Comments to accompany slides:

1. Property and Sales Tax Indicators
2. Property taxes are almost a third of the operating budget and represent the only source of funding for the CIP. Sales taxes are the smallest component. Most of the budget, about 50%, comes from revenues for utilities: electric, water, waste water, and trash collection.
3. To maintain a uniform level of services, the city revenue base must grow about 4% annually to cover salaries, healthcare, construction cost increases, equipment and operational expenses.
    
4. Property Tax Base
5. Garland's collection of property taxes per person are essentially at the bottom of the list of comparable area cities and well below the average of those cities. It is a reflection that property values in the city are much lower.
6. Most of the property tax comes from the residential sector. The commercial sector pays twice: first for real property and then for personal property. As noted, the value of the residential base has significant impact.
7. The market for homes is on the larger side, with more bathrooms, larger garages, and with special rooms, like a media room. Older, smaller homes quickly lose their value in that market. Unfortunately, 80% of Garland's houses could be classified on the smaller side.
8. Over 50% of houses in the city were built between 1970 and 1989. All of these will decline at the same rates. When whole neighborhoods decline at the same rate, there is little incentive to reinvest in the neighborhood unless other forces are stronger: access to transit or to parks, as examples.
9. The property tax base through 2002 was appreciating well above that required 4% figure. For several reasons, 9/11 and some self-imposed, the increase dropped dramatically in 2003 but was making a return. The increase in 2007 was primarily due to the dramatic appraisal increases the commercial sector received.
10. The price per square foot for residential property was steadily increasing each month compared to the year before. The increases started dropping with 9/11 and continued until we saw lower prices for over two years. A brief return to the positive side at the end of 2005 was short-lived and took a nose-dive at the end of 2007 with the sub-prime mortgage situation. The up tick at the end of the graph gives some hope but one month does not a trend make, as we will soon learn.
11. For a number of years, new construction was nominal and then in 1995 it started climbing, more than doubling in just three years. New construction has remained relatively high since and must remain high if we are to continue to Grow the City.
12. In 2007 some alarming trends were becoming apparent.
13. Financial conditions were changing in the country and new marketing projects were being created that made home ownership easily available to a much larger number of people.
14. Frankly, a lot of people were buying a lot of houses they soon wouldn't be able to afford. Much of the reason was a change in lending practices where less down payment was required and borrowers were going to face higher payments in the near future.
15. The subprime mortgages made it easy to get into a house but staying there was going to take a much larger financial commitment.
16. Pop! In one year the price of homes in the U.S. fell over 9%.
17. Through 2006, home prices were rising across the Metroplex. Unfortunately, they weren't rising at the same rates in Garland. In fact, we had been basically flat for a number of years. New housing tracts were being built and prices were rising in parts of the city but those increases were offset by declines in other areas.
18. Over the last year, prices for smaller homes (less than 1300 square feet) and medium-sized homes (1300-2400) were dropping, with the fastest decline in smaller homes. However, prices for larger homes were rising, even raising somewhat the average of all homes. Unfortunately, of late, the prices for larger homes have started to decline.
19. Looking again at the graph showing the changes in the price per square foot on sales (Slide 10), that hopeful spike in Mar, 2007, was an anomaly. Every month following shows prices steeply declining. By last Christmas, prices were 9.2% lower than the previous year.
20. Not surprisingly, the average days on the market for residential properties was increasing, almost 10% in a year.
21. The number of foreclosures in Garland was up to 1.6% of the base by Jan. The rate in District 1 was somewhat better, at 1.1%.
22. That rate of 1.6% compared well to other Metroplex cities that were doing as badly or worse, but was high compared to Richardson, Plano, and Allen.
23. Unfortunately, the worst is yet to come. The good side is the peak should be relatively soon and then start declining. Staff reports that the last such downturn in Garland took five years to correct itself.
     
24. Sales Tax Revenue
25. A number of Texas cities are smaller than Garland and have smaller sales tax collections per capita, but Amarillo, Beaumont, Brownsville, Irving, Longview, Lubbock, McAllen, Mesquite, Tyler, and Waco have higher gross sales tax revenue. Each is an example of an regional city benefitting from sales to buyers from outside the city.
26. Among Texas cities, Garland is 31st in sales tax revenue. We're sandwiched between Laredo and Pasadena.
27. Between 1999 and 2004, there was virtually no sales tax growth in Garland. With the completion of the Firewheel Town Center and introduction of beer and wine sales, sales taxes have been rising. That rate of growth has dropped but it does continue. Further development will help.
28. Consumer confidence in the economy is not high and several measures indicate caution.
29. Looking closer at the sales tax growth shows shallow increase through 2007 but the rate of growth was dropping.
30. My emphasis continues to be Grow the City. We are at a plateau in sales tax growth but initiatives started under Mayor Bob Day may soon revive and propel our prospects. All is not doom and gloom. Development continues in north Garland along SH-190, but we will see new access to our markets with the extension of SH-190 to IH-30, with development at Centerville Marketplace, Harbor Point and the area near Bass Pro, Downtown, and the new Saigon Mall on Jupiter near Beltline.
31. Frankly, there is a great deal of uncertainty right now. I have a great deal of confidence that we can continue to Grow the City but we are years behind. Many of the ideas and plans to accomplish that revitalization are still on the drawing boards. Coming but not overnight.