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Unfair Property Taxes in Houston

Harris County Appraisal District’s (HCAD) assessment of property taxes has a discriminatory effect against African Americans. This pattern has been occurring for at least five years. Houses in primarily African-American Zip Codes are seven times more likely to be over-taxed by at least 10 percent than homes in primarily Anglo Zip Codes. This could violate the Texas Constitution’s requirement of uniform and equal taxation and may violate the Fair Housing Act of 1968.

HCAD is the appraisal district which estimates property tax values in Harris County, the largest county in the Houston, Texas metropolitan area. They value more than 1 million homes and 1.6 million total properties.

The most egregious example is Zip Code 77028. Property taxes are well in excess of what is fair in Zip Code 77028, which is 72 percent African-American. The typical home is paying 87 percent in excess property taxes, based on a study conducted by O’Connor & Associates. While the average sales price fell 17 percent during 2013, HCAD increased the values by 0.05 percent The largest subdivisions in Zip Code 77028 are Clairmont Place, Rosewood Estates, Glen Manor, Quimby U/R, Pelham Place, Parkhurst Estates, Homestead, Rosedale Gardens and Larkston Place.

O’Connor & Associates compiled an analysis of over 11,100 sales which occurred during October 2013 through March 2014. The survey was comprehensive and included records for which a sales price and a 2014 Harris County Appraisal District market value were available.

This is not an isolated incident. Homes in primarily African-American Zip Codes are seven times as likely to be more than 10 percent over assessed than homes in primarily Anglo Zip Codes. Seven of ten Zip Codes with homes more than 10 percent over-valued are primarily African-American and Hispanic.

Property taxes are one of the largest expenses for low-income home owners. “The continuing pattern of HCAD’s overvaluing residential property in terms of true market value particularly in minority neighborhoods is shocking,” O’Connor said. “A disproportionate number of the Zip Codes that fall 3 standard deviations above the median level of assessment have high levels of minority population. The chance of that happening randomly is almost zero.”

There are several reasons why it is in HCAD’s interest to ignore the problem: 1) few minority and poor home owners protest, 2) it is not a priority since no one is paying attention and 3) it helps with the ratio study which is an important test for the appraisal district, a key measure of appraisal district performance.

There are several serious consequences of excess taxation of homes in African-American areas. First, it increases the level of foreclosures as mortgage payments are artificially increased by the excessive taxes. Second, it has led to a meaningful loss of wealth in the African American community. Even homes owned free and clear are being foreclosed as home owners are unable to pay the excess taxes.

“In coordination with the Houston Black Real Estate Association, I requested to meet with senior HCAD management several times to address this issue early in 2014 before values were released. However, by not responding to the requests, they declined to meet”, according to O’Connor.

“HCAD’s decision not to meet to discuss this serious problem is very troubling. The Texas Constitution requires “Taxation shall be equal and uniform”. HCAD is required by state law to fairly tax all property owners, and this must be their most important objective. There is a historic and incontrovertible record of HCAD assessing excess property taxes in minority communities. This is unacceptable and should be resolved immediately”, according to O’Connor. Systemic over-taxation of African- American areas may also be a violation of the Fair Housing Act of 1968.

O’Connor & Associates is a Houston-based property tax consulting firm. It is the only firm that represents property owners of any value in volume, representing over one hundred thousand home owners. “Most firms want to handle only large commercial businesses or wealthy home owners’ protests,” said Pat O’Connor, president of the firm, “but helping the small guy part of our mission, and in this case, it’s the lower-end home owner who is really getting the raw deal.” O’Connor & Associates represents over 110,000 clients, which we believe is more than any other property tax consulting firm in the nation.

For more information contact Scott Sherrill at 713 375 4264 or Pat O’Connor at 713 822 8613.

Blog Author

Patrick O’Connor, MAI, Owner and President
Patrick O’Connor has been active in reducing property taxes, providing expert witness testimony and appraising commercial real estate property since 1983. Pat is active in publishing analyses and data with respect to the real estate market, while being a highly regarded media spokesperson for the real estate community. He holds a MAI, the highest achievable designation from the Appraisal Institute, and is a licensed senior property tax consultant. Pat earned a Master of Business Administration from Harvard University. In 2001, he authored the first definitive consumer guide to Texas property taxes, Cut Your Texas Property Taxes.

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