, the bad, and the ugly

 Information Request - there is never too much

information you can give us - in addition to our information request if there are any appraisals or purchase offers, or if you are planning to take your property to market - we need to know!

 Open line of communication - if you ever have any

questions, comments, concerns - CALL US!

OF F I CE

ST E VE L AAS

 TCAD OFFICE PROPERTY TYPES  USE CODE 50 – HI-RISE OFFICE > 6 Stories  USE CODE 51 – LARGE OFFICE > 35,000 SF  USE CODE 52 – MEDIUM OFFICE 10,000 SF – 35,000 SF

Office Portfolio – Travis County

How TCAD sees your office building:

Office Portfolio – Travis County

How we portray your office building:

Office Portfolio – Travis County

Reality:

Office Portfolio – Travis County

Office Portfolio – Travis County

2013 2014 2015 2016 2017 Total NRA 52,230,616 52,425,410 52,453,941 53,277,376 53,717,025 Value $7,004,316,780 $8,029,479,436 $10,336,527,888 $12,702,746,410 $14,491,264,951 # of Buildings 665 672 680 691 696 Value/SF $134.10 $153.16 $197.06 $238.43 $269.77 % Δ 14.21% 28.66% 20.99% 13.15% Class A NRA 27,982,713 28,177,507 28,206,038 29,029,473 29,441,335 Class A Value $4,469,652,315 $5,198,491,689 $6,870,997,151 $8,770,072,929 $10,101,165,543 Class A Buildings 192 200 206 214 219 Class A Value/SF $159.73 $184.49 $243.60 $302.11 $343.09 % Δ 15.50% 32.04% 24.02% 13.57% Class B NRA 22,786,736 22,786,736 22,786,736 22,786,736 22,786,736 Class B Value $2,450,594,604 $2,717,878,665 $3,337,905,584 $3,791,941,055 $4,264,832,587 Class B Buildings 425 425 426 426 429 Class B Value/SF $107.54 $119.27 $146.48 $166.41 $187.16 % Δ 10.91% 22.81% 13.60% 12.47% Class C NRA 1,055,259 1,055,259 1,055,259 1,055,259 1,055,259 Class C Value $66,051,879 $70,950,661 $80,488,433 $82,553,427 $90,742,037 Class C Buildings 34 34 34 34 34 Class C Value/SF $62.59 $67.24 $76.27 $78.23 $85.99 % Δ 7.42% 13.44% 2.57% 9.92%

Office Summary by Class

7.6% 13.5% 38.6% 26.9% 15.1% 3.6% 7.6% 24.4% 18.1% 12.4% 2.8% 11.1% 21.5% 20.6% 11.8% $0 $1,000,000,000 $2,000,000,000 $3,000,000,000 $4,000,000,000 $5,000,000,000 $6,000,000,000 $7,000,000,000 $8,000,000,000 $9,000,000,000 $10,000,000,000 $11,000,000,000 2013 2014 2015 2016 2017 Class A Class B Class C

2018 Projection

Office Portfolio – Travis County

2018 Projection 5% to 15% increases; depending on submarket and building class

Office Portfolio – Travis County

Why are Values so High?? - Notable Office Transactions

 5th & Colorado, 179,351 SF, built in 2016

$119,000,000 ($663.50/SF)

 100 Congress, 411,536 SF, built in 1987

$245,000,000 ($595.33/SF)

 Domain 7, 221,973 SF, built in 2015

$98,907,284 ($445.58/SF)

 Capital Ridge, 216,511, built in 2015

$96,000,000 ($443.40/SF) Note: TCAD will time trend the sales

Office Portfolio – Travis County

Why are Values so High?? - Notable Office Appraisals

 1001 Congress, 24,737 SF, built in 2002

$10,000,000 ($404.25/SF)

 823 Congress, 181,351 SF, built in 1970

$62,000,000 ($341.88/SF)

 Terrace 7, 192,214 SF, built in 2002

$61,900,000 ($322.04/SF)

 Midtown Medical, 82,000, built in 2003

$32,500,000 ($396.34/SF) Note: TCAD will time trend the sales

Office Portfolio – Travis County

TCAD Sources of Data Costar, Real Capital Analytics, TREPP, Real Estate Alert, Austin Investor Interests, Austin Business Journal, Austin American Statesman, Korpacz, Capital Market Research, CBRE, Weitzman, Local Business Conferences, PWC, Brokerage Office Publications, RERC, JLL, Fannie Mae, Freddie Mac, SEC reports, Internet, Owners replying to Surveys, …

Office Portfolio – Travis County

HOW CAN YOU HELP US??

 Income and expense statements, rent rolls (as of

1.1.18), capital improvement budgets, lease proposals for leases that were not accepted, etc.

 Details are important (lease summaries – help us

determine market rent)

 Client Interview – helps us better understand your

property.

 Recent appraisals, purchase offers or listings

Office Portfolio – Travis County

Office Portfolio – Travis County

Income Valuation Model (CBD & SWE)

APART ME NT S

JASON L E E

 08 – Apartment with 50+ Units

(but labeled as apartment with 100+ Units)

 06 – Apartment with 26 to 49 units  05 – Apartment with 5 to 25 units  Neighborhood Code then added to distinguish general location

Examples: 08FNW; 08NE; 08SW; 05CEN; 06EAS; etc.

TCAD’s Apartment Use Codes

486 Apts 143 Apts 543 Apts 08 (50+ Units) 06 (26-49 Units) 05 (5-25 Units)

46% 42% 12%

All Apartments – Travis County

57.8% 32.7% 9.5%

Class A Class B Class C

Large Apartments (08) Travis County 486 Total

Where we’ve been

+8.73% +10.55% +9.81% +9.96% +7.60% +16.49% +18.08% +14.97% +17.16% +13.98% +7.30% +25.95% +17.98% +26.14% +18.32%

$0 $2,000,000,000 $4,000,000,000 $6,000,000,000 $8,000,000,000 $10,000,000,000 $12,000,000,000 $14,000,000,000 2013 2014 2015 2016 2017

Large Apartment Values 2013-2017

Class A Class B Class C

+9.6% +13.92% +16.16% +26.44% +24.61 $0 $50,000,000 $100,000,000 $150,000,000 $200,000,000 $250,000,000 $300,000,000 $350,000,000 $400,000,000 $450,000,000 $500,000,000 2013 2014 2015 2016 2017

Medium Apartments (06 Apts – 26 to 49 Units)

06 Apts (26-49 Units)

Where we’ve been

+10.58% +13.57% +14.34% +22.81% +19.38% $0 $100,000,000 $200,000,000 $300,000,000 $400,000,000 $500,000,000 $600,000,000 $700,000,000 $800,000,000 2013 2014 2015 2016 2017

Small Apartments 05 – 5 to 25 Units)

05 (5-25 Units)

Where we’ve been

How the Taxing Jurisdictions see Value Increases:

How it feels to Property Owners:

Canyon Resort Great Hills Mandalay University Estates University Village Promesa West Koenig Flats Jan-17 Dec-16 Nov-16 Nov-16 Nov-16 Nov-16 $44,500,000 $35,550,000 $77,700,000 $54,290,000 $45,050,000 $39,800,000 $38,000,000 $30,964,100 $57,347,302 $39,152,698 $40,427,700 $36,807,000

85.39% 87.10% 73.81% 72.12% 89.74% 92.48%

Barton Creek Villas Remington Hills The Brodie Bridges at Volente Westlake Vistas Sep-16 Sep-16 Sep-16 Sep-16 Aug-16 $51,250,000 $25,750,000 $48,900,000 $25,500,000 $65,130,000 $43,594,200 $22,640,000 $44,931,600 $20,587,000 $57,594,500

85.06% 87.92% 91.88% 80.73% 88.43%

TCAD REPORTED SALES VS. 2016 FI NAL VALUES - CLASS A

92.05% 85.37% 56.17% 93.41% 89.68% 85.43%

TCAD REPORTED SALES VS. 2016 FI NAL VALUES - CLASS B

TCAD REPORTED SALES VS. 2016 FI NAL VALUES - CLASS C/ D

Sales Prices vs. Assessment Value

All Sales reported by TCAD for 2017 Value Assessment Cap Rates range from 3.49% to 5.36% (excluding Tax Credit sales) 76 Sales: 6 reported with Cap Rates above 5%.

TCAD Income Calculations

+14.49% +7.60% +20.99% +13.98% +25.63% +18.32% $0 $2,000,000,000 $4,000,000,000 $6,000,000,000 $8,000,000,000 $10,000,000,000 $12,000,000,000 $14,000,000,000 2016 Final Values 2017 Noticed Values 2017 Final Values

Noticed Values vs. After Appeal Values

Class A Class B Class C

Sticker Shock and Appeal Efforts

+34.52% +19.38% +43.65% +24.61% $0 $100,000,000 $200,000,000 $300,000,000 $400,000,000 $500,000,000 $600,000,000 $700,000,000 $800,000,000 $900,000,000 2016 Final Values 2017 Noticed Values 2017 Final Values

Noticed Values vs. After Appeal Values

05 Apts 06 Apts

Sticker Shock and Appeal Efforts

2018

What should we expect?

I NDUST RI AL

MIKE MORRIS

Industrial Overview 2018

 TCAD INDUSTRIAL PROPERTY TYPES

 USE CODE 60 - BULK WAREHOUSE < 25% FINISH OUT  USE CODE 64 - OFFICE WAREHOUSE 25% TO 50% FINISH OUT  USE CODE 65 - FLEX WAREHOUSE 50% TO 75% FINISH OUT  USE CODE 66 - SERVICE CENTER > 75% FINISH OUT

TCAD’s Industrial Value Changes

10.4% 39.9% 21.5% 9.0% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0% 2014 2015 2016 2017

Industrial Value % Increases

$2.2 Billion $4.3 Billion

Value Per Use Type

< 25% FO $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 USE CODE 60 USE CODE 64 USE CODE 65 USE CODE 66

MILLION

2013 2014 2015 2016 2017 25% to 50% FO 50% to 75% FO >75% FO

2017 Use Code Value To Total Value

< 25% FO 25% TO 50% FO 50% TO 75% FO >75% FO

40 % 23 % 9 % 27 %

USE CODE 60 USE CODE 64 USE CODE 65 USE CODE 66

TCAD Income Model

60NOR < 25% FINISH OUT 64NOR 25% TO 50% FINISH OUT

TCAD Income Model

65NOR 50% TO 75% FINISH OUT 66NOR >75% FINISH OUT

Why We Need Your Information

Possible Reasons For Value Adjustments

 Physical Adjustments

Layout, Dock-High vs Grade-Level Loading, Site Amenities, Parking Ratios, Truck Turning Radius, Accessibility, Soil Condition or Drainage, Foundation Issues, etc.

 Income Adjustments

Caps/Stops, Capital Replacement Items (roof replacement, HVAC, repair/replace driveway or parking areas, bathrooms, ADA compliance cost), etc.

Industrial Market Indicators

 Vacancy

Warehouse 7.50% trending up Flex/SC 9.80% trending up

 Rental Rates

Asking Rates are trending flat Warehouse $0.45 to $0.75 NNN Flex/SC $0.80 to $1.25 NNN

 Cap Rates

Class A 5.50% to 6.00% Class B 6.00% to 7.00% Class C 7.50% to 8.50%

New Construction 2017 / 2018

 Free Port Tech South

280,000 SF Southeast

 Burleson Commerce Park

513,500 SF Southeast

 Commerce Center South (4 Bldgs)

328,570 SF Southeast

 Commerce Center South Bldg. 10

96,280 SF Southeast

 Tech Ridge Bldg. 3.1

115,200 SF Northeast

 Tech Ridge Bldg. 2.1

84,395 SF Northeast

 Heritage Crossing Bldg. 4

80,340 SF North

 2017 TOTAL NEW CONSTRUCTION

1,498,285 SF

 2018 NEW CONSTRUCTION (12 Bldgs) 1,676,756 SF Travis County

RE T AI L

L ANCE L AWSON

Retail In Travis County Skyrocketing Values

Overall Value Change

5.3% 10.9% 30.7% 22.9% 13.7% $0 $1,000,000,000 $2,000,000,000 $3,000,000,000 $4,000,000,000 $5,000,000,000 $6,000,000,000 $7,000,000,000 $8,000,000,000 $9,000,000,000 2013 2014 2015 2016 2017

Total Value

Values Increased 105% from 2013 to 2017 ($4.1B to $8.4B)

TCAD’s Retail Value Changes

5.3% 10.9% 30.7% 22.9% 13.7% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 2013 2014 2015 2016 2017

Year over Year % Increases

Morrison & Head was the registered agent on 26%

• f the $8.4B in value for 2017.

TCAD’s Retail Value Changes

2013 2014 2015 2016 2017

Total NRA 36,097,028 36,695,382 37,208,767 37,953,680 38,345,959 Value $4,128,581,023 $4,578,250,140 $5,982,389,904 $7,352,327,271 $8,359,725,511 Value/SF $114 $125 $161 $194 $218 % Δ 5.3% 10.9% 30.7% 22.9% 13.7% Class A NRA 13,815,503 14,384,641 14,886,276 15,588,751 15,981,030 Class A Value $1,906,996,908 $2,163,798,796 $2,999,558,470 $3,807,320,394 $4,382,588,817 Class A Value/SF $138 $150 $201 $244 $274 % Δ 7.6% 13.5% 38.6% 26.9% 15.1% Class B NRA 14,370,227 14,389,890 14,401,640 14,444,078 14,444,078 Class B Value $1,550,331,584 $1,668,639,714 $2,076,369,499 $2,451,488,964 $2,755,090,101 Class B Value/SF $108 $116 $144 $170 $191 % Δ 3.6% 7.6% 24.4% 18.1% 12.4% Class C NRA 7,911,298 7,920,851 7,920,851 7,920,851 7,920,851 Class C Value $671,252,531 $745,811,630 $906,461,935 $1,093,517,913 $1,222,046,593 Class C Value/SF $85 $94 $114 $138 $154 % Δ 2.8% 11.1% 21.5% 20.6% 11.8%

Retail Summary by Class

7.6% 13.5% 38.6% 26.9% 15.1% 3.6% 7.6% 24.4% 18.1% 12.4% 2.8% 11.1% 21.5% 20.6% 11.8% $0 $500,000,000 $1,000,000,000 $1,500,000,000 $2,000,000,000 $2,500,000,000 $3,000,000,000 $3,500,000,000 $4,000,000,000 $4,500,000,000 $5,000,000,000 2013 2014 2015 2016 2017 Class A Class B Class C

TCAD’s Retail Type Codes

 30; Strip Center < 10,000, SF  40; Regional Shopping Mall (Hill Country Galleria)  41; Community Shopping Center (Arboretum Market)  42; Neighborhood Shopping Center (Escarpment Village)  43; Strip Center > 10,000 SF  44; Grocery Store  45; Department Store > 25,000 SF  46; Discount Store > 25,000 SF

Notable Transactions (2016 & 2017)

 Shops at the Galleria, 498,834 SF

$132,000,000 ($265/SF) – Per TCAD

 Brodie Oaks Shopping Center, 322,590 SF

$93,000,000 ($288/SF) – Per TCAD

 Westwood Shopping Center, 183,655 SF

$83,400,000 ($493/SF) – Per TCAD

 Mueller Shopping Center, 10,912 SF

$6,000,000 ($550/SF) – Per TCAD

Note: TCAD will time trend the sales

Sample TCAD Commissioned Appraisals (1/1/2017)

 Shady Hollow Village, 104,462 SF

$27,050,000 ($259/SF) - CBRE

 Dillard's, 157,030 SF

$17,150,000 ($109/SF) - CBRE

 Domain II, 370,697 SF

$139,000,000 ($375/SF) – CBRE

 Pleasant Valley Plaza, 18,188 SF

$2,300,000 ($126/SF) – CBRE

Note: TCAD will time trend the appraisals

TCAD’s 2017 Proforma Model Central (CEN)

TCAD’s 2017 Proforma Model Central (CEN)

Looking to 2018

34.6% 22.9% 25.2% 13.7% 10-15% $5,000,000,000 $5,500,000,000 $6,000,000,000 $6,500,000,000 $7,000,000,000 $7,500,000,000 $8,000,000,000 $8,500,000,000 $9,000,000,000 $9,500,000,000 $10,000,000,000 2016 Notice 2016 Final 2017 Notice 2017 Final 2018 Projection

Total Value

And This is When…

Keys to success:

 Property Specific Knowledge and Information  Market Knowledge  Valuation Experience  Comprehensive Analysis  Relationships

Morrison & Head Steps In

L E GI SL AT I VE UPDAT E

RAY HE AD

Jo hn K e nne dy

Se nio r Ana lyst

(512) 472-8838

jke nne dy@ tta ra .o rg

VAL UE & T AX RAT E HI ST ORY

MART IN ME RCADO

Property Tax Valuation History

5 YEAR REVIEW

CITY OF AUSTIN 2013 2014 2015 2016 2017 5Yr Chg 10Yr Chg

$32,544,046,139 $36,723,278,453 $42,548,402,379 $54,185,911,829 $60,306,557,852 85.3% 118.1% 4.8% 12.8% 15.9% 27.4% 11.3%

$54,247,808,842 $63,110,795,176 $76,202,881,365 $84,149,977,168 $93,222,685,126 71.8% 91.8% 9.3% 16.3% 20.7% 10.4% 10.8%

$86,791,854,981 $99,834,073,629 $118,751,283,744 $138,335,888,997 $153,529,242,978 76.9% 101.4% 7.6% 15.0% 18.9% 16.5% 11.0%

• Bus. Personal Property -

$9,849,489,407 $10,308,389,990 $10,850,140,079 $10,823,198,339 $10,964,905,945 11.3% 19.9%

• 2.9%

4.7% 5.3%

• 0.2%

1.3%

$96,641,344,388 $110,142,463,619 $129,601,423,823 $149,159,087,336 $164,494,148,923 70.2% 92.7% 6.4% 14.0% 17.7% 15.1% 10.3%

$12,883,994,905 $17,238,414,758 $25,452,795,719 $30,591,998,638 $32,713,759,576 153.9% 195.3% 12.5% 33.8% 47.7% 20.2% 6.9%

$83,757,349,483 $92,904,048,861 $104,148,628,104 $118,567,088,698 $131,780,389,347 57.3% 77.3% 5.5% 10.9% 12.1% 13.8% 11.1%

$- $10 $20

$30 $40

$50 $60 $70 $80

$90 $100

$110 $120 $130

$140 $150 $160

$170 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Total Value in Billions Property Tax Year

City of Austin Property Tax Valuation History

10 Year Review

Total Market Value Real Estate - Market Value

Net Taxable Value

Land Only - Market Value Agric, Hmstd Cap & Exempt (Loss) Bus Prsnl Prop - Market Value

Property Tax Valuation History

5 YEAR REVIEW

TRAVIS COUNTY 2013 2014 2015 2016 2017 5Yr Chg 10Yr Chg

$46,998,434,673 $51,867,840,494 $59,407,169,192 $72,830,502,606 $79,924,775,863 70.1% 93.2% 4.0% 10.4% 14.5% 22.6% 9.7%

$77,818,112,522 $90,306,286,492 $107,757,307,697 $118,965,458,695 $131,495,589,333 69.0% 87.2% 8.8% 16.0% 19.3% 10.4% 10.5%

• Real Estate Total Market

$124,816,547,195 $142,174,126,986 $167,164,476,889 $191,795,961,301 $211,420,365,196 69.4% 89.4% 6.9% 13.9% 17.6% 14.7% 10.2%

• Bus. Personal Property -

$11,809,653,781 $12,368,958,407 $12,809,025,120 $12,855,469,629 $13,011,853,723 10.2% 20.4%

• 1.3%

4.7% 3.6% 0.4% 1.2%

$136,626,200,976 $154,543,085,393 $179,973,502,009 $204,651,430,930 $224,432,218,919 64.3% 83.3% 6.2% 13.1% 16.5% 13.7% 9.7%

$30,004,449,806 $35,797,313,857 $44,078,013,373 $50,429,403,017 $53,469,005,546 78.2% 103.6% 9.9% 19.3% 23.1% 14.4% 6.0%

$106,621,751,170 $118,745,771,536 $135,895,488,636 $154,222,027,913 $170,963,213,373 60.3% 77.8% 5.1% 11.4% 14.4% 13.5% 10.9%

$-

$10

$20 $30

$40

$50 $60 $70 $80 $90 $100

$110

$120 $130

$140

$150 $160

$170

$180 $190 $200 $210 $220 $230 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Total Value in Billions Property Tax Year

Travis County Property Tax Valuation History

10 Year Review

Total Market Value Real Estate - Market Value

Net Taxable Value

Land Only - Market Value Agric, Hmstd Cap & Exempt (Loss) Bus Prsnl Prop - Market Value

Tax Year

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Austin ISD

1.2020 1.2020 1.2270 1.2420 1.2420 1.2420 1.2220 1.2020 1.1920 1.1920

Travis County

0.4122 0.4215 0.4658 0.4855 0.5001 0.4946 0.4563 0.4169 0.3838 0.3690

City of Austin

0.4012 0.4209 0.4571 0.4811 0.5029 0.5027 0.4809 0.4589 0.4418 0.4448

Travis County Healthcare District

0.0679 0.0674 0.0719 0.0789 0.0789 0.1290 0.1264 0.1178 0.1105 0.1074

Austin Community College

0.0954 0.0946 0.0951 0.0948 0.0951 0.0949 0.0942 0.1005 0.1020 0.1008

Total Effective Rate

2.1787 2.2064 2.3169 2.3823 2.4190 2.4632 2.3798 2.2961 2.2301 2.2140

Total Percent Rate Change

1.2% 1.3% 5.0% 2.8% 1.5% 1.8%

• 3.4%
• 3.4%
• 3.5%
• 0.7%

Austin, Travis County - Tax Rate History

Property Tax Year

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Austin, Travis County Tax Rate History - 10 Year Review

0.00 0.20 0.40 0.60 0.80 1.00 1.20 1.40 1.60 1.80 2.00 2.20 2.40 2.60

Tax Rate per $100 Value Primary 5 Jurisdictions

Total Effective Rate

Austin ISD City of Austin Travis County Travis County Healthcare District Austin Community College

Texas Major Metropolitan - 2017 Tax Rate Comparison

Tax Rate per $100 of Value

0.00 0.25 0.50 0.75 1.00 1.25 1.50 1.75 2.00 2.25 2.50 2.75 3.00 3.25

City - County Jurisdiction

County, Hosp, CC, Etc Tax Rate City Tax Rate School District Tax Rate Total Effective Tax Rate

T AXI NG E NT I T Y I MPACT

CHE T MORRISON

Tax Rates

Effective Tax Rate - The effective tax rate is a “no tax increase” tax rate for the tax roll as a whole. It is a calculated rate that would provide the taxing unit with approximately the same amount of property tax revenue that was received in the previous year on properties taxed both years.

Tax Rates

The following is a simple example to illustrate the concepts in understanding tax rates:

Maintenance & Operating Tax Rates

Year 1 Taxable Value Tax Rate Taxes Property A $4,000 0.100000 $400 Property B $3,000 0.100000 $300 Property C $2,000 0.100000 $200 Property D $1,000 0.100000 $100 Total $10,000 0.100000 $1,000 Year 2 Taxable Value % Δ in Value Effective Tax Rate Taxes Property A $4,800 20.0% 0.090909 $436 Property B $3,100 3.3% 0.090909 $282 Property C $2,200 10.0% 0.090909 $200 Property D $900

• 10.0%

0.090909 $82 Total $11,000 0.090909 $1,000

Rollback Tax Rate

The Texas Property Tax Code allows taxing units (other than school districts) to increase the tax rate to the Rollback Tax Rate which is 8% over the Effective Tax Rate. Tax increases above the Rollback Tax Rate are not disallowed, but such tax increases may require voter approval. Seven percent of registered voters in the taxing jurisdiction must sign and file a petition to call for an election. Senate Bill 1 tried to limit the rollback rate to 4% and then negotiated to 5% with a provision that an election was required. It failed to gain the support needed to pass. Senator Bettencourt has vowed he will reintroduce the bill in 2019.

Actual New Construction Added to the Tax Roll for the City of Austin

The City

• f

Austin had new construction

• f

$2,700,000,000 added to the tax roll for FY2018. New Construction Taxes = $12,009,600

Actual New Construction Added to the Tax Roll for Travis County

Travis County had new construction

• f

$4,062,303,391 added to the tax roll. New Construction Taxes = $14,989,900

The cumulative increases in the adopted rates over the past ten years were 67.89% by the City of Austin, and 36.26% by Travis County. Actual taxes levied have increased 100% (from $307,929,055 to $617,275,588) by the City of Austin, and 55% (from $391,782,699 to $607,427,760) by Travis County over the past ten years. Budgets for the General Fund have increased 67.5% (from $613,300,000 to $1,027,100,000) by the City of Austin, and 66.18% ($450,754,725 to $749,062,401) for Travis County over the past ten years.

Increases by Entity

Both the City of Austin and Travis County adopted budgets in September for FY 2018 that included property tax increases in excess of the Effective Tax Rate. The City of Austin increased the M & O Tax Rate by 7.886%, and Travis County increased the M & O Tax Rate by 4.98%. Over the past ten years, Assessed Taxable Value increased 81% (from $76,752,007,737 to $138,775,986,481) for the City of Austin, and 80% (from $95,269,235,051 to $171,000,908,622) for Travis County.

Increases by Entity

General Fund Budget Per Capita Comparisons

One way to evaluate levels of government spending is to compare budgeted expenditures per capita to similar governments. Population numbers vary by source, so to use comparable methodologies for each entity, “U.S. Census Quick Facts” was used. The population numbers are estimated at June 2016 for all entities. Budget numbers came from each Governments’ budget documents for 2017/2018 which they published online.

General Fund Budget Per Capita Comparisons By City

City

Austin Fort Worth Dallas San Antonio Houston

Budget Per Capita

$1,084 $795 $970 $801 $870

Population

947,890 854,113 1,317,929 1,492,510 2,303,482

Expenditure Budget-GF $1,027,128,000

$679,166,273 $1,278,846,913 $1,196,017,236 $2,004,525,865

General Fund Budget Per Capita Comparisons By County

County

Travis Tarrant Dallas Bexar Harris

Budget Per Capita

$625 $263 $208 $275 $585

Population

1,199,323 2,016,872 2,514,984 1,928,680 4,589,928

Expenditure Budget-GF

$749,062,401 $530,790,197 $523,230,620 $531,105,853 $2,687,324,000

City of Austin—2009 to 2018 (Adopted Budget 2018) Population growth 770,296 to 947,890 (23%)

Indicators of Growth in Spending – City of Austin

General Fund Budget growth $621,032,000 to $1,027,128,000 (65.39%)



The General Fund Budget grew 2.84 times the growth in population (65.39/23)

Growth in Taxes Levied $307,929,055 to $617,275,588 (100.46%)



The taxes levied grew 4.37 times the growth in population (100.46/23)

Travis County—2009 to 2018 Population growth 1,008,345 to 1,199,313 (18.9%)

Indicators of Growth in Spending – Travis County

General Fund Budget growth $450,754,725 (2009 Adopted Budget) to $749,062,401 (2018 Adopted Budget) (66.18%)



The General Fund Budget grew 3.5 times the growth in population (66.18/18.19)

Growth in Taxes Levied $391,782,690 to $607,427,760 (55%)



The taxes levied grew 2.90 times the growth in population (55/18.9)

Cumulative tax rate increases over effective tax rate (36.26%)

So, Where are City of Austin Taxes Headed?

So, Where are City of Austin Taxes Headed?

“The revenue forecast is informed by economic and demographic analysis and conservatively estimated. As depicted in the graph…the General Fund is projected to remain in balance over the course of the five‐year forecast horizon at or slightly below the roll‐back rate of 8%.”

(Adopted Budget 2018, Vol 1, p.34)

City of Austin – General Fund Forecast

“The budget is proposed at the State‐defined rollback tax rate of $0.4451 per $100 of taxable value. I believe this is a fiscally prudent course of action in light of the risk

• f lower revenue caps being imposed in future fiscal years

by the State.”

• -- Elaine Hart, Interim City Manager

(Adopted Budget 2018, Vol 1, p.18)

City of Austin – General Fund Forecast

What Can Be Done?