Recession and Texas Property Taxes
I have written a lot about the economy and its effect on property taxes.Â Â The actions today by the federal government to bail out financial institutions, I believe is a clear message both nationally and here in Texas.Â Â For example Bloomberg reported, “Lehman Brothers Holdings Inc.‘s bankruptcy filing may delay the sale of about $30 billion of commercial real estate assets at a time when property values are eroding, leaving less on the table for creditors.”Â Additioanlly, The Wall Street Journal reported that, “retail giant Centro Properties Group, New York developer Macklowe Properties, office-building investor Broadway Real Estate Partners LLC and others are now facing an even rougher ride in the wake of Lehman Brothers Holdings Inc.’s bankruptcy, the collapse of American International Group Inc. and the buyout of Merrill Lynch & Co. by Bank of America Corp.”Â Further, “After these and other market crises, cash-flow projections for properties are being scaled back in anticipation of a greater economic slowdown. The sales market — long considered the last hope of many distressed players — has virtually ground to a halt.”
These sort of developments will effect tax rolls nationaly.Â In Texas tax rolls which had enjoyingÂ double digit growth rates in prior years which dropped toÂ single digit growth this year will see further decline in the future.Â
The fundamental of doing business have changed.Â TheÂ construction, development and buyingÂ and sellingÂ of real estateÂ will continue to suffer.Â The loss of value in real estate will be reflected in future tax rolls.Â The Texas Legislature would be well advised to keep the changing business environment when they address changes to the Texas property tax system in the upcoming session.