[Editor’s note: The following column is the opinion of Jon Anderson and not the editorial opinion of daltxrealestate.com.]
Many heralded the end of 2016 with grinding glee. There seemed to be way more bad news on the local, federal, international and celebrity death stages than felt typical. I wouldn’t try to wade into the national political scene, but Texas had more than enough of its own blistering recklessness littering our real estate domain this past year.
Fair Park
What seemed to be a freight train to hell as the Walt Humann plan for Fair Park was rammed through Parks Board approval and only derailed at the final hour. The city attorney realized the law was not on the freight train’s side. So while every media outlet in town decried the poorly worded, Swiss cheese contract with the city, it was scuppered on a technicality. Of course the city is broke now, so Fair Park can continue rotting and serving its one tenant, the State Fair. Will South Dallas quietly return to being ignored by North Dallas 49 weeks of the year?
Preston Center
After two years, the Preston Center Area Task Force dumped their self-authored report on the city. In the end, the costly research was largely discarded. The recommendations pretty much maintained the status quo. The plan set forth very little detail … about as you’d expect when the authors of a book report haven’t actually read the book. The $300,000 spent didn’t get the city a solid plan of action. Instead they got a hollow chocolate Santa. Looking at how this city operates, “hollow” is the name of the game.
Potties, Politics and Education
Last year saw the creation of bathroom bills and laws seeking to throw another minority under the stall. In May, Texas saw Lt. Governor Dan Patrick foaming at the mouth because the Ft. Worth school district made accommodations for their transgender students. I should have said “student” because the school board said they made such accommodations about once a year. Patrick’s response? He pandered that he’d give back federal education funding just to keep that transgendered student from going to the bathroom. That’s $10 BILLION a year or roughly $500 million per transgendered student statewide. Seriously?
What an attention-seeking ass.
People buy homes because of schools. What do you think the removal of $10 billion annually from Texas education would do to schools and property values? Relocating companies would certainly think twice before pushing the “Texas” button.
I was told to “engage brain before opening mouth”, apparently making me unsuitable for politics.
Social Security
The orange ink is still wet on the sea change in presidential politics and we already have Texas Republican Sam Johnson from Collin County itching to severely cut Social Security benefits. If successful, it means seniors will have less to live on than they already do. Of course Johnson is immune from his own medicine as he gets a guaranteed congressional pension. Johnson says the cuts are needed to continue to fund the program. Of course, mathematicians will tell you that the easy way to top up Social Security’s coffers is to remove the current $127,200 contribution cap. Were Social Security taxes collected on all personal income above the cap, the problem would be largely solved.
Why isn’t such a simple fix enacted? It effects the wealthy and corporations who don’t want to pay their fair share. I was speaking with a rather wealthy construction company owner about this and asked him if he would even notice a continuation of the Social Security contribution. He said “no” not in the least. So the fix would cause zero hardship on those high-earners and corporations paying a little more, but Sam Johnson thinks it’s better for the rest of us to get less. Of course if you suggested congressional pensions should take the same hit, he’d be first in line to bellyache.
If seniors have less money in retirement, they may be forced from their homes as taxes and maintenance rise over time. They will also have less to spend on medical and assisted living costs that will further burden the public purse.
Police and Fire Pensions and Credibility
What an interesting turn of events. For years (decades?) Dallas has had crappy pay for its police and fire personnel. Instead of keeping staff by upping salaries in real-time (as real organizations do), they devise a pay-later pension plan that will explode in the distant future … long after they’re all out of office. I absolutely know that when this plan was devised there was an army of actuaries shouting “Danger, Will Robinson!” from the top of their No. 2 pencils. But politics being politics, and tomorrow being someone else’s problem, away Dallas went.
Hitch that ticking time bomb to flamingly bad management and a global depression … and the bomb explodes sooner.
Far from handling this now enormous problem with aplomb, we have hyperbolic, headline-grabbing Mayor “You can’t have freedom without boundaries” Rawlings telling us a few months ago that property taxes would have to be raised 130 percent to pay for the current shortage (against state law). As I pointed out at the time, that would be if the city had to pay a lump sum in a single year. Flash forward and now suddenly it’s a more graceful 30-year payback.
Rawlings also handily shouted “fire” in a crowded theater when he announced he was seeking to close lump sum withdrawals … which naturally spurred the already-occurring run on the bank to intensify. The end result has further depleted the pensions’ assets. Well done, sir.
In the end, blue lives matter … but green matters more.
Of course this is also an especially troubling time for police forces in general. I predict that nationwide the police are at the dawn of their own “pedophile priest” scandal. By this I mean the ubiquity of cameras are now exposing the bad apples to the light of day. Just like the priests, police had the iron-clad trust of the majority of citizens. It’s confusing and infuriating to discover that trust continues to be so routinely broken.
Also, both institutions played a central role in protecting the guilty for decades by covering-up victims’ stories. Most dangerously, unlike the Catholic scandal, the incidents aren’t from 40 years ago, they’re from an hour ago when emotions are still red hot. Any police force not proactively purging the problem officers and righting their own ship will find themselves starring in a viral video … and its accompanying lawsuit … in the coming years. Remember the billions the church ultimately paid? Yeah, like that.
People don’t like to pay for others’ mistakes. Pension deficits and (eventual) police misconduct lawsuit judgements get paid with tax dollars … property tax dollars. At the same time, it double-whammies by diverting money away from roads, schools (that Patrick already wants $10 billion poorer) and a raft of other city services. It also means our bond interest rates are higher. A trifecta lose-lose-lose for Dallas citizens.
Beanstalk House Price Growth Returning to Normal
House prices in many areas continued their out-of-control sales rates with homeowners being counseled to buy their next house before listing their current home … lest they be Holiday Inn-ing between homes. As Candy pointed out, we started to see a bit of cooling extend below the million dollar market. Houses that would’ve flown off the market a year or two ago are taking a pinch longer to sell. The slow return to a normal Dallas market has begun. With every interest rate climb, buyers will be priced out of the market. At some point, rising rates will impact selling prices as what buyers’ can afford remains largely unchanged thanks to wage stagnation.
The “cost” of the past three years’ market growth? Runaway property taxes.
Property Taxes
Just a month ago, the state legislature began discussing bill SB 2 that would try to smooth out our recent and aggressive property tax increases. Introduced by the Senate Select Committee on Property Tax Reform & Relief chairman Republican Paul Bettencourt, the bill has a lot of good in it. However there’s one key issue not addressed. Texas’ lack of real estate transaction disclosure leaves appraisal districts largely blind when setting values because they can’t see actual sales price data. Why was this key point left out? Turns out Bettencourt runs a tax appraisal consultancy whose job it is to lower (wealthy) people’s tax bills. Arming appraisal districts with accurate sales information would harm his personal business. Conflict of interest much?
So again, those who are most able to pay their fair share are likewise the most able to skirt their fair share.
I welcome 2017 but understand improvement over 2016 is a mighty low bar indeed.
Remember: High-rises, HOAs and renovation are my beat. But I also appreciate modern and historical architecture balanced against the YIMBY movement. If you’re interested in hosting a Candysdirt.com Staff Meeting event, I’m your guy. In 2016, my writing was recognized with Bronze and Silver awards from the National Association of Real Estate Editors. Have a story to tell or a marriage proposal to make? Shoot me an email [email protected].
