You know, the City used to justify municipal extravagance with the rationalization that we need to swing our tax base from residential properties to commercial and industrial properties. Well, this year valuations went the other way.
From an article in this week’s El Paso Inc.:
Increases in commercial and industrial property values usually lead the way when the El Paso Central Appraisal District releases new certified valuations in July, but this year it’s the modest 2.9% increase in home values.
This year’s commercial and industrial property valuations of $11.4 billion actually fell $184 million below last year, catching the city and probably other taxing jurisdictions by surprise.
In addition, new valuations of multifamily properties came in at $2.1 billion, which is $31 million or 1.4% less than last year.
“In over a decade, I’ve never seen commercial values go down,” said Robert Cortinas, the city’s chief financial officer. “Historically, on the commercial side, we’ll see a 2.8% increase.
“That’s happened every year I’ve been with the city. It just doesn’t make sense.”
As a percentage, the loss in industrial and commercial values isn’t large, just 1.6%. That’s the equivalent of 920 new homes valued at $200,000 suddenly disappearing from the tax roll.
The revenue loss would come to just $155,230 at the city’s tax rate of 83.4 cents per $100 valuation. But the city wasn’t expecting losses in property valuations, particularly not in the very areas it’s worked hard to improve – business and industry.
“When I got the certified values Wednesday, I was very, very shocked at what I saw,” Cortinas said. “The surprising thing is there was a lot of growth.
“We had almost $254 million in new construction in commercial – a 3.5% increase. But it’s on existing commercial property where we saw the decrease.”
When you add a bunch of new commercial properties to a stagnant population base, the supply increases but the demand doesn’t. So of course the value of the existing properties will decrease.
Drive down one of our commercial corridors and look at all the For Rent signs that are popping up in front of empty storefronts.
For Rent signs and vacant lots are the growth industries in El Paso.
All that “development” is just re-slicing the pie. There’s no increase in business. The existing demand is just redistributed.
And, still we see new construction of mini-mall/strip-mall sites, all the time. And, yes, there are a lot of empty storefronts for rent or for lease. But, let’s keep pissing away the tax dollars in pursuit of legal battles to tear down even more of downtown in order to build more empty space!
Rich, this goes back to reinforce what I had posted last week from the Reuter’s article. In addition, I too read the El Paso Inc. article and it states that many large “entities” had asked for “readjustments” on their tax value: hospitals, large entities, etc.
Paul Foster is a sharp businessman, and I don’t get why he is spending all of his capital on El Paso instead of say, Austin, San Marcos, San Antonio. San Antonio is going to double in growth in the next 20 to 30 years, making it a city of 3 million. And, this is within the city limits unlike the Dallas Metroplex. Doesn’t include outside of SA which is going to boom as well…Boerne, New Braunfels…Floresville, etc. Austin is the same way. Plus, Pflugerville, Georgetown, Dripping Springs, etc. El Paso is certainly Not going to double in the next 20 to 30 years…in fact, the continual erosion will happen. He’s buying and rehabbing buildings but who is going to occupy them? And, El Paso is, despite what the drum-beaters said about the Chihuahua’s.. are not turning EP to a destination point.
If there is any consolation, EP is not alone in the future erosion (see Reuter’s article).
Such a shame because El Paso has a lot to offer. Friendly people. Great weather. Great Mexican food. Diversity of culture. Sad, but like Gomer said, Surprise…Surprise…Surprise