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May 15th, 2013:

From the “Tax breaks for me but not for thee” department

There are two types of people in Texas: Those for whom the tax code is written to favor, and everybody else.

BagOfMoney

The Dallas Country Club, not a place usually thought of as needing a huge tax break, used a quirk in state law to reduce its taxable value by nearly half.

Valero, one of the largest oil companies around, also used this provision to twice to force the Texas City school district to repay millions in collected taxes.

At a time when budgets are tight and school districts are hurting, counties statewide are watching their tax bases shrink by hundreds of millions of dollars in some cases as big business takes advantage of a 1997 amendment to the tax code that was intended to make sure homeowners were treated fairly.

The tax clause allows companies to file lawsuits year after year to reduce taxable value on their properties without any regard for the true market value, slowly shifting the tax burden to homeowners, officials in several Texas counties say.

In Bexar County, the clause allowed a new $600 million J.W. Marriott resort, in 2010 the largest Marriott in the world, to reduce its taxable value by more than half.

To Michael Amezquita, Bexar County’s chief appraiser, “It’s the equivalent of backing up the Brink’s truck to the public trough and driving away.” In his opinion, “It’s a legal way to steal dollars.”

As of Jan. 1 this year, there were 4,222 lawsuits challenging property values in Harris County, about 98 percent of them using the tax clause. The lawsuits represent about $35 billion in taxable value.

[…]

Lawsuits using the tax clause flooded the courts after the Texas 14th Court of Appeals ruled in 2005 that tax consultants testifying for the property owner did not need to use approved methods for determining value. The judge only has to believe that the testimony is reasonable.

“It’s like the Legislature just gave them a big red ‘easy’ button to reduce property taxes on the basis of equity,” said Sands Stiefer, attorney and deputy chief appraiser for the Harris County Appraisal District.

The lawsuits are nearly always successful, and most are settled out of court.

“It’s going to shift the tax base back to residential property,” said Ken Nolan, chief appraiser for the Dallas County Appraisal District.

Amezquita, the Bexar County appraiser, said that after Marriott lowered its tax value, he was sued by nearly every hotel in the county for tax rate reductions.

In El Paso County, a refinery used the law to slash its $781 million taxable value by 60 percent.

In Harris County, Houston 8th Wonder Properties purchased 104 acres of unimproved land for $77 million and a judge reduced the taxable value to $38 million. The appraisal district is appealing to the Texas Supreme Court. Houston 8th Wonder Properties officials did not respond to a request for comment.

The key element of the 1997 law allows companies to reduce their taxable value to the median value of similar properties. But because there is no definition for a comparable property, businesses are able to pick properties that in reality are dissimilar, appraisal district officials say.

In Harris County, HCA Gulf Coast compared 62.5 acres of prime, undeveloped property with a strip of property 90 feet wide, so narrow that it cannot be easily developed, according to an example of unfair property comparison given to legislators by the Harris County Appraisal District. The court reduced the value of the prime property by half.

Isn’t that nice? The effect of this ridiculous largesse is in the tens of billions statewide; it cost HISD $11 million just last year. There was a bill by Sen. Wendy Davis to try to limit the damage of this by restricting these lawsuits to properties valued at under $1 million, but it never had a chance in the Senate. Way too much money at stake to for that.

Hand in hand with this kind of generosity towards the wealthiest taxpayers is the notion of tax “reform” that lowers their taxes even more but does nothing for anyone else.

When the Texas House began debating HB 500 last Tuesday, the proposal would have reduced the collective tax bills of Texas businesses by $400 million. After several hours of debate, that figure had ballooned to $627 million as lawmakers eagerly tacked on amendments for various industries who said they had been treated unfairly under the state’s “margins” tax.

After all, Gov. Rick Perry has promised the Legislature will approve $1.8 billion in tax relief. Why say no to any exemption?

“HB 500 takes a stupid tax policy and makes it stupider,” a frustrated Rep. Mark Strama, D-Austin, told the House at the end of the lengthy debate. The bill, especially with all the amendments just approved, he said, would make the margins tax “more inequitable and more arbitrary.”

What the Legislature should be doing, he said, is a complete overhaul of the tax.

As Tuesday’s debate showed, that is easier said than done.

Texas’ tax system is “unbalanced, inefficient and inequitable,” said Bernard Weinstein, an adjunct professor of Business Economics at SMU’s Cox School of Business. And yet, elected officials view tax studies as opening a Pandora’s box, said Weinstein, a member of the 1987 Select Committee on Tax Equity,

“It’s great to sit down and talk about the big picture, but I don’t know too many politicians who are willing,” he said.

“Tax reform to many people equals tax increase.”

For those who are already winning, maybe. For the rest of us, it might mean we’d be screwed a little bit less. Again, we can’t let that happen.

“When the state cuts, local governments have to pick up the pieces,” said Scott McCown, executive director of the Center for Public Policy Priorities. “You can’t just cut taxes. We need tax reform.”

[Former Deputy Comptroller Billy] Hamilton agreed that it made sense to view “state and local tax structure as a unit.”

“High property taxes are the price we pay for the tax system we’ve got,” he said.

When the governor promises tax relief, added SMU’s Weinstein, an important question is: “For whom?”

Unless you have a lobbyist there in Austin schmoozing for you, the answer is not you. You don’t get the breaks, you get the tab. It’s not by accident, it’s the system we’ve put in place.

Finally, on a related note, Mayor Parker’s office put out this statement on property tax fairness yesterday.

Property tax fairness is an issue important to the city’s bottom line and that of every residential property owner because they are bearing an unequal tax burden. Clearly, all properties need to be valued appropriately. The current system is obviously inequitable and rewards a lack of transparency by the owners of many commercial properties. All too often, sound valuations made by Harris County Appraisal District (HCAD) are unfairly attacked by these owners, and HCAD, bound by a system that favors the owners, is forced to defend its actions with one hand tied behind its back. It is time for a change, and the state legislature is the primary place to make that change. The City of Houston will work with HCAD, the Houston Organization of Public Employees and other groups to achieve that change.

See here for more. It’s a little late to address this in the current legislative session, but the sentiment is correct, and I hope the fight for more tax fairness is a highlight of the next session.

The Uptown plan is as much about HOV as it is BRT

Maybe more.

Most discussion of the Uptown Tax Increment Reinvestment Zone’s plan, which goes before City Council this week, has been about a proposal to annex Memorial Park into the zone and spend $100 million restoring the drought-stricken park. The centerpiece of the zone’s plan, however, is a $187.5 million vision to widen and rebuild Post Oak Boulevard with dedicated bus lanes in the middle, build 7,500 feet of elevated bus lanes on the West Loop, and finance a transit center and parking garage at Westpark and the West Loop.

“We’re doing a lot to improve streets in the Uptown area to help make it more convenient for people to get around, but getting to the Uptown area, we’ve done about all we can with the automobile,” said John Breeding, director of the Uptown zone. “What we need to do is find some way to grow our transportation supply, and that is by bringing in transit.”

Breeding stressed that Post Oak’s existing six lanes and protected left turn lanes would be preserved.

More than 65 percent of Uptown workers live to the southwest and northwest in areas served by HOV lanes and Metro’s park and ride service, Breeding said, but just 10 of 300 daily park and ride buses visit the Galleria; most go downtown.

“We are badly underserved right now,” said Kendall Miller, an Uptown zone board member. “We have some local routes that kind of go through us, we have some van pools that are organized by the big companies. It’s very ad lib.”

About 37 percent of all downtown workers take a Metro vehicle to work, Breeding said, and 62 percent of them make more than $80,000 a year, showing people choose transit for many reasons and that everyone from oil executives to retail clerks would use the buses if they served Uptown.

[…]

Metro board member Christof Spieler said about half the people who live in areas served by park and rides use the service, adding that Metro has long wanted to add Uptown to that list.

“It’s never been possible because, in order to get from the Northwest Transit Center or the Southwest Freeway to Uptown, those buses would have wound up stuck in same traffic with everyone else,” he said. “I really think this is a game-changer for transit in one of our most important job centers.”

City Councilman Oliver Pennington, who represents the area, said Greater Houston Partnership data show there are almost 200,000 jobs in his district, 91 percent of which are filled by workers living elsewhere, creating “a terrific traffic nightmare.” The proposed transit plan would make the area more competitive and more livable, he said.

“I’m a firm believer that we need some things to show what a great city we are. I think it will not only serve the people, but it will show the world that Houston is doing things for its citizens. We need some physical evidence of the kind of life that we enjoy here.”

See here, here, here, and here for the background. I think this is the first mention I’ve seen of elevated bus lanes for the West Loop, which would enable the park and ride buses to avoid the traffic of the Loop and thus be more attractive to potential riders. It certainly makes sense to expand the park and ride network into Uptown, and I do think it will be heavily used once that happens. Having the support of CM Pennington makes approval of the TIRZ expansion very likely, though I’m sure there will be some lively discussion given the Memorial Park concerns that have been raised.

Expansion of the TIRZ is still a necessary condition for any of this to go forward. Funding for this plan is dependent in part on a grant from the Houston-Galveston Area Council Transportation Policy Council, which has not yet approved said funding but could take the matter up once soon.

The proposals could come for consideration before the regional group’s Transportation Policy Council – the body responsible for allocating the federal grants – on May 24 or June 28, said Alan Clark, H-GAC’s transportation director.

“The council allocated around $400 million in grants at its April 26 meeting. The projects in question were not slated for action, but money was held back so these projects can be considered,” Clark said.

Before the proposals go for a TPC vote, an H-GAC advisory committee will consult with the Texas Department of Transportation about one phase of the plan that would involve linking bus service on Post Oak to Metro’s Northwest Transit Center, Clark said.

Current ideas include creating a grade-separated bus way above the main lanes of Loop 610 that would be connected to a Post Oak transit line, he said.

“Because this (the connection between Post Oak and the Northwest Transit Center) is so integral to the overall plan and its anticipated benefits, the Technical Advisory Committee wants to do further study,” Clark said.

Again, I feel confident that this will go through, but it’s fine if H-GAC wants to take its time and think about it some.

One other point to stress about all this is that by extending Metro’s park and ride network into Uptown, which includes the BRT lanes on Post Oak, we are also building for even more expansion and connections in the future. The Westpark transit center would obviously be of use when the University line finally gets built. If there is ever a commuter rail line along US 290, the Northwest transit center, which is the northern endpoint of this project, would be the gateway from it into Uptown. Adding a node to a network has value beyond the node itself. This plan has a lot to offer for Uptown, but it’s potentially very good for the big picture as well.

Garces and Mendez spar over a photo

Usually, the city election season doesn’t get into full swing until summertime, safely after the legislative session has ended. But clearly, it’s on in District I.

The photo in question

Houston City Council District I candidate Graci Garces is calling for opponent Ben Mendez’s apology after Mendez — or someone with his campaign — allegedly e-mail blasted a photo of….um, Garces enjoying a meal at a restaurant.

“I was appalled that Ben Mendez and his campaign would distribute a photo of me that is intended to bully, harass, and discriminate,” Garces explained in her statement.

She continued: “The Mendez campaign crossed the line of decency and should be held accountable.”

Hair Balls has to admit: we’re a little confused by the whole thing. We’re not sure what the Mendez hoped to gain by distributing the photo, or if it was just someone’s idea of a joke. What’s the message of this photo? That Garces is not a size 2, and therefore is a freak of nature whose very existence must be documented and shared with the rest of the world?

We think Garces and her supporters — some of whom have written their own open letter demanding an apology — are raising too much of a stink over this, but that’s politics. What bothers us most of all is the way Mendez’s campaign is(n’t) dealing with this.

Campos, who is Graci Garces’ campaign manager, has copies of the open letters. The first one has links to pages that talk about bullying and fat shaming, which is the direction I assume Garces intends to go with this. You can see the photo embedded above, which was included in the open letters. Garces is not a size zero, and nobody looks good in a photo taken while eating, especially a non-thin person and double especially a non-thin female person, who is likely to be reduced to an object of ridicule and derision by some number of people who see said photo. (See, for example, some of the comments on that Hair Balls post.) Garces wants to head that off, and I understand and admire that impulse. On the other hand, she herself has now made that photo of her more widely known than it was likely to become without her actions, and it’s not clear that the message she’s sending with it will accompany all of those images or sink in with the people who see them. One can argue that from a strategic perspective, she should have let it go. I think her course of action was the right thing to do, but not necessarily the best way to win the election.

As for Mendez, I don’t know the story behind this, and if you read through that Hair Balls piece, you can see that his campaign is not exactly on top of things response-wise. Whatever his intent was, let’s hope this steers the campaign for this open seat back to more substantive matters. District I voters – really, all of us – deserve that much. Texpatriate has more.

On the Astros’ Wives Gala

What Nonsequiteuse says:

I’m really upset that the Houston Astros have left the Houston Area Women’s Center in the lurch as far as the gala this year. I know the people and the programs that will suffer without those funds, and let me tell you, it will hurt.

I’d like to suggest some constructive next steps the parties involved in this meltdown might take to not just repair the damage, but to launch a new partnership that is beneficial to each party and the larger community.

You can read the basics at KHOU (which broke the story), CultureMap (and an update here, with comments from the Astros), the Houston Press (which brings in some additional elements of recent developments with the ball club), and undoubtedly many other places. Great, long history and details on the Houston Chronicle. But the quick history:

  • The Astros, through their Astros’ Wives organization, traditionally held a black-tie gala benefiting theHouston Area Women’s Center, our region’s oldest,  largest, and exceedingly well-respected nonprofit organization supporting survivors of domestic and sexual violence and educating the community on how to create a world free of such violence.
  • The gala has happened for so long, and been so well-received by the community, that the proceeds have become a key line item in the agency’s annual operating budget.
  • The ball club just announced that it is “officially” disbanding the Astros’ Wives, and that the club will redirect its charitable focus toward troubled youth and inner-city baseball programs.
  • KHOU broke the story [Tuesday] morning.

My thoughts, which I hope might form the basis for constructive move-aheads:

Fill the Gap
The immediate need is making sure HAWC has the funds they need to finish their budget year. Making do without the gala proceeds is like asking a team to play without a shortstop.

Let’s not wait for the team to act. You can donate here. Share the link once you’ve kicked in your bit, and remember, even $15 or $50 helps.

You should read the full post by Nonsequiteuse for a number of ways that this can be fixed or mitigated. The HAWC does great and necessary work, and it doesn’t deserve to be left hanging like this. While the Astros Wives Organization is a separate non-profit that is not affiliated with the ballclub, surely Jim Crane could have given the Women’s Center more notice about this change in policy. Maybe one last gala for old times’ sake, then part ways with plenty of time for the HAWC to plan for the next year. Failing that, there are some fine ideas in NS’ post, so check it out. I hope we can all come together and find a way forward for the HAWC this year.

UPDATE: More this morning, on the Astros’ response and what could have been done about the things they brought up.

UPDATE: Sean Pendergast piles on.