BY BRANDI SMITH

The tale goes that Collin McKinney was given the pen he used to sign the Texas Declaration of Independence. At 70, he was the oldest member of the Convention of 1836 at Washington-on-the-Brazos. McKinney’s true pioneer story started long before the convention, but it ends right where ours begins: in Van Alstyne, Texas.

“You have a lot of history here”

The town, which now boasts a population of more than 3,000, had very humble beginnings. It truly began with a community called Mantua, located just a few miles southwest of what is now Van Alstyne. Mantua had been founded in 1854 as a site for a seminary. The school set the tone for the town; gambling, horse racing and liquor sales were all prohibited.

Within a couple years, Mantua’s population grew to roughly 300. But when Houston & Central Railroad came calling in 1872, asking for $1,000 to put a railroad through the town, the rail company was denied. Instead, it purchased neighboring property located in Van Alstyne, named for Maria Van Alstyne, the widow of the railroad’s treasurer and stockholder, William Van Alstyne.

The rail line helped the fledgling city swell in population, eventually drawing the people, businesses and even the First Christian Church – the oldest in Texas – from Mantua. This is where Collin McKinney, namesake of Texas’ Collin County and McKinney, its county seat, was laid to rest.

“You have a lot of history here that is a part of Texas,” said Randy Uselton, president of the Van Alstyne Economic Development Corporation.

“We’re planning before it’s time to build”

Now nearly 150 years in, a lot has changed in what was once a rural community, located 50 miles north of Texas’ second-largest city.

“Dallas is moving this way. We’re not going to be able to stop it,” Uselton said. “U.S. 75 is already set up to come all the way to Van Alstyne and be widened. We know it’s coming.”

Van Alstyne leaders had the foresight to plan for the eventuality that Dallas’ sprawl would stretch that far north.

“The city has been forward looking for generations and thus we have planned ahead for the growth that is coming our way,” said Bill Benton, whose family established its real estate company, Benton Luttrell, just 17 years after Van Alstyne was established.

Planning for future growth included maintaining what makes the community a destination for residents and businesses. The city aimed to preserve its historic downtown while offering opportunity for development in designated areas.

“The city council did a really good job of laying out the city and setting areas that are for industrial or for commercial,” Uselton said. “We’re planning before it’s time to build.”

That forward-thinking approach is what drew city manager Frank Baker to Van Alstyne in 2012.

“I saw the potential to influence change in a community that’s rich in history and on the edge of the urban sprawl,” he said.

Since he came on board nearly four years ago, Baker said he’s focused on identifying deficiencies in resources and services, including utilities, infrastructure, roads and drainage. The city’s also working to update walking trails and park playground equipment.

Van Alstyne is also in the process of increasing its water system capacity, installing larger water mains on the west side of U.S. 75. It’s working on a similar project for the sewer system and is also updating the Wastewater Treatment Plant.

The primary focus, though, is always on managing growth.

“We’re doing that through direct discussions with property owners and developers to discuss their specific ideas,” Baker said. “Those ideas are compared with the community development plans, the city’s design manual and subdivision regulations. If those ideas complement the adopted plans, we work towards making the ideas reality.”

“I sit down and listen”

Van Alstyne’s EDC, founded in 1996, plays a principal role in helping build the future in this historic town, specifically in enticing new businesses to move and convincing existing businesses to stay.

The two-pronged approach begins by reaching out to interested parties with an information-packed brochure highlighting the history and future of Van Alstyne.

“We’re ready for companies to come in and be a part of our community,” Uselton said. “We don’t want them to come in and set up just because we have land. We want them to say, ‘Y’all are easy to work with, so we’re going to come there.’”

Once a business has settled in Van Alstyne, the next challenge is keeping it. That’s where the EDC’s Business Retention Program comes in.

“What I do at my job is I sit down and listen to people: what do they need? How can we help them? Then we bring programs to them in a way that personalizes it for that company that they can stay,” said Uselton.

He illustrated his point by sharing a recent conversation with a Van Alstyne-based business that had outgrown its building.

“We worked with them to get them in a position to stay in the area,” Uselton said. “They’re going to put up a new building, new offices and a new warehouse.”

It’s clear many companies – big and small – have made the choice to stay in Van Alstyne. Texas Star Bank, Benton-Luttrell-Brown Insurance & Real Estate, City Drug Company, the Van Alstyne Leader and Van Alstyne Hardware Company have all been in operation for more than 100 years. Others, such as GCEC Electric & Telecom and Foxworth Galbraith, may not have been there quite as long, but the jobs they’ve created have had a significant economic impact on the community.

“These businesses come to town and they don’t want to leave because they have good employees and a good quality of life,” said Uselton.

“It’s an asset for the community”

Another fairly new addition to the historic town is Grayson County College – South Campus. Built in 2005, it’s already added a new building to keep up with demand and Grayson’s president said there could be more expansion in the not-too-distant future.

“The South campus is definitely on the radar for more buildings and different outreach opportunities,” said Dr. Kim Williams.

The college provides another draw for businesses considering relocating to Van Alstyne: a skilled workforce. Students are able to earn Associate degrees in a variety of fields, including welding, electrical technology and medical laboratory technology. They’re also able to get their vocational nursing certificate.

Already serving approximately 500 students each term, Dr. Williams predicts Grayson’s south campus population will grow right along with the city.

“I think we all work well together. I do think it’s an asset for the community to have something like this in a town this size,” she said.

“A can-do attitude is contagious”

On Van Alstyne’s horizon both literally and figuratively is a massive project sure to have a substantial impact. Called Mantua, the 3,017-acre development stretches from Van Alstyne into neighboring Anna.

“When fully developed, Mantua will be among the largest developments in the DFW region,” said Benton, the developer whose family started its business in Van Alstyne three generations ago. “Its most intriguing attribute is the reality that Mantua will have the most freeway frontage, access and commercial potential of any mixed-use planned community development in North Texas.”

The project, which spans nearly 5 square miles, hasn’t started construction yet. Benton said that will be determined by “the continued march of development north on U.S. 75 and the owner’s timing.”

However, as it develops, Mantua will have an increasingly dramatic and positive influence on Van Alstyne and Anna, Benton predicted.

“It will do that by stimulating a stronger mix of land uses, property values and related revenue opportunities,” he said. “Location is key, but the history and culture of our community that has a can-do attitude is contagious.”

The city is also eyeing other opportunities for development, having recently annexed 380 acres for mixed use.

“We have retail and commercial identified along the thoroughfare corridors. Further into the property, there will be single-family and two-family homes,” Baker said.

Meantime, D.R. Horton and Stonehollow Homes are working on a multi-phase subdivision called Georgetown, while Circle Plat Homes is redeveloping lots in some of the city’s more historic areas.

Baker highlighted a variety of other new additions to Van Alstyne’s business community, including O’Reilly Auto Parts, Golden Chick and Palladium USA International. Even more is on its way.

“I believe we’re one of the finalists for the distribution center to be put in our area that will service Dallas,” Uselton said. “Hopefully we’ll have some finalization on that in the near future.”

“The potential here is great”

Amidst the growth and changing landscape within Van Alstyne, leaders there understand the value of maintaining its quality of life.

“People are seeing that Van Alstyne is a beautiful town,” said Uselton. “I can see the stars at night here, but in fifteen minutes I’m into Dallas.”

Along with its beauty, history and key location come endless recreational opportunities and a lauded school system.

“I think the potential here is great,” said Dr. Williams.

Added Baker: “Van Alstyne, Texas is one of the best places in this nation to work, live and play.”

10 Notable Women in Commercial Real Estate [Llenrock Blog]

Richardson cookie company planning 50 new stores this year [Dallas Business Journal]

Construction to begin on new Allen alternative office complex [Dallas Business Journal]

Robert Shaw’s Columbus Realty teams up with McKinney to develop former courthouse site [Dallas Business Journal]

Why Facebook expanded its Fort Worth land holdings near its $1B data center   [Dallas Business Journal]

By Ray Hankamer for REDNews

 

Takeaway: While supply and demand in oil and gas seeks equilibrium, the various commercial real estate segments will adjust according to their own, different cycles.

 

Daily supply of crude oil only exceeds demand by about one per cent, and demand worldwide is growing at approximate one per cent per year-so the balance is not far off; however, only one per cent imbalance was enough to send prices plummeting from $100 to $30!

Worldwide supply has been stable for last few years and is slightly declining due to aging infrastructure and political situations in producer countries other than the US

Supply growth has been almost exclusively in the US, where “the spigot can be turned on and off quickly” in response to market forces

Shale production takes huge capital outlays during drilling and ongoing throughout the life of the well, creating lots of work for oilfield supply companies

Capital outlays have come mostly from private equity and lender services, less from banks-so “the banks are not in trouble” overall

Shale oil production got started 2009-2012 and really built momentum, zooming up in 2013-2015 causing present oversupply

With all the boom in shale oil, the US still imports about 40% of its needs, so relations with countries like Saudi Arabia are still vital to us-our exports of oil are tiny in the overall equation and it is a question of exporting certain grades to certain offshore refineries

Rig count at all-time low of 600, going to 500-this is from peak of 2,200 rigs-this represents huge hit to service companies in the Oil Patch

The “fix” to the supply/demand imbalance is already well underway, and by the end of this year prices around $60 per barrel are predicted, going to $70 in 2017…but, “this could be wrong”

Asian economies are continuing to grow and transportation and demand for fuel is growing too

Iran production will not be a big factor, but it has been a scare factor to the market

“Falling demand for petroleum products” in Asian countries means only that demand there will grow at 15% per year and not 18%, so not a consequential negative

Shale oil wells deplete 30-40% each year from the previous year, unlike conventional wells, so new drilling must continue for overall production to stay even

Demand worldwide for Liquified Natural Gas continues to grow and exports will increase

Pipelines cost half as much as rail to ship petroleum products and with lots of pipelines under construction, most basins in US will be “overpiped” by 2016

Some pipelines are being built to export natural gas to Mexico, but Pemex is experiencing managerial and financial weakness on its end, delaying progress

Office Market: vacancies rising in sub-markets where O&G layoffs are happening, and lots of sub-lease space is coming on market, putting downward pressure on rates

Hotel Market: starting to see weakness as supply of rooms catches up, just as demand from O&G business travel slacks off

Retail Market: still strong and playing catch-up; some regional malls being renovated/reconcepted

Industrial Market: still strong with vacancies up only from 4 to 5%

Multi Family:  WAY overbuilt, and net absorption at zero with almost 30,000 units still under construction-ouch!

Single Family: still only about 3.5 months inventory in re-sale market; demand for new homes and lots remains good

Construction prices still high and contractors still have backlogs

Positive job growth in Houston predicted this year in the 21,000 range-as high salaried O&G jobs shrink, lower pay hospitality and leisure and government and medical and education job openings will grow

 

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By Ray Hankamer for REDNews, January 2016

Takeaway/Summary:  Houston office market will suffer extreme weakness in those submarkets depending on the Energy Sector: The Energy Corridor, Greenspoint, Westchase, & The Woodlands.  Less pain in the CBD, but still some, and some in the Galleria.  Oil prices should be in the $60-62 range by end of 2016, but will have to stabilize for a period of many months before any new hiring by oil companies.  Mergers & acquisitions and bankruptcies will continue to throw sub-lease space into an already glutted market in these submarkets.

Oil traders, not refineries or end-users, establish the price of a barrel of oil

Supply is falling off dramatically as it becomes un-economic to produce, but demand, while slowing a little, continues to grow worldwide

China’s middle class is burgeoning and vehicle ownership will create ongoing rising demand into the foreseeable future

US has become the world’s swing producer, replacing OPEC in years past; US is very nimble in responding to market forces and can turn the spigot on or off more efficiently than many other producer countries

Some countries whose production costs are high will cease producing altogether, while American engineers are resourceful and will continue lowering the cost of bringing a barrel to market

Offshore is more expensive and development there takes a very long time; it will be the last to resume exploration after prices stabilize

For tenants, now is the time to move up to quality and to lock in long-term deals at lower rates

For landlords, lead the market down by being pro-active to get / keep the best tenants; don’t ‘follow the market down’

Energy Corridor office has 17% vacancy including sub-lease and it may be 35% by end of the year

Houston is where the core employees of the worldwide oil and gas industry are working and they are far less likely to be laid off than blue collar or other employees in far-flung branch locations

“2018” should be a super year for Houston-ongoing from there will be ups and downs but nothing so dramatic as we have experienced recently

 

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BY BRANDI SMITH

The month of January provides an opportunity to reflect on the year that was, look ahead at the year that could be and, without fail, take a punch to the gut when you open your property tax notice. Over the past few years, residential and commercial property owners in Texas have watched the amount they owe steadily increase.

“Property taxes, if you look at opinion polls, are probably one of the least popular taxes around and part of the reason is that they’re paid in a lump sum,” said Jim Popp, managing partner of Popp Hutcheson PLLC, which bills itself as “The Property Tax Firm.”

Texas is one of just nine states without a personal income tax, a benefit for its residents to be sure. However, that shifts the burden of state and municipal revenue to sales and property taxes. In fact, property tax is the largest tax assessed in Texas, generating more than $45 billion dollars for taxing units in 2013, the most recent year full data is available.

The Texas Comptroller, in its 2012 report Your Money and the Taxing Facts, reported that property taxes outgrew population by a nearly 5 to 1 margin between 1992 and 2010. The revenue shot up so much in that time that it’s now almost twice that of the second-largest tax: sales.

Texas Property Tax – By the Numbers    

The most recent complete data from the Texas Comptroller reveals that nearly half the taxes generated in Texas come from property owners.

 

“Sales taxes can vary dramatically based on the economy from year to year,” said John Hightower, partner at Olson & Olson. “Sales taxes will go up and down, but property taxes are much more consistent, much more dependable.”

According to analytics site WalletHub, the average Texan pays $3,327 in property taxes, the 6th highest rate in the country. Compare that to the national average of $2,089 or the averages of our neighboring states, such as Arkansas ($1,068), Louisiana ($832), Oklahoma ($1,499) or New Mexico ($1,249).

Voters in the Lone Star State made it known in November 2015 that they were fed up with the rising taxes, buoying Proposition 1 with 86 percent support.

Some critics of the state’s property tax system, including Senator Paul Bettencourt, label it “riddled with inconsistencies.” Bettencourt, who is CEO of Bettencourt Tax Advisors and former Harris County Tax Assessor-Collector, is chairing the governor-appointed Select Committee on Property Tax and Relief.

In our January issue, Bettencourt told REDNews, “We’re looking to make tax rates and appraisals more consistent across the state.”

However, Popp, who primarily represents commercial property owners in their fight against appraisal districts, defends how Texas does business.

“The system is really not broken. We have probably the most fair, accountable and transparent property tax system, I think, in the United States,” insisted Popp. “I’ve drafted and pushed to passage about 50 changes to the property tax law in the past three [legislative] sessions and I’m always trying to fine tune it.”

To understand how property taxation in Texas works, one must examine its two sides: the property value set by appraisal districts and the tax rate set by local jurisdictions.

According to the Texas Comptroller, “an appraisal district in each county sets the value of taxable property each year.” It does so by assessing properties at least once every three years. That means that on January 1, the 254 districts in Texas are required to set a market value for each of the parcels within their boundaries. They typically do this through a series of mass appraisals.

“It’s very expensive as it is to do a mass appraisal on that many properties, but if you sat down and hired an individual appraiser to do an individual appraisal on each piece of property, it would cost a phenomenal amount of money,” Hightower explained. “In some cases, the cost of appraisal would exceed the amount of taxes that would be generated from the property.”

As with any process completed in bulk, Hightower said some compromises must be made.

“The process of appraising property is not an exact science,” said Hightower. “People who have looked into the issue recognize that the margin of error is something like 10 percent to 15 percent.”

Even so, Hightower argued against changing the educational process for appraisers: “There are very stringent training requirements currently and the science of doing mass appraisal is pretty well developed.”

Popp agreed: “Our chief appraisers are doing an admirable job and I think generally they’re doing a real service to the taxpayers.”

Once a value has been set and the notice mailed, the property owner has choice of paying the bill or contesting it. The latter decision, depending on which district issued the notice likely first results in an informal meeting with staff.

“Then if I’m not happy with the results, I would appear before a three-member panel of the appraisal review board,” explained Hightower, who defends districts when the dispute escalates to a lawsuit.

“We only represent local government, we have since we were created 40 years ago,” he said, referring to the firm of Olson & Olson.

A marginal number of cases make it to court. Using Harris County as an example, of the more than 1.6 million properties that are taxed each year, just a few dozen will make it to trial.

“When I talk to the Legislature, I tell them, ‘Look, if you were only completely wrong 25 times out of a million floating decisions, I think you’re doing pretty darn good,” Popp said.

Despite Hightower often being on the other side of a case from Popp, the two seem to agree that though this first branch of property taxation receives the most complaints, that is typically to blame not on appraisal districts, but on the local jurisdictions that set the tax rate.

“People complain about the values rising on their commercial property, but they’re really complaining about the increase in taxes as a result of the value rising on their commercial property,” said Popp.

His approach to solving the issue is at odds with Hightower; Popp suggests reining in the local agencies that set the rates, whereas Hightower emphatically supports local control of those rates.

“I think some of the focus is on how do we find ways to control, limit or watch growth in government spending?” Popp said. “The problem is that many of the homeowners out there don’t understand that the increase in their value is not the direct result of their taxes; what’s happened is values go up, but taxing units leave rates the same. The result is: they get more revenue.”

“Property taxes are a big part of the revenue of cities,” said Hightower. “They have money from property taxes, sales taxes, franchise fees and user fees, but the most dependable and substantial source of revenue for cities is property taxes.”

That’s why, he argues, a city’s residents should be the ones to decide whether rates are too high or, in some cases, too low.

“It would be a shame if their citizens couldn’t say, ‘OK, we’re willing to pay a little more taxes in order to get our streets rebuilt more quickly,’” said Hightower.

The issue of rate control is bound to be considered by Sen. Bettencourt’s committee as it tours the state to gather information from the taxpayers themselves. The group is also likely to hear the increasing calls for an end to Texas property tax all together. Proponents of this approach, which was laid out in a 2012 study by the Texas Public Policy Foundation would replace property taxes with an expanded sales tax. The report suggested the change could create new jobs and increase personal income.

Whatever information the committee gathers, the senators will present their results and recommendations to their fellow state legislators. Then begins an entirely new process of debate and negotiation, which, in the end, will weigh the financial needs of taxpayers with that of the cities and counties in which they live or do business.

“The system,” said Bettencourt, “is out of balance.”