Unaffected Taxpayers Could Pay for Tornado Damage Losses

Reappraisals to begin of damaged properties for lower taxes

Dallas County Commissioners Tuesday authorized reappraisal of properties damaged in the October 20 tornado.

It could reduce taxes for those property owners, reduce expected revenue for local government agencies and increase property taxes for everyone else in the future.

The Dallas Central Appraisal District posted information about the reappraisal process for affected property owners.

"Our appraisers have done this before. They know what they're doing and we're being very, very fair about this," said DCAD spokesperson Cheryl Jordan. "We will allow you to come in and protest the disaster value that we come up with."

Property owner Mike Hernandez was pleased to hear Tuesday about reappraisal but wondered what appraisers would consider fair. His Preston Hollow home was still standing but severely damaged.

"If it is land value, they would have to consider the timberline that was lost, not just on my property but the whole neighborhood. If it's structural, they need to consider what it's going to take to rebuild that property to get it right back to where it used to be prior to the storm," he said.

Hernandez and his family hid in a closet beneath stairs as the tornado blew right through his house. It separated walls and lifted the roof.

"If we can avoid taking the whole thing down, that would be great," he said. "I believe it's going to be very expensive."

Jordan said the reappraisal process in the damage areas will take several weeks and DCAD hopes to provide local government agencies with a supplemental tax role by the end of January.

Dallas County Budget Director Ryan Brown told County Commissioners Tuesday the insurance industry estimate of $2 billion private property damage would equate to around $1 million reduced revenue for Dallas County in the current budget year.

"Those impacted homeowners will either receive a refund from their property tax or they will receive a new bill," Brown said.

There are just 73 days in the current year since the October 20 tornado, or about 20 percent of the year. Since most damaged properties will still be damaged at the beginning of next year when 2020 values are appraised, the full year budget hit to local governments from lower values would be 5 times as much.

To make up for that, Brown told County Commissioners that state law allows a higher property tax rate next year, above the new limit imposed in the last session of the Texas Legislature.

"Because it was declared a disaster, you're no longer under the 3% cap for next year, which does give you that flexibility to cover that loss that you're going to experience into the following year," Brown said.

It's too soon to know exactly how large the government revenue impact will be or whether governments will decide to use the higher tax rate option.

Jordan offered an example of how reappraisals could affect a severely damaged $500,000 home. If it was leveled to the slab, the land value could be $100,000 and the slab value $1,000. Assuming the home had full value for 80% of the year, the prorated value would be $420,200. The full year value if the property was not rebuilt by January would be only $101,000.

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