As you’ve probably read by now, the Dallas Independent School District’s Board of Trustees voted 5-3 last night to purchase the building at 9400 N. Central Expressway in a bid to consolidate the district’s various departments that are currently spread all over Dallas County.
We can debate the merits of having a building where hundreds of employees will be able to work under one roof for the first time in probably more than 50 years, but that was done for quite some time last night.
Instead, I’d like to talk about something else that came to light (actually, I’ve heard the confusion from many a homeowner about this time every year, too) at this meeting — folks don’t know there’s a difference between the appraisal value Dallas County Appraisal District uses for taxation, and a fair market value appraisal.
The building the district is buying will have a $46.5 million price tag and was built in 1979. Last night, both Bernadette Nutall and Joyce Foreman questioned that number and pointed to the fact that DCAD said the appraised value of the property was $23,790,000.
Like I said, they’re not the first folks to think the two values are interchangeable. But they’re not.
“The DCAD value is simply the number the government uses to determine how much to charge the owner in property taxes. Fair market value represents a reflection of the realistic amount of money a buyer and seller can expect to exchange in a property transaction based on current market conditions,” said Dallas Realtor Brian Davis with Dave Perry-Miller Real Estate.
This article in the New York Times is a great explainer on the difference:
‘What we’re talking about is a moving target,’ said J. P. Vaughn, the publisher of Creative Real Estate Online. Ms. Vaughn explained that in addition to market value — homes are also described by their appraised value, their assessed value and by values calculated using automated-valuation models. Market value, Ms. Vaughn said, is defined as the price at which a house will sell within a reasonable period of time. Using that definition, the house in the example would have a market value of $420,000.
Our own Jon Anderson took a deep dive into appraisals and DCAD valuations last month as well. He explained:
One thing I haven’t touched on, and it’s huge, is commercial property. Talk about a complete black hole. Almost everything is private. Even if DCAD could access it, there’s no commercial MLS to centralize data. As a result, the commercial contribution to overall tax revenues is almost certainly the most inaccurate and results in the lowest ratios of market value to DCAD valuation. If commercial property was taxed accurately, residential tax rates would likely plummet.
By most accounts, even at $46 million, this is a good buy for the district. The district will have room to grow, but in the meantime, it can honor the leases for the 55 current tenants in the building. According to the presentation last night, the district projects it will start seeing a savings by 2018 when they are projected to be around $3.8 million. Those savings will continue to increase until it hits around $28 million or so by 2021.
If all goes as planned, the district will close on the building in about two months, and after some make-ready, employees could begin moving in by December 2016.