On Tuesday, November 3rd, Texans will go to the polls to vote on 11 proposed amendments to the Texas Constitution. Four of these relate to real estate so I want to make sure folks know what is going on. Since this is an off-year election, turnout is expected to be low. Please take a few minutes to stop by to vote on Tuesday.
Amendment #2 — Simply put, this amendment requires that property taxes for residential homesteads be based upon the value of the property as a residence. Currently, a property can be assessed based upon the “highest and best use” of the property. Essentially this means that a residential property can sometimes be assessed as if it was something other than residential. Consider a house that backs up to commercial property. Since commercial property is generally worth more, the property could be assessed upon its potential value if the owner were use it as commercial property. Agriculture and open-space land in Texas already enjoy this protection. Proponents argue that it is not fair to tax a residential owner on a hypothetical use of the property, but instead upon the actual use. Opponents argue that it will reduce the overall tax base and, thus, the local government’s revenue. A ‘yes’ vote is in favor of the change.
Amendment #3 — This amendment grants the state powers to ensure that appraisal methods are consistent throughout Texas. Properties are assessed at the county level. Because there are 254 counties in Texas, there can certainly be some disparity in how the assessments are conducted, even though general standards are applied. Passage would allow the legislature full discretion to prescribe the manner of enforcement of appraisal procedures. Please note that this only grants the state the power to impose uniform standards, it does not grant the state the power to impose a state property tax. Proponents argue that a uniform standard would ensure fairness in property taxes across the state. I have not seen any opposition views to this amendment. A ‘yes’ vote is to allow the state to set uniform standards.
Amendment #5 — Aimed at rural counties, this amendment would allow adjoining counties to combine their appraisal review boards. When a property owner protests their assessment, an appraisal review board will hear the appeal. Because participation on the board requires a willingness to serve, and expertise in the subject, rural areas often find it hard to adequately fill board positions. This amendment would allow counties to join forces. While this amendment will permit all Texas counties to do this, it is really aimed at the rural counties. Proponents argue that it will make it easier for rural counties to fulfil their obligations to property owners. Opponents argue if the review boards are going to be consolidated then the appraisal boards should have the right as well (essentially they don’t thing the amendment goes far enough). A ‘yes’ vote is to permit the considation of review boards.
Amendment #11 — Texas is joining many other states in an effort to limit the government’s power of eminent domain. In 2005, the United States Supreme Court decision in Kelo versus City of New London ruled that it was permissible to use eminent domain to take private homes to turn over to a private developer to redevelop. The court ruled that this was a public use. Since then, however, much of the public has been alarmed at this decision. This proposed amendment enacts a variety of rules to restrict the states power in this regard. First, the state will restrict the “taking, damaging, or destroying” of private property for public use to situations in which are necessary for the ownership, use, and enjoyment (note the use of ‘and’) by the state of Texas, a political subdivision of the state (a city, county, etc), the public at large, or an entity granted the power of eminent domain. Another permitted use of eminent domain is the elimination of urban blight (but the property to be taken must be blighted – not just near other blighted property). The term “public use” specifically does not include the taking of property for transfer to a private entity for purposes of economic development or increased tax base. As for the ability of an entity to be granted to power of eminent domain, the legislature will be permitted to grant that power to an entity only when both legislative houses approve it by a two-thirds majority vote. In short, Texas is going to make it a lot harder to use eminent domain beyond the structure that most people believed in prior to the 2005 Supreme Court ruling. Proponents argue that this will take statutes previously enacted and strengthen them by implementing them into the constitution. There are several opposition arguments. One is that since these are currently in statutes, they should not have to be added to the constitution. Another is that the state is given too much power because any entity can be granted eminent domain powers if the legislature agrees. Currently, utilities and common carriers have this power and opponents don’t want others to have even a chance at getting it. A ‘yes’ vote will approve the amendment.
If you would like to get more information on these proposed amendments (or the other 7 on the ballot as well), you can check out my source material at http://www.tlc.state.tx.us/pubsconamend/analyses09/analyses09.pdf. Please remember to vote on Tuesday.