Historic Districts May Get a Tax Break With State Rep. Morgan Meyer’s House Bill 3971

As the saying goes, nothing is certain but death and taxes.

Another truth? While taxes are inevitable, they are seldom equitable. This is especially true when it concerns historic districts and property valuations. Thankfully, a new bill in the Texas House has been introduced to address this issue and help those with historic properties afford to keep them.

What’s Goes Into an Appraisal?

It’s very much a Catch-22 situation. We all understand it’s the job of the Dallas Central Appraisal District to assess value to land and homes and collect property taxes. Let’s get it straight from the horse’s mouth. 

Dallas Central Appraisal District (DCAD) is responsible for appraising property for the purpose of ad valorem property tax assessment on behalf of the 61 local governing bodies in Dallas County . The appraisal district is a political subdivision of the State of Texas. Our duties include establishing and maintaining accurate property values for all real and business personal property. The Texas Property Tax Code is the primary source of law and guidance for the Texas property tax system.

The key word here is ACCURATE, and that’s a tough word because it’s being left open to quite a bit of interpretation. And often that interpretation fails on the basis of logic.

Historic districts attract business. That’s a given. Major motion pictures and television shows choose to film in Dallas because of our historic buildings and homes. When Dallas plays host to a movie like Oliver Stone’s “JFK” or a television series like ‘Queen of the South,” you can bet a ton of money pours into our city.

Developers also bring in a great deal of revenue. They love building multi-family homes near historic districts. That’s because proximity to a neighborhood filled with beautiful 1920s homes offers a cachet for potential buyers and renters that cannot be matched. Drive down Bryan Parkway and when you hit Live Oak you can see multi-family complexes stretch to downtown. There’s something to be said for living in an apartment but being close enough to use Swiss Avenue for your morning run or dog walk. You get to enjoy the beauty of a historic district, without any of the upkeep—or the expense.

It takes a special kind of crazy to buy a historic home (and I should know, I live in a conservation district in a 1920s-era house). You have to love history, accept continued upkeep, and promise to follow often arbitrary and frustrating rules about what you can and cannot do to your home. Fortunately, we have dedicated homeowners and thriving historic districts. 

So why does DCAD seemingly punish these folks that pour their hearts, souls, and wallets into keeping these historic beauties in such good shape that people line up yearly to see them on neighborhood home tours?

I called up some neighbors for insight. Jim Anderson lives in the Peaks Suburban Addition and was an urban planner and the preservation officer for the City of Dallas for 26 years.

“We are being hit very hard,” Anderson said. “Our land values have tripled and sometimes quadrupled. We tell DCAD we are zoned single-family and two-thirds of our neighborhood is in the historic district. However, they see our neighborhood surrounded by townhome development and assume those can be developed here eventually. They can’t. We are zoned as a historic district. We cannot tear down our homes. Even if they burned down we could only build back as a single-family home.”  

Then there is the issue of adjoining properties. If there is a homeless encampment across the street from a historic neighborhood it does not impact assessed value.

“We are told, they don’t care about adjoining property and what’s on it,” Anderson said. “But you can bet if a big expensive house goes up, our assessed value will increase. We own a vacant lot that is zoned single-family and we plan to build a single-family house there. DCAD is assessing that lot with the same land value as a fourplex.”

It’s crazy, right? Certainly it is far from fair or logical. But it’s legal. For now.

The Plight of Historic Neighborhoods

Historic neighborhoods are being held hostage. It’s like the state is biting the hand that ultimately feeds development in the city. To what end?

Are historic districts going to eventually be homes only for the uber-wealthy because you have to be a millionaire to live in them? Guess what? Those folks don’t want them. Like I said, it takes a special individual to put up with the rules and restrictions and Dallas is lucky to have people that are up to the task.

Brian Schultz is the president of the Swiss Avenue Historic District and reminded me that in most cities, historic districts tend to be in urban areas.

Revitalized, But Penalized

The owners of these historic homes have been remarkably effective at revitalizing those neighborhoods, and they act as a beautiful backdrop for developers to buy adjacent to those districts. 

“The appraisal districts are not instructed to take into consideration overlays,” Schultz said. “If you have a historic designation on a home there are tax considerations and obligations but if you are not a historic monument, like the Aldredge house, the tax is punitive but the county is following the law.”

And there’s the rub. It’s city vs. state. The city overlay has absolutely nothing to do with state laws. So let’s not be so quick to beat up on DCAD. Their hands are tied.

“DCAD does not have the tools to solve the issue,” Swiss Avenue homeowner Joanna Hampton said. “In our case, because we are just a historic city overlay there is no mechanism to consider the valuation issue. DCAD understands the issue, they just cannot adjust it. As they evaluate and see the values going up, then they try to assess the land and that is the challenge.”

And it’s not slowing down.

“Homeowners may have been here 20 or 30 years but don’t qualify yet for a tax freeze,” Hampton added. “They now find themselves faced with maintaining their home or paying taxes. It’s impossible to do both. We have to have an amendment to state law.”

I’m happy to report that House Bill 3971 is in the works. 

“The bill was authored and filed by Representative Morgan Meyer who represents district 108,” Preservation Dallas Executive Director, David Preziosi said. “That is a large area that covers several historic districts in East Dallas. Meyer is chair of Ways & Means committee so the bill was heard favorably this past Monday at the committee hearing.”

“I filed House Bill 3971 to address an issue raised by constituents that I represent who live in the Swiss Avenue Historic District in Dallas. Historic districts oftentimes have various restrictions and covenants that don’t allow property owners to make improvements to their land and structures. Appraisal Districts do not always take into consideration these restrictions and the result is inaccurate appraisals for these types of properties. H.B. 3971 will ensure that appraisals more accurately reflect the value of these historic properties by instructing appraisal districts must take into consideration the effect of restrictions place by the historic districts on the property owner’s ability to alter, improve, or repair the property. It’s important to pass this bill to ensure that owners of these historic properties are assessed fairly and able to preserve our rich Texas history and attract further investment to preserve and restore many of our historic districts.”

State Rep. Morgan Meyer (R-108)

This did not happen easily or quickly. It took a village and when you get a village of the wonderfully eclectic folks that take on the responsibility of a historic home, you get traction, so despite the fact that there is currently no companion bill in the Senate, I fully expect a smart Senator to back this bill.