By Riki Markowitz
On January 10, 2017, the 85th session of the Texas Legislature convened here in Austin. For less than 140 days, after distracting weekends and holidays, leaders from Texas Association of REALTORS (TAR), Austin Board of REALTORS(ABoR), Williamson County Realtors (WCREALTORS), and Texas Association of Builders (TAB) have the chance to advocate for more than a dozen important issues. Some of the globally supported initiatives include reducing new fees and costly regulations, pushing for transportation and infrastructure funding, promoting affordable housing strategies, and mandating tax transparency.
Hidden Property Tax
The Problem: Hidden property taxes have been a threat to housing affordability in Austin, as well as Dallas, Houston, and San Antonio, the last several years. Between 2004 and 2013 property owners watched tax revenues shoot up by 46 percent, according to TAR, which comes out to $14.29 billion. “Part of the increase can be attributed to new property added to the appraisal roll and higher property values,” says Daniel Gonzalez, TAR’s director of legislative affairs.
What we can do: Demand transparency. Help owners recognize when their home value goes up but their tax rate stays the same or only lowers slightly, but not enough to cover their increased property appraisal.
Sound confusing? Check out TAR’s helpful video on their Stop the Hidden Property Tax website.
“Essentially what’s happening is that counties are hiding behind higher appraisal values that justify higher budgets at the local level,” explains Gonzalez. “But no one tells property owners what the additional revenue is going to be used for.” Essentially, local taxing entities are not transparent about how tax rates are being set. As a result, many homeowners all over the spectrum have been forced to sell because they were unable to afford their tax liability.
A top concern for TAB, one that trickles directly down to agents, brokers, and buyers, is the notion that Austin has been considering charging developers linkage fees. Those advocating for charging these impact fees say that earnings will fund affordable housing programs. But more likely, says Ned Muñoz, vice president of regulatory affairs at TAB, is the risk that more fees will put housing out of reach for potential buyers. Thousands in Austin alone would be priced out and won’t qualify for a mortgage.
What is it: Linkage fees are a per-square-foot assessment on all new development and is charged to builders. “The concern we have with the fees are that you’re raising the price of housing for everyone in the name of affordable housing for the few. We feel that it is counter intuitive,” says Muñoz. If there’s a $2 fee on a 2,000-square-foot home, a linkage fee adds $4,000 to the cost of that home. TAB crunched some numbers and came to the conclusion that for every $1,000 added to the price of a starter home, 20,000 potential buyers are priced out of home ownership. “It just doesn’t make sense,” says Gonzalez.
While legislation on linkage fees has not yet been mandated in Texas, more than 900 TAB members from 28 chapters felt compelled to attend an organized rally at the Capitol in mid-February.
What we can do: There’s a balanced way to do this, says Muñoz. For example, using existing revenues, float bonds, or offer incentives like waiving other regulatory fees.
Transportation and Infrastructure
In 2014, a statewide proposition was passed to fund road and highway construction in the state. To this day, however, the program is still lacking the finances needed. TAR explains that perpetuating monetary shortages is the underperforming gas tax, which at 20 cents has not been raised since 1991.
According to Muñoz, the current insufficient transportation network and poor infrastructure impedes commerce, inflates the cost of goods and service, and decreases viable housing options.
What we can do: ABoR has come up with several ideas for travel demand management that can help alleviate congestion until there’s funding for construction projects. Brandy Guthrie, 2017 president of ABoR, says that travel demand management techniques would go a long way in relieving travel problems, including flexible work arrangements and telecommuting. “If we work more collaboratively from a more global perspective with other businesses, it can help ease congestion and traffic for everyone.”
While affordable housing and transportation are hot topics for everyone in Austin, there are some mandates supported by just one or a combination of associations. For instance, Darian Rausch, treasurer for WCREALTORS and a member on the board of directors, says they’re “laser focused on watching bills that can negatively affect property rights.” Another concern is streamlining city ordinances regarding open house signs. Until that happens, REALTORS in Williamson County may need to file an open house event plan with one or more cities, provide a map with the location of every open house sign, and pay a steep fee for every event.
ABoR’s Guthrie says that while there are no water shortages right now, drought conditions are a potential reality. “We encouraged local municipalities and board officials to be more involved in research and implementation of projects that would add to current water resources.” Texas REALTORS are also supporting the implementation of the State Water Plan, which outlines how Texas will provide water for the next half century, by way of conservation and infrastructure improvements.
The best way to help get a bill introduced or to stop those that are a nuisance to real estate professionals, is for members to actively support TAR, ABoR, WCREALTORS, and TAB and get familiar with issues these organizations are monitoring. Also, consider familiarizing yourself with state lawmakers. Texas REALTORS are hosting a REALTOR Day at the Texas Capitol on April 4. Members of the real estate community from across the state are invited to meet with lawmakers and discuss this years’ legislative priorities. Forging positive relationships with legislators is one of the best ways to help promote REALTOR and homeowner policies. RL