The last item on San Angelo City Council's October 6th public agenda is the nomination of board members for the Tom Green County Appraisal District. Homeowners know the creep in appraisal values that have hit residential real estate since our local economy boomed, then un-boomed. Did commercial real estate values rise similarly to keep up with actual sales prices?
The City of San Angelo inked a deal to buy the First Financial Bank building on the corner of Bryant and Beauregard for nearly $1.6 million. City Manager Daniel Valenzuela spoke about the purchase:
“The local real estate market is ultra-competitive,” Valenzuela said. “Almost every other site we considered for a police station over the past three-plus years was purchased before we could make an offer. We feel fortunate to have secured perhaps the best site downtown San Angelo could offer at what we believe to be a reasonable cost."The appraised value of the 301 W. Beauregard building is $225,930. The purchase price is a mere 602% premium on the county's appraised value. The appraisal changed every year since 2011 so the low number is not from inattention.
Why would this building have such a large differential between appraised and market value? There are companies who work to lower commercial real estate appraisals. Paramount Property Analysts has a division that does just that. Paramount lists First Financial Bankshares as a client.
No matter the reason the City missed out on years of property tax receipts from an appraised value closer to market. This raises a question. Is the First Financial building on Beauregard an isolated case or common practice in San Angelo? That's for the current Tom Green County Appraisal District Board and its successor, about to be appointed.
Note: Another item on the agenda is public hunting at Twin Buttes Reservoir. Does anyone else recall Council approving a Master Recreation Plan in May 2013?
Update 10-4-15: Austin has a fight over commercial real estate tax appraisals. The Travis County Tax Appraisal District attorney said "commercial property appraisals are within 90 to 110 percent of the market value. A council-commissioned study — which the district has said is unreliable — said 2015 commercial appraisals had a median undervaluation of 27 percent." Florida has a similar fight over commercial property valuations.
Update 10-8-15: A Texas real estate man noticed the huge commercial real estate tax breaks companies get, directly and indirectly. As a result residential property owners end up paying more than their share.