That should make it a good year for the entities that depend on property tax revenues, as Loren Steffy notes.
When Williams Tower sold for $412 million recently, the new owners may have expected a break on property taxes.
After all, the iconic west Houston skyscraper was valued on the tax rolls at the time for a mere $227 million.
That sort of disparity between a building’s market and taxable value, however, is changing. The Harris County Appraisal District this week released its new appraisal rates for the current tax year, and the district is stepping up efforts to raise the values it assesses on office buildings that have historically been under-appraised. The reason: Houston’s resurgent economy is spurring increased demand for office space.
“You have a lot of activity throughout 2012 that really shows that the market for Class A and Class B office buildings has really improved and values have gone up significantly,” said Guy Griscom, the appraisal district’s assistant chief appraiser for commercial properties.
More sales, higher occupancy and higher rents help raise the averages that the appraisal district uses in assessing values.
While the higher appraisals still won’t catch up to the market value for most prime properties, it will narrow the gap that’s existed for several years.
Individual property appraisals won’t be available a few more weeks, but the district intends to raise appraisals on almost 350 of the city’s top office properties by more than 50 percent.
It’s attempting to address a problem I pointed out last year: the disparity between market values for prime office buildings and the value carried on the tax rolls.
See here for the previous time Steffy wrote about this. I’ve discussed the subject of sales price disclosure a number of times before. That’s not what HCAD is using here since they’re still not allowed to do so, but the volume of sales and other real estate action has given them enough information to at least deal with some of the office buildings that have changed hands. I’m sure the city, the county, and the various school districts are eagerly awaiting the results. See The Leader News for more on a related matter.