Just as many of you received your 2021 property tax statements, you might’ve thought there was a mistake. Personally, I thought Jean Lafitte’s treasure was finally discovered at one of my properties and nobody had told me. Or maybe they just made a mistake, a typo, you know, an intern hit the wrong dollar amount, and nobody noticed. So, I called the Galveston Central Appraisal District and, no, the amount was correct, on all the properties. At this point, I was just angry and disappointed. Angry because many friends in the industry were calling me saying they might have to declare bankruptcy. Disappointed the Texas Legislature would allow this problem to continue without any real safeguards to the taxpayers.
I will give you just one of my multiple property examples. An office complex on 23rd Street, also known as Tremont Street, went from a $580,000 valuation to $2,497,690. These tenants are locked into three- to five-year leases. They have inflation adjustments worked into their future rents based on historical data over the last five years like insurance and property tax increases. None of this data accounts for 330 percent increases in property taxes in one year. Who could ever forecast such an increase in their cost of doing business?
As far as apartments (both large and small) and rental homes, people need to realize that landlords pass on the cost to their residents. If we get a $200 a month increase in our cost of doing business, we have to raise the rent $200 the next time the lease is renewed only if the rental market allows. We’ve been raising the rent over many years to cover massive increases in flood insurance (federal government), windstorm insurance (state of Texas), and mostly property taxes (city, county and school). Most of our increases have gone to pay additional taxes to the above agencies. Plus, we still have rising cost of air-conditioning repair and replacement, lumber prices rising 120 percent, and general maintenance. I’m not throwing a pity party; I’m explaining why rents have risen dramatically compared to the rate of inflation.
The latest increases in property taxes will drive many working-class renters off the island and out of the county. We see “Help Wanted” signs all around the county. We don’t need massive increases in rent just to cover out-of-control property taxes. Galveston will be hit especially hard since those who work in the tourism industry will be hard pressed to find affordable housing on the island.
These types of unpredictable increases will influence development in our county. When real estate investors and commercial builders cannot predict their cost of doing business to any degree of accuracy, they will put projects on hold. This cost jobs and future “fair tax revenue” to our county and cities.
The Texas House Ways and Means Committee is currently meeting about out- of-control property taxes. Please contact your local state representatives, Mayes Middleton and Greg Bonnen, and Sen. Larry Taylor. Ask them for meaningful property tax reform and property tax caps on all property in the state of Texas, for example 3 percent maximum per year or tied to the CPI factor. Anything is better than this unpredictable system of ever-increasing taxation that financially devastates both owner and renter.