Original post:
This post may not be of much interest to residents who have lived here for years and are already well-versed in the property tax structure, but for those of us who have invested in Section 9 (which is the active construction area south of Centerpointe Drive) or who recently purchased homes in the older sections, this topic definitely deserves a few words.
My introduction to the PID came a few weeks ago in the form of a fellow new resident shouting, "What the FFF&@% is this huge bill that I just found in my mailbox?!?!"
I was unable to answer their question and, oh joy, it turns out that we received one quite like it: an invoice assessing substantial fees by "League City Public Improvement District (PID) 3".
My better half (a meticulous engineer) actually possessed the superhuman patience required to review the approximately three thousand pages of our closing documents to see if the existence of this financial obligation had been disclosed to us at any point. He found nothing. Perhaps this occurred because we had checked the box indicating we'd be responsible for direct payment of our own taxes (i.e., no escrow - if you pay into an escrow, this thing may be invisible to you), and therefore the onus was on us to discover what exactly those taxes are? I don't know, but I DO know that having a surprise invoice show up in your mailbox is a highly efficient form of education.
The PID fee appears to be essentially a means of trading up-front lot costs for twenty years of tax-like installments. The clearest explanation of PIDs that we have found was actually written for nearby Victory Lakes, which is in a separate PID with a slightly different assessment structure but, boy, I bet they hired a nice PR firm to write their blurb, because it's a work of sugar-coated art.
I have no issue with the payment of any fee that is rightfully owed, as this one appears to be. However, it would have been nice to:
(a) have received prior information about it. I can perceive no reason why it would not be revealed during the sales process. Given that other neighborhoods such as VL pay the same type of fees, there's no competitive disadvantage incurred by admitting to it. Some buyers are on tight budgets and I could see where this thing could come as a nasty shock to them.
(b) it would also have been nice to have NOT been misled by the "NO MUD TAX!!" siren song. Seriously, a rose by any other name is still a rose. To the layperson, there's no material difference between a MUD tax and a PID assessment - the distinction is perceptually semantic (as the VL summary says, "you can compare it to a city MUD tax in that it is part of the total cost of ownership of your home").
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| This is a screengrab from a current Centerpointe sales listing. It may be perfectly legal to advertize like this, but the best I can say about it is that I think it's bad form. |
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| Aaaaand here's a snippet from another active listing by a realtor who appears to be a fan of implanting oversized, uh, expectations in peoples' minds about the magnitude of taxes and fees associated with purchasing here. |
It is my understanding that PID is about $10K/acre per year. So if your lot size is 0.18 acres, then your PID bill will be about $1,800. I was also told that the duration of PID taxes is 15 years per home, not per owner. So if someone moved into a home that was 3 years old, then the new owners would be responsible for years 4-15. MUD taxes are based on the home's property value and usually never end. Hopefully PID will be gone 15 years from now.
ReplyDeleteDepending on which information source you believe, Americans' median length of home ownership is between 5 and 8.2 years. While it's helpful that a PID assessment will cease in 15 or 20 years, that doesn't provide much practical impact to most of the current residents who pay it annually.
ReplyDeleteThere's also the issue of total payments. PID 3 assesses a 5.03% interest rate, according to our invoice. That means that 48% of our 2011 assessment actually goes to pay interest rather than debt. And of course the total payout by the homeowner will be vastly larger than the original assessment, if they decide to take the full amount of time to pay.
Which raises the obvious question: if a resident predicts that they will keep their house long term, is it possible to voluntarily pay down these debts to avoid thousands of dollars in interest charges? We have not researched that, but information on the internet suggests that it's possible. Don't take everything you read on the internet at face value, but here's a discussion group pertaining to this issue:
http://www.trulia.com/voices/Home_Buying/Centerpointe_in_League_City_TX_does_not_seem_to_h-229192