Paper: Houston Chronicle
Date: Fri 02/22/2008
Section: A
Page: 1
Edition: 3 STAR

By MIKE SNYDER
Staff

A city ordinance that places new restrictions on development in flood-prone areas known as floodways is likely to reduce taxable property values by hundreds of millions of dollars, Harris County's tax assessor-collector said Thursday.

The assessment by Paul Bettencourt is consistent with an analysis of Harris County Appraisal District data by a group of property owners opposed to the ordinance, adopted in 2006. In both cases, the projected reductions reflect the law's prohibition on building on vacant land in floodways, which the city had permitted under certain conditions since 1985.

"When you look at this with some really conservative numbers, it's several hundred million just for starters," Bettencourt said.

A value reduction of $250 million would reduce city tax revenues by $1.6 million, about half the cost of a police cadet class, based on the current tax rate of 64.375 cents per $100 value. The combined effect on the city, county and school districts would be about $6 million, Bettencourt said.

Andy Icken, a deputy city public works director who has overseen development and enforcement of the floodway ordinance, said he believes it will only affect vacant land and that its impact will diminish over time as bayou expansion projects shrink the floodways.

Jim Robinson, the appraisal district's chief appraiser, declined to speculate on the effects of the law.

The ordinance's impact on property values is not hard to understand, said Frank Lucco, a Houston property appraiser with 30 years of experience.

"Land only has value based on its utility," Lucco said. "If I have land where I could build a high-rise, and the next day the only thing I can do with it is graze cattle, you've gone from maybe $50 a square foot to 50 cents a square foot."

Risks of storm runoff

The City Council adopted the ordinance Aug. 30, 2006, after city engineers concluded that the cumulative effects of 21 years of construction in floodways had raised flood risks.

The city banned new construction in floodways prior to 1985 but changed its rules that year to allow owners to build if they submitted an engineer's certification that the building would raise flood levels by only a tiny amount.

Floodways are regulatory zones designated to carry storm runoff rapidly along bayous and streams into the Houston Ship Channel and ultimately the Gulf of Mexico. The floodways' boundaries are defined by mathematical formulas applied to adjacent flood plains - broader swaths of land that store water from floods and are identified by measuring their elevation.

After the ordinance took effect in October 2006, private appraisals showed dramatic declines in the values of some properties in floodways, and owners began peppering City Hall with telephone calls and

e-mails as they faced the prospect that their largest asset might lose much of its value.

Private appraisals a clue

The appraisal district, which establishes property values for tax purposes, did not factor the ordinance into its appraisals last year but intends to do so this year, Robinson said.

Robinson and Bettencourt met with Icken on Thursday to discuss the ordinance and its potential impact on taxable property values.

The appraisal district expects to establish preliminary 2008 values, subject to owners' appeals, for most properties by mid-March, Robinson said. Values for properties in floodways, however, will be delayed for about a month to allow the district time to take the ordinance into account.

Some clues about the law's impact, however, are available from private appraisals and appeals of tax appraisals last year.

The appraisal district initially appraised two vacant lots in the White Oak Bayou floodway owned by Bruce Norcini, an oil company engineer, at $71,050 and $70,775. After Norcini appealed based on the fact that the properties were no longer available for development, the Appraisal Review Board reduced the values to $4,150 each - a drop of more than 90 percent.

Norcini, who provided the appraisals to the Chronicle, is one of five property owners who have sued the city challenging the floodway ordinance. None of the cases has come to trial.

Interpreting the law

The law's effect on developed properties in floodways is less clear.

Icken said it would have no impact on existing homes or commercial buildings, since officials are interpreting the law to allow reconstruction if steps are taken to improve conveyance of water, such as putting a home on a pier-and-beam foundation rather than a slab.

But Lucco maintained that future administrations might interpret the law differently and said his own experience in dealing with the city shows that different officials seem to have different understandings of what the law allows. This uncertainty, he said, could make potential buyers leery, which in turn would reduce values.

"If you had your choice to buy two properties, one that had this issue and one that didn't, why would you choose to buy the one that had this issue?" Lucco asked.

A change in the numbers

The city's estimates of the number of properties affected by the ordinance also appear to be in flux.

At a meeting of a City Council committee last September, Icken said 9,920 properties were affected: 2,373 single-family houses, 3,562 vacant properties and 3,985 other properties.

During Thursday's meeting, Bettencourt said, Icken said that about 7,000 properties, including 2,200 vacant lots, were affected. Icken could not be reached Thursday to explain why the numbers changed.

To test the impact of the ordinance, residents of an affected neighborhood in northwest Houston obtained appraisal district records showing that 1,548 vacant lots in floodways had an average value of $110,000 last year. Applying the 94 percent reduction in Norcini's vacant lots' value after his appeal would yield a value loss of about $103,000 for each lot.

If this were true for each of the 2,200 vacant lots the city now says are in the floodway, the total value loss would be $226.6 million - close to Bettencourt's estimate of $250 million, which he described as extremely conservative.

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