Blog Archives

A little budget review.

8/28/2016

Folks, the below language is copied straight from the City Manager’s report to the Mayor and City Council in the Budget Presentation on the City’s webpage. Please review, then check my arithmetic at the end.
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........"Finally, it will require the City to strategically prioritize between addressing unmet capital infrastructure needs (i.e. streets and alleys) versus providing enhanced or additional amenities (i.e. median improvements, parks, and facilities) versus reducing the tax rate, thus requiring a significant political discussion and consensus building within the community. This was true last year and remains true today.

THE GOOD NEWS!

Due to this growth, the FY2017 Proposed Budget includes a recommendation to lower the property tax rate by one cent, from $0.787173 to $0.777173 per $100 in assessed valuation.

As indicated previously, future reductions will need to be strategically weighed between capital infrastructure needs and enhanced or additional public amenities. Rowlett is fortunate that it is in the position to address the property tax rate at this time.

Why is this the right year to reduce the tax rate? Even with a 9.6% increase in assessed valuation, last year was not the right year to reduce the tax rate. We needed to reach the point where we can fund approximately $10.5 million annually for streets and alleys and we needed time to have some of the new development hit the tax rolls. However, FY2017 is a good place in our history to make the first cut in the tax rate. We expect to receive another 9.7% increase in assessed tax values “and” many of the projects that were about to start last year have now started and are going vertical. This is the right year to have this conversation!".........
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There is an easier way to say all the above. Essentially, it asks the question, "Do we want it all now, or slow it down a little bit and don't hit the taxpayers so hard so quick?" I guess you have to give the taxpayers something, no matter how small. Key words in the City Manager's report to the council was "significant political discussion and consensus building within the community." Well, I guess I'm writing about "consensus building." It's kinda hard to build "consensus" with the following numbers.

My arithmetic:

Per the above, in 2016 the tax per dollar (as determined by the increase in real estate values) increased 9.6 cents per dollar. It is anticipated that 2017 values will increase by 9.7% , or 9.7 cents per dollar.

So……..2016…………….9.6 cents per $100
………...2017…………….9.7 cents per $100
Two year total……..19.3 cents per $100

But, the city is lowering the tax rate by $0.01 per $100 for 2017.

So……in two years, the city is receiving $0.183 per $100 in evaluation, and the taxpayer avoids another $0.01 in their tax bill in 2017 with a tax rate reduction of one cent. The City of Rowlett is receiving 18 times more of the new values than the taxpayer.

Now folks, I know the city has to replace some reserves. I’m not that thick headed. But, things seem to be a little lopsided. I don’t remember any time in my life that I got a 9.5% raise two years in a row. I don’t think I know anyone else that has, either.

Looking at it another way, If your house was worth $200,000 in 2015, your city tax rate would have been $0.787173 per $100, or a $1,574.35 tax bill for your house. In 2017, your house would have increased in value by:
2016…….$200,000 x 9.6%=     $219,200.00
2017…….$219,200 x 9.7%=      $240,462.4
                                 19.3%
But, the city is lowering the tax rate by only $0.01 per $100 of valuation. Therefore, the new rate of $0.777183 applied to the new evaluation of $240,462.40 would be a $1,868.80 tax bill. That is an increase of $294.45.

It’s pretty safe to say that if you owned a $200K house two years ago, your taxes over the past two years will have gone up about $300.00. Reducing the tax rate by one cent saves the tax payer about $24. This is just plain stingy, Folks, and a windfall for the city.

As for new revenue from newly developing properties, it all depends on how much tax abatement was given away. For example, The Villages, down by City Hall, has a 15 year tax abatement. They won't be contributing much for a while. In fact, the taxpayer will pay for additional fire and police protection for The Villages.

Brian Funderbunk, City Manager, is one of the best numbers men I know. I would prefer some straight and specific talk about what we're going to buy with an additional 18% tax raise rather than vague language that doesn't say much. I would like to hear a mid-range plan for the restoration of Rowlett's economic health for the next two years. I don't want a plan for the day to day activities. I don't need that. I want a plan that specifically sets out our use of funds derived from this new value. The new revenue is being generated because we're in a part of the country that's enjoying a very fast growing economy. I want to know how much we're going to collect over normal inflation, and how we're going to use it. I also want to know how much the new development will be contributing..........say everything after 2015. If we have given it all away from tax abatement grants, the taxpayer is going to continue to be nailed.

There is no doubt in my mind that if the tax rate was doubled, someone would figure out how to spend it all.

Brian Funderbunk, City Manager, is a good guy. You need to tell him and City Council how you feel. Now, you gotta be fair. We need financial stability to keep our excellent bond rating.

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Turning a page in Rowlett's history

8/26/2016

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In the night sky, there is beginning to assemble a most desirable alignment of the stars. I can see them coming together and shining favorably on Rowlett. Furthermore, it involves my love of sailing. I couldn't be happier. After love of family, friends, and career, Rowlett and sailing are the next two "good things" up on my "good thing" list. I want to offer my "take" on this new heavenly phenomena.

You should by now have begun to see advertisements on a Bayside Regatta, to be held on Lake Ray Hubbard. A regatta usually means a sailboat race. It does in this case.

Folks, there's a lot going on here besides a sailboat race.   Rowlett's future is also significantly effected by this cosmic event. A little history is in order.

Three events substantially effecting Rowlett have happened over the past three years. One is the arrival of DART. Another is the arrival of Bush Tollway. More recently, the old Robertson Park became Bayside, and was annexed into Rowlett. Bayside could develop into
$1 BILLION of real estate development, thus adding considerably to Rowlett' tax base. These are critical stars in the above mentioned constellation.   All are good for Rowlett.

On the negative side, Rowlett and parts of Garland suffered a disastrous tornado. In Rowlett, 1100 homes were damaged and nearly 400 were totally destroyed. The tornado caused untold amounts of grief, hardship, and loss. However, the tornado revealed a heretofore hidden asset of North Texas. The character of our people was already at work while the sound of the funnel was still being heard. The funnel missed our house by 300 feet.   I could hear the sirens of the first respondents while I could still hear the awful noise of the tornado moving off to the northeast. Not only did our police and firemen respond spectacularly, neighboring towns and cities sent help immediately. There didn't seem to be any meetings. Things just started happening. This event also became a star in the above constellation. It demonstrated the will and character of not only Rowlett residents, but all nearby towns of North Texas. Rowlett received national attention stemming from the tornado event. We are proud to be from Rowlett, Texas.

So, the stage is now set.

A couple of months ago, a sailing friend approached me. His name is Ron Surley and he is a consummate sailor. I'm a pretty good sailor, but I believe Ron is a little better. Anyhow, Ron asked me if the City of Rowlett would be interested in sponsoring a Regatta.   I didn't know, but I thought it would be a great idea. I used to compete in a Regatta called "The Cancer Regatta" whereby all net proceeds were donated to the Cancer Society. I knew a lot of funding was needed for tornado victims. It was an easy decision to propose donating all net proceeds to tornado victims. Ron didn't know Rowlett "officialdom," but I did.   I set up the meeting with the mayor, Todd, and the City Manager, Brian. They loved the idea and quickly supported taking the next step. The Rowlett Chamber of Commerce was a very important part of our equation. It was important they were aboard. They are experienced in conducting bazaars, gatherings, events, etc. So........if Ron Surley was to organize the "on the water" sailing event, and the Chamber was to organize the "solid ground" events, we could have the beginnings of a happening.   The Chamber didn't even think. They joined up immediately. To energize everyone's plans, Kent Donahue, developer of Bayside, leaped into the efforts and donated use of land at Bayside and $10,000 for start up funding. Those funds will go toward the advertising and general organizing of the event. Kent's signing up for the program put fuel into Bayside's entry into Rowlett. Kent has been to the meetings and has already become a great corporate citizen of Rowlett.

I knew things were coming together, but it came home when I went to a meeting about the Regatta on Wednesday afternoon, August 24. The people present were downright impressive. Kent Donahue and a couple of associates were there. Rowlett's Police Chief, Fire Chief and Fire Marshall were all there, along with other members of their staff. Diane Lemmons, President of the Chamber of Commerce, and some of her staff were present. I can not emphasize enough the help that Diane and her Chamber is contributing to this endeavor. It is outstanding. The sailing community was represented by Ron Surley, Bob Barnes, and myself. There were 12-14 people standing in the middle of the road at the south end of Bayside in the hot sun hashing out details of the proposed Regatta and shore side events. I was struck by the "can do" attitude and the complete cooperation of the various entities.    One amusing thought came to mind. There was not one politician present. Everyone there was someone who make things work. No pomp and circumstance. Everyone there was good at what they do, and they know how to do it. Politicians just get in the way. I am now confident this will be a grand event.

All the above is about a sailboat race. However, my opening comments said a lot more than a sailboat race was going on.

If all goes as planned, this event will become an annual event, with perhaps different charities over the years receiving the benefits. This will become an introduction of Bayside to North Texas. The importance of Bayside to Rowlett is enormous. Rowlett will, once again, leap into the news. People all over North Texas will investigate what all the hubbub is about. Rowlett will be seen as a waterfront community, a most desirable real estate feature, and that is special in the North Texas area. Visitors will learn that, from Rowlett, you can take a train to athletic events, the airport, and employment centers all over the DFW area. Also, there is an Interstate Highway going right thru Bayside and a Tollway going right thru the middle of Rowlett. We have 23 miles of shoreline on Lake Ray Hubbard, a 23,000 acre lake.

You need to know all this because your personal net worth will benefit from increased value of your home if this event meets, or exceeds expectations. Rowlett will become a most desirable place to live. Real estate taxes should go down, and you will be proud of Rowlett. In the course of events, you might become a sailor, and there are worse things than that.

When taken in total, all the above is a complete re-branding of Rowlett. Rowlett will no longer be a little known backwater suburb of Dallas. Rowlett will become truly one of the great places to live in the Metroplex.

This is a win-win event. You must support the Regatta. Tell all your friends about it.    Especially tell your friends that live outside Rowlett. The members of the Chamber deserve your support. Let people discover what we have in Rowlett. Business leaders are not exempt. They need to see what Rowlett and Bayside have to offer.

The Regatta is October 1. Be there. A lot of good things happen if you are.

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Apartments in the eyes of others

8/20/2016

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A few days ago, a very interesting question was posed to the local Facebook club.   The question was simple. It simply asked what the readers thought of apartments.   My goodness, you would have thought someone left the gate open. I didn't read them all because there were simply too many responses.

I can say that many were against apartments........just because. Some suggested that apartment dwellers were of less character than home owners. Of course, that's poppy cock. There are many, many reasons why some people prefer renting. Believe me folks, I have been in apartment projects that I could never afford to live in.   Some responses were offered with apparent thought behind them. Some were just emotional knee jerks.

However, no one said anything about the people that have the most risk to lose money. That would be the lenders. Do you think they deliver bundles of cash just for the simple asking?   Often, the research of the lenders prevent developers and cities from making serious mistakes.

An apartment project with approximately 200 units would cost between $20 million and $25 million, depending on land cost and amenity package. These apartments are not built out of petty cash. Developers must seek financing for these projects.

The very first question any lender asks is, "How do I get paid back?" The lender then researches the capability and credit support of the applicant. The marketplace in which the apartments are to be built is studied. This would include the existing inventory of apartments, the rent costs and the income of the area. Then, how big an area? Is it only the town of the project, or is it much broader. A very high dollar project in Dallas, or any major city in the South, might have a market all the way to Kansas City, Chicago, St. Louis, etc. It gets cold up there and many of the wealthier Americans might prefer a place in the south, particularly after retirement. We need affordable apartments for seniors, who often have to live on Social Security and modest savings.   There are many needs in the rental business. Some are amply filled. Some are not.

Lenders know all this. They try to take all into consideration before approving a loan to build any apartments. They absolutely don't want the project to fail. If it fails, they lose their customer's, or their own, money.

The lenders will not approve anything just because someone wants to do it. That includes cities. In fact, the very first question our City Council should ask is, "Do you have a lender expressing interest in your project?" If they don't, Council should tell them to come back when they have an interested lender.

This will probably save time.

In at least one deal the Council approved, apparently a restaurant developer couldn't get financing for three restaurants when the land was free. This one was probably not ready for City Council.

Apartments require a lot of study. It's best if you know what you're doing.

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As we learn more.......

8/18/2016

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I am now convinced that we should make all Olympic athletes take an IQ test before being allowed to leave the country.

Can you imagine how much money in endorsements a certain four US swimmers lost for their stupidity in Rio?

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August 15th, 2016

8/15/2016

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I owe you all an apology. I have been receiving some comments that I did not know about or responded to. I used to always get an email when someone commented. Something was changed by my provider and I either missed it or was not informed. The email notification stopped. I just discovered by accident that I had 6 comments. All were approved and are now on the blog site. I also answered three.

Sorry.

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Taxes, taxes n taxes.

8/14/2016

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Well, everybody should be settling into the fact that their home's tax appraisal has gone up on the average of 9-10%. That's good and bad. That means, if you have a $200K house, the value of your home has probably increased $18-20K. Your balance sheet just increased by that amount. On the other hand, there could be some bad in that news.

With the above increase in value, and no decrease in the tax rate, your real estate taxes will go up 9-10%. If you have been paying $1400 per year, your taxes would increase by $120-$140 per year. That is giving all your taxing authorities a 10% raise. The question then becomes, "Do they need it?"

Let's isolate Rowlett. If the city's budget remained exactly the same, there should be a 10% reduction in the tax rate. Folks, that ain't gonna happen. In recent years, there has been some shell games going on to get money where it's needed. Many reserves have been spent. These funds need to be replaced. Also, the tornado created some costs that no one anticipated. We'll get some federal government help, but not enough to cover all costs from the tornado. So, it's reasonable to assume that city taxes will go up some. Then, the question is, "How much?"

I don't want to get off in the weeds here about expenditures. Also, I don't want the city to run on a shoestring. But, neither do I want the city to spend foolishly because they got a windfall.

I think we ought to share in the increased good fortune of increasing home values by splitting the difference. I think the city should get half of the new revenue created by increasing values, and the tax payer should get tax burden relief by half of the presumptive new tax revenue.

The tax rate should be cut by 5%.

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Bayside

8/10/2016

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I attended a Chamber of Commerce luncheon today. The main event was a presentation of Kent Donahue, developer of Bayside. I have met Kent a couple of times. He's a good fellow.

Kent described where he is, and where he's going in converting Robertson Park into a development called Bayside.

Folks, I've been around some pretty fancy real estate development over the past 50 years. Nothing I have been around equals the grandeur of what Kent Donahue is planning for Bayside. It includes an 8 acre clear water pool, magnificent water fountain displays, very upscale housing, resort hotel, apartments, marina, upscale and casual restaurants, offices, and a spectacular bridge and entrance to the development. There are probably many things too numerous to mention.

If reality and dreams come together, and I think they will, Bayside will completely "re-brand" Rowlett. Rowlett will no longer be a backwater of Dallas area suburbs. Maybe a little different than Frisco and Plano, but not less noticeable. I have high hopes for Rowlett, and I think it just might be possible.

Kent Donahue is the perfect developer for this endeavor. He is not flashy or showy. He's down to earth and quietly confident. There's a huge difference between confident and "showy." Showy gets the headlines. Confidence gets the job done. I like the ones that know how to make something work.

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Whew......

8/10/2016

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I just got back from a trip to Indiana. I attended a high school reunion. Boy!! Talk about a trip down memory lane. I have lived in Texas for 51 years.

Interestingly, because of the Internet, email, Facebook, and cell phones, keeping in touch isn't near as difficult as it used to be. I once went for a period of about 30 years without any contact at all with old classmates. We came from a small town and opportunities lay elsewhere. We scattered to the winds.

Then, along came computers, email, Facebook, and cell phones and voice mail. Slowly, we began to rekindle relationships. We're probably nearly as close now as we ever were. We just don't see each other as often as we once did. I now communicate on a fairly regular basis with people that were classmates as we attended kindergarten.

Anyhow, it was great fun. I, once again, became cozy with my favorite food, the very Hoosier, breaded tenderloin sandwich. They are dinner plate size. The rather old fashioned mashed potatoes and gravy were still as creamy as I remembered them. They are not like mortar joint compound.

We visited the Tippecanoe Battlegrounds. where the Prophet, brother of Tecumseh, was defeated. That fight got President Tyler elected. We also visited the graves of my great, great, great, great grandpa and grandma. Grandpa fought in the War of 1812 and died in 1837. He carved his farm out of the woods. We visited the site of one of the few remaining covered bridges in Indiana. I wanted to get down to the IU campus in Bloomington, Indiana, but we just ran out of time.

The corn is unbelievably high. It is only August and it is 10-12' high. The ears have already set on, but the silks haven't turned yet.......soon, tho. It will be a bumper crop, baring any unsavory weather. We followed Wildcat Creek and it's thick woods all over the place and crossed the Wabash River a few times. The words to "Back Home Again in Indiana" began to come to mind. Seeing "candlelight through the Sycamores" could have been a reality.

Of course, I have lived in Texas for 50 years, now. I am truly a Texan. However, a very important part of my life is still a welcome visit, from time to time. After college, I headed West, as the man said, and sought adventure.

It's been a good ride.

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