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www.ElPasoCountyPropertyTaxTrends.com documents that El Paso County Appraisal District has experienced moderate growth in market value. The number of tax parcels has been flat. Moderate increases in assessed values have resulted in El Paso County residents to protest at well below the statewide average. El Paso is at 6% versus the statewide average of 10%. This site has details on number of tax protests, appraisal review board members, budget, number of appraiser total market value, total taxes levied, value by type of property, number of judicial appeals, number of appraisal district staff, appraisal district budget and much more.

The market value of El Paso County taxable property rose from $45 billion in 2014 to $52 billion in 2018. This is a 15.6% increase over 5 years; 3.1% per year. This is slightly higher than inflation for property tax purposes. These increases are part of the impetus for Senate Bill 2, which caps taxes for school at 2.5% and cities / counties at 3.5% per year for existing property, plus the value of new construction.

Property tax savings from protest hearings at El Paso County Appraisal District (ECAD) have vacillated between $21 and $62 million during 2012 to 2018. Commercial accounts were reduced $32.5 million in 2018 versus residential accounts for $6.2million. There are more residential accounts protested but the commercial accounts receive a large portion of appeal reductions. Their value is also much higher. The ratio of tax savings at the administrative hearings is 16% single family and 84% commercial. This ratio is low for single-family.

The number of tax protests in El Paso Appraisal District has almost risen by half; from 19,220 in 2014 to 27,250 in 2018, a 42% increase. However, the number as a % of total accounts is low. It is currently about 6% but should be 30%. Spread the word to your friends and coworkers to appeal their property taxes. The property tax appeal is routine obligation of the owner, like changing the oil in a car, or having the HVAC checked annually. If the tax assessment is not watched routinely, it will become a problem.

This increase is a good start and we want to keep the momentum growing. El Paso County Appraisal District 2018 property tax protests include 15,040 residential and 12,210 commercial accounts. Residential accounts for 54% of the appeals but for 16% of the savings ($6.2million out of $38.8 million in 2018). It would be good to see more property tax protests in El Paso County.

Judicial appeals in El Paso County have ranged from 441 to 526 during 2014 to 2018. The number appears stable. Property tax savings in El Paso County due to judicial appeals have been moderate given the size of the county. Most appeals are resolved without trial. Judicial appeal tax reduction average $15 million per year from 2014 to 2018.

The El Paso County Appraisal District budget rose from $12.05 million in 2012 to $14.95 million in 2018, a 24% increase over 7 years. This average 3.4 annual increase in ECAD budget is below than the average rate of increase in appraisal district budgets.

The El Paso County Appraisal Review Board has generally ranged from 30 to 35 members during 2012 to 2018.

The number of appraisers has increased from 40 in 2014 to 53 in 2018.

2020 property tax deadline is May 15th; deadlines to protest are not extended due to Covid-19.

Visit www.ElPasoCountyPropertyTaxTrends.com to learn more.

Your property taxes will be aggressively appealed every year by the #1 property tax firm in the country. If your taxes are not reduced you PAY NOTHING, and a portion of the tax savings is the only fee you pay when your taxes are reduced! Many FREE benefits come with enrollment.

The current rout in oil prices was started by a feud between the Russians and the Soviets. This resulted in: 1) about 10 million barrels per day of excess production and 2) prices falling by two-thirds. Prices fell from $50 to 60 per barrel to $20 to 25 per barrel.

Covid-19 started shutting down the U.S., along with most of the world, two to three weeks ago. There is effectively a national “shelter in place” order. Demand for crude oil is expected to fall 15 to 20%, or about 15 to 20 million barrels per day. However, there is some indication that production is starting to fall.

Worldwide demand for crude oil was about 100 million barrels per day. The extra oil pumped by the Saudis and Russians caused a glut of 10 million barrels per day.

Crude oil storage space totals 1.6 billion barrels. The storage facilities are 75% full, leaving about 400 million barrels of storage space. 20 million barrels per day of excess production will fill storage to capacity in 20 days. 10 million barrels a day for 40 days also fills storage.

The price of oil would plummet to near zero without space available to oil. The price of crude oil is more likely to be below $10 per barrel in 30 to 90 days instead of above it.

Most oil producers have a marginal production cost about $20 per barrel. Only 3 counties have a marginal cost of production below $15 per barrel: 1) Saudi Arabia, 2) United Arab Emirates (UAE) and 3) Iraq.

The marginal cost of producing oil is $15 to 20 per barrel for: Nigeria (on-shore), Oman, Qatar, Iran, Algeria, Kazakhstan, Venezuela and Ecuador and U.S. (on-shore but not shale).

West Texas Crude is just above $20 per barrel today. It is rational that producers with a marginal cost above $20 to produce would slow production. This is particularly true since the crude oil storage facilities are 75% full. Oil producers are well aware storage capacities are almost full. However, producers who cease production lose their mineral rights. So they will be reticent to stop production.

It is a tough call whether oil producers will halt production prior to filling existing storage. Once existing storage is exceeded, the price will plummet.

Patrick O’Connor

Your property taxes will be aggressively appealed every year by the #1 property tax firm in the country. If your taxes are not reduced you PAY NOTHING, and a portion of the tax savings is the only fee you pay when your taxes are reduced! Many FREE benefits come with enrollment.

Oil and gas equipment BPP owners qualify for a large property tax exemption for most of 2020. Texas statutes provide for a partial exemption (Texas Tax Code 11.35) after a disaster declared by the Texas governor. Governor Gregg Abbott declared all 254 counties of Texas a disaster area on March 13, 2020, due to Covid-19 / Coronavirus. The amount of exemption is based on the level of damage.

2 Property Tax Appeals in 2020 for Oil and Gas BPP?

The value of oil and gas BPP has been devastated by Covid-19. The price of oil at $20 per barrel is quickly eliminating demand for oil and gas BPP. Because of the confluence of too much production and lower demand, the world is awash in oil. There are 1.2 billion barrels in storage. Production was reported to exceed demand by 10 million barrels per day prior to Coronavirus / Covid-19. Reports indicate demand for crude oil is down 15 to 20%, or 15 to 20 million barrels per day.

The April 2 Wall Street Journal reported crude oil inventory is expected to grow by 25 million barrels per day. That would exhaust the remaining 400 million barrels of storage in less than a month (16 days).

Exemption Application

The oil and gas equipment property tax exemption application will proceed separately from the normal property tax protest. Routine property tax protests will be filed by the May 15 deadline. The application for the partial property tax exemption is due about June 26 (105 days after March 13 when governor declared all of Texas a disaster area because of Covid-19).

Hearing Process

The appraisal district can accept, modify or reject the oil and gas BPP property tax exemption application, much like a homestead exemption application. The owner can appeal if the exemption is denied. If the property owner and appraisal district cannot agree, an appraisal review board (ARB) meeting is scheduled. The ARB hearing can be appealed to district court, just like a typical value dispute.

Judicial Appeal for Exemption

The percentage of the total value exempted will range from 15% to 100%, depending on the level of damage to the oil and gas BPP. The options are 15%, 30%, 60% and 100%. This amount of exemption applies to land and improvements for real estate, as well as business personal property. This exemption applies to the value after the “other protest”; the normal protest on value.

Example for Oil and Gas BPP

Oil and gas BPP is initially valued at $5 million and reduced to $4.5 million at ARB and $3.5 million during judicial appeal. The partial exemption is granted for 60%, due to the reduction in demand for such equipment. The 60% exemption would exempt $2.1 million, leaving only $1.4 million taxable. The taxable amount was reduced by 72% between the normal appeal and the partial exemption, for 80% of the year. The first 20% of the year (72 days Jan 1 to Mar 12/365~20%), taxes are based on $3.5 million (judicial appeal value).

Oil and gas BPP Property Tax Exemption Example

Initial Noticed Value   :  $5.0 million
ARB Value                     :  4.5
Judicial Appeal            : 3.5 [Appraised Value for Jan 1 to March 12]
After 60% Exemption  : $1.4 million [Appraised Value March 13 to December 31]

The oil and gas BPP property tax exemption is applied for a portion of the year: March 13 to December 31. The property would be taxed based on $3.5 million (judicial appeal number) from January 1 to March 12 and taxed based on appraised value of $1.4 million during March 13 to December 31, 2020. The property is taxed on an appraised value of $3.5 million for 20% of the year and $1.4 million for 80% of the year.

The exemption is cancelled on January 1, of the following year (2021 in this case). Any lingering impact of Covid-19 would be considered based on January 1 value for tax year 2021.

It does not appear residential properties have yet been effected. However, it is early to say whether housing values will be impacted. There is a substantial opportunity to reduce property taxes for owners of Texas oil and gas BPP tragically impacted by Covid-19.

Your property taxes will be aggressively appealed every year by the #1 property tax firm in the country. If your taxes are not reduced you PAY NOTHING, and a portion of the tax savings is the only fee you pay when your taxes are reduced! Many FREE benefits come with enrollment.

Consider three options:

Case 1 Case 2 Case 3
# of Infections 3,55,00,000 4,60,00,000 10,00,00,000
Healthcare Visit 1,65,00,000 2,20,00,000 5,50,00,000
Hospitalizations 4,60,000 5,65,000 15,00,000
Deaths 34,200 43,000 1,50,000

What price would we pay to avoid the above level of infections, healthcare visits, hospitalizations and deaths? The U.S Office of Management and Budget (OMB) estimated the value of a human life at $7 to 9 million in 2012. Using 38,600 deaths (average of Case 1 and Case 2) and $8,000,000 per life, we would be willing to spend $308 billion.

However, Case 1 and Case 2 are not estimated deaths from Covid-19. They are actual 2018-2019 and 2019-2020 numbers of influenza (flu) infections and deaths from the CDC (Centers for Disease Control and Prevention).

Case 3 appears to be the worst case scenario with limited Stay at Home, but smart social distancing. No other country has exhibited a level of infections and deaths likely to exceed Case 3, based on adjusting their cases to a “U.S. equivalent”, or based on adjusting for population. The U.S. should do massive testing and provides certificates of clear and not infected. Testing is much less expensive than idling 25% of the country. Many people can and should work at home for an indefinite period. Airlines are now operating at request of U.S government. Allow restaurants to operate with social distancing. Be creative. Restart hotels, restaurants, movie theatres, personal services with certificate of not infected with Covid-19 (healthcare, hair, nail, gyms, retail, service). Creatively operating with social distancing, with most workers remote, is an alternative to Stay at Home.

Alternatively, is it worth destroying 30,000,000 jobs to save 150,000 lives? Yes, dying is much more tragic than losing a job. We should not diminish the destruction to people and families due to losing 30,000,000 jobs. There will be massive emotional strain, foreclosures, bankruptcies, divorces and other non-financial costs to eliminating 30 million jobs. One job loss is a tragedy. 30 million is a calamity of millennial dimensions. This level of unemployment has not been seen since the Great Depression.

Losing 30 million jobs is realistic and perhaps low. Layoffs totaled 10 million in the first two weeks. Restaurants and hotels employ 24 million, 18 million of whom have been laid off. Healthcare employs 16 million and routine healthcare has come to a standstill. Healthcare providers have started laying off idle workers. Hospitals are idle awaiting a flood of Covid-19 patients. The flood has not materialized except in New York. Hospitals are receiving little revenue. Small rural hospitals are closing, likely permanently. Casinos, movie theatres, sports, concerts, airlines, and many other industries are at a standstill. Balance sheets are weak. Few hotels, restaurants, airlines, casinos will survive 3 to 4 months without a substantial increase in revenue. The CARES Act will help healthcare. However, it will not have a meaningful impact on hotels, restaurants, casinos and movie theatres.

The cost of Stay at Home will likely be $6 to 8 trillion, or about 19 to 26 times the cost of $308 billion for 38,600 deaths. This implies we are expecting 733,000 to 1,004,000 deaths unless we Stay at Home. Is that a valid expectation? The U.S is about 10 days into Stay at Home and deaths total 5,758 per John Hopkins website. U.S. Covid-19 infections total 238,820 (John Hopkins – all John Hopkins data as of April 2, 2020).

The cost of $6 to 8 trillion is calculated as follows: 1) assume $21 trillion GDP for U.S. economy pre-Covid-19, 2) assume 25% drop in GDP to stabilize at $16 trillion of GDP in 6 months, 3) assume slow recovery to pre-Covid-19 revenue in either 6 or 18 months. Lost GDP is $3.75 trillion with a total 12 month recovery and $6 trillion with a 24 month recovery. In addition to the lost GDP, there is “phase 1” of recovery, the CARES Act, which cost $2 trillion. Hence, $3.75 to 6 trillion of lost GDP and $2 trillion of phase 1 recovery totals roughly $6 to 8 trillion. This does not consider the emotional or financial distress of the families of 30 million workers laid off, perhaps for six to months to longer. Many jobs will never return. Many restaurants will reopen eventually, under new management. Few restaurant owners have cash reserves to operate more than one to four months without revenue, including public companies.

The World is Not the Same; Everything has Changed

The world is not the same; everything has changed. The stark-terror and raw-fear caused by Covid-19 is unprecedented. It is leaving a scar affecting the social norms in ways not yet understood. Will we visit movie theatres? Will we return to restaurants? How many restaurants will still be open? When will be travel by air and return to hotels in volume? Will new habits have formed? Will we cook at home and watch Netflix instead of going to the movies? We do not understand the world after Covid-19 and Stay at Home are completed. However, habits and spending patterns will have changed; some forever.

Time is Not Our Friend

Businesses have started closing and millions will have closed by the end of April. If Stay at Home extends until the end of May, perhaps 10 million businesses will close. The first issue is cash for payroll. When the business can’t make payroll, it is generally the end. Employees can’t be expected to hang around. Millions of businesses already can’t make payroll. The second issue is cash for rent, interest, utilities and critical vendors. Weak balance sheets are not prepared for no revenue for months. This includes private and public companies. We are at the tail-end of the longest expansion during the last 120 years in the U.S.; about 11 years. At the end of the business cycle, offers for credit are most generous. Business balance sheets are weak across much of the country; heavy on debt and weak on cash. Articles suggest the cash flow reserves available for private restaurants is days, not weeks of reserves. Public companies are thought of as existing forever; many only have working capital for one to four months with little or no revenue.

Negative Multiplier Effect

Decimating the revenue of businesses means they can’t pay employees, rent, utilities and vendors. The employees are not the only ones affected. Business will not pay rent before not paying employees. Rent payments not received will cause property owners to default on mortgage payments. Owners of both equity and debt positions will be affected. The value of AMC Theatre bonds are down by 40 to 50%. Total U.S. debt (Source: 2017 Treasury Department) is about $40 trillion. It is $27 trillion excluding Treasuries. A 10 to 20% loss on the balance would total $2.7 to $5.4 trillion (in addition to $6 to 8 trillion above).

Category Amount Percentage
Treasury $13,953.6 35.16%
Corporate Debt $8,630.6 21.75%
Mortgage Related $8,968.8 22.60%
Municipal $3,823.3 9.63%
Money Markets $937.2 2.36%
Agency Securities $1,981.8 4.99%
Asset-Backed $1,393.3 3.51%
Total $39,688.6 100%

No Revenue for a Business has Never been Considered or Modeled

The writer studied at Harvard Business School (HBS) during 1981 to 1983. HBS uses solely the case method. Three cases a day, each 20 to 30 pages; five days a week. Be ready to open (present a five-minute analysis) as through you are the leader. Six-hundred cases per year; 1,200 cases over two years. In two years there were no cases on revenue going to zero. The lesson the first day was if you run out of cash, it is game over. You CANNOT run out of cash. Payroll must be met. However, the concept of cessation of business, with revenues falling 90% or more for millions (perhaps tens of millions) of business was not considered. In three cases per day, there was not one case where the businesses revenue stopped 90% overnight.

It appears the political leaders do not understand:

  1. Businesses have never encountered this type of business cessation in 200 years.
  2. Businesses are not prepared for this; balance sheets are weak. We are quite late in the economic cycle and banks have loaned liberal during the expansion. Cash balances are none to 4 months revenues at most businesses.
  3. The PPP plan does not help businesses who do not restart their revenue stream. Retaining Stay at Home through April or May will almost certainly doom entire industries such as hotel, restaurant, casino, movie theatres, and perhaps airlines (despite the government money). However, Staying at Home for two more months will also doom millions of unrelated businesses that do not have cash to make payroll for two more months.
  4. Closing an existing business is MUCH easier than opening a new business.

Six to eight trillion dollars is difficult to conceive, as is 150,000 deaths. Based on $7 trillion and saving 150,000 deaths, the cost is $46.7 million per life saved. Using $3 trillion for debt losses, and a total cost of $10 trillion, the cost is $66.6 million per life saved.

The number of deaths in other countries does not indicate more than 100,000 to 150,000 deaths if that many. There is simply no empirical data consistent with the 1 million deaths doomsday scenario. Consider the following deaths to date (4/2/2020) and the U.S equivalent (adjusted based on larger population in U.S.)

Country Actual Deaths U.S. Equivalent Population  Actual Population (MM)    Adj Factor (US pop/ other pop)
U.S. 5,758 5,758 327 1
China 3,322 783 1,386 0.236
Italy 13,915 75,836 60 5.45
Spain 10,096 70,628 47 6.96
Germany 1,074 4,231 83 3.94
Iran 3,160 12,766 81 4.04

Italy and Spain have peaked in deaths. Both had a weak initial response to Covid-19. It appears neither is likely to double the current number of deaths, or about 150,000 (high end with low response used for Case 3). The number of Chinese deaths, adjusted for the difference in population is less than 783. (You can see why the Chinese data is not considered credible.) Flu infections caused 34,200 deaths in the 2018 – 2019 season and are estimated to have caused 43,000 deaths this year.

The top ten leading causes of death in the U.S. are:

Each of these deaths is tragic. The normal flu does not make the list. Covid-19 will not make the list in 2020.

“Snap Back”?

There are widespread expectations of a 25% reduction in GDP in the second quarter. What is changing is the “snap back” expectation. There was an initial expectation that consumers would “snap back” and return to hotels, restaurants, airlines, casinos, movie theatres just after Stay at Home was lifted. The “Snap Back” theory is no longer credible; it will not happen. No one expects hotels, restaurants, movie theatres, casinos, etc to return to normal in six months. Hotels, restaurants, airlines, movie theatres and many other businesses may not achieve pre-Covid-19 revenue for 12 to 24 months. Initial expectations of a 6-month recovery have vanished.

V-Shaped versus U-Shaped

The type of recovery has also been described as a V-shaped recovery versus a U-shaped recovery. Any expectations of a V-shaped recovery have passed. The damage inflicted in March has eliminated the possibility of a V-shaped recovery. Continuing Stay at Home through May will make the U-shaped recovery wider and more expensive, in financial and human terms.

Too Low for Flu or Too High for Covid-19?

It appears we are paying a cost of $6 to 8 trillion to avoid a level of deaths about double the normal level of flu deaths. It seems either the level of effort to avoid the flu annually is low or the cost to fight Covid-19 is high.

Proving a Negative – That One Million Would Die without Stay at Home

It is impossible to prove a negative. What would have happened if we did not Stay at Home? Would there be 100 million infections and 1 to 2 million deaths? We will never know. However, the data from Iran, Italy and Spain, all of whom had weak or poor responses, do not support 1 or 2 million U.S. deaths. This is true even when discounting the credibility of Iranian deaths. U.S. Equivalent deaths in Iran, which is peaking, are today 12,766. I will be the first to say the Iranian data is not credible. However, it does not appear the U.S. equivalent Iranian deaths will approach 150,000.

Importance of U.S. Security

Covid-19 is a real disease. It is serious. But so is U.S. security. Destroying 25% of our economy and 30 million jobs will seriously weaken U.S. security. The Covid-19 disease is serious. The tough question is whether the cost of the treatment is excessive and self-destructive.

Why Do Models Vary from Reality?

Scientists and political leaders see the calculus different than me. Differing opinions are healthy. I’d be more excited about Stay at Home if the consequences of not Staying at Home were clearer. We can only assume our leaders our using the best “scientific models”. However, even excluding countries with unreliable data, there seems no empirical data that the consequence of not Staying at Home would be 1 million deaths or more. Is it possible the models have such an excessive safety factor that the results are not meaningful?

Note 1 [Most of the deaths are people who are elderly and have preexisting condition. That does not diminish the value of their life, but it does reduce expectations of future economic production.]

www.NuecesCountyPropertyTaxTrends.com documents that Nueces County Appraisal District has experienced moderate growth in market value. The number of tax parcels has been flat. Large increases in assessed values have caused Nueces County residents to protest at well above the statewide average. Nueces is at 11% versus the statewide average of 10%. This site has details on number of tax protests, appraisal review board members, budget, number of appraiser total market value, total taxes levied, value by type of property, number of judicial appeals, number of appraisal district staff, appraisal district budget and much more.

The market value of Nueces County taxable property rose from $30 billion in 2014 to $41 billion in 2018. This is a 36.7% increase over 5 years; 7.3% per year. This is much higher than inflation for property tax purposes. These large increases are part of the impetus for Senate Bill 2, which caps taxes for school at 2.5% and cities / counties at 3.5% per year for existing property, plus the value of new construction.

Property tax savings from protest hearings at Nueces County Appraisal District (NCAD) have increased from $13.1 million to $32.0 million during 2012 to 2018. Commercial accounts were reduced $23.4 million in 2018 versus residential accounts for $8.6 million. There are more residential accounts protested but the commercial accounts receive a large portion of appeal reductions. Their value is also much higher. The ratio of tax savings at the administrative hearings is26.9% single family and 73.1% commercial. This ratio is typical for single-family.

The number of tax protests in Nueces Appraisal District has been flat; 18,680 in 2014 to 21,020 in 2018. This is a 12% increase in protest in 6 years. It is a good start and we want to keep the momentum growing. Nueces County Appraisal District 2018 property tax protests include 10,470 residential and 10,550 commercial accounts. Residential accounts for50% of the appeals but for 19% of the savings ($2.4million out of $12.6 million in 2018).

Judicial appeals in Nueces County have ranged from15 to 48 during 2014 to 2018. There is no apparent trend to the judicial filings. . Property tax savings in Nueces County due to judicial appeals have been low given the size of the county. Most appeals are resolved without trial. Judicial appeal tax reduction average $0.5 million per year from 2014 to 2018, except for 2015 had tax savings of $21.8 million.

The Nueces County Appraisal District budget rose from $7.2 million in 2012 to $7.7 million in 2018, a 6.9% increase over 7 years. This average 1% annual increase in NCAD budget is well below than the average rate of increase in appraisal district budgets. None of the judicial appeals savings were for houses.

The Nueces County Appraisal Review Board had 9 members during 2012 to 2018.

The number of appraisers has been risen gradually; from 39to 41 over 4 years during 2014 to 2018.

2020 property tax deadline is May 15th; deadlines to protest are not extended due to Covid-19.

Visit www.NuecesCountyPropertyTaxTrends.com to learn more.

Your property taxes will be aggressively appealed every year by the #1 property tax firm in the country. If your taxes are not reduced you PAY NOTHING, and a portion of the tax savings is the only fee you pay when your taxes are reduced! Many FREE benefits come with enrollment.

www.HidalgoCountyPropertyTaxTrends.com documents that Hidalgo County Appraisal District has experienced substantial growth in market value. The number of tax parcels has risen only slightly. Large increases in assessed values have caused Hidalgo County residents to protest at well above the statewide average. Hidalgo is at 9% versus the statewide average of 10%. This site has details on number of tax protests, appraisal review board members, budget, number of appraiser total market value, total taxes levied, value by type of property, number of judicial appeals, number of appraisal district staff, appraisal district budget and much more.

The market value of Hidalgo County taxable property rose from $37 billion in 2014 to $47 billion in 2018. This is a 27% increase over 5 years; 5.4% per year. These large increases are part of the impetus for Senate Bill 2, which caps taxes for school at 2.5% and cities / counties at 3.5% per year for existing property, plus the value of new construction.

Property tax savings from protest hearings at Hidalgo County Appraisal District (HCAD) have remained flat at $42.3 million in 2012 versus $42.6 million in 2018. Commercial accounts were reduced $38.3 million in 2018 versus residential accounts for $4.4 million. There are more residential accounts protested but the commercial accounts receive virtually all the tax adjustments during appeals. The ratio of tax savings at the administrative hearings is10% single family and 90% commercial. This ratio is lower than typical for single-family.

The number of tax protests in Hidalgo Appraisal District increased by half; from 23,260 in 2014 to 31,270 in 2018. This is a 34% increase in protest in 6 years. It is a good start and we want to keep the momentum growing. Hidalgo County Appraisal District 2018 property tax protests include 11,660 residential and 19,610 commercial accounts. Residential accounts for 37% of the appeals but for 10.3% of the savings ($4.4million out of $42.6 million in 2018).

Judicial appeals in Hidalgo County have ranged from 32 to 139 during 2014 to 2018. There is no apparent trend to the judicial filings. Property tax savings in Hidalgo County due to judicial appeals have been low given the size of the county. Most appeals are resolved without trial. Judicial appeal tax reduction average $1 million per year from 2014 to 2018.

The Hidalgo County Appraisal District budget rose from $6.4 million in 2012 to $8.5 million in 2018, a 32.8% increase over 7 years. This average 4.7% annual increase in HCAD budget is lower than the average rate of increase in appraisal district budgets. None of the judicial appeals were for houses.

The Hidalgo County Appraisal Review Board ranged from 3 to 7 members during 2012 to 2018.

The number of appraisers has been risen gradually; from 41to 45 over 4 years during 2014 to 2018.

2020 property tax deadline is May 15th; deadlines to protest are not extended due to Covid-19.

Visit www.HidalgoCountyPropertyTaxTrends.com to learn more.

Your property taxes will be aggressively appealed every year by the #1 property tax firm in the country. If your taxes are not reduced you PAY NOTHING, and a portion of the tax savings is the only fee you pay when your taxes are reduced! Many FREE benefits come with enrollment.

Property tax deadlines are not changing despite shelter in place orders due to Covid-19. Orders are in place for most of the largest counties in Texas. The exact order and specific exceptions vary by county. April 3 is a typical termination date. However, few expect the shelter in place to end April 3. Best case is two to four weeks after April 3. *EDIT: We know now this has been extended to April 30*

Texas property tax protest deadlines remain unchanged. Be sure to protest each of your properties by May 15, 2020. The deadline is not extended.

Most appraisal districts in Texas are closed to the public but working. Appraisal districts are not likely to reopen to the public until late April or May.

It is not clear if or how the Appraisal Review Board (ARB) hearings will be conducted. Covid-19 will likely impact our environment for 12 to 18 months. There were three waves of the Spanish Flu in 1918. There will likely be more than one pass of Covid-19. The three large waves of Spanish Flu, which originated from the same location, were: July 1918, November 1918 and March 1919. It occurred over nine months; not one or two.

ARB members are typically over 60, an at-risk group for Covid-19. In-person hearings with ARB members seem unlikely during 2020. ARB hearings will likely need to be virtual, or phone hearings, as provided by statute.

Property tax deadlines of April 15 for renditions and May 15th to appeal property taxes are not changed.

Protest deadline: May 15th
Rendition deadline: April 15th, extension available until May 15th

The reason these dates are not changing is the date to certify the tax rolls is July 20. Tax roll certification is a prerequisite to tax entities setting budgets and tax rates. The tax roll certification date will not be extended due to Covid-19. The tax entities have already decided it will not happen.

Most appraisal districts are closed and have on-line options.

O’Connor will handle over 200,000 property tax appeals this year in Texas. Reducing your taxes is our passion. Sign up online in 2 or 3 minutes, and we can take care of it for you.

Following are government and professional service exceptions for Harris County:

Essential Government Functions. All services provided by local governments and municipalities located in Harris County needed to ensure their continuing operation to provide for the health, safety and welfare of the public, including law enforcement, jail operations and other services. Further, nothing in this Order shall prohibit any individual from performing “Essential Government Functions”. All Essential Government Functions shall be performed in compliance with social distancing requirements of six feet to the extent possible.

Professional services. Professional services, such as legal or accounting services, insurances (sic) services, and “real estate services” when necessary to assist in compliance with legally mandated activities or to further Essential Business, Essential Government functions, or Critical Infrastructure.

Most appraisal districts are operating but not open to the public.

O’Connor is working virtually with only a handful of people at the central physical office. The balance have converted to virtual and will likely remain so for an unknown period.

Your property taxes will be aggressively appealed every year by the #1 property tax firm in the country. If your taxes are not reduced you PAY NOTHING, and a portion of the tax savings is the only fee you pay when your taxes are reduced! Many FREE benefits come with enrollment.

www.BexarCountyPropertyTaxTrends.com documents that Bexar County Appraisal District has experienced substantial growth in market value. However, the number of tax parcels has risen only slightly. Large increases in assessed values have caused Bexar County residents to protest at about 160% of the statewide average of 10% of all parcels. This site has details on number of tax protests, total market value, total taxes levied, value by type of property, number of judicial appeals, number of appraisal district staff, appraisal district budget and much more.

The market value of Bexar County taxable property rose from $120 billion in 2014 to 184 billion in 2018. This is a 53.3% increase over 5 years; 10.7% per year! These large increases are part of the impetus for Senate Bill 2, which caps taxes for school at 2.5% and cities / counties at 3.5% per year for existing property, plus the value of new construction.

Property tax savings from protest hearings at Bexar County Appraisal District (BCAD) have increased sharply: from $27.1 million in 2012 versus $113 million in 2018. Commercial accounts were reduced $93 million in 2018 versus residential accounts for $21 million. There are more residential accounts protested but the commercial accounts have a higher value. Bexar seems overly difficult for home owners given the large reductions awarded commercial property owners (almost 5X the residential reductions).

The number of tax protests in Bexar Appraisal District increased by about 70%; from 63,400 in 2014 to 108,120 in 2018. Bexar County Appraisal District 2018 property tax protests include 68,080 residential and 40,040 commercial accounts. Residential accounts for 64% of the appeals but for18.6% of the savings ($21 million out of $113 million in 2018).

Judicial appeals in Bexar County have been increased sharply over the past six years. The volume of judicial appeals rose from 47 in 2012 to 371 in 2018, a 689% increase in six years. Property tax savings in Bexar County due to judicial appeals have been moderate given the size of the county. Most appeals are resolved without trial. Judicial appeal tax reduction were $321 million in 2012 and $994 million in 2018. Single-family savings accounted for 4.6% of the judicial appeal refunds.

The Bexar County Appraisal District budget rose from $14.5 million in 2012 to $18.7 million in 2018, a 29% increase over 7 years. This averages 4% annual increase in BCAD budget is less than the average rate of increase in appraisal district budgets.

The Bexar County Appraisal Review Board remained at 50 during 2012 to 2018.

The number of appraisers has been risen slowly; from 70 to 78 over 5 years during 2013 to 2018.

2020 property tax deadline is May 15th; deadlines to protest are not extended due to Covid-19.

Visit www.BexarCountyPropertyTaxTrends.com to learn more.

Your property taxes will be aggressively appealed every year by the #1 property tax firm in the country. If your taxes are not reduced you PAY NOTHING, and a portion of the tax savings is the only fee you pay when your taxes are reduced! Many FREE benefits come with enrollment.

www.DentonCountyPropertyTaxTrends.com documents that Denton County Appraisal District has experienced substantial growth in market value. However, the number of tax parcels has risen only slightly. Large increases in assessed values have caused Denton County residents to protest at well above the statewide average. Denton is at 19% versus the statewide average of 10%. This site has details on number of tax protests, appraisal review board members, budget, number of appraiser total market value, total taxes levied, value by type of property, number of judicial appeals, number of appraisal district staff, appraisal district budget and much more.

The market value of Denton County taxable property rose from $68 billion in 2014 to 115 billion in 2018. This is a 69% increase over 5 years; 13.8% per year! These large increases are part of the impetus for Senate Bill 2, which caps taxes for school at 2.5% and cities / counties at 3.5% per year for existing property, plus the value of new construction.

Property tax savings from protest hearings at Denton County Appraisal District (DCAD) have increased sharply: from $65.4 million in 2012 versus $100.9 million in 2018. Commercial accounts were reduced $96million in 2018 versus residential accounts for $2 million. There are more residential accounts protested but the commercial accounts receive virtually all the tax adjustments during appeals. The ratio of tax savings at the administrative hearings 2% single family and 98% commercial. $49 in commercial property tax reduction for every $1 in residential property tax reduction. This ratio is quite unusual.

The number of tax protests in Denton Appraisal District increased by about 110%; from 42,370 in 2014 to 89,060 in 2018. Denton County Appraisal District 2018 property tax protests include 52,930 residential and 36,130 commercial accounts. Residential accounts for 59% of the appeals but for4.6% of the savings ($4.6 million out of $100.9 million in 2018).

Judicial appeals in Denton County have been increased sharply over the past six years. The volume of judicial appeals rose from 33 in 2012 to 100 in 2018, a 203% increase in six years. Property tax savings in Denton County due to judicial appeals have been moderate given the size of the county. Most appeals are resolved without trial. Judicial appeal tax reduction were $0.1 billion in 2012 and $0.9 billion in 2018, an 800% increase Single-family savings accounted for none of the judicial appeal refunds.

The Denton County Appraisal District budget rose from $10.0 million in 2012 to $13 million in 2018, a 30% increase over 7 years. This averages 4% annual increase in DCAD budget is less than the average rate of increase in appraisal district budgets.

The Denton County Appraisal Review Board remained stable at 18 to 20 members 2012 to 2018.

The number of appraisers has been risen steadily; from 26 to 35 over 5 years during 2013 to 2018.

2020 property tax deadline is May 15th; deadlines to protest are not extended due to Covid-19.

Visit www.DentonCountyPropertyTaxTrends.com to learn more.

Your property taxes will be aggressively appealed every year by the #1 property tax firm in the country. If your taxes are not reduced you PAY NOTHING, and a portion of the tax savings is the only fee you pay when your taxes are reduced! Many FREE benefits come with enrollment.

www.CollinCountyPropertyTaxTrends.com documents that Collin County Appraisal District has experienced substantial growth in market value. However, the number of tax parcels has risen only slightly. Large increases in assessed values have caused Collin County residents to protest at well above the statewide average. Collin is at 19% versus the statewide average of 10%. This site has details on number of tax protests, appraisal review board members, budget, number of appraiser total market value, total taxes levied, value by type of property, number of judicial appeals, number of appraisal district staff, appraisal district budget and much more.

The market value of Collin County taxable property rose from $68 billion in 2014 to 115 billion in 2018. This is a 69% increase over 5 years; 13.8% per year! These large increases are part of the impetus for Senate Bill 2, which caps taxes for school at 2.5% and cities / counties at 3.5% per year for existing property, plus the value of new construction.

Property tax savings from protest hearings at Collin County Appraisal District (CCAD) have increased sharply: from $65.4 million in 2012 versus $100.9 million in 2018. Commercial accounts were reduced $96million in 2018 versus residential accounts for $2 million. There are more residential accounts protested but the commercial accounts receive virtually all the tax adjustments during appeals. The ratio of tax savings at the administrative hearings 2% single family and 98% commercial. $49 in commercial property tax reduction for every $1 in residential property tax reduction. This ratio is quite unusual.

The number of tax protests in Collin Appraisal District increased by about 110%; from 42,370 in 2014 to 89,060 in 2018. Collin County Appraisal District 2018 property tax protests include 52,930 residential and 36,130 commercial accounts. Residential accounts for 59% of the appeals but for4.6% of the savings ($4.6 million out of $100.9 million in 2018).

Judicial appeals in Collin County have been increased sharply over the past six years. The volume of judicial appeals rose from 33 in 2012 to 100 in 2018, a 203% increase in six years. Property tax savings in Collin County due to judicial appeals have been moderate given the size of the county. Most appeals are resolved without trial. Judicial appeal tax reduction were $0.1 billion in 2012 and $0.9 billion in 2018, an 800% increase Single-family savings accounted for none of the judicial appeal refunds.

The Collin County Appraisal District budget rose from $10.0 million in 2012 to $13 million in 2018, a 30% increase over 7 years. This averages 4% annual increase in CCAD budget is less than the average rate of increase in appraisal district budgets.

The Collin County Appraisal Review Board remained stable at 18 to 20 members 2012 to 2018.

The number of appraisers has been risen steadily; from 26 to 35 over 5 years during 2013 to 2018.

2020 property tax deadline is May 15th; deadlines to protest are not extended due to Covid-19.

Visit www.CollinCountyPropertyTaxTrends.com to learn more.

Your property taxes will be aggressively appealed every year by the #1 property tax firm in the country. If your taxes are not reduced you PAY NOTHING, and a portion of the tax savings is the only fee you pay when your taxes are reduced! Many FREE benefits come with enrollment.

www.WilliamsonCountyPropertyTaxTrends.com documents that Williamson County Appraisal District has experienced substantial growth in market value. The number of tax parcels has risen only slightly. Large increases in assessed values have caused Williamson County residents to protest at well above the statewide average. Williamson is at 26% versus the statewide average of 10%. This site has details on number of tax protests, appraisal review board members, budget, number of appraiser total market value, total taxes levied, value by type of property, number of judicial appeals, number of appraisal district staff, appraisal district budget and much more.

The market value of Williamson County taxable property rose from $42 billion in 2014 to $78 billion in 2018. This is a 86% increase over 5 years; 17.1% per year! These large increases are part of the impetus for Senate Bill 2, which caps taxes for school at 2.5% and cities / counties at 3.5% per year for existing property, plus the value of new construction.

Property tax savings from protest hearings at Williamson County Appraisal District (WCAD) have increased sharply: from $16.3 million in 2012 versus $39.0 million in 2018. Commercial accounts were reduced $29 million in 2018 versus residential accounts for $10 million. There are more residential accounts protested but the commercial accounts receive virtually all the tax adjustments during appeals. The ratio of tax savings at the administrative hearings is 25% single family and 75% commercial. This ratio is typical.

The number of tax protests in Williamson Appraisal District increased by about 110%; from 29,770 in 2014 to 50,040 in 2018. Williamson County Appraisal District 2018 property tax protests include 39,630 residential and 18,410 commercial accounts. Residential accounts for 68% of the appeals but for 25% of the savings ($10 million out of $39 million in 2018).

Judicial appeals in Williamson County have ranges from a low of 19 in 2015 and a high of 65 in 2018. There does not appear to be a trend. Property tax savings in Williamson County due to judicial appeals have been moderate given the size of the county. Most appeals are resolved without trial. Judicial appeal tax reduction average $2 million per year from 2014 to 2018.

The Williamson County Appraisal District budget rose from $10.0 million in 2012 to $13 million in 2018, a 30% increase over 7 years. This averages 4% annual increase in WCAD budget is less than the average rate of increase in appraisal district budgets. None of the judicial appeals were for houses.

The Williamson County Appraisal Review Board remained stable at 12 to 13 members 2012 to 2018.

The number of appraisers has been risen exponentially; from 8 to 31 over 5 years during 2013 to 2018.

2020 property tax deadline is May 15th; deadlines to protest are not extended due to Covid-19.

Visit www.WilliamsonCountyPropertyTaxTrends.com to learn more.

Your property taxes will be aggressively appealed every year by the #1 property tax firm in the country. If your taxes are not reduced you PAY NOTHING, and a portion of the tax savings is the only fee you pay when your taxes are reduced! Many FREE benefits come with enrollment.

www.TravisCountyPropertyTaxTrends.com documents that Travis County Appraisal District has experienced substantial growth in market value. However, the number of tax parcels has been flat. Large increases in assessed values have caused Travis County residents to protest at about three times the statewide average of 10%. The market value of tax parcels has almost doubled from $137 billion in 2013 to $246 billion in 2018. The number of tax parcels been flat at about 400,000. This site has details on number of tax protests, total market value, total taxes levied, value by type of property, number of judicial appeals, number of appraisal district staff, appraisal district budget and much more.

The market value of Travis County taxable property rose from $137 billion in 2014 to 246 billion in 2018. This is a 80% increase over 5 years; 15.9% per year! These large increases are part of the impetus for Senate Bill 2, which caps taxes for school at 2.5% and cities / counties at 3.5% per year for existing property, plus the value of new construction.

Property tax savings from protest hearings at Travis County Appraisal District (TCAD) have increased sharply: from $129 million in 2013 versus $271 million in 2018. Commercial accounts were reduced $178 million in 2018 versus residential accounts for $93 million. There are more residential accounts protested but the commercial accounts have a higher value.

The number of tax protests in Travis Appraisal District increased by about half; from 96,370 in 2014 to 142,700 in 2018. Travis County Appraisal District received 2018 property tax protests. These include 99,520 residential and 43,180 commercial accounts. Residential accounts for 70% of the appeals but for 34% of the savings ($93 million out of $271 million in 2018).

Judicial appeals in Travis County have been increased sharply over the past six years. The volume of Judicial appeals rose from 188 in 2012 to 1,221 in 2018, a 804% increase in six years. Property tax savings in Travis County due to judicial appeals have been moderate to low given the size of the county. Most appeals are resolved administratively. Judicial appeal tax reduction were $20.7 million in 2012 to $21.5 million in 2018.

The Travis County Appraisal District budget rose from $12.7 million in 2012 to $18.3million in 2018, a 44% increase over 7 years. This averages 6.3% annual increase in TCAD budget exceeds the average rate of increase in appraisal district budgets.

The Travis County Appraisal Review Board fell from 35 from 2012 to 21 in 2018. However, in 2019, TCAD had few if any informal hearings and all accounts went to the ARB.

The number of appraisers has risen substantial; from 57 in 2013 to 62 in 2018. The number of appraisers increase by about 10% while the market value of parcels rose 80%.

2020 property tax deadline is May 15th; deadlines to protest are not extended due to Covid-19.

Visit www.TravisCountyPropertyTaxTrends.com to learn more.

Your property taxes will be aggressively appealed every year by the #1 property tax firm in the country. If your taxes are not reduced you PAY NOTHING, and a portion of the tax savings is the only fee you pay when your taxes are reduced! Many FREE benefits come with enrollment.

www.DallasCountyPropertyTaxTrends.com documents that Dallas County Appraisal District has experienced substantial growth in market value. However, the number of tax parcels has been flat. Large increases in assessed values have caused Dallas County residents to protest at about 150% of the statewide average of 10%. The market value of tax parcels has almost by half from $215 billion in 2013 to $322 billion in 2018. The number of tax parcels been risen slightly from 90,850 to 138,290 in 2018, a 52% increase. This site has details on number of tax protests, total market value, total taxes levied, value by type of property, number of judicial appeals, number of appraisal district staff, appraisal district budget and much more.

The market value of Dallas County taxable property rose from $215 billion in 2014 to 322 billion in 2018. This is a 49.8% increase over 5 years; 10% per year! These large increases are part of the impetus for Senate Bill 2, which caps taxes for school at 2.5% and cities / counties at 3.5% per year for existing property, plus the value of new construction.

Property tax savings from protest hearings at Dallas County Appraisal District (DCAD) have increased sharply: from $205 million in 2013 versus $440 million in 2018. Commercial accounts were reduced $403 million in 2018 versus residential accounts for $37 million. There are more residential accounts protested but the commercial accounts have a higher value. Dallas seems overly difficult for home owners given the large reductions awarded commercial property owners (10X the residential reductions).

The number of tax protests in Dallas Appraisal District increased by about half; from 90,850 in 2014 to 138,290 in 2018. Dallas County Appraisal District 2018 property tax protests include 79,490 residential and 58,800 commercial accounts. Residential accounts for 57% of the appeals but for 8% of the savings ($37 million out of $440 million in 2018).

Judicial appeals in Dallas County have been increased sharply over the past six years. The volume of Judicial appeals rose from 848 in 2012 to 1,938 in 2018, a 128% increase in six years. Property tax savings in Dallas County due to judicial appeals have been moderate given the size of the county. Most appeals are resolved without trial. Judicial appeal tax reduction were $0.9 billion in 2012 and $3.3 billion in 2018. Single-family savings accounted for 3% of the judicial appeal refunds.

The Dallas County Appraisal District budget rose from $21.5 million in 2012 to $27.5 million in 2018, a 8% increase over 7 years. This averages 4.0% annual increase in DCAD budget is less than the average rate of increase in appraisal district budgets.

The Dallas County Appraisal Review Board increased from 85 from 2012 to 102 in 2018.

The number of appraisers has been stable; typically 100 to 116 annually during 2013 to 2018.

2020 property tax deadline is May 15th; deadlines to protest are not extended due to Covid-19.

Visit www.DallasCountyPropertyTaxTrends.com to learn more.

Your property taxes will be aggressively appealed every year by the #1 property tax firm in the country. If your taxes are not reduced you PAY NOTHING, and a portion of the tax savings is the only fee you pay when your taxes are reduced! Many FREE benefits come with enrollment.

The market value of real estate requires a willing buyer and a willing seller; both knowledgeable. The economic outlook is a factor in real estate valuation, since the market value of real estate can be thought of as the risk-adjusted, present value of future cash flows. The U.S. economy faces a reduction is GDP potentially rivaling the great depression of 1929, and occurring at unprecedented speed. The great depression was gradually revealed over 12 to 18 months; Covid-19 has put 40 million jobs at risk in three weeks. Layoffs just for hotel and restaurants will likely exceed 18 million. During the great depression, unemployment rose to ~25% and GDP fell by 15%. This is expected to occur in the second quarter. The duration is unknown.

The impact of Covid-19 seems sharper, more intense and vivid (red spheres with yellow spikes that feather. It may last longer lasting than the 1999 Russian bond crisis, the 2001 dot.com, and the 2008 housing bust. The intensity is higher because of: 1) massive layoffs of 75% of employees in restaurants and hotels, 2) the rapid pace of change and 3) sense of panic. In only three weeks, since March 6, 2020, the scale of economic destruction and chaos is almost unfathomable. During the 2008 housing crisis, the emergency unraveled gradually over six to nine months.

We are experiencing the highest level of uncertainty remembered by anyone alive. Covid-19 occurred here in three weeks; only 10% of the time for the housing crisis. Citizens are listening live to government announcements at the city, county, state and federal level. New York’s governor, Mario Cuomo, predicted that 40 to 80% of people in New York could be infected by Covid-19, for a total of 8 to 16 million people. The number of reported Covid-19 infections in China is 83,000, or 0.0064% of the total Chinese population (83,000 / 1,300,000,000). Why the New York governor is projecting 40 to 80%, when China had well under 1% is unclear. But false information is part of the cause of panic. Panic is causing people to hoard cash in addition to toilet paper. Uncertainty is heightened by an uncoordinated response from government officials. There are no buyers for commercial real estate at pre-Covid-19 prices. Most pending commercial transactions are being cancelled and few new transactions are being initiated.

V-Shape or U-Shape Recovery – Does it Matter?

The nature of the recovery is pivotal to valuation. People pray for a quick V-shaped recovery. However, a U-shaped recovery, with 3 to 6 months at the bottom and then a gradual recovery over six to eighteen months seems more likely. We have been in lock-down for part of a month. The lockdown was expanded until April 30th (on May 29). People are quarantined for at least one more month. What happens then depends on our success of reducing new infections sharply. How many businesses can survive three months with no revenue to perhaps 25% of normal revenue? This is the likely reality for 10 to 20 million businesses. In a V-shaped recovery, within a month, hotels would be at stabilized occupancy and airlines would be back to normal traffic levels. Most businesses that closed during the two or three month shut down reopen. Do you believe airlines and hotels will be at 90% of pre-Covid volume one or two months after the quarantine is lifted?

Commercial Real Estate

Covid-19 has had a massive and immediate impact on commercial real estate. The magnitude of the change is magnified by the current level of uncertainty (written March 27, 2020 and edited March 29). The duration of slowdown for Covid-19 is unknown, as is the rate of recovery. If millions of businesses fail, the ripple effect will impact employees, vendors, landlords and owners. There are 32.5 million businesses in the U.S. Most do not have adequate reserves to operate for three months without revenue. It is now clear many real estate tenants will not have access to their rented premises, or are operating below capacity, and will be struggling to pay their bills.

Following are large industries seriously affected by Covid-19.

Restaurants – 15.6 million employees – 1 million + locations

Restaurants employ 15.6 million at over 1 million locations with annual revenue of $899 billion, before Covid-19. Restaurants providing take out are largely foundering, with revenue of 10 to 20% of before Covid-19. Staff has been slashed at more restaurants by 70 to 75%. It is unclear how long restaurants offering take-out, will remain open with 10 to 20% of prior revenue. Most publicly traded restaurants would not fare well after only two to three months. Most have a reserve account for only one or two months revenue.

Hotels – 8.3 million employees

Hotels are clearly impacted by Covid-19. Many or most hotels have already closed, or are operating with a skeleton staff. Occupancy rates are 5 to 20%. For how long is unknown. Publicly traded, large hotel chains announced layoffs of 80 to 95% of their employees last week. Marginal costs of remaining open are higher than marginal revenues. Many hotel owners will default on their loan payment due April 1. Unless there is a V-shaped recovery, which is not expected, hotel loan defaults will approach 75% after six months. Hotels employ 8.3 million and have revenue of $218 billion. Hotels will be hardest hit. Even if the quarantine were lifted at the end of April, hotels would no likely reach prior stabilized occupancy levels for another six months at a minimum. It depends on how quickly businesses and individuals start traveling. It also depends on whether the level of travel is the same Post-Covid-19.

U.S. Healthcare – 16 million

U.S. healthcare employs 16 million and is facing large layoffs since all activities other than addressing emergencies or Covid-19 have ceased. It seems likely that 25 to 50% of the healthcare workforce is idled, or 4 to 8 million. Unknown damage due to halt in routine activities. Only emergency surgery and Covid-19 and other emergencies are occurring. Many of these employees may be paid.

Business and Professional Services – 19.6 million employees

A relatively low level of disruption is expected, but even 10% is 2 million people

Wholesale and Retail Trade – 19.7 million employees

A relatively low level of disruption is expected, but even 10% is 2 million people

Manufacturing – 15.7 million

A relatively low level of disruption is expected, but even 10% is 1.5 million people

Income Properties

Owners of income properties have been ordered not to evict for two months in many cities and states. How many tenants will elect not to pay for two months? This includes apartments, office, retail, warehouse, gyms, movie theaters, restaurants, etc. One large landlord expects a 50% default rate for April rent, due 5 days from today. The ripple effect from income properties is loan defaults.

Casinos employ 362,000 and generate revenue of $42 billion. Most have been laid off or furloughed.

U.S. airlines employ 452,000 and have revenues of $233 billion. Most have been laid off or furloughed.

Vendors to Restaurants, Hotels, Healthcare, Airlines and Casinos

Vendors will be impacted two ways: 1) bad debts will increase and 2) new orders will slow or be eliminated. One firm is SYSCO; as of this writing, it is valued at $26 billion, has 69,000 employees and annual revenue of $60 billion. SYSCO’s net margin is only 3%; doesn’t allow for much bad debt. Restaurants are listed first in a description of the firm, followed by Healthcare, Senior Living Facilities, Higher Education and Government. The volume of activity has fallen sharply in every category except Senior Housing.

40.6 Million Jobs in Restaurant, Hotel, Casino, Airlines and Healthcare

Healthcare, restaurants, hotels, airlines, Boeing, and casino employ 40.6 million, or 31.0% of the U.S. workforce which totals 131 million. Restaurants and hotels, two horribly devastated sectors total 23.9 million jobs, or 18.2% of the workforce. Business and professional services, wholesale and retail trade and manufacturing total 55 million employees. Some portion will be lost. The great depression was a 15% contraction in GDP and 25% reduction is employment, from 1929 to 1932. This economic cycle will rival the great depression for severity, unless there is a fast V-shaped recovery for revenue for hotels and restaurants. Most of the existing restaurant and hotel businesses will close unless revenues increase rapidly in two or three months. Restaurants and hotels now open are incurring greater marginal costs than the marginal revenue. They are operating at a loss. The limited revenue does not cover even the cost of the skeleton staff, food and utilities. They are losing money after terminating 75% of the staff.

Economic Fabric Stretched or Torn; Does Moral Hazard Matter?

The ripple impact of restaurants, hotels, casinos, movie theatres, gyms and many other types of businesses will affect many businesses. Companies are reviewing plans several times a week; sometimes daily. Options are few and limited for businesses that lose 30% or more of their revenue. Most businesses operate on a margin of 0 to 20% profit. Businesses and individuals who suddenly lose their income stream will need to quickly select who they are paying, unless they have substantial reserves. Most small businesses have reserves for a week to two months. The largest hotel and restaurant chains only have reserves for 1 to 4 months with few exceptions. This does not include lines of credit not on 2019 balance sheet. This analysis is based on comparison of monthly run rate for revenue, liquid assets, liquid liabilities and cash. Most hotels and restaurants have a quick ratio (current assets / current liabilities) of 1.0 to 1.5. The quick ratio for McDonalds is 1.0

No Moral Hazard? – Is Government Encouraging Tenants Not to Pay?

Is the government sending the wrong message with promises of no foreclosures and evictions for two months? Will borrowers with Fannie Mae, FHA, Freddie Mac and other loans decide not to pay for two-months? Orders by city, county and state governments are abrogating private contracts. The U.S government sponsored a 60-day ban on foreclosures and evictions from Fannie Mae, Freddie Mac and FHA? Will home owners interpret this as a signal not to pay their mortgage for 2 months? This plan ignores the issue of moral hazard. It does not clearly lay out what happens after the two months. Do they waive the payments, recast the loan or foreclose? How long will lenders wait before requiring payment?

Wisdom of Paying People Not to Work; Will it Slow the Recovery? Negative Moral Hazard

Unemployment insurance payments will exceed the potential earning at the prior job. If the jobs becomes available, should the offer be accepted? Or is it better to collect more for four months, while possibly not paying rent or mortgages. From late April to late July, many would receive more funds by remaining on unemployment insurance. That is what Chuck Schumer meant by “unemployment benefits on steroids”. This will negatively impact the recovery by delaying a return to employment.

Will Home Owners Interpret this as a Suggestion Not to Pay for Two Months?

Most home loans are Fannie Mae, Freddie Mac and FHA. Will business owners transfer the halt on payments for their residence e to their commercial property or commercial rent? Will the leniency of U.S. lenders encourage business owners to ask for reductions and or payment extension of rent? Today, it is unclear if owners of commercial properties will be receiving checks for rent for April. In addition to layoffs, some business have stopped / delayed paying vendors. Many cities and states have imposed 30 to 60 days prohibition of evictions. It is possible and perhaps likely these will be extended? How many tenants will elect not to pay? Could it be more than 20% of the tenants who do not pay?

Multiple national businesses including Cheesecake Factory and Mattress Firm have announced they are renegotiating April rent. April 1, 2020 is five days from now, and there is uncertainty regarding whether tenants will pay rent, or hoard cash. The March 30th announcement extending the quarantine through April 30 will not encourage tenant to pay April rent.

Benefits and Limitations of $2 Trillion Government Plan

The $2 trillion plan will put hundreds of billions; likely over $1 trillion into the economy in two to four months. Low-wage and moderate income will be protected for four months. The $2 trillion plan will help many small businesses with loans for two months of: salary, interest, rent and utilities. However, the $2 Trillion plan will not stave off insolvency for businesses deprived of revenue for three to six months.

Disaster Awaits Millions of Small Businesses

How many businesses can survive three to six month with 0 to 20% of existing revenue? The answer is most public companies fail after two to six months. Most private companies fail after 1 week to three months.

The $2 trillion bill passed today will not help restaurants, hotels, airlines, movie theatres, gyms and many other types of businesses. Businesses can’t pay rent unless they are operating profitably. The problem is a lack of revenue; providing money to pay employees for two months does not address the underlying problem. There is no purpose in having employees at the location since there is no business activity. Businesses need revenue similar to before Covid-19. Most businesses have a profit margin of 10 to 20% or less. If revenue is reduced more than 20%, most businesses become unprofitable. The program for small business does not have a meaningful impact on businesses with large reductions in revenue. This includes hotels, restaurants, casinos, and healthcare. Healthcare revenues should snap back after the “shelter in place” orders end. However, restaurants, hotels, airlines, and casinos likely face six to eighteen months to regain their prior level of revenue, after the quarantine is lifted.

Tens of millions of businesses are making the decision to layoff or furlough a portion of their employees, or just to close. Other employers have reduced compensation broadly, perhaps 30% across the board. The unemployment report this week (week of March 23, 2020) was 3.3 million, about 5 times the prior record. Exceeding the old record by 400% indicates the severity of disruption to the U.S. economy. Economists had forecast about 1 to 1.5 million; the level of layoffs was twice the highest estimate. Again, hotels and restaurants employee 23.9 million. The 3.3 million announced this week will not be the largest number; total layoffs just from hotels and restaurants are likely to total 18 million, 13.7% of the 131 million U.S. employees.

Is Reopening Hotels and Restaurants Hard?

In a word, yes. Based on 3 months in quarantine and a U-shaped recovery, most restaurants and hotels will fail. The owners in some cases will be personally bankrupted. Many good people will exhaust their personal savings to keep the business alive. Some will exhaust the retirement savings and put mortgages on free and clear homes.
Most existing owners will not have the capital to re-open the business. Many if not most will exhaust their capital trying to save their business. Chain hotels and restaurants are easier to open. But opening most businesses that requires operating capital sufficient to start business and sustain it during the one to two years of startup.
Closing a business like a hotel or restaurant is easy. Any fool can close a business. Talent, intense dedication for several years and capital are required to start a business. Re-opening shuttered hotels and restaurants could easily require two to four years. This is particularly true if the lender forecloses on the real estate.

Covid-19 Impact on Real Estate Values, Sales and Loans

Residential

Residential real estate transactions are continuing as normal, as of March 27. Contracts pending will close. It helps the government is available to purchase loans for these transactions. However, this could change after the contracts pending close.

Commercial Loans

Commercial lenders will see loan defaults more similar to the great depression than the 2008 housing crisis. Millions of businesses will fail. They will not be able to pay the landlord rent or the tenant the mortgage payment. Lenders are expected to face some loan payment defaults in April. However, by July the number of defaults will likely have grown due to business failures. With limited exceptions, the U.S. government does not purchase loans for commercial properties. CMBS loans have ceased; banks are hit and miss and life companies appear to be quoting business. Lenders will be wary if they have substantial loan defaults in April to July.

Commercial transactions have slowed or come to a stop due to uncertainty over the future. The buyers and lenders are cancelling the transaction. The current level of uncertainty reduces the number of buyers to close to zero. Few investors would transact the purchase of commercial real estate without a substantial discount. Today, a discount of 25% seems modest and low given the severity of this crisis. It seems likely a buyer could be induced to purchase a property not impacted by Covid-19 at 25 to 50% of the prior value.

Uncertainty impacts the pool of buyers and lenders and the market value. Covid-19 sharply reduces the pool of buyers for commercial real estate given the current uncertainty. Many large owners of real estate are days or months away from defaulting on their loans if revenue falls 20%. The market for commercial real estate today is illiquid with few buyers. It is clear the market value of commercial real estate is lower. The level of discount also depends on the type of property. Hotels and casinos would be deeply discounted. The level of discount for apartments, office, retail and warehouses will be better understood after reviewing data on April and May collections.

By Patrick O’Connor, MAI
OConnor
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www.HarrisCountyPropertyTaxTrends.com is a collection of facts, data and insights into Harris County property taxes. Total annual property taxes, total assessed values for residential and commercial, number of protests, number of staff at appraisal district, appraisal district budget, number of tax parcels, judicial appeals and more.

The market value of Harris County taxable property rose from $379 billion in 2013 to 581 billion in 2018. This is a 53% increase over 5 years. These large increases are part of the impetus for Senate Bill 2, which caps taxes for school at 2.5% and cities / counties at 3.5% per year for existing property, plus the value of new construction.

Property tax savings from protest hearings at Harris County Appraisal District (HCAD) rose from $7.8 billion in 2012 to $10.4 billion, a 33% increase. Commercial accounts were reduced $8.6 billion in 2018 versus residential accounts for $1.7 billion. There are more residential accounts protested but the commercial accounts have a higher value.

Harris County Appraisal District totaled 371,300 protests in 2018. This includes 251,750 residential and 119,550 commercial accounts. Residential accounts for two thirds of the number of appeals but for 17% of the savings ($1.7 billion out of $10.4 billion in 2018).

Judicial appeals in Harris County rose about three-fold from 2012 to 2018. (2,861 in 2012 and 7,553 in 2018). Property tax savings in Harris County due to judicial appeals rose from $59.3 million in 2012 to $271.6 in 2018; a 358% increase.

The Harris County Appraisal District budget rose from $63.8 million in 2012 to $85.6 million in 2018, a 34% increase over 6 years. This averages 5.6% annual increase in HCAD budget.

The Harris County ARB is the largest in the state with 190 members in 2018.

The number of appraisers has essentially remained flat; 291 in 2014 and 297 in 2018.

2020 property tax deadline is May 15th; deadlines to protest are not extended due to Covid-19.

Visit www.HarrisCountyPropertyTaxTrends.com to learn more.

Your property taxes will be aggressively appealed every year by the #1 property tax firm in the country. If your taxes are not reduced you PAY NOTHING, and a portion of the tax savings is the only fee you pay when your taxes are reduced! Many FREE benefits come with enrollment.

www.FortBendCountyPropertyTaxTrends.com provides amazing insights into the vast sums raised by the property tax in Fort Bend County, Texas. Property taxes are a primary funding source for local government; county, city and school. The Fort Bend website includes information such as total tax parcels, total tax protests, total annual property taxes, total assessed values for residential and commercial, number of staff at appraisal district, appraisal district budget, judicial appeals and more.

The market value of Fort Bend County taxable property rose from $62 billion in 2014 to 91 billion in 2018. This is a46% increase over 4 years; over 10% per year. These large increases are part of the impetus for Senate Bill 2, which caps taxes for school at 2.5% and cities / counties at 3.5% per year for existing property, plus the value of new construction.

Property tax savings from protest hearings at Fort Bend County Appraisal District (FBCAD) have remained flat: $63 million in 2012 versus 61 million in 2018. Commercial accounts were reduced $46 million in 2018 versus residential accounts for $15 million. There are more residential accounts protested but the commercial accounts have a higher value.

Fort Bend County Appraisal District totaled 68,680 protests in 2018. This includes 50,290 residential and 18390 commercial accounts. Residential accounts for 73% of the number of appeals but for 17% of the savings ($15 million out of $61 million in 2018).

Judicial appeals in Fort Bend County soared twenty-fold from 2012 to 2018. (84 in 2012 and 2,224 in 2018). Property tax savings in Fort Bend County due to judicial appeals have been flat from $4.1 million in 2012 to $4.2 million in 2017; .

The Fort Bend County Appraisal District budget rose from $5.99 million in 2012 to $13.1 million in 2018, a 119% increase over 6 years. This averages 20% annual increase in FBCAD budget.

The Fort Bend County ARB has increased from 30 in 2012 to 38 in 2018.

The number of appraisers has risen substantial; from 35 in 2012 and 49 in 2018. This is a 40% increase in staffing over 6 years.

2020 property tax deadline is May 15th; deadlines to protest are not extended due to Covid-19.

Visit www.FortBendCountyPropertyTaxTrends.com to learn more.

Your property taxes will be aggressively appealed every year by the #1 property tax firm in the country. If your taxes are not reduced you PAY NOTHING, and a portion of the tax savings is the only fee you pay when your taxes are reduced! Many FREE benefits come with enrollment.

www.MontgomeryCountyPropertyTaxTrends.com documents that Montgomery County Appraisal District not seen a large increase in the number of tax parcels. However, the budget has doubled over the last 7 years. The site has details on number of tax protests, total market value, total taxes levied, value by type of property, number of judicial appeals, number of appraisal district staff, appraisal district budget and much more.

The market value of Montgomery County taxable property rose from $52 billion in 2014 to 70 billion in 2018. This is a 35% increase over 5 years; 7% per year. These steady increases are part of the impetus for Senate Bill 2, which caps taxes for school at 2.5% and cities / counties at 3.5% per year for existing property, plus the value of new construction.

Property tax savings from protest hearings at Montgomery County Appraisal District (MCAD) have increased sharply: from $15 million in 2013 versus $57 million in 2018. Commercial accounts were reduced $47 million in 2018 versus residential accounts for $10 million. There are more residential accounts protested but the commercial accounts have a higher value.

Montgomery County Appraisal District totaled 30,370 protests in 2018. This includes 18,570 residential and 11,800 commercial accounts. Residential accounts for half of the appeals but for 18% of the savings ($10 million out of $57 million in 2018).

Judicial appeals in Montgomery County have been steady at Montgomery County Appraisal District. Judicial appeals ranged from 95 to 229 from 2012 to 2018, with no discernable trend up or down. Property tax savings in Montgomery County due to judicial appeals have been modest. Judicial appeal tax reduction rose from $0.2 million in 2012 to $5.3 million in 2018. A large increase but a tiny portion of
The Montgomery County Appraisal District budget rose from $6.1 million in 2012 to $12 million in 2018, a 97% increase over 7 years. This averages 13.8% annual increase in MCAD budget.

The Montgomery County ARB increased from 12 from 2012 to 24 in 2018.

The number of appraisers has risen substantial; from30 in 2013 to 55 in 2018. Both the number of appraisers and the budget basically doubled.

2020 property tax deadline is May 15th; deadlines to protest are not extended due to Covid-19.

Visit www.MontgomeryCountyPropertyTaxTrends.com to learn more.

Your property taxes will be aggressively appealed every year by the #1 property tax firm in the country. If your taxes are not reduced you PAY NOTHING, and a portion of the tax savings is the only fee you pay when your taxes are reduced! Many FREE benefits come with enrollment.

www.TarrantCountyPropertyTaxTrends.com documents that Tarrant County Appraisal District has experienced substantial growth in market value and number of parcels while limiting the budget increases. The market value of tax parcels has almost doubled from $129 billion in 2013 to $213 billion in 2018. The number of tax parcels has grown from 1.5 million to 1.8 million from 2014 to 2018. The budget has increased 20% over 7 years, a much more modest level of increase in budget than most appraisal districts. The site has details on number of tax protests, total market value, total taxes levied, value by type of property, number of judicial appeals, number of appraisal district staff, appraisal district budget and much more.

The market value of Tarrant County taxable property rose from $129 billion in 2014 to 213 billion in 2018. This is a 65% increase over 5 years; 13% per year. These large increases are part of the impetus for Senate Bill 2, which caps taxes for school at 2.5% and cities / counties at 3.5% per year for existing property, plus the value of new construction.

Property tax savings from protest hearings at Tarrant County Appraisal District (TAD) have increased sharply: from $41 million in 2013 versus $320 million in 2018. Commercial accounts were reduced $225 million in 2018 versus residential accounts for $95 million. There are more residential accounts protested but the commercial accounts have a higher value.

The number of tax protests in Tarrant Appraisal District has about doubled from 72,180 in 2014 to 148,070 in 2018. Tarrant County Appraisal District totaled 148,070 protests in 2018. This includes 112,920 residential and 35,150 commercial accounts. Residential accounts for 75% of the appeals but for 30% of the savings ($95 million out of $320 million in 2018).

Judicial appeals in Tarrant County have been increased sharply over the past six years. Judicial appeals rose from 572 in 2012 to 1,221 in 2018, a 135% increase in six years. Property tax savings in Tarrant County due to judicial appeals have been moderate to low given the size of the county. Most appeals are resolved administratively. Judicial appeal tax reduction were $20.7 million in 2012 to $21.5 million in 2018.

The Tarrant County Appraisal District budget rose from $19.8 million in 2012 to $23.7 million in 2018, a 20% increase over 7 years. This averages 2.8% annual increase in TAD budget, well below the increase in most appraisal district budgets.

The Tarrant County Appraisal Review Board increased from 65 from 2012 to 85 in 2018.

The number of appraisers has risen substantial; from 85 in 2013 to 119 in 2018. The number of appraisers increase by about half while the budget only rose twenty percent.

2020 property tax deadline is May 15th; deadlines to protest are not extended due to Covid-19.

Visit www.TarrantCountyPropertyTaxTrends.com to learn more.

Your property taxes will be aggressively appealed every year by the #1 property tax firm in the country. If your taxes are not reduced you PAY NOTHING, and a portion of the tax savings is the only fee you pay when your taxes are reduced! Many FREE benefits come with enrollment.

www.BrazoriaCountyPropertyTaxTrends.com documents that Brazoria County Appraisal District has done an exception job in resolving property tax appeals with minimal time and cost for the tax payers. They resolve most prostests informally and have few lawsuits. The site has details on number of tax parcels, total market value, value by type of property, number of appeals, number of appraisal district staff, appraisal district budget and much more.

The market value of Brazoria County taxable property rose from $30 billion in 2014 to 49 billion in 2018. This is a 63% increase over 5 years; over 10% per year. These large increases are part of the impetus for Senate Bill 2, which caps taxes for school at 2.5% and cities / counties at 3.5% per year for existing property, plus the value of new construction.

Property tax savings from protest hearings at Brazoria County Appraisal District (BCAD) have increased sharply: from $10 million in 2012 versus 29 million in 2018. Commercial accounts were reduced $19 million in 2018 versus residential accounts for $9 million. There are more residential accounts protested but the commercial accounts have a higher value.

Brazoria County Appraisal District totaled 30,370 protests in 2018. This includes 18,570 residential and 11,800 commercial accounts. Residential accounts for 61% of the number of appeals but for 32% of the savings ($9 million out of $28 million in 2018).

Judicial appeals in Brazoria County have been minimal at Brazoria County Appraisal District. Judicial appeals ranged from 13 to 57 from 2012 to 2018, with no discernable trend up or down. Property tax savings in Brazoria County due to judicial appeals have been neglible.

The Brazoria County Appraisal District budget rose from $4.1 million in 2012 to $5.7 million in 2018, a 39% increase over 6 years. This averages 6.5% annual increase in BCAD budget.

The Brazoria County ARB remained at 7 from 2012 to 2018.

The number of appraisers has risen substantial; from 8 in 2013 to 22 in 2018. The number of appraisers more than doubled while the budget rose modestly.

2020 property tax deadline is May 15th; deadlines to protest are not extended due to Covid-19.

Visit www.BrazoriaCountyPropertyTaxTrends.com to learn more.

Your property taxes will be aggressively appealed every year by the #1 property tax firm in the country. If your taxes are not reduced you PAY NOTHING, and a portion of the tax savings is the only fee you pay when your taxes are reduced! Many FREE benefits come with enrollment.

www.GalvestonCountyPropertyTaxTrends.com documents that Galveston County Appraisal District has grown only modestly over the last six years. Neither the total value of property nor the number of parcels has grown sharply. The budget has increased 25% over 7 years, a much more modest level of increase in budget than most appraisal districts. The site has details on number of tax protests, total market value, total taxes levied, value by type of property, number of judicial appeals, number of appraisal district staff, appraisal district budget and much more.

The market value of Galveston County taxable property rose from $28 billion in 2014 to 37 billion in 2018. This is a 32% increase over 5 years; 6% per year. These steady increases are part of the impetus for Senate Bill 2, which caps taxes for school at 2.5% and cities / counties at 3.5% per year for existing property, plus the value of new construction.

Property tax savings from protest hearings at Galveston County Appraisal District (GCAD) have increased sharply: from $18 million in 2013 versus $24 million in 2018. Commercial accounts were reduced $17 million in 2018 versus residential accounts for $7 million. There are more residential accounts protested but the commercial accounts have a higher value.

Galveston County Appraisal District totaled 34.060 protests in 2018. This includes 24,700 residential and 9,360 commercial accounts. Residential accounts for two-thirds of the appeals but for 29% of the savings ($7 million out of $24 million in 2018).

Judicial appeals in Galveston County have been limited, with the exception of a spike in 2018. This spike is based on the property affected by Hurricane Harvey. Judicial appeals ranged from 11 to 29 from 2012 to 2017 before spiking to 414 in 2018. Property tax savings in Galveston County due to judicial appeals have been modest. Judicial appeal tax reduction rose from $0.1 million in 2012 to $2.0 million in 2018. There was a spike of $18.3 million in savings in 2017.

The Galveston County Appraisal District budget rose from $4.8 million in 2012 to $6.0 million in 2018, a 25% increase over 7 years. This averages 3.2% annual increase in GCAD budget, well below the increase in most appraisal district budgets.

The Galveston County ARB increased from 9 from 2012 to 12 in 2018.

The number of appraisers has risen substantial; from 8 in 2013 to 17 in 2018. The number of appraisers doubled but the number of parcels increased only modestly.

2020 property tax deadline is May 15th; deadlines to protest are not extended due to Covid-19.

Visit www.GalvestonCountyPropertyTaxTrends.com to learn more.

Your property taxes will be aggressively appealed every year by the #1 property tax firm in the country. If your taxes are not reduced you PAY NOTHING, and a portion of the tax savings is the only fee you pay when your taxes are reduced! Many FREE benefits come with enrollment.