Property Taxes – Troubling Economics

revenue & EXPENSESProperty taxes are a sensitive subject in Greater Hartford. Just about every year there is a budget referendum in at least one local town as angry residents fight yet another property tax increase. The debate in some towns is more heated than in others (but we won’t mention any names).

You may be happy to know that rising property taxes are a hot topic in other cities and states as well. An editorial in this weekend’s Wall Street Journal highlights a number of areas that are experiencing increasing taxes at the same time as they see falling home prices. In Arizona, where there is a state property tax, property values have fallen 17% on average in the past year. But taxes are on the rise. Ouch!

Unfortunately the root cause of property tax tension throughout the US is likely to get worse. The economics of running a town are deteriorating. Let’s consider the revenue and expenses separately.

Nearly all of town revenue comes from property taxes. Although real estate has historically been an appreciating asset, that is perhaps not the case today. Let’s assume that property values have stagnated. Therefore town revenue has also stagnated.

Expenses, on the other hand, are rising even more quickly than their historical rates. Education (much of a town’s budget) is rising at 2.5x general inflation, healthcare (another significant piece) is rising at 2.0x general inflation. We all know about energy prices, which impact many of the services the town provides (police, fire, trash pickup, snow plowing, heating city buildings, …).

Revenue is stagnant while expenses are accelerating. We all better sharpen our pitchforks and ready our torches because in the current global economic environment, this dynamic looks like it will only get worse.  Other than protest, is there anything we could or should do?  Or should we just ride it out?  This is shaping up to be a big problem throughout the country.

A Day at the Park?

I wish it was a day at the park … but there is no park where I can play with other dogs!

Lonely at Home

Hello all, Libby here.  I’m making Kyle write about our exciting trip to West Hartford Center in hopes that you will also support a town dog park.  The event was organized through the West Hartford Dog Park Coalition, and noted by Amy on Friday.

On the move

Dogs of all sizes, and their people, paraded through the Center to raise awareness.

Socializing

We were all well behaved, patiently waiting to cross the street.

Behaving

I had a wonderful time and was exhausted by the time we got back to the car.

Exhausted

And when we got back to the house I drank a whole bowl of water before taking a little snooze.

Thirsty

Socializing and meeting new friends is an important part of life. And it is much more difficult without a dog park. How would you like it if you never got to see anyone face-to-face and had to do all of your correspondence through pee-mail?

That’s what I thought. Do the right thing. Libby out.

Condo Association Meetings: The Good, the Bad & the Ugly (Part 2)

Yesterday we reviewed the good aspects of the annual homeowner’s meeting that I recently attended for the complex in which Amy and I own a unit.  Today we’ll get into the Bad and the Ugly.

The Bad

1. This particular complex was built as apartments in the 1960s and converted to condos in 1979.  If we assume that major maintenance was performed in anticipation of selling the units, then most of the improvements are approaching 30 years old – which is the useful life of lots of stuff.  We spent a fair amount of time at the meeting talking about repairs to boilers and roofs.  So despite the board’s planning, the Association is probably going to need to increase revenue in the next few years as more systems fail.  This means either higher condo fees or dreaded special assessments.  Boo!  Hiss!

2. The meeting was run using Roberts Rules of Order, which most people don’t really understand (myself included). The formal procedure made it difficult for everyone to participate effectively since folks would not know when to speak or how to speak. I could imagine that after one person’s question received a curt, “You can’t say that now,” others were intimidated into silence.

3. One civic-minded resident is working very hard to address energy efficiency and preventative maintenance, but seems to have a contentious relationship with the Board. Which leads directly to…

The Ugly

The meeting turned ugly as our civic-minded activist grew frustrated with the Board’s responses to his concerns and their use of precedure to prevent him from speaking his peace. As the discussion became more acrimonious, we transitioned from calling people by first names to using surnames (Mr. Smith, Ms. Jones …) and citing condo association bylaws as threats. Ultimately personal issues were raised in an uncomfortable manner.

Conclusion

Now that I have a better sense of the cast of characters, I’ll be interested to see how the drama unfolds.  Energy efficiency is an issue that everyone is concerned about in this day and age, and our activist had some good suggestions for how individual owners can make a difference.  Whether he will have community-wide influence remains to be seen.

I certainly got my money’s worth in terms of entertainment, and also learned quite a bit about the complex.  I was glad to hear that the community is in such good shape (despite Part 2’s observations).  If you own a condo I would definitely recommend attending your next homeowner’s meeting.  I bet you’ll see much of what I saw; different faces, but similar characters.

Condo Association Meetings: The Good, the Bad & the Ugly (Part 1)

First, Kyle, Amy’s husband, will now be a blog contributor.  Below is his first blog.  We’ll eventually figure out how to distinguish his posts from Amy’s…

I recently attended the annual homeowner’s meeting for the complex in which Amy and I own a unit.  It was my first event in the community, and after perusing last year’s minutes in the pre-distributed packet I was optimistic that it would be an exciting evening out.

(Amy: You’re a LOSER, Kyle. Condo meetings are not an exciting evening out.)

Overall, I was very pleased with what I heard.  But the meeting was not all holding hands and singing Kum Ba Ya; some folks got quite excited.  So let’s review the good, the bad, and the ugly.  Although I can’t be sure, I would bet that some of the following themes play out in many annual homeowner meetings.

The Good:

1. The board members seemed to care about the community and are genuinely trying to do the right thing for their fellow owners.  Many have lived in the development for decades, and all have both financial and emotional investments in the community.

2. The Association’s finances are in good shape.  There is a meaningful amount of cash and minimal liabilities on the association’s balance sheet, and an operating profit on the income statement.  Beyond that, the cash balances are invested in a responsible manner.

3. The Board budgets for planned repairs in an effort to avoid, or at least minimize, special assessments.

4. The property management company is responsive and maintains an active dialog with the community.

As an owner, and especially a non-resident owner, these are the issues that I care about most.  Stop by tomorrow as we conclude with the BAD and the UGLY…