Tuesday, November 3, 2015 by Jo Clifton

Appraisal district, Mueller folks air differences

Some owners of affordable housing in the Mueller development have seen their homes’ appraised values double since 2013.

One of those homeowners is Janeka Rector, whose home was appraised at $179,000 last year. Next year it will be appraised at more than $378,000. “The 10 percent cap (on appraisals) on my home is the only thing that’s keeping me in my home,” she said. According to the website for the Travis Central Appraisal District, or TCAD, “The homestead cap adjustment is calculated on a year to year basis. If a property had a homestead cap adjustment last year it was due to the assessed value being higher than 10% of the previous year’s assessed value.”

Although Rector got into the affordable housing program after learning about it from a co-worker, she says now that she could not honestly recommend that any of her friends try to buy affordable housing at Mueller until this problem is resolved.

The Mueller Foundation, which oversees the affordable housing program, asked for a meeting with the TCAD board of directors in order to present its case. That meeting lasted for about two hours on Monday as Mueller residents and their lawyers sought to persuade the board that they – not the lawyers and appraisers for TCAD – have the law on their side.

Although residents of affordable housing in the Mueller development and their lawyers presented both emotional and rational arguments in favor of lowering the assessed value of their homes to the affordable rate at that meeting, the lawyer for TCAD responded by blaming the Mueller Foundation for property owners’ predicament.

Judith Hargrove, attorney for the appraisal district, started by saying, “TCAD is willing to do anything in its power to assist with this issue. And it shouldn’t be portrayed that TCAD is somehow intentionally taking a position that is not legal that is harming this (affordable housing) program or intends to harm this program, because that is absolutely not the case. TCAD is being blamed … for a situation that the Mueller Foundation created by the way it established this program, and it did not restrict the resale prices of these properties.”

Hargrove then pointed to the fact that 14 of 51 properties that started out at affordable housing prices, under $200,000, have been resold at market prices. Those 14 properties had already sparked numerous questions from board members to the Mueller advocates.

“If they are reselling at market prices, then why should they be appraised at below market values?” asked Hargrove. Under the agreement that affordable home purchasers sign with the Mueller Foundation, when they sell the property, their profit is limited to 2 percent for each year they owned the home. The foundation has the right of first refusal, but the foundation is not limited in the amount of money that it can make when it resells the property.

In most cases, the foundation resells the property to another family in need of affordable housing. However, in certain cases the foundation has sold the homes at market value and plowed the profit back into the foundation to finance renovations and finance more affordable housing.

Although the restrictions placed on homeowners limit the amount a homeowner can receive upon sale, those restrictions do not limit the resale price, Hargrove noted. Evidently these same problems may not arise in other affordable housing programs within the city because of the way their covenants are written.

Attorney Mike McKetta, representing Mueller homeowners on a pro bono basis, told the board that he believes TCAD is misreading the law. Referring to three cases in which Mueller affordable homeowners appealed their appraisals to the district’s review board, McKetta said, “I believe that if the view being expressed in the three review board hearings were accurate … those would be saying that this appraisal district last year acted illegally, and the year before and the year before that. And it did not.”

It was appropriate and it continues to be appropriate to consider the encumbrances, or restrictions, on what homeowners may do with their property, he said. McKetta urged a review of the data and the law to arrive at a different conclusion for Mueller properties.

Patti Summerville, executive director of the Mueller Foundation, told the board it was important to note that not one penny of taxpayer money goes into the foundation (which is a 501(c)(3) charitable entity). “Our homeowners are more than willing to pay their fair share of the taxes,” she said.

Summerville noted that the agreement between the city and the foundation sets aside 25 percent of the homes in the development as being affordable housing, and the board of the foundation is committed to making sure that that is true in perpetuity. She said the main reason why the 14 homes were sold at market value was economics.

TCAD board member Tom Buckle said he was troubled. “The major problem I have … the money doesn’t go to the homeowner – so why should they have to pay?”

Homeowner Karen Bondy, who addressed the board with a child in her arms, told board members that her family purchased their home at Mueller in 2012. They never expected to be able to afford a home in Austin, but because of the Mueller program, they were able to do so. She said she is a speech pathologist for Austin Independent School District, and her husband works for the state in an agency that helps people with disabilities. “We are the people who are helping the other people in the community, and we won’t be able to live in Mueller under the current situation,” she said. She asked them to work with the foundation to solve the problem.

One member of the board wondered if there was a need for legislation to solve the problem. State Rep. Celia Israel, whose district includes Mueller, asked the board to find a way to change the appraisals at Mueller to allow the program to continue. She said, “I encourage you not to rely on the Legislature. My colleagues are not always good with legal precedent and data. So I encourage you to find a way to get to yes.”

Of course, the TCAD board does not have the authority to direct the lawyers and the appraisers who work for the district to change their appraisal methods or assumptions.

Board Chair Dick Lavine said that while he could not speak for the whole board, he was happy to give homeowners the opportunity to speak and to hear from their attorneys. “Obviously, the chief appraiser and her attorneys will make a decision based on our understanding of the statute about how we go forward from here,” he said. “But there is no doubt, and I think that we all understand, that affordable housing is a major issue for this city, and how we resolve it will determine what kind of city we live in.”

Photo of Board Chair Dick Lavine by Jo Clifton.

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Key Players & Topics In This Article

affordable housing: This general term refers to housing that is affordable to Austinites, with or without subsidy.

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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