El Paso home tax appraisals increase substantially; 30,000 protests expected

After several years of small increases, the taxable values of El Paso County homes are going up an average 6 percent —  the largest increase in at least a decade, according to preliminary data released April 30 by the El Paso Central Appraisal District.

The total valuation of all commercial properties increased just over 8 percent in the county and city. No average increases for commercial properties were available from the appraisal district.

Higher property values likely will increase El Paso property tax bills even if the city, county, school districts and other taxing agencies don't increase their tax rates this year.

MORE: El Paso property tax bills continue to rise

Appraisal district officials project 28,000 to 30,000 protests could be filed this year by home and commercial-property owners, based on previous years.

More than 8,000 protests had been filed by May 7, out of 418,944 residential and commercial properties. Of those, 7,208 protests were filed by homeowners.

Of the total number of properties, 369,863 are residential properties, according to the El Paso Central Appraisal District.

Property owners have until May 15 to file a protest, online or by mail, with the appraisal district to challenge a property's tax appraisal and try to lower it by submitting photos and other evidence to show the appraisal is not accurate.

That deadline has changed from May 31 in previous years due to a law passed in the last session of the state Legislature. 

Soldier fought valuation and won

Army Cpt. Riley Lynch, 29, said he's happy he protested the value of his far East Side home, which, he said, he bought new in summer 2016 for $198,000.

The appraisal district increased the value of his home to $212,072 this year, and he recently convinced one of the district's Appraisal Review Boards, which hears protests, that the value should go back to $198,000.

A home on his street, Merry Meadow Place, sold for $185,000 and others in the area have sold for $190,000, he said.

The proposed appraisal was 2.7 percent above his home's 2017 value, but 7.1 percent above his purchase price.

"I couldn't protest last year because I was overseas (Afghanistan)," Lynch said.

The appraisal district is "arbitrarily valuing" homes based on square footage and other data because appraisers don't actually physically look at each home, Lynch said.

David Stone II, assistant chief appraiser for the El Paso Central Appraisal District, said the district's appraisers "look for sales in neighborhood's and group properties by type and average square footage, and apply that to properties of the same type. We run ratio studies to see the ratio of appraised value to sales prices."

One thing that hamstrings the appraisal process is that in Texas, sale prices do not have to be reported, said Dinah Kilgore, the district's director and chief appraiser. 

"We get information by talking to real estate brokers, sending out questionnaires asking for sales prices," and other means, but a lot of sales are not reported, Kilgore said.    

The appraisal decrease should lower Lynch's property tax bill by a few hundred dollars — money that he and his wife can use for other things, he said.

Values affect tax bills

Government agencies use the appraisal district's annual property valuations to set tax rates.

The tax rate for residents in El Paso, which includes four taxing agencies, ranked second highest among the nation's 50 largest cities, behind Detroit, in a study released in April. However, the city's tax bill to homeowners ranked lower — 17th among the 50 largest cities.

The study  was done by the Lincoln Institute of Land Policy in the Boston area, and the Minnesota Center for Fiscal Excellence in St. Paul, Minn.

Whether tax bills rise "is totally dependent on the taxing entities," the appraisal district's Stone said.

"Under truth-in-taxation, theoretically when the appraised value increases, the tax rate should decrease to raise the same revenue as the prior year," Stone said. "Generally, any increase in revenue over the prior year is considered a tax increase, even if the tax rate stays the same or even decreases."

Reasons for the rise in home values

Increased buyers' demand for El Paso homes coupled with increased prices on construction materials have increased home prices in El Paso, and that drove up homes' market values and taxable values this year, Stone said.

The district's appraisals reflect property values on Jan. 1, he said. 

The taxable value of an average single-family home in El Paso County is $126,823 this year, an increase of $7,169, or up 6 percent from 2017, according to the appraisal district's preliminary values. In 2017, the average taxable home value increased less than 1 percent in the county. 

Inside the city limits, the taxable value of an average single-family home is $132,277 this year, an increase of $7,040, or up 5.6 percent from a year ago. Last year, the average taxable home value increased less than half of a percent in the city.

This is the largest valuation increase since the national real estate boom, prior to the Great Recession in December 2007 to June 2009.

El Paso's taxable values soared 17 percent in 2006, according to El Paso Times archives. However, Texas law caps taxable valuation increases at 10 percent per year for owner-occupied homes.

MORE:Home prices rise to record high in El Paso, other Texas cities

El Paso taxable home values have increased around 1 percent to 3 percent per year in recent years, with two larger blips in 2014, when the preliminary taxable value increased 4.6 percent in El Paso County, and in 2009, when the preliminary taxable value increased 4.62 percent, Stone reported.

The taxable value is a home's larger market value with homestead exemptions and other exemptions taken out, which lowers the value, Stone said. 

The average market value of a single-family home is $132,757 in the county this year, and $137,731 in the city, according to the appraisal district's home appraisals.

Those numbers are lower than the average sales prices reported by the Greater El Paso Association of Realtors. In January, the average sales price of a resale home was $156,184 and $185,441 for a new home — both increases compared with January 2017.

The Realtors' average sales prices are higher than the appraisal district's average market values because the district's values include all homes in El Paso County, not just ones being sold, including lower-valued homes in less desirable neighborhoods where sales occur less frequently, the district's Stone said. 

Higher home value increases equity, tax bill 

Ray Adauto, executive vice president of the El Paso Association of Builders, the El Paso homebuilders group, said increased valuations give homeowners more equity in their homes, but at the same, he said, the increased values cause problems because higher values also increase a property's tax bill, he said.

"El Paso incomes are not keeping pace with increased valuations and increased taxes," he said.

New home sales are doing well this year, in part, Adauto said, because buyers are looking to beat increases in mortgage loan interest rates that some see on the horizon.

Tom Torres, president of the Greater El Paso Association of Realtors, said home prices have been going up. But March data released by the association indicate that the average sales prices for resale homes declined compared with February and compared with a year ago. The average new home price in March was lower than February, but about the same as in February 2017, the association's data show. Torres didn't know why the average prices declined.

Increased values are good for homeowners because of the increased equity it gives them, Torres said. Increases in taxes bring in more money for the city's quality of life projects, including parks, he noted.

Salaries are lower in El Paso than in many other cities, he said. So, he said, "when values go up, there's less of a pool of buyers."

Vic Kolenc may be reached at 546-6421; vkolenc@elpasotimes.com; @vickolenc on Twitter.    

How to protest

A property owner can file a protest of their property's appraised tax value by mail or online to the El Paso Central Appraisal District at epcad.org/ProtestsAndAppeals.

The deadline is May 15, or 30 days after the property owner receives an appraisal notice, whichever date is later. Most people's deadline is May 15.

Protest forms for mailed-in protests are included in appraisal notices sent to property owners. Additional forms are available online at epcad.org/Home/Forms 

Evidence needs to be presented either in person or online to help prove that a property is not appraised correctly. It could be due to bad conditions of the property or due to a home's appraisal being higher than similar properties in a neighborhood. 

Evidence can include photos of the property, repair estimates and home sale prices for similar properties in an owner’s neighborhood.

Evidence needs to be uploaded to a property owner's online file for online protests, or taken in person when meeting with a district appraiser or at a hearing with one of the Appraisal Review Boards, or ARB.

For mailed in protests, a property owner will be notified when the owner can meet informally with a district appraiser to determine whether an agreement can be reached on an appraised value. If an agreement can't be reached, then the owner can have the case heard the same day by the ARB, and it will decide the appraised value.

For online protests, the owner is notified, by email, of the district's determination on what value it accepts on the owner's property. If the owner disagrees, then the owner is scheduled for a hearing with the ARB.