Zactax tells The Colony council appraisal methods, exemptions drove residential tax increases

Zactax presented an analysis of The Colony’s property-tax data from 2018–2024 and told the council the structure of appraisal methods and exemptions—not local tax-rate hikes—largely explains why many homeowners see bigger bills.

“This will be the nerdiest presentation you probably will see all year,” the Zactax representative said as he began the briefing. He said his firm examined appraisals, collections and changes in value and found that while citywide collections rose modestly, residential appraisals and organic appreciation in existing homes outpaced commercial appraisal growth. He described a roughly 20% gap between the total appraised value and actual collections that he attributed primarily to exemptions and cap loss.

Zactax said residential appraisals averaged about a 10.8% annual increase since 2019 (appraisal numbers, not revenue), while commercial appraisals rose more slowly overall though new commercial construction accounted for much of commercial value gains. “Even if you collect the no new revenue rate … you are still going to be raising taxes on existing residential property owners,” the presenter said, summarizing how appraisal-method differences can raise bills for homeowners even when a council holds the dollar tax levy steady.

The presenter also described what he called a “dark box” effect in commercial appraisals: large similar retailers in some appraisal districts receive an agreed-upon, relatively static valuation that can understate true market differences and blunt volatility in the commercial roll. That, he said, tends to increase the relative share residential taxpayers carry as residential market values climb faster.

Using the city’s data, Zactax estimated residential taxpayers were responsible for roughly 64% of the city’s property-tax-funded services in 2018 and that the residential share had shifted about 9–9.5 percentage points by 2024. Under the firm’s modeled trajectory, the presenter said the residential share could continue moving higher by 2031 without structural change.

He outlined policy levers and trade-offs: a city can raise homestead exemptions to reduce homeowners’ burdens but cannot lawfully adopt separate tax rates by property class under Texas law; splitting millages (a practice used in some other states) or large state-level reform would be required to change the underlying mechanics. He encouraged council members to use the analysis to explain the issue to residents and to press state legislators for reform.

The city thanked Zactax for the analysis and noted it maintains an annual subscription with the firm for continuous sales- and property-tax review.