Downtown property owners face steep tax increases
HARLINGEN — Patricia Thomas’ thrift store stands to close its doors if she’s hit by a proposed 70-percent tax hike that threatens to change of face of the city’s downtown business district.
Along the city’s historic Jackson Street, one of the biggest tax increases in decades could transform the landscape of the business district that took more than 30 years to develop.
The Cameron County Appraisal District is proposing raising property values an average of about 70 percent along the four-block area.
Bill DeBrooke, who owns several buildings in the area, said that could force about 40 businesses to pay a total of $70,000 more in property taxes from First to Fourth streets.
Now, properties along those blocks are assessed at a total $4.3 million.
Under the proposal, assessments would increase to a total of $7.25 million, marking an increase of $2.95 million.
That means the assessed value of the El Rialto Reception Hall would jump from $92,415 to $219,382, an increase of $127,000.
Meanwhile, the Salvation Army’s building, now assessed at $298,560, is proposed to be valued at $491,212, increasing by $192,652.
Along Jackson’s third block, the Jackson Square Event Center, now assessed at $320,479, is proposed to be assessed at $422,822, an increase of $102,343.
Only one property stands to drop in assessed value.
Next door to the event center, the property at 305 E. Jackson, now assessed at $340,901, would be assessed at $332,896, a decrease of $8,005.
If the proposed property values stand, they would force tax increases that could drive many merchants out of business, leaving building owners with empty storefronts.
“This is going to be devastating,” DeBrooke, who spearheaded the drive to revitalize the area nearly 30 years ago, said as he sat Friday at the window of an empty building next to the Rialto Reception Hall.
“We have a viable downtown that’s an important part of this community,” DeBrooke said.
If tenants go out of business, property owners will struggle.
“Sometimes you’re clearing $200 to $300 a month,” DeBrooke said of owners of the buildings dating back to the city’s early years. “For me, it’s obviously going to be a hit.”
What does the appraisal district say?
The appraisal district is proposing increasing property values to bring them closer to values in other parts of the downtown area, Chief Appraiser Richard Molina said.
“Jackson Street was far off when it comes to being at market value,” Molina said.
The district apparently had not reappraised the four-block area in recent years because a low number of property sales did not allow comparisons with other downtown areas.
“It could be we didn’t have too many sales,” he said. “In the last three years, we had a few.”
New sales helped appraisers adjust property values to bring them closer to those in other downtown areas, Molina said.
DeBrooke said he found the proposed increases on the appraisal district’s website.
Those proposed increases, which were inadvertently posted on the district’s website, could change, Molina said.
Molina noted property owners can protest, presenting arguments to request lower appraised values.
“If we have something wrong, we’re going to fix it,” he said.
The district will not certify the area’s property values until June, he said.
DeBrooke said he and other property owners would protest steep increases in property values.
“They have taken some of this stuff considerably above market,” he said.
DeBrooke said nearby low-income neighborhoods and the La Placita area bring down property values in the four-block Jackson Street district.
“They don’t understand the values in the central core,” he said, referring to appraisal district officials.
What would happen next?
If the district certifies the proposed values in June, tenants will face 15 to 20 percent rent increases, DeBrooke said.
“Most of the leases are structured so the tenant pays the tax increases one way or another,” he said.
DeBrooke said steep tax increases would threaten to transform the downtown area, which offers the city’s lowest rents.
“What the downtown has been able to do is get little guys in business,” he said. “We have evolved the downtown. We’ve got a lot of single women starting businesses. They just don’t have a lot of money. If you have to kick the rents up to cover costs, some people won’t be able to afford it. They’re small business people. They’re struggling.”
If property values soar, DeBrooke said he would have to pass down the tax increase to tenants such as Jackson Street Antiques, a shop that helped draw out-of-town customers to the area.
What about the businesses?
For owner Leo Garza, rent would jump from $800 to $1,022 a month, DeBrooke said.
“Nobody likes increases in taxes — that’s money out of your pocket,” Garza, who opened his shop 20 years ago, said as he sat near the door of the store. “Nobody likes to bare the brunt.”
At Twinkets and Friends, co-owner Patricia Thomas said the thrift shop would close down after about three years in business.
“If my rent goes up, we’re out of business,” Thomas, a retired teacher, said as she and her twin sister spoke with customers.
“It’s crazy to open this store on what we’re making,” she said.
Thomas said she and the shop’s four co-owners used a year’s worth of profits to safeguard the shop from burglars.
“We took all of last year’s profits to pay for a security system,” she said.
At Carlitos Wine House, owner Carlos Betancourt said a big tax increase would strain the popular restaurant and bar.
“That’s ludicrous. That’s insane — 70 percent,” Betancourt said. “It would be a problem for all of us. We’re small businesses. You live from day-to-day.”