For the third year in a row, the owners of the Iroquois Building are protesting the property’s appraisal.
The historic downtown building, 121 S. Main St., was built in the early 1900s. Vinco Investments, owned by Eveline Bethune, purchased the property in 2016.
“It’s so frustrating to have to appeal every year,” Bethune said. “But we do because it’s not right that these appraisals get to suddenly be so high, even if that’s not what the real value is.”
Since appraisal notices were sent out in mid-April, some commercial property owners have expressed frustrations about receiving appraisals they feel are unwarranted. Some residential property owners have expressed similar complaints, even saying they received increase notices despite having homes still damaged from Hurricane Harvey.
According to the Victoria Central Appraisal District, notices are sent to property owners if the value of their property has changed by $1,000 or more from the previous year. The appraised value of a property is meant to reflect the market value of the property as of Jan. 1 this year, according to the appraisal district.
For the Iroquois Building, in recent years, the annual appraisals have shot far beyond a $1,000 change. The property was appraised at $337,950 in 2016, the year that Vinco Investments purchased the building. In 2017, it was given an appraisal of about $300,000 to $400,000 higher, an “astronomical increase,” said Allyson Griffin, the company’s director of business development.
Vinco Investments protested the appraisal, and it was lowered to $545,000, the same price that the company purchased the building for.
The following year, the building’s value saw another major increase, about $200,000, Griffin said. After protesting, the value was brought down to $421,770.
This year was no different. The building received an appraisal of $736,980, and Bethune and Griffin said they would protest again.
Bethune said since the company purchased the property, it hasn’t made any improvements or made any notable changes. She thinks the way commercial properties are appraised is an unclear process.
“Just certainly the appraisals, and then the taxes, are way too high,” Bethune said. “It’s almost not feasible for people to maintain a building or make money as a landlord in this town.”
Vinco Investments owns other commercial properties, Griffin said, but the Iroquois Building is the only property where the company has protested its appraisal.
Kinsey McGrew, a senior tax consultant at Junek Consulting, said an accurate appraisal of a commercial property can determine the life of a business.
“Ultimately, a correct appraisal affects the success of a business because if they have to pay everything they have coming in to property taxes, the business won’t succeed,” she said. “It could mean whether they can thrive or whether they have to close their doors.”
Victoria Central Appraisal District’s Chief Appraiser John Haliburton said three methods can be used to determine the value of a property: cost, income or market/sales approach.
The first approach is based on the cost to build the same property, less depreciation based on factors such as the property’s age.
The second approach determines the value through analysis of income coming in to the property and takes into account factors that include expenses to the owner.
The third approach looks at sales of similar properties, but disclosing real estate sales prices isn’t required by law in Texas as it is in most other states. That fact and because commercial properties often vary more significantly than residential properties lead appraisers frequently to rely on the cost and incomes approaches when evaluating commercial properties, Haliburton said.
Still, Griffin said, she thinks the burden falls unfairly on the property owner.
“I don’t understand their means or their system because there are no downtown sales or changes to support our building’s value going up hundreds of thousands of dollars,” she said. “Why put the burden on the property owner to give you proof, to go, ‘No, no, no. This is what we’re making. This is what we’re losing. Take it back down.’ A property should be appraised for what it is actually worth, and it’s often not.”
From 2017 to 2018, net taxable appraised values for both commercial and residential properties decreased 4.36%, according to data from the city finance department. The decrease is mainly attributed to Hurricane Harvey.
Haliburton said there is no data regarding the average that commercial property appraisals changed this year. The average homeowner saw an 8% increase for their residential property this year, Haliburton said previously, though that number is likely to change after protests are complete.
The appraisal district has until July 25 to deliver the final tax roll to taxing districts in Victoria County, which includes the city, the county and the Victoria school district. The tax roll will affect how those districts determine their budgets and set their tax rates.
Griffin said she thinks increasing appraisals that have no merit are a problem not just for commercial property owners, but also for all people involved with the property.
The Iroquois Building has eight tenants, including larger operations such as The Law Office of Duane G. Crocker and Texas RioGrande Legal Aid, as well as smaller, “mom and pop” type businesses, including Danny Vivian Photography and Mint & Vine, a marketing, advertising and design agency.
“We can’t take the higher appraisals and taxes and pass that on to our tenants because they won’t be able to afford to stay,” Griffin said. “The city and the county need to realize, where else will they go? This puts property owners out of business and then businesses themselves.”
Louise Patillo, who owns multiple properties, including The PumpHouse Riverside Restaurant and Bar, 1201 W. Stayton Ave., said she thinks the property’s appraisals are always accurate.
Because the PumpHouse is unique, it’s understandable that it’s difficult to appraise it compared to other properties, so she doesn’t take any issues with the process, she said.
“As taxpayers, I feel like we’d all like to always pay less,” she said. “But as far as the process, I don’t feel that it’s unfair.”
When commercial property owners want to protest their appraisals, they are often at a disadvantage compared to residential property owners, McGrew, of Junek Consulting, said.
“The common issue with commercial properties is taxpayers don’t typically have the tools and understanding of appraisal methods,” she said. “Because there are different types and a lot of factors in play for commercial properties, it’s not as clear-cut as it is for residential homes.”
County Commissioner Kevin Janak, who serves on the board for the central appraisal district, said it is important that taxpayers be aware that the state dictates the laws and rules that the appraisers follow.
He said he knows “a lot of people aren’t always happy” after annual appraisals are received and encourages property owners to protest their appraisals if they think they are too high.
“That’s something that we do not want to lose sight of,” he said. “It’s very important that the employees at the central appraisal district are recognized for following the law and doing their jobs, and, equally so, it is the taxpayers’ duties and right to question appraisals if they seem out of the ordinary.”
Griffin said Vinco Investments would continue to protest the Iroquois Building’s appraisals, assuming the owners continue to see increases they think are out of line.
“If you do the research, nothing makes sense,” she said. “And at the end of the day, it doesn’t just affect the property owners, it affects a lot of people involved and needs to be correct.”