Analysis of Montgomery County real estate tax records reveals wide inconsistencies in the way sand mines are appraised. Fifty three parcels of land in Montgomery County devoted to sand mining received seven different real estate tax classifications. Not one classification had anything to do with mining, though one parcel was classified as commercial land and two were classified as industrial.
Sand Mines on East and West Forks of the San Jacinto are appraised seven different ways from Sunday.
36 West Fork Mines Received Six Different Classifications
Sampling 36 parcels of land used for sand mining on the West Fork of the San Jacinto revealed that properties were taxed as:
A1 – Residential Single Family (1)
D1 – Qualified Ag & Timber Land (6)
E3 – Other Improvements over 5 acres Non-Ag (1)
E4 – Vac Rural Land over 5 acres Non-Ag (24)
F1 – Commercial (real) (1)
F2 – Industrial (real) (2)
The numbers in parentheses represent the number of parcels found within each category. The sample included West Fork mines larger than 5 acres from US59 to just west of I-45 on the San Jacinto River’s West Fork that showed clearly visible mining activities on the Montgomery County Appraisal District website.
17 East Fork Parcels Classified 3 Different Ways
Yesterday, I posted about one San Jacinto East Fork/Caney Creek mine in Porter that was subdivided into 17 different parcels. The parcels were classified as:
D1 – Qualified Ag & Timber Land (10)
C1 – All Vac Res Lts & Vac Res Tr < 5 Ac (3)
E4 – Vac Rural Land over 5 acres Non-Ag (4)
Real Estate Tax Roulette?
Altogether, the East and West Fork parcels represent a sample size of 53. Excluding undeveloped land reserved for expansion, several things stood out.
Sometimes adjacent pieces of land that were being used in identical ways received different classifications.
Areas dedicated to mining – often without any agriculture or timber – received ag/timber exemptions that dramatically lowered their taxes.
None of the parcels appeared to be vacant, yet 27 parcels out of 53 (more than half) were classified that way.
NOT ONE parcel of the 53 received a G3 Category classification for sand mines.
Not One Parcel Classified as “Subsurface Interests”
The G category in Texas Property tax includes “Real Property: Oil and Gas, Minerals and Other Subsurface Interests.” The Texas Property Clasification Guide states on page 10, “… real property defined as mines and quarries, should be reported as Category G3.”
The Texas State Controller’s website states: “Tax Code Section 23.01 requires … the same appraisal methods and techniques be used in appraising the same or similar kinds of property.”
Yet 53 parcels of land in Montgomery County devoted to sand mining received seven different classifications, not one of which had anything to do with mining.
Financial Impact of Inconsistencies
So how big of a deal is this? Yesterday, we saw the value of an ag/timber exemption compared to land classified as C1 and E4 on the East Fork. The actual tax due for the ag/timber land was $1.83 per acre. But the tax due on other land not receiving the exemption was $102.36 – 56 times more!
Today, I discovered similar inconsistencies on the West Fork.
JR Development paid $37,764.34 on 568 acres classified as vacant rural land (E4). The tax equaled $66.49 per acre or 36 times more than land with the ag/timber exemption.
For that land zoned as commercial, Scottie McDonald paid $2,180.18 on 22.1427 acres for tax/acre of $99.00. That’s 54 times more than land with the ag/timber exemption.
I still need to investigate this more. Is there a policy in Montgomery County NOT to classify mines as mines? Why are subsurface interests being given away? Did the State do away with the G3 classification?
https://i0.wp.com/reduceflooding.com/wp-content/uploads/2018/09/SandMinesInRed.jpg?fit=1024%2C684&ssl=16841024adminadmin2018-09-27 01:56:172018-09-27 08:40:33Inconsistencies in Montgomery County Sand-Mine Real-Estate Tax Appraisals
I wish I could get a deal like this! A cardiologist from Nacogdoches named Dr. Prabhakar R. Guniganti (in a trust set up for his family members) owns virtually all the land used for sand mining adjacent to Kingwood on Caney Creek, White Oak Creek and the East Fork of the San Jacinto. Here’s the best part! The land isn’t taxed as industrial land. It’s taxed as agricultural and timberland, even though:
Almost half of the land does not appear to be used for agriculture or timber any more, and hasn’t been for quite some time.
Among other stringent requirements, State and County guidelines say that if a parcel is clear cut, it cannot go without replanting for more than two years to quality. The guidelines also state that both timber and agricultural land must be used at an intensity comparable to the surrounding area. Additionally, timberland must be used with the intent to produce income from timber and be devoted principally to the production of timber.
Guniganti is not alone; I’m just using him and his trust as an example. Several of the sand mines on the West Fork are also taxed at the same agricultural/timber rate.
$241 in Tax on Ten Acres
I found one 10-acre parcel of Guniganti land that owed a whopping $241.09 in real estate tax for 2017. Deal of the century! It hasn’t had any timber on it for about three years and Montgomery County is still assessing it as timberland for 2018.
Cross-check the information against the Montgomery County Tax Assessor/collector’s website. The two sites don’t always agree, but the assessor issues the actual tax bills, so for the purposes of this analysis we’re using the assessor’s info when computing taxes paid.
When I clicked on Guniganti’s 10-acre parcel as discussed in Step 2 above, here’s what I found. A little gray box popped up describing the location and size, plus the owner’s name. In this case, Guniganti no longer owns the property himself; he sold it to a trust in his family’s name, Guniganti Family Property Holdings LLC (limited liability corporation). LLCs are a common strategy that land owners use to insulate themselves from liability that may arise from use of the property.
The blue box shows the boundary of the ten acres within the mine. Clearly, there is no timber on this land and it is part of the mine.
Clicking on “View property information,” tells you the classification of the property, tax rates that apply to it … and the history of ownership, Note that Guniganti bought this parcel in 2014 and sold it to his LLC in 2017. Also note that, despite the sale, the market value of the property is assessed at $0.00 and its agricultural market value is also assessed at $0.00.
.
Because the Montgomery County appraiser classifies this parcel as “Timber,” the County, emergency services, the hospital, college, and school districts will have to split up a grand total of $241.09.
Of course, the land originally contained timber. Montgomery County appraises it as though it still does. That’s sweet if you’re Guniganti – especially when you consider that he owns nearly 2000 acres in the area and all but 217 are classified as Ag & Timber.
But why should sand mines enjoy the Ag/Timber tax break? These are multi-million dollar businesses.
$288 in Tax on 218 Acres
Let’s look at another example of how Guniganti benefitted from an exemption that he didn’t seem to qualify for.
This 218-acre parcel occupies most of the middle of Guniganti’s mine. Though it has some timber on the periphery, approximately 90% of it appears to be used for sand mining.
That parcel has a market value of $439,480, but was appraised at $12,450 because of the agricultural/timber classification.
In this second example, the 2017 tax due on a 218-acre, income-producing property with a market value of nearly half a million dollars is just $287.71. Here’s the actual 2017 tax bill.
Almost 2000 Acres in Two Categories
What about the rest of the mine and the surrounding property which will be used for expansion? As luck would have it – for comparison purposes – the Guniganti Family Trust owns 17 different parcels of land in and around the mine totaling almost 2,000 acres.
Guniganti owns 17 parcels of land in Montgomery County totaling about 2000 acres. For an interactive list, click on the image above.
Most parcels are classified Ag/Timber including approximately 750 acres being mined. However, several are classified as “unimproved rural” and one was “unimproved residential.” Check them for yourself if you have several hours.
This spreadsheet breaks the Guniganti Family Trust properties down into two different categories: Ag/Timber and Other to show the benefits of the ag/timber classification.
The Big Payoff
In 2017, thetaxable value per acre of the ag/timber land was $68 per acre. But the taxable value for the land not receiving any exemption was $3,120 per acre – 46 times more.
The actual tax due for the ag/timber land was $1.83 per acre. But the tax due on other land not receiving the exemption was $102.36 – 56 times more!
Guniganti still enjoys the ag/timber benefit on these properties for the 2018 tax year.
Substantial differences.
Almost 90% of Guniganti’s land is classified as ag/timver. However, he paid seven times more tax on his other land. Thus, you can see the benefits of the exemption.
In total, Guniganti paid $3,189.61 in tax on 1741 acres receiving the ag/timber classification. Those parcels have a market value in excess of $4 million.
Had that property been taxed at the Montgomery County Appraisal District’s opinion of their market value, he would have had to pay about $120,000 more in tax
I still don’t understand how sand mines qualify for Ag/Timber rates when all the ag and timber is long gone. I hope there’s a reasonable explanation. Not all sand mines in Montgomery County receive the ag/timber exemption. But that’s a story for another day.
As always, these represent my opinions on matters of public policy. They are protected by the First Amendment of the United States Constitution and the Anti-SLAPP statute of the great State of Texas.
Posted 9/26/2018 by Bob Rehak
393 Days since Hurricane Harvey
https://i0.wp.com/reduceflooding.com/wp-content/uploads/2018/09/10acresinContext.jpg?fit=1504%2C1172&ssl=111721504adminadmin2018-09-24 23:47:472018-09-26 09:53:30East Fork Sand Mine in Montgomery County Appraised as Ag/Timber Land
Sand mining best practices throughout the country and the world urge operators to leave vegetation in place until they are ready to mine an area. The reason: to reduce erosion. However, approximately 60 acres of the sand mine below on the East Fork of the San Jacinto where it meets Caney Creek and White Oak Creek was cleared but not mined – just in time for two 500-year floods.
Approximately 65 acres of this mine were cleared before two five-hundred year floods, contributing to downstream sedimentation in the East Fork, even though only about three acres of the area was mined.
The cleared area lies totally in the 100-year flood plain and was inundated. Satellite images of the area downstream from the cleared land show a sudden buildup of sand. While the sand did not all come from the cleared area, one wonders how much sedimentation could have been prevented by following best practices.
The following sequence of images shows the rapid removal of vegetation.
The white outlined area will be totally cleared before Harvey. On April 8, 2014, it was all dense forest.
By March 3, 2016, most of the area was cleared.
By January 23, 2017, just before Harvey, the area was entirely cleared.
Risk from Flooding
This FEMA flood hazard map shows that the entire area lies within with 100-year flood plain (aqua) and adjacent to the floodway (cross-hatched area).
Before and After: Results
This image from 2014 shows the area in question when it was still forested. Note how little sand is in the river downstream from the mine.
Here’s the same view after vegetationwas cleared and the area was inundated by Harvey in 2017. Note all the sediment in the river downstream.
Much of the sand and sediment washed downstream is invisible to satellite photos because it’s under dense forest canopy. This area (downstream the sand mine being discussed) was once wetlands. A boardwalk through those wetlands had to be excavated from several feet of sand after Harvey.
Here’s what part of the same trail looked like before it was excavated. Approximately 30 acres of the park were blanketed with dunes up to 10 feet tall after Harvey. Every trail in the park required repairs. Total cost: approximately $200,000 to Kingwood residents.
A bird’s nest that was ten feet up in a tree is now knee high. Many of the trees along the Eagle Point trail in East End Park are buried under so much sand that they are dying.
An Ounce of Prevention
It’s impossible to tell how much of the sand above resulted from the removal of vegetation? Previous posts showed how the mines stockpile also eroded. The river itself contributed sediment. However, if the mine were not in the flood plain and if the miners had not removed so much vegetation so far in advance of mining, we wouldn’t be having this discussion.
So why do miners favor the floodplains and floodways? Why to they remove vegetation years before it will be mined? Is it all about the relentless pursuit of efficiency at the expense of safety?
Tomorrow, we will look at economics, taxation and how some well-intentioned laws passed in the late seventies to protect family farms helped fuel a boom in sand mining.
Posted September 24, 2018
391 Days since Hurricane Harvey
https://i0.wp.com/reduceflooding.com/wp-content/uploads/2018/09/Harvey-SanJac_374.jpg?fit=2000%2C1333&ssl=113332000adminadmin2018-09-24 02:26:442018-09-24 07:46:37Sand Mining Best Management Practices: Vegetation
Inconsistencies in Montgomery County Sand-Mine Real-Estate Tax Appraisals
Analysis of Montgomery County real estate tax records reveals wide inconsistencies in the way sand mines are appraised. Fifty three parcels of land in Montgomery County devoted to sand mining received seven different real estate tax classifications. Not one classification had anything to do with mining, though one parcel was classified as commercial land and two were classified as industrial.
Sand Mines on East and West Forks of the San Jacinto are appraised seven different ways from Sunday.
36 West Fork Mines Received Six Different Classifications
Sampling 36 parcels of land used for sand mining on the West Fork of the San Jacinto revealed that properties were taxed as:
The numbers in parentheses represent the number of parcels found within each category. The sample included West Fork mines larger than 5 acres from US59 to just west of I-45 on the San Jacinto River’s West Fork that showed clearly visible mining activities on the Montgomery County Appraisal District website.
17 East Fork Parcels Classified 3 Different Ways
Yesterday, I posted about one San Jacinto East Fork/Caney Creek mine in Porter that was subdivided into 17 different parcels. The parcels were classified as:
Real Estate Tax Roulette?
Altogether, the East and West Fork parcels represent a sample size of 53. Excluding undeveloped land reserved for expansion, several things stood out.
Not One Parcel Classified as “Subsurface Interests”
The G category in Texas Property tax includes “Real Property: Oil and Gas, Minerals and Other Subsurface Interests.” The Texas Property Clasification Guide states on page 10, “… real property defined as mines and quarries, should be reported as Category G3.”
The Texas State Controller’s website states: “Tax Code Section 23.01 requires … the same appraisal methods and techniques be used in appraising the same or similar kinds of property.”
Financial Impact of Inconsistencies
So how big of a deal is this? Yesterday, we saw the value of an ag/timber exemption compared to land classified as C1 and E4 on the East Fork. The actual tax due for the ag/timber land was $1.83 per acre. But the tax due on other land not receiving the exemption was $102.36 – 56 times more!
Today, I discovered similar inconsistencies on the West Fork.
However, even $99/acre is still dirt cheap!
To see the list of who’s classified as what, download this Excel worksheet, West Fork MCAD Classifications.
I still need to investigate this more. Is there a policy in Montgomery County NOT to classify mines as mines? Why are subsurface interests being given away? Did the State do away with the G3 classification?
I’m sure the Montgomery County Appraiser can help us understand why none of the sand mines on the San Jacinto are classified as mines and why half of them receive ag/timber exemptions they apparently don’t qualify for.
Posted by Bob Rehak on September 27, 2018
394 Days since Hurricane Harvey
East Fork Sand Mine in Montgomery County Appraised as Ag/Timber Land
I wish I could get a deal like this! A cardiologist from Nacogdoches named Dr. Prabhakar R. Guniganti (in a trust set up for his family members) owns virtually all the land used for sand mining adjacent to Kingwood on Caney Creek, White Oak Creek and the East Fork of the San Jacinto. Here’s the best part! The land isn’t taxed as industrial land. It’s taxed as agricultural and timberland, even though:
Guidelines for Appraisals
Among other stringent requirements, State and County guidelines say that if a parcel is clear cut, it cannot go without replanting for more than two years to quality. The guidelines also state that both timber and agricultural land must be used at an intensity comparable to the surrounding area. Additionally, timberland must be used with the intent to produce income from timber and be devoted principally to the production of timber.
$241 in Tax on Ten Acres
I found one 10-acre parcel of Guniganti land that owed a whopping $241.09 in real estate tax for 2017. Deal of the century! It hasn’t had any timber on it for about three years and Montgomery County is still assessing it as timberland for 2018.
See for yourself.
When I clicked on Guniganti’s 10-acre parcel as discussed in Step 2 above, here’s what I found. A little gray box popped up describing the location and size, plus the owner’s name. In this case, Guniganti no longer owns the property himself; he sold it to a trust in his family’s name, Guniganti Family Property Holdings LLC (limited liability corporation). LLCs are a common strategy that land owners use to insulate themselves from liability that may arise from use of the property.
The blue box shows the boundary of the ten acres within the mine. Clearly, there is no timber on this land and it is part of the mine.
Clicking on “View property information,” tells you the classification of the property, tax rates that apply to it … and the history of ownership, Note that Guniganti bought this parcel in 2014 and sold it to his LLC in 2017. Also note that, despite the sale, the market value of the property is assessed at $0.00 and its agricultural market value is also assessed at $0.00.
.
Because the Montgomery County appraiser classifies this parcel as “Timber,” the County, emergency services, the hospital, college, and school districts will have to split up a grand total of $241.09.
Nevertheless, Montgomery County taxed the 10 acres at $10,000. At a 2.4109% tax rate, the family trust owed $241.09 on this land in 2017. Here’s the actual tax bill for 2017 from the assessor’s web site:
Of course, the land originally contained timber. Montgomery County appraises it as though it still does. That’s sweet if you’re Guniganti – especially when you consider that he owns nearly 2000 acres in the area and all but 217 are classified as Ag & Timber.
Back in 1966 and 1978, the Texas legislature saw the value of ranch, farm and timberland increasing exponentially. Many family farms and ranches were being taxed out of existence. They didn’t make enough money to pay real estate taxes at the normal market value. So the legislature created special exemptions, first for family farms, and then for corporations and trusts.
Fair enough. We certainly need farms and ranches.
But why should sand mines enjoy the Ag/Timber tax break? These are multi-million dollar businesses.
$288 in Tax on 218 Acres
Let’s look at another example of how Guniganti benefitted from an exemption that he didn’t seem to qualify for.
This 218-acre parcel occupies most of the middle of Guniganti’s mine. Though it has some timber on the periphery, approximately 90% of it appears to be used for sand mining.
In this second example, the 2017 tax due on a 218-acre, income-producing property with a market value of nearly half a million dollars is just $287.71. Here’s the actual 2017 tax bill.
Almost 2000 Acres in Two Categories
What about the rest of the mine and the surrounding property which will be used for expansion? As luck would have it – for comparison purposes – the Guniganti Family Trust owns 17 different parcels of land in and around the mine totaling almost 2,000 acres.
Guniganti owns 17 parcels of land in Montgomery County totaling about 2000 acres. For an interactive list, click on the image above.
Most parcels are classified Ag/Timber including approximately 750 acres being mined. However, several are classified as “unimproved rural” and one was “unimproved residential.” Check them for yourself if you have several hours.
This spreadsheet breaks the Guniganti Family Trust properties down into two different categories: Ag/Timber and Other to show the benefits of the ag/timber classification.
The Big Payoff
Guniganti still enjoys the ag/timber benefit on these properties for the 2018 tax year.
Substantial differences.
Almost 90% of Guniganti’s land is classified as ag/timver. However, he paid seven times more tax on his other land. Thus, you can see the benefits of the exemption.
In total, Guniganti paid $3,189.61 in tax on 1741 acres receiving the ag/timber classification. Those parcels have a market value in excess of $4 million.
I still don’t understand how sand mines qualify for Ag/Timber rates when all the ag and timber is long gone. I hope there’s a reasonable explanation. Not all sand mines in Montgomery County receive the ag/timber exemption. But that’s a story for another day.
As always, these represent my opinions on matters of public policy. They are protected by the First Amendment of the United States Constitution and the Anti-SLAPP statute of the great State of Texas.
Posted 9/26/2018 by Bob Rehak
393 Days since Hurricane Harvey
Sand Mining Best Management Practices: Vegetation
Sand mining best practices throughout the country and the world urge operators to leave vegetation in place until they are ready to mine an area. The reason: to reduce erosion. However, approximately 60 acres of the sand mine below on the East Fork of the San Jacinto where it meets Caney Creek and White Oak Creek was cleared but not mined – just in time for two 500-year floods.
Approximately 65 acres of this mine were cleared before two five-hundred year floods, contributing to downstream sedimentation in the East Fork, even though only about three acres of the area was mined.
Removing Vegetation Risks Sedimentation Downstream
The cleared area lies totally in the 100-year flood plain and was inundated. Satellite images of the area downstream from the cleared land show a sudden buildup of sand. While the sand did not all come from the cleared area, one wonders how much sedimentation could have been prevented by following best practices.
The following sequence of images shows the rapid removal of vegetation.
The white outlined area will be totally cleared before Harvey. On April 8, 2014, it was all dense forest.
By March 3, 2016, most of the area was cleared.
By January 23, 2017, just before Harvey, the area was entirely cleared.
Risk from Flooding
This FEMA flood hazard map shows that the entire area lies within with 100-year flood plain (aqua) and adjacent to the floodway (cross-hatched area).
Before and After: Results
This image from 2014 shows the area in question when it was still forested. Note how little sand is in the river downstream from the mine.
Here’s the same view after vegetationwas cleared and the area was inundated by Harvey in 2017. Note all the sediment in the river downstream.
Much of the sand and sediment washed downstream is invisible to satellite photos because it’s under dense forest canopy. This area (downstream the sand mine being discussed) was once wetlands. A boardwalk through those wetlands had to be excavated from several feet of sand after Harvey.
Here’s what part of the same trail looked like before it was excavated. Approximately 30 acres of the park were blanketed with dunes up to 10 feet tall after Harvey. Every trail in the park required repairs. Total cost: approximately $200,000 to Kingwood residents.
A bird’s nest that was ten feet up in a tree is now knee high. Many of the trees along the Eagle Point trail in East End Park are buried under so much sand that they are dying.
An Ounce of Prevention
It’s impossible to tell how much of the sand above resulted from the removal of vegetation? Previous posts showed how the mines stockpile also eroded. The river itself contributed sediment. However, if the mine were not in the flood plain and if the miners had not removed so much vegetation so far in advance of mining, we wouldn’t be having this discussion.
So why do miners favor the floodplains and floodways? Why to they remove vegetation years before it will be mined? Is it all about the relentless pursuit of efficiency at the expense of safety?
Tomorrow, we will look at economics, taxation and how some well-intentioned laws passed in the late seventies to protect family farms helped fuel a boom in sand mining.
Posted September 24, 2018
391 Days since Hurricane Harvey