Last week, the Dallas Central Appraisal District (the organization that appraises all property in Dallas County for tax purposes) revised its appraisal for the land the city is considering purchasing for the Convention Center Hotel. Previously, DCAD had valued the land at $7.3M. Now, they have assessed it at $36.5M. Why is this important? Because the property owner is asking the city to pay $42M.
When we began discussing paying $42 million for the convention center hotel site, one of the primary questions I asked city staff was: Why would we pay six times the appraised value set by the Dallas Central Appraisal District? Why would we pay $42 million for land valued at only $7 million, particularly when the property owners protested to DCAD last year that $7 million was too much?
This $35 million difference meant one of two things: Either the city was being duped into paying six times what that property was actually worth and the city’s appraisals were wrong, or DCAD had seriously undervalued this commercial property, resulting in years of lost tax revenue to the city. And if it were the latter, if DCAD had undervalued this property, then it stood to reason that it had done the same for other commercial properties across downtown and across the city, and the City of Dallas had lost millions and millions of tax dollars from these undervalued commercial properties. That, of course, meant the tax burden was shifting more and more to residential property owners.
The problem is, under Texas state law, DCAD can obtain the sales prices for residential properties, but not commercial. I, along with Mitchell Rasansky (before he was instructed by city attorneys not to participate in this discussion), had requested that city staff work with DCAD to figure out why there was such a disparity between the city’s appraisals and DCAD’s for the convention center hotel land.
The thing is, the owner of the proposed site for the convention center hotel can’t have it both ways. They can’t claim that the property is worth a whopping $42 million when they want to sell it to the city, but a measly $7 million when they want to pay taxes. I’m glad city staff worked with DCAD to try to more accurately reflect the market value of the property at issue and better gauge the property values of other commercial properties downtown. It makes the asking price for this property somewhat more credible, and, looking at the bigger picture, I am hopeful that we’ll see greater equity in our property tax system so that we are all paying our fair share, not just residential property owners.
At the end of the day, this is all a matter of fairness. It’s not fair for residential property owners to pay more, year after year, to see their appraisals rise every year, and for commercial property owners not to pull their weight due to a loophole in state law that prevents transparency and disclosure.
I understand that DCAD is revising its appraisals for several downtown properties, and perhaps others. Will commercial property owners enjoy seeing their taxes rise? Will they like paying taxes on the full market value of their properties rather than some deflated, undervalued price? Probably not. I sure don’t like paying taxes on my house. But I, along with my neighbors, have to pay taxes on the actual market value of our homes, and it should be the same for commercial property owners across our city. And if the owners of the land for the hotel want the city to pay $42 million, they damn sure better be willing to pay taxes on that amount.