When a major hurricane or devastating winter freeze hits Texas, the physical destruction is obvious. But for property owners, there is a secondary storm that follows closely behind: the impact on local property taxes.
If your property came away from a major disaster entirely unscathed, you might feel a sense of relief. But if historical events like Hurricane Harvey are any indication, owners of undamaged properties should brace themselves for an aggressive tax hike.
Local municipalities rely heavily on property taxes to fund their budgets. When a massive disaster strikes, thousands of properties are damaged or destroyed, which means their taxable value plummets. At the very same time, cities face hundreds of millions of dollars in unexpected debris cleanup and infrastructure repair costs.
This creates a "perfect storm" of municipal finance: plummeting revenue colliding with skyrocketing expenses. To make up the massive shortage, local appraisal districts frequently shift the tax burden onto the properties that survived the storm.
While voters have passed Revenue Caps to limit the growth of property tax revenue, many city charters include a "disaster exception." This allows politicians to bypass the revenue cap to temporarily raise taxes after a federal or state emergency declaration.
If you own an undamaged home or commercial property following a major disaster, here is how the county will likely attempt to raise your taxes:
Appraisal districts will look at data indicating higher home prices in the months immediately following the storm. This data is skewed by the temporary, desperate demand for housing by displaced property owners, but the district will use it to artificially inflate your property's baseline value.
Districts will dramatically increase values in the multi-family sector. They base this on the post-storm surge of occupancy from displaced citizens seeking short-term shelter. They use this temporary spike to calculate a much higher Net Operating Income (NOI) for the complex.
Similar to multi-family units, most business-owned property is valued using the income method. Even if a business suffered a massive dip in revenue due to the local economic freeze caused by the storm, mass-appraisal algorithms often ignore this reality and hike values anyway.
Because they use mass-appraisal models, the district will value damaged properties as if the storm never happened unless the owner proactively informs them. The burden is entirely on the owner to prove the damages existed.
If your property was damaged, gather time-stamped photos, insurance claims, adjuster's estimates, invoices, and receipts immediately. You will need this evidence to apply for a temporary disaster exemption or to fight your valuation.
If your property was undamaged, you must conduct a comparable sales and uniform property value analysis. If the county uses spiked, post-storm sales prices to justify your increase, it is essential to formally argue that pre-storm sales are the only true reflection of a stabilized market.
Whether your property was devastated by a storm or completely untouched, you are likely to encounter an aggressive tax hike. PropertyTaxes.Law can analyze your valuation and fight the appraisal district on your behalf.
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