Mueller Makes Plea to TCAD Board

Affordable homes program threatened by spiking appraisals

Mueller Neighborhood homeowners and their advocates appeared before the board of the Travis Central Appraisal District Monday, to plead that TCAD has incorrectly appraised affordable home values in the northeast Austin development. The appraisers disagree.

Mueller Neighborhood Housing (Photo courtesy of City of Austin)

As conceived by the City of Austin and implemented by the Catellus Development Corp. and the nonprofit Mueller Foundation, 25% of Mueller homes are reserved at “affordable” prices for qualified buyers (earning less than 80% of median family income). That category currently represents 290 homes, with another 300 planned at full build-out of the development. On the affordable housing stock – which is physically integrated into market-rate neighborhoods – resale values are restricted to an annual appreciation of 2%. From 2007 until last year, say Foundation administrators, TCAD appraisers acknowledged that 2% ceiling (or an earlier more complicated formula, similar in value) as reflecting, for valuation purposes, the market-rate price.

Something shifted last year. Although a few affordable homeowners had occasionally seen higher valuations – normally lowered on direct appeal – in the most recent cycle, about 50 affordable homes were abruptly assessed at full market rates, some more than 100% above their previous appraisals. Although the homestead exemption will limit the one-year tax hike to 10%, homeowners say the rising tax payments will quickly price them out of their homes. Homes that were originally appraised at $170,000, for example, were suddenly issued appraisals above $325,000. “Under these rising appraisals,” homeowner Janeka Rector told the board, “my home will become unaffordable within five years.”

Monday’s board meeting was inconclusive. Just prior to the meeting, board Chair Dick Lavine told the Chronicle that while the board sets overall TCAD policy, it cannot directly intervene in appraisal matters, and Chief Appraiser Marya Crigler and her staff are responsible for acting in accord with state law. Moreover, he said, there was no action item on the agenda – just the opportunity for homeowners, Foundation representatives, and other advocates to present their case and hope that some collaborative resolution could be found.

After more than two hours of discussion, that resolution did not seem much closer. Homeowners, Foundation spokespersons, attorneys, and others pled their case that the appraisal ground had shifted under the homeowners, endangering the entire Mueller affordable housing program. Advocates included state Rep. Celia Israel, Foundation Director Patti Summerville, consultant Kelly Weiss of Community Wheelhouse, and several attorneys representing either the Foundation or homeowners. Board members appeared sympathetic, but asked pointed questions about the design of the program, and particularly about the occasional release of some affordable homes “to the market” – 14 previously affordable homes have been sold at market rates, although the “excess” income (above the 2% annual rate) goes not to the homeowner, but to the Foundation to re-invest in additional affordable housing stock.

Some board members seemed troubled by an apparent TCAD standard that homeowners pay property taxes on market values that they cannot actually realize. Mike McKetta, an attorney speaking on behalf of homeowners who have already had appeals denied by the Appraisal Review Board, insisted that existing state law requires appraisals to acknowledge all encumbrances on a property – including the Mueller covenants that limit homeowners’ appreciation and give the right of first refusal to the Foundation, which reinvests any excess profit into the affordable housing program.

But in a brief closing statement to the board, TCAD attorney Judith Hargrove responded that “TCAD is being blamed for a situation that the Mueller Foundation created in the way it established this program.” Hargrove argued that since the Foundation has the ability to allow the houses to sell at full market prices – as it has done in 14 instances – “the sales prices are not restricted.” Since TCAD is required by law to appraise at market value, pricing all the homes – “affordable” or not – at actual market values is what the agency is required to do. “What they [the Mueller Foundation] have done to alleviate this problem,” Hargrove said, “is to blame it on TCAD.”

Hargrove’s argument, however, left hanging in the air the question of one board member, Tom Buckle: “The money doesn’t go to the homeowner – why should the homeowner pay the taxes on it?”

Hargrove said that TCAD is willing to do “anything within its power to assist in this issue,” but said the only available recourse appears to be legislative action. Israel asked that the board not rely on the Legislature. “Find a way to make it happen,” Israel said. “Find a way to get to yes.”

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Mueller Neighborhood, Travis Central Appraisal District, property taxes

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