Downtown property owners brace for jump in values

April 14, 2019

HARLINGEN — Like other Jackson Street building owners, Steve Aune is about to find out if he’ll face a tax hike that could hurt his business.

Tomorrow, the Cameron County Appraisal District is expected to post on its website what property owners and merchants believe could be staggering increases in property values along the downtown business district.

Across the Jackson Street business district, property owners and merchants fear a spike in their appraised values could trigger a tax hike that could shut down shops and leave empty buildings.

“I want to find out,” Aune, owner of a building at 214 E. Jackson St. that’s home to Nip’ n Tuck Draperies, said Friday, referring to the appraisal district’s new property values.

About eight years ago, the district raised his building’s appraised value from $40,000 to $225,000, he said.

Now, he’s bracing for another increase.

“The word on the street is they’re increasing 70 percent,” he said.

Along Jackson Street, the fear of a big tax hike has property owners and merchants wondering about the area’s future.

On Thursday night, merchants invited Rick Moreno, the appraisal district’s real estate manager, to respond to their concerns.

“This particular year we had, for the first time, a lot of improvements in the downtown area,” Moreno told the crowd of about 20 merchants. “We haven’t appraised the area in a while because we didn’t have the information. Now we’ve got a surge of information.”

From the audience, Leo Garza warned increased property values would spark a tax hike that would drive many merchants out of business.

“We have people on the street hanging by the skin of their teeth. Any increase will impact,” Garza, owner of Jackson Street Antiques, told Moreno.

Based on the proposed property values, Garza’s monthly rent would jump from $800 to $1,022.

Moreno said the state comptroller’s office requires appraisal districts to set property values at the market rate.

“Our primary job is to appraise property at 100 percent of market value,” he said. “I understand it’s a burden passed on. We’re not trying to push people out of business.”

Like other property owners, another tax increase would hurt his business, too, Aune said.

“I’m barely making it now,” he said. “I work so hard. My business has not increased at all. I need more business.”

Values changing

In the past few years, property values along the five-block area from Commerce to Fourth Street have largely gone unchanged.

“We look at them annually but whether they change annually is another story,” Chief Appraiser Richard Molina said. “If the market is stagnant, you see minimal or no changes. In previous years, there wasn’t enough information on Jackson Street to justify where the market value should be.”

So most properties there, he said, fell below the market value.

“The streets behind and in front are at market value so the other people are paying their share (of taxes) based on being at market value,” he said.

Now that might all be changing.

Last month, property owner Bill DeBrooke found proposed property value increases on the district’s website.

According to DeBrooke, they showed average increases of about 70 percent, while some properties doubled in value.

Now, properties along the five-block area are assessed at a total of $4.3 million.

Under the proposed numbers posted last month, assessments would jump to a total of $7.25 million, marking a $2.95 million increase.

That’s a 69-percent jump.

Soon after DeBrooke found the proposed increases, the district removed the proposed values because they had been inadvertently posted, Molina said.

“Some of those values are way out of line,” DeBrooke said Friday.

Rent key factor

Along Jackson Street, property owners want to know how the district came up with the proposed increases.

According to Molina, the district largely used rental information to set its new proposed property values.

“This year, we obtained many rental rates. We have plenty of rental information there,” Molina said. “We have a few sales to support (preliminary values based on rental information). In Jackson Street, the information we use is from Jackson Street itself.”

However, DeBrooke, who owns several Jackson Street buildings, argues Jackson Street’s rents here have largely remained unchanged.

“I don’t know any rents high enough to justify any increase like these,” he said. “They’re not much higher than they were 20 years ago.”

From 1990 to 2000, he said, average monthly rents for 25-foot-wide buildings stood at about $750.

Then from 2000 to 2008, they climbed to about $850 to $900, he said.

After the recession hit in 2008, rents remained largely unchanged.

Now, average monthly rents go for about $1,000.

“In the last two or three years, they have been coming back but not to the tune of what the appraisal district thinks,” DeBrooke said.

At the end of Thursday night’s meeting, property owner Ed Sokolosky stood up and warned a tax hike could force merchants out of buildings.

“Everyone in this room has worked their tails off to make Jackson a destination,” he said. “With the taxes going up, this will stop because there won’t be anyone left downtown. Sooner or later, this is going to be a ghost town.”