Tuesday, October 20, 2015 by Jo Clifton

Appraisals worry some Mueller homeowners

Owners of affordable housing in the Mueller development are worried that they will no longer be able to pay the taxes on homes they bought at affordable prices – for example, $160,000 to $170,000 – because the Travis Central Appraisal District is appraising the properties at market value instead of at the affordable prices.

According to Patti Summerville, executive director of the Mueller Foundation, TCAD is appraising homes at the affordable price only for the first year. After that, the appraisal district is assigning values more appropriate for market value housing, so the value of a home that cost and was appraised at $170,000 last year might be appraised at $300,000 this year. With a homestead exemption, the taxable value will go up to $187,000, Summerville said, “but after five years, the homeowner will perhaps see a doubling in taxes.”

Apparently, the appraisal district changed its rules in 2014, which is why increased appraisals are now an issue, Summerville said.

The foundation and homeowners say that the houses that are bought and sold as affordable housing stock should be compared with other affordable housing and not appraised as if they were regular market value houses.

Real estate developer Catellus, which developed Mueller, committed to building 25 percent of the homes – more than 1,400 new houses, condos and apartments – for households with incomes lower than the area’s median. The promise of Mueller was that it “would be one of the largest communities offering affordable and workforce housing in central Texas,” according to the Mueller website.

In order to keep the program sustainable, the Mueller Foundation holds a second lien on each home and has a right of first refusal when a homeowner decides to sell. When a sale occurs, the homeowner is allowed to make only a 2 percent profit for each year he or she has been in the house. Generally speaking, the foundation will take the property and sell it to another family who qualifies for an affordable home.

Additionally, owners of the affordable housing are not allowed to rent out their property, and if they wish to use it as a temporary short-term rental, they must stay in the house at the same time as the renter.

Owners are also not allowed to make any changes or additions to the homes without permission.

These are some of the factors that distinguish the affordable housing from market rate housing, Summerville explained. There are other affordable housing developments that have the same rules, and homeowners there are in jeopardy of having to pay much higher taxes also, she said.

She described the homeowners as people with moderate incomes of approximately $40,000 to $50,000 a year, such as teachers and state workers. The difference in estimated taxes, she said, would mean that someone who now pays about $324 a month on the affordably priced home will be paying almost $600 a month when the value goes up to the market rate.

The Mueller Foundation has hired lawyers to advise those homeowners and to protest property appraisals they feel are unjustified. In a recent email to affordable homeowners in Mueller, Summerville wrote, “As you know, we (the Mueller Foundation, Catellus Development, Community Wheelhouse, Texas ProTax & Lorri Michel, attorney-at-law) have been working fervently with TCAD to resolve the tax issues. Texas ProTax has been able to verify that 100 of the 290+ affordable homes are secure at this point.” Those 100 homes, Summerville said, have been recently purchased and are still being appraised at their sales price.

“However, during the last official tax protest on September 21st … TCAD refused to consider the affordable sales price as the basis. … Our last option is to take this to court,” Summerville said. “Our attempts to work with TCAD personnel have failed. Basically, their lawyers disagree with our lawyers as to what the law says. While we have sent two legal opinions and are now working with an additional attorney to plead our case, TCAD has not provided a legal opinion of their own but has only said they disagree.”

Summerville said that the foundation does not want to “beat up on TCAD or the staff there – they are doing their jobs as they see fit.” She noted that the foundation has prepared a presentation that it hopes to make to the TCAD board on Nov. 9. However, she said Monday that it was not clear whether the foundation would be able to speak for more than the three minutes allotted during citizens communication.

The email continues, “We will be ready to take this to court after November 9 if this issue is not resolved in favor of our homeowners. We have done our homework and believe the law is on our side.”

Of course, the appraisal district believes the law is on its side. Asked for comments, Chief Appraiser Marya Crigler said, “Because this is potentially going to be in litigation, let me get an attorney to call you.” She added, “Per the constitution and by law, all properties must be appraised at market value.” The attorney did not call back by our deadline.

Photo by Garreth Wilcock made available through a Creative Commons license.

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Key Players & Topics In This Article

Mueller: The Mueller Development is a Planned Unit Development built on the site of Austin's former airport.

Travis Central Appraisal District: The tax appraisal district for Travis County.

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