Greetings, and welcome back to ZacCast, the official podcast for local government nerdery of all kinds. I'm Chad, that's Pat. Uh, we actually- unlike last time, we actually have topics to discuss today. We did a little bit of preparation for today's episode, so, uh, we're glad that you're here with us. How are you doing, Patrick?

I'm good. I'm good. I've got some sinus... Oh, man, the pollen. The pollen is everywhere. It's crazy. How are you, dude?

I'm, I'm good. You have a good April Fools' Day?

I did. I saw a couple, um, online posts that were pretty funny.

So my sister-in-law's birthday is the day after April Fools' Day, and so the joke, the running joke for, like, the last 15 years has been that I tell her happy birthday on the 1st. I decided not to do that this year, 'cause it's kind of getting old. Like-

Mm-hmm

... some running jokes, you can just keep going forever-

Yeah

... even though they're not funny anymore, but I just felt like it's kind of, kind of enough. But, uh, we did actually pull a pretty interesting April Fools' prank on my parents.

And?

Okay, so a couple of weeks ago, I come across this tweet where this guy says he's, he's started this new, uh... He's, he's basically just gaslighting his family. So you know how, like, you do Wordle, and you send the Wordle results, and, like, there's all these games where you can send the results via text?

Yes.

And so everyone's playing these games and sending their results, and there's always these big family chats where everyone just sends their Wordles and things like that. So he cr- created this fake game called Jumble, and he just sent, you know, a random result, and he's trying to convince his family that this is a real game, right?

Oh.

So this sounded funny, and we're coming up on April Fools' Day, so, uh, I sent it to my brother. He's like: "We have to do this to my parents." Like, can we create a game, like an actual game, that my parents can play, that will be kind of absurd, but they'll never be able to actually win it? So me, and him, and his wife, we kind of start brainstorming a little bit, and we come up with this game called Jumbles.

Okay.

It is not... It's no longer active, so you can't play it anymore, but the, the premise was you would get 17 images of, like, animals, or food, or whatever, like, random, just random things, okay?

Uh-huh.

I had, like, 150 that you could- that it would randomly pick from. So you get 17 images. You have to create four groups of four, and there's one spare. Okay?

Okay.

But the way that it works is the first three guesses, they're always correct, okay? The last four guesses, you have five options, they're always wrong. But the funny part is, no matter what you choose, I just send those things... Like, say you choose, like, a fox, and sushi, and, you know, uh, a drumstick, whatever. You send- you, like, those are the choices that you made for a group. I send those things to ChatGPT, and then it just comes up with whatever kind of absurd connection that it can come up with-

Ah

... to group those things together. So, like, s- some of the connections were just outrageous. 'Cause I, I also, like, created a database where I could store the results and see --

Of course, yes

... like, the results of my parents' games. Uh, and then there's, there's also a back-end side where it will generate fake winning results. So the three of us can send fake winning results to my parents every day, but when they play, they cannot win the game. So...

This is the nerdiest, funniest family joke I've ever heard. This is pretty awesome.

Yeah, so I'll, I'll have to share maybe some screenshots in the show notes, or some of the examples of things that, um, the connections that, that ChatGPT made. But every day, you can see my mom getting progressively more angry at the game. So, like, yesterday, she, she sent her results, and she's like: "This is the dumbest game ever." It's like, it's-

So have you told her yet?

So today... I, I was gonna do it on April f- like, on April Fools' Day, flip it, where it gave some kind of n- indication that it was fake.

Uh-huh.

But the day before was Easter, and I didn't- I wanted to spend time with the family, so I, I didn't take time to do that. So... And then I forgot about it, uh, on, on Monday. So yesterday afternoon, I updated the, the game so that after the game ends, like, the next game that you play, it shows, um, three icons: like, a no-

Mm-hmm

... soap, and a radio, and this is gonna be the indication that this is not real. You're obviously not familiar with the no soap radio joke?

I'm not, no.

Okay, so the no soap radio joke is also a prank.

Okay.

You have one or two more people-

Is your mom familiar with that?

Oh, yes.

Or... Okay.

Oh, yes.

Okay.

So you have two or more people that are in on the prank, right?

Uh-huh.

And then there's always one- there's one mark.

Okay.

And the, the, the, the idea of this prank is that you tell a nonsensical joke, like, a long, long, you know, setup. It just kind of goes nowhere. It just k- keeps going, it keeps going, and then the punchline is, "No soap radio." And everyone else who's in on it just l- laughs like it's hilarious.

Okay.

But the one person has no idea, so you just kind of see, like, are they gonna follow in and laugh? Are they not gonna get it and just think it's stupid? So I put, "No soap radio," 'cause that's pretty much what this is.

So is your mom the only one who's taken the bait at this point, or is your dad, as well?

My dad, he played once, and he's done with it. But my mom, she's trying, she's trying to win.

She's trying.

I feel, feel so bad for her.

Does she listen to our podcast?

No.

Okay, that's good news.

No.

So I actually do have a parent who listens to the podcast occasionally, so, uh, you know, it's, it, it... I get interesting questions after the fact from that. But yeah, that's, that's pretty good. Uh, quick question for people who want to get into, uh, creating random April Fools' jokes via code: How long did it take you to code this game?

So, um, I had help, because obviously I have a job, right? And I have kids at night, so-

Yeah

... you know, like, uh, I can't devote too much time to it. Um, so-... my brother and sister-in-law kind of built the concept for the game with ChatGPT-

Okay

-over the, like, over an afternoon. And then, um, last Tuesday night, I had... I took my son and his friend to soccer practice, so I had, like, an hour and a half in the car while they were at practice.

Mm-hmm.

So I did about 80% of the code there, and then when I got home, I had, like, 30 minutes left, and I kind of finished it up. A couple of hours, really.

This is hilarious. Okay.

Yeah.

I mean, that's, that's, that's pretty awesome. Uh, I, I would love to know a follow-up on how your mom reacts when she finds out.

I will tell you.

That's so funny.

As soon as she finishes... She's gotten two guesses so far today. Uh, so what I should have done is I should have made it where on the last day, you win. Instead, I made it on the la- it was- 'cause it was easier for me to do to make it where you just lose.

Yeah.

So that every, every, you know, guess is wrong. Um, so-

So not only did you play a joke on her, but she's never actually gonna win at any point.

She's never gonna win it, yeah. So I'll, I will let you know.

Nice.

So-

That's fantastic

... so that's my- S- so sometimes when, like, you have a random idea that sounds fun, it's super easy as a programmer to just, like, jump in and immediately do it. Because a lot of times when you're doing kind of the same things over and over again, it's not that you don't enjoy it, 'cause I do, but it's, it's, mmm, can be, be more repetitive and mon- monotonous, things like that. So you get, like, a new idea. So, like, that's why whenever you pitched this idea the other day about economic development stuff, like, I immediately jumped in and started kind of playing with it-

Yeah

... 'cause it's new and exciting, right? So they threw this idea out there, and I was like, "Yes, let's do this." And you can just kind of jump in and, and get it, get it done, so.

I, I'm like that with puzzles. Like, Jennifer loves puzzles, right? So especially when she's off of work, uh, during holidays and things like that, yeah, we'll do a 1,000-piece puzzle or a 1,500-piece puzzle. And we just wrapped one up. We just wrapped up Pooping Puppies-

Nice

... which are puppies by the pool that are pooping. Uh, and-

In the pool or just by the pool?

By the pool.

Okay.

Yeah, they're all kind of around the pool, and they're, they're pooping. And so, um, and for the first time, we put that one in a frame. We thought that would be a good bathroom picture. So we, we put that one in a frame, put it in a bathroom in the house.

Have you ever done one of those, like, white ones or clear ones, like, solid color?

God, they're so hard.

Yeah, where there's no-

They're so hard.

Yeah.

We did, we did one, um... Yeah, we did one over spring break that was... It, it wasn't, like, a straight solid color, but it was like everything was a shade of blue, right? It was so hard. So, so hard. But yeah. All right, what are we gonna talk about first?

Okay, first topic for today is your topic-

Yeah

... Amazon Lockers.

Amazon Lockers. So we've gotten this question quite a bit, uh, and we've, uh, we've done some brick-and-mortar audits lately. Um, it, you know, like, sales tax has been a little lethargic, and so cities have been looking for a little bit of extra money, and they, you know, wanna go in and make sure everybody's paying them. So we've been doing some brick-and-mortar audits. Uh, those are somewhat fun. It kind of breaks up the monotony of what we do every day. Um, and so we've done a couple of those, and, and what we've noticed in that is, we've come across some Amazon Lockers, and we've gotten some questions from clients about Amazon Lockers as well. It's a really interesting, uh, topic, because Amazon Lockers are basically like a place of business, except somebody's not there, right?

They would not-

So

... fall under the place of business rules.

They wouldn't fall under the place of business definition. Uh, and I'm gonna kind of get that, to that in just a second, but these Amazon Lockers are being placed outside of, you know, gas stations-

Gas stations, yeah

... and grocery stores and things like that, and multiple areas. And basically, an Amazon Locker, for those that, you know, don't use it, you know, 'cause-

Yeah

... I have, like, the little thing on my garage door where they, like, open my garage door, put the package in, and then close my garage door. Um, you know, the MyQ, I think that's what it's called.

Mm-hmm.

Um, and so but an Amazon Locker allows you to basically have your package delivered to this secure locker location so that it can't be stolen off your front porch, right? Like, that's the point of the Amazon Locker. I think Amazon actually gives you a little bit of an incentive, too, if you get something delivered to a, a locker in a high, high area. Like, they'll give you, like, a dollar off or something like that. Uh, so they-

It's probably also easier 'cause it's just one stop, and they can deliver-

Yeah

... multiple packages.

Yeah, it's, uh, it's, it's kind of like, uh, kind of like FedEx using Walgreens. I don't know if anybody's done that. Or, um, you know, it's like my FedEx person now does not, like, put a sticky on my door and say, "Hey, we'll be back tomorrow." They basically put a sticky on my door and say, "Go to your local Walgreens and pick up your package," which is interesting. Uh, UPS does the same thing with their UPS Stores, uh, that are out, where you go pick up that package at the local UPS. So but with an Amazon Locker, the question is, is how does the sales tax work on an Amazon Locker? And because if, if it's not a place of business, then it should be taxed to the point of delivery.

Which is there-

And-

... at the locker

... which is there, which is at the locker. And we have confirmed with the Comptroller's office that that is how they're supposed to be taxed. What we haven't been able to confirm, though, is, is that actually included in the data somewhere? Because just like remote sales tax, we don't get to see any type of address listing for what was purchased to what address.

Mm-hmm.

And this brings up, like, this bigger topic, which is, aren't we kind of getting to a point where we should start to require online purchasers at some point? I mean, this is gonna be a debate. I see Chad shaking his head, like, "This is too hard, too difficult." I could see it. But how do we know that all the packages that are going to that Amazon Locker are being taxed correctly?

Um, well, that's what we pay the Comptroller for, right?

It's a lot of money, by the way.

Just-

Throw that out there again

... yes, if you, if you wanna know how much, just go back to the last episode. I think we talked about it there.

Correct.

Um, you think that, uh, say, a Fort Worth has, you know, several hundred thousand addresses where an Amazon package could be delivered. For, from, from my perspective, I don't wanna see all that noise in my sales tax.... like, when I'm looking at Zactax or if you have what other-

Yeah

... other platform, like, I don't wanna see every single address as a place of business or, like, a point of delivery. I think it would require the comptroller to totally change their reporting.

Yes, it would.

Um, it would definitely require the businesses to. Um, 'cause right now they would just say, "Okay, here's all the addresses in, you know, Flower Mound or San Marcos or whatever," and bundle that up as one number, and then it comes to you as a list filer, right? So, like, you see-

Right

... the amount that amazonservices.com, Amazon Marketplace, that they remitted on your behalf to items that were delivered there. Those lockers are just gonna be a part of that number. Now-

Of course, but don't you, don't, don't you think there should be some type of, like, auditable track for that? 'Cause right now there's not.

Okay. Well, I don't think the cities are ever gonna see that-

Okay

... because the cities don't get the details of those audits right now, generally speaking. Like, there's a huge audit right now we have no details on, right?

Oh, 100%.

And we're never gonna get details on it. It's a massive audit adjustment.

Correct.

Uh-

But don't you think we ought to be talking, like, legislatively about there should be some type of, um-

I, I think it would be fair to say-

... transparency to the audit process of, of remote taxpayers?

I think it would be fair to say if a business has over a certain threshold of sales taxes remitted or taxable sales as a list filer, that the comptroller has to do a routine audit on those transactions to make sure that they're being filed correctly. Um, I think that'd be fine, and if that was released as some kind of report, like, you know, everything checked out or we found 10% of their sales were misallocated or things like that. Um, but I, I mean, I, I just... Given how backlogged the comptroller is right now, even simple requests are taking, like, not, not even, like, public information requests, but just, "I have a question about this," can take 15, 20 days to get a response-

Yeah

... um-

Yeah

by, by our team. Like, there's- they don't have the resources staffing-wise to do those kinds of audits on a regular basis.

Man, I wish we... You know, we'd never be able to get somebody in the comptroller's office to actually say this out on our podcast, but there's a multitude of reasons for that, right? One, retirements. Uh, we have fantastically long-tenured comptroller employees who are retiring-

Mm-hmm

... or retired, uh, recently. And two, frankly, man, when we came out of grad school, you could make a lot of money working for the comptroller's office as a, you know, budget, finance, you know, numbers nerd, right? Now, you're gonna get paid a significant amount more working for a city or the private sector, for sure, but you're gonna get paid significantly more in a city for that same role, you know, for that analyst role, than you would for the comptroller's office.

Yeah, probably so.

Um, because the state has just really clamped down on, um, on where their pay is. Uh, and man, that just continues to happen. I mean, we're not seeing it just in the comptroller's office. You saw it last legislative session in the LBB, Legislative Budget Board, which by the way, is, like, one of the most important functions of any analytical-minded people in the state. Uh, if you know anybody that's been at LBB or you understand what LBB does, um, they're huge-

It's like the CBO for the Texas Legislature.

It's, it's like the CBO, and every, every piece of legislation that comes forward in Texas has to have a fiscal note from LBB, right? And those fiscal notes really control a lot. Um-

Yeah.

But-

Those fiscal notes are also largely worthless when it comes to city-related things, but that's okay. We'll talk about that later.

Well, they're worthless when it... Yeah, we're- they're worthless when it comes to city-related things because it, it... And to be fair, LBB has had to limit what their analysis looks at and how... They, they just don't have the ability, the firepower anymore to do some of that stuff. But, um, I, I think on the Amazon lockers, though, to wrap up the Amazon locker conversation, twofold. One, yeah, I, I, I kinda convinced you there for a little bit. I don't think you realize that you came to my side there, but-

On what?

There should be some form of transparency on, you know, list payers that are paying so much money.

I'll tell you what-

In sales tax statewide

... it would really help, it would really help our, uh, economics platform if we could see how much remote tax was generated by each household.

That would be fantastic.

Like, from that side, I would, I would appreciate it. But from just-

Yeah

... a normal, everyday analytic side, it would just be, it'd be way too much data.

It'd be, yeah.

I, I don't think it'd be feasible.

You don't think, you don't think Amazon or these list filers could provide an annual report pretty easily to say, "This is how much was bought through our platform at this address?"

I mean, it's... Sure, like, um, but I bet they could.

They could be a little too big brother-ish, too, though.

Yeah. Uh, I, I would imagine there would be privacy concerns especially if-

Yeah

... you're talking about sensitive things, like adult-oriented online vendors.

Wow, that's where you went? I was thinking, like, gun purchases, you know.

Well-

Nobody really wants the government-

You got-

... to know what guns they own. That's, that's always been, like, a-

It's like they're-

... NRA argument.

You register them, though.

I'm not saying it's my argument. I'm just saying, you know, it is what it is.

I mean, if you go buy a gun, you've gotta give them your driver's license and do a background check, so it's not like it's a secret.

Not at every... You could buy a gun at a gun show and not give them an address, right?

I've bought-

You can do a peer-to-peer-

I've purchased one gun-

You can do a peer-to-peer purchase without a-

Well, that's true-

... without a transfer

... but that's not, that's not gonna be sales taxable anyway.

Yeah.

Or at least it's probably not gonna be-

It's not gonna be-

... collected

... reported as sales taxable.

Correct.

Yes, it, it should be sales taxable by, by the, uh, the rules there. So, uh, anyways, uh, two things on the Amazon locker. One, as a city, 'cause this is where I got the question: Should we allow these? Should we encourage these? The answer is yes. Yeah, you-

Well, okay

... an Amazon locker in your city should generate-

I'm, I'm glad that you went there, so you go ahead-

A net positive revenue

... and I'm gonna come back to it.

Right. Okay. Um, and then two, the transparency conversation that we've already had. But I, I think we do need... I do need to say for sure that, you know, in, in my opinion, I don't know if you agree with me or not, it's not a bad thing to have Amazon lockers.... it's, it's only going to secure sales tax revenue. And if somebody from outside your city buys something and places it in an Amazon Locker, you're actually receiving sales tax that you would not normally have received-

Yeah, so-

- according to the Comptroller's office.

So interestingly-

Which I 100% trust

... uh, I'm pretty sure that we were the first Amazon Locker. Do you remember this? Like, 10 years ago, at the holidays, we created a program called Gift Guard.

Oh, we did, yeah, 100%.

And we-

I remember this

... basically allowed anyone in a reasonable area, like, anyone who wanted to drive to Hudson Oaks City Hall, could have their packages shipped to Hudson Oaks City Hall, and we would keep them securely for you.

Yeah, which-

Whether it was because you didn't want them to get stolen or because they had Christmas gifts that you didn't want your kids to find, um, you could have them shipped to City Hall, and then guess what? We got the sales tax.

It was a money play, total money play. Uh, and... 'Cause we had no package theft in Hudson Oaks. Let's face it, we, we didn't. We had a great police department, which is basically a private security force that hits every residential street multiple times a day. Um, we didn't have package theft, but we had 60% of adjoining communities' traffic that would drive through Hudson Oaks every day, and we thought, "Well..." And we had a huge social media following. We had an enormous social media following for cities at that time. And so we're like, "Oh, yeah, we'll do this," and we- ... To be fair, we actually had quite a few, like, large packages.

Mm-hmm.

You know, things that were extremely valuable, uh, that-

Yeah

- got delivered there, so, you know, for-

It, it worked out well because we typically didn't have a December council meeting-

Yeah

... because the council chambers was, like, half full of packages.

I'm not sure the rest of the staff loved the program as much as we did, uh, mainly 'cause they had to, you know, basically work as, you know, people to help grab packages for people-

Mm

... right? Uh, but we did have, like, a dolly in there for people, right? Like, we gave them a dolly. We gave them a cart. We gave them help with it.

Yeah, and we even had-

Yeah

... a little online, uh, system where you could enter tracking numbers and your information, so then, like, we could keep-

Right

... make sure we knew if it was coming, to expect it.

Yeah.

So, and how to get a hold of you-

And did we notify them-

... if you forgot about it? Yeah, yeah.

Yeah, and we notified them when we got it, too, right?

Right.

Like, "Hey, we have your package."

Yeah.

Okay, yeah. Dude, that was pretty slick back then.

Yeah, it was a pretty robust system.

That was a long time ago.

It was.

It was. I mean, that was a little bit more robust than Jumbles.

Yes. Yeah, it was. Uh, and it had a lot more users. Um-

Yeah

... so, so you said that both you, you should allow them and you should encourage them. I'm curious what your take on them is just generally from a, like, a social or community development standpoint. Like, should we really be encouraging even more-

Distance them, yeah

... distance between our, like, from our retail and, uh, like, retail environment to be less social?

Uh, how is that... I, I guess from an Amazon Locker standpoint, how is that less social?

I mean, maybe it's not, 'cause you're gonna buy from Amazon-

Yeah

... either way.

Yeah.

But is there, like, is there a deeper principle or concern that maybe we should be... Like, do we want our cities to just basically just be Amazon Lockers?

I, I don't think-

Because-

... we want our cities to basically be Amazon Lockers. Like, I think we need to establish local economic generation that occurs, right? And we've talked about it time and time again that, you know, look, Main Street by square foot does much better than Wall Street by square foot does. And, and what we mean by that is, is, like, your downtown district with small mom-and-pop shops generates more sales tax per square foot than your Walmart store does.

And property tax.

And, and property tax, correct, yeah.

And that-

So-

... any income goes back into the community much more.

Correct. Yeah, and so I, I think, I think that's what we need to focus on. I think Amazon... But focusing on trying to get people to not shop remotely, like, that's a dying cause. That's not gonna happen. And that is a once in a generational change, like CompuServe and AOL were a generational change for us as kids, right? Like, that's just not gonna... W- we're not gonna all of a sudden go start shopping for ease-of-life issues. Now, here's the d- thing: things that people like to feel, touch, and understand, right? So, uh, bedsheets-

Mattresses

... pillows, mattresses, um-

I just listened to a-

You know, buying, buying furniture, those type of things, like, those things are still gonna do fairly well in a retail space.

I, I just listened to an old Freakonomics podcast episode and caught a lot of grief from my wife about it, about why there are so many mattress stores. It's pretty interesting.

Well, one was a Ponzi scheme.

Yeah, but-

Right

... mostly they just have extremely high margins.

Oh, very high margins.

So... And you-

Yeah

... don't have to store inventory there.

We've got a guy here in Parker County who has, like, a small mattress store. He does quite well, and he's, like, a one-man mattress store.

Yeah.

So-

Yeah, they were saying at the time, most, uh, most Mattress Firm locations only needed to sell about 12 to 20 mattresses a month-

That's crazy

... in order to break even.

Yeah. It's nuts. Um, and, and their salespeople are commission-based, right?

Right.

So they're not making a lot of money on the front end unless they sell mattresses. So yeah, it's, it is wild for sure. Um, you know, the game's changed a little bit with the advent of, like, Casper and-

Mm-hmm

... some of those. Those, I, I'll be honest with you, they're not very g- that... It, it doesn't compare to my Beautyrest.

Nope.

Yeah.

I don't know about you.

I have resisted... Like, we have a pretty nice bed. Um, but we-

Are you a Sealy Posturepedic Firm guy-

I am

... or Soft one?

I-

Pilltop or no pilltop?

S- uh, well, uh, I don't really have the option to decide what we get, so I kinda go- Like, well, probably we should... We would benefit from one of those, uh, dual firmness mattresses.

Uh-huh.

You know, where, like, you can adjust it. Um, I, I do like it a little bit more firm than, than my wife does. Um, but yeah, something about-

You can do that with Posturepedic.... yeah, we, we don't have, we don't have one.

Okay.

Like, maybe the next, next bed we get will, will be one of those. But yeah, I, I'm also a bit skeptical about buying a mattress that I'm sleeping on every single day online without actually, like, testing it out first.

Okay. Yeah.

So-

I, I mean, the last mattress that we bought, uh, we went to Nebraska Furniture Mart, and basically just, like, tried out all the mattresses while we were there-

Yeah

... for, like, a solid hour and a half.

Whichever one you fell asleep on is the one you bought.

Yeah, we just- yeah, yeah, did- went there. I mean, I fully understand. Mattresses are a very important decision. But my kid has a Casper mattress, and I kind of feel bad for him, my youngest. So-

Kids don't know the difference.

Yep, true. So next topic, man.

Let's roll into-

Next topic. Uh, you wanna talk positive or negative first?

Um-

I feel like the zoning conversation's kind of a crab sandwich.

Okay, we can go to the other one first.

Okay, let's-

That's fine

... let's, let's-

We also don't need to spend a ton of time on it, so if you wanna make sure we have enough time-

Yeah

... to hit the, uh, the second one or the third one, that's, that's good.

Yeah, so let's, let's talk a little bit about, uh, the Y'allitics episode. If you're not familiar with Y'allitics, I think we've talked about it before.

We have.

Um, yeah, so if you're not familiar with Y'allitics, WFAA, uh, they're two political, uh, reporters, um-

The two Jasons.

The two Jasons. Uh, they go to breweries around the state, and they meet with people, and they, uh, record these Y'allitics, and it's basically all about Texas politics. Um, and they had a guest on, uh-

Mm.

What was the guy's name? I can't remember the guy's name.

Chandler Crouch.

Yeah, Chandler Crouch, who's a Tarrant County guy.

He's a real estate agent who offers free property tax protest services.

Yes, it's chandlercrouch.com, right, is his website. Um, and he is a guy who has worked behind the scenes on appraisal district reform, not appraisal reform necessarily, but appraisal district reform. But he did get into some of that, uh, as well. So I wanna talk a little bit about some of the change in the laws that we're gonna see coming up this year. Uh, the biggest one is, is that appraisal districts currently, um, are not elected boards. They're, uh, appointed by a percentage of the share that a taxing jurisdiction has within the appraisal district, right? So, um, those board members right now are mainly appointed by the largest cities and the largest school districts. The school districts really kind of control appraisal boards more than, uh, than any other entity, just because they tend to be the larger taxing jurisdictions from a taxation standpoint, 'cause-

Higher rates

... it's not based on- it's, it's based on your percentage of tax that you're taking, right? Uh, so obviously the jurisdictions that are larger with higher rates are gonna take more, and they're gonna have higher votes. Um, which means when you decrease your tax rates, over time you have less control, and you pay for less of the budget for the appraisal district, is also the way that it works. So with school district reform that we saw this year, um, and with, uh, some of the tax decreases that we had in property taxes that were pushed from the legislature, local cities actually got a... and special districts and counties, got a significantly higher share of the cost of appraisal districts because it changed the balance, right, uh, in the way that they did that, and that's just the way the funding mechanisms and formulas are set up in appraisal districts. But those boards are also appointed that way. The new rules are there are going to be three elected board members that are gonna run for election, just like any other local politician. Um, so they're gonna run for election. You're now gonna have people electing appraisal board members, and those appraisal board members are then gonna become a part of the board as the elected members, and they also are gonna have some greater controls over ARB members. ARB is the Appraisal Review Board. So if you challenge your property taxes, and you can't get an agreement from staff, that's the first level, uh, staff is like, "Yeah, we don't agree with you," your next level before you have to sue the appraisal district, uh, is to go before the ARB, and the ARB is appointed individuals from the community. They get paid to be ARB members, and typically, it is a sweet spot for real estate agents to make money throughout the year. Uh, and, you know, those real estate agents, they've got to go make more money now because, boy, oh, boy, this- has their game changed lately. So these are the changes, and if these elected members, if two of three of the elected members do not want an ARB member, that ARB member will be automatically removed, and they'll have to replace that ARB member. So they have, like, a veto authority over the appointed ARBs. So there now will be somewhat representation within the taxation. Uh, right now, I think what shocked you, Chad, is that there was no representation for your taxation.

No. So my comment was that the idea that there was no representation was bogus to begin with, 'cause that's what the, this article or this, uh, episode is called.

Ah, okay.

"We Finally Have Representation in Taxation."

Yeah, okay. I gotcha.

There is plenty of representation. The, the appraisal district has a, has a mechanistic job.

Yep.

Their job is supposed to be free from politics. They have to appraise your property at market value. That's it.

Yep.

It shouldn't have... To the extent possible, it should not have a political angle.

A- asterisks, they have to appraise your residential property at market value.

Correct, yes.

Okay, let's-

Yes

... we're gonna talk about that in a minute.

Yeah.

So-

Yeah

... to the extent possible, they shouldn't have a political agenda. Like, the, the focus of this episode was we need people on the appraisal boards that are advocates for the taxpayer. That's not the appraisal district's job.

Yes, agreed.

The appraisal district's job is to, to estimate what your v- property is valued at and what it's worth.

A- agreed.

So this guy who was talking, what was his name again? I'm sorry.

Chandler Crouch.

Oh, Chandler Crouch. So, so Chandler... Uh, I'm glad we agree on this. We did not green-room this conversation before we started, so I actually thought we were on separate pages here, but I'm glad we agree. In my opinion-

... this is another, "We've gotta go find a boogeyman for a problem that we need to fix, because everybody complains about it, so we have to find, like, this populist boogeyman that's out there." And that populist boogeyman is these appraisal boards, because they're just these evil people who are not accountable to the taxpayer, and they're just out there to screw the taxpayer, right?

Mm-hmm.

Let me be very clear. The person who's out there to screw the taxpayer is your state representative and your state senator, who continue to have different appraisal methods. That's the person screwing the taxpayer, okay? The person you're pulling the lever for at the ballot box is the person screwing over the taxpayer.

Yeah, so-

We've talked about it.

So they actually discussed that-

We've, we've done analysis on it.

They actually discuss that in the episode?

They do, and that's something-

They, they talk about commercial pr- appraisals and how they're based on income and things like this, and so if a store starts making more money, then the, the appraisal goes up. That is not true.

Yes.

100%. We have the sales tax data. We have the appraisal data. It is not true.

Not true.

The appraisal districts are not using actual sales and income to, to value commercial properties. Large commercial properties with national tenants are getting valued based on lawsuits.

Yes.

Right? So here's the deal-

I guarantee you that Walmart is making more money now than they were five years ago, and their appraisal value is identical.

Yep.

It's not an in- it's, it's, it's not an income-based appraisal as you would expect it to be, based on the terminology.

Man, I don't think I've been this excited to talk about a topic for, like, two years, and, and I'm just, like... I'm, like, shaking with giddiness right now. That is the o- that, like... I just ran away with that when I heard that out loud, right? Because we knew, and I just had a conversation with the city manager on this the other day, too. We know that the Walmart values are the same. We know the Lowe's values are the same.

It's public data.

We know the Home Depots, the Targets. It's public data. You can see it. We've done the analysis. Um, Hey Team just hired a data scientist, super excited about that, so that we can do more of this stuff and look into it even deeper. But as cities, we have to get more aggressive in this conversation, right? Because the conversation is so filled with untruth, with just populist, evil untruth, that it shapes it.

I don't know that I would go that far.

No, it-

I don't know that I would call it evil, because the c- system is so complicated, that you can think that you understand it. I don't even think that I understand it. Like, there's a-

So, so, but... Yeah.

There's a Dunning-Kruger effect, right, where you, like, you learn a little bit about it, and you think, "Oh, I, I've, I've got this. This is the problem." No, this system is so complex, there are hundreds of problems with it, and they all feed on each other.

Yes.

So yeah-

Correct

... it's j- just making, like, one boogeyman out of it i- is, is easy to do, because it riles people up.

Well, and I think that's what they did.

It's way more complicated than that.

They, they did this with the board process, right? They did it with, uh, with revenue caps, with 3.5% revenue caps. They've done it... You know, so the state legislature at this point has just gone down this laundry list of these things that we're going to do to fix these issues. And to be fair, guys, the far right doesn't really even agree with what the legislature's done at this point, right? So, like, it's a Band-Aid on something, and, like, the public policy foundation that's out there, it... They, they don't even really... It's not exactly what they would propose, and we don't agree with what... I don't personally agree with what they would propose, either. Now, the reality is-

They're proposing 0% growth, but without votes.

That's correct. Yeah, with... I mean, and how in the world would you ever... Uh, you would just start to destroy governmental services, and, uh, you know, you'd get into a California situation, where you're just gonna have to fee the life out of everybody for everything. You go to the park, congratulations, you're paying a fee, right? Uh, you drive on that city road, we're gonna charge you by the mile to drive on the roads. Like, it's just y- you're gonna have to pay for services, people, one way or the other. Um, and a taxation system is, is a more fairer way to do that than some other ways. So we've been doing it for years, folks. I mean, even after we threw the tea off the British ship and we formed our own government, we then created our own taxation system. I mean, come on, let's be realistic. My issue with this, the reason I said evil, is because we, we create a lie, right, based on a small truth. So we take a small truth. We take one individual who does something bad, right? We take one issue with building materials, and we... You know, where somebody's, um, you know, uncle is u- is put into a city code that they have to use a specific fixture, right? We use that, and we say, "All cities across the board cannot do anything with building materials now," right? We do that everywhere, but now they're doing that in an area that's super complicated, right? And they're actually making it more complex and more complicated as they go, and what they need to do is look at how we appraise. Now, here's where I think Chandler Couch made some good points. Commercial appraisals are not on the same system as residential appraisals. We've talked about this for years. Uh, residential appraisals are on a market-based system, so if your neighbor's house sells for X, your house is probably worth the same amount per square foot or somewhere close, based on that market value. Commercial is done by lawsuits, by revenue methods, by... You know, there's a multitude of methods that are in the code, and they're not market, right? They can be, but they're not. And we know for a fact that they're not following sales, because we can show that, right? Uh, we could white paper that-

Well, we can see it.

We can just-

We can't show.

We can see it.

But we can see it.

Yeah, we can't show you, 'cause it's confidential data on the sales tax side, but 100%, we're telling everybody out there Walmart sales are growing or over the last five years are up, right? They're lethargic right now, but they're still up.... yet their property tax bill is not changing. So let's just, let's just be honest and get that information out there.

Well, well, let's say their property tax, um, their property tax appraisal-

Appraisal is not changing

... is not changing. Their property tax bill is going down-

Yes

... because of compression.

Yes. And it's going down at a faster rate than the residential side, because the residential side is growing within the compression, so the algebra and the flow of money is changing from one to the other, right?

Yes.

I wish you could actually see me making these hand signals to Chad like I'm landing a plane on an aircraft carrier. But this is a, this is a major issue that we have to address, and Chandler goes into this in this Y'allitics episode. I would- I really would strongly encourage everybody to go listen to this. It's very important.

Just j- just like the Jasons, have a beer so that you don't get your blood pressure up too much, 'cause there are some things that-

Yeah, it's gonna... It's- yeah, and Chandler drun- drank water the whole time, which they kind of made fun of him for-

Yeah

... like, five or six times, 'cause he's on, like, a keto diet. I don't know. So, uh, I've lost a lot of weight. I still drink beers. So anyways, all that being said...

Yeah, the Med- by the way, the Modelo Oros are pretty good. Or Or- Oros.

They are pretty good.

Yeah.

Did we t- did we talk about that off, off-

On air, yeah

... camera? Like, off... Yeah, okay, yeah. So if you're looking for a light beer that has very few calories, and you still want something to have some taste, Modelo Oro is for you.

There you go. It's, like, 95 calories-

So-

... three carbs.

I feel like we're not sponsored by them, but I probably should say, uh, "Please drink responsibly."

Yes.

21 and up only. So, 'cause I, I feel like we have to do that. Uh, but anyways, he does bring up a good point, which is not only should we rethink commercial appraisals and business appraisals, but we also should rethink residential appraisals. Is it reasonable to tax people on unrealized gains? I think that's a big question that we should have a conversation about.

That's the- that's what property tax is.

It, it is, yeah. It, it is, it is a tax on unrealized gains. Um, and it's funny, because he almost gets to the point where he's like, "Well, maybe we should have..." He doesn't say it, right? But... And this is a fairly conservative guy, but he almost gets to the point where it's like, "Well, maybe we should figure out some other taxation system. I mean, a consumption tax, I just really can't make the math work, you know, to do a, a flat tax, a, you know, blah, blah, blah, blah, blah." He doesn't say it, but I thought to myself, "Didn't we just pass a constitutional amendment against an income tax?"

Mm-hmm.

I mean, so we, we basically just limited ourselves severely to do what-

Yeah

... he was actually-

Like, honestly-

... kind of suggesting without saying it.

If the alternative is that you get taxed on income that you make, and you don't get taxed on income you don't make, versus getting taxed repeatedly on the value of something that you can't actually access, we can't complain-

Well, and-

... about the property tax system and then say, "But an income tax is just not gonna happen." Like, we can never do that. That would just not be Texan.

Well, so here, here's the thing-

You can't have it both ways.

We, we talk about the, the, the, the kernel of truth that's in this, right? So one of the things that's talked about all the time in property tax reform is we've got to stop taxing people out of their homes, right? It's talked about every single time we talk about this. "We've got to stop taxing people out of their homes." To be fair, that's actually somewhat of a good point. It has a little bit of truth to it, right? You have somebody who's been living in a house for 40 or 50 years-

Guess what?

They-

They have they have over 65 exemptions.

They do now.

In many places-

Right

... they have freezes.

They do have freezes in many places, right? Um, but the reality of it is, is that I'm living in a house right now where I went, even with the reform that we had, that I paid, like, $4,500 a year in taxes when I moved in in 2013, right? And now, you know, I'm paying almost $11,000 a year in taxes in that same house, right? And before somebody says, "My 2013 tax or my 2014 tax really was on fully improved value. It wasn't a new house with that fully improved value that grew," that comes up all the time. I have to have that conversation with a lot of people. But the very first step in this conversation is, "Hey, let's not talk about what we need to fix until we can get the numbers right." If... I actually don't have any problem at all with taxing commercial properties based on revenue, right? I don't, I don't have any issue with that at all, if that's the path we wanna take. What we really need to talk about-

It's not like we don't have the data.

That's correct. We have the data. We have the ability to do that. The comptroller has everything they would need in order to do that and send that. We already send it to other entities under confidential data requirements. Why couldn't we send it to appraisal districts so that they could do the same thing, right? And I'm, I'm not... I wanna be very clear, I'm not looking to get any appraisal district sales tax analysis game. I mean, that would be a big market for us.

Yes.

254 of them, it'd be fantastic, but we're, we're not looking at that. We're just trying to say, there's got to be a different way, because that Walmart store is selling more. So therefore, in the eyes of Walmart... I don't care about in the eyes to somebody else, right? 'Cause that's what they argue. "Well, in the eyes of somebody else, they can't do anything with 200,000 square foot," right? I don't care. In the eyes of Walmart, you're operating there, you're putting pressure on the system, you have traffic, you're using the police department, the fire department, and everybody else to deal with everything that you've got, and your sales went up 6%, so why are we not making 6% more off of you, right? That's a very logical conversation. Why can't we have it? And I think your comment about whatever that nerdy topic is, what's the effect? What'd you call it there, Sheldon?

The what?

The, the Dunning-Browning effect, or the Dunning-

Oh, the, the Dunning-Kruger.

Dunning-Kruger effect, right?

Yes.

Is our legislative officials do not wanna think about the hard. This is hard. This is not easy. It's very difficult. You may have to have different buckets. You may have to say, "Residents account for this, and they account for this expense. Commercial accounts for this, and it accounts for this expense," and so we have to have buckets that charge for those things, right? Just like, you know, you say, "Oh, that's just too difficult to do," we do it in water and sewer all the time. ... We do it now.

That's true.

We do it in transportation fees, we do it in drainage fees. I just, I just think it's extremely important for us to take a sec and stop, and as cities, we have to start driving this conversation. Stop fighting the things we can't win, 'cause that's what we've done for the last legislative two sessions. That's what we've done. We've gotten really scared, and we're about to get to another topic. We've gotten really scared about these big topics that have come out of the governor's office or lieutenant governor's office or the far right or wherever, right? And we've found the boogeyman, and we're gonna try to fight the boogeyman from getting passed. And I'll tell you what, folks, what we've learned is, is when we fight the boogeyman, the boogeyman is winning, right?

He fights harder.

He fights harder.

Yeah, and-

And so-

... and the boogeyman is about to take away your ability to lobby him, so there's that, too.

100%. So what we need to do is become a part of the conversation. We need to have logical discussions, and I will tell you, the legislators that I have talked to, that I have sat down and explained this to, they start to get a light. They start to see it. But the problem is, we can't do that on our own, 'cause I'm not allowed to talk to a legislator more than 40 hours a year, right? 'Cause I'm not gonna be a lobbyist. We're not doing that for you, sorry. But the reality of it is, is that if every city official goes and talks, if every appraisal district chief appraiser, if everybody starts to have conversations with their state legislature, if we put together local economic advisory committees and things like that to go have these conversations, we could become significantly more sustainable within our tax system and not impact our residential customers. And by the way, if you're a city, the people who actually vote for you, right? Let's not forget that you- your council members, who hire and fire you, are elected by the people who live in the houses. So why are we giving these huge discounts, huge discounts to the business community? I mean, we could study this. You could study this. There is plenty of, of thi- we, we go in and do a water rate study for $100,000 a year, yet we're not gonna spend $10,000 to study the overall impact of commercial versus residential and the tax rate differences for the last 10 years? Come on, guys, we've got to do something about it, 'cause if we don't, we're gonna continually get, uh, capped on everything we do, and it's just gonna continue to get ugly because they're gonna look for the next populous message. They're gonna look for the next thing that's easy to digest, and the easiest thing to digest is you, as in cities.

Yep.

Yep.

Yeah. So I'll throw this out there again as we wrap this up. I w- I admit I have not done enough studying on it, but I am still intrigued by the idea of split rates-

Yep

... and having those effective rate, uh, calculations be done on commercial and residential separately.

I mean, it's a d- it's a dart at the wall, right?

It's just something.

Like, we're just, we're just throwing it up there as an idea.

But at least it would mean that-

Yeah

... the commercial rate would go up as commercial values stay flat, and the residential rate would come down lower, right?

Correct.

Um, uh, or come, come down more.

Which, which means that the burden would remain similar.

Would remain relatively constant, generally speaking.

With existing values.

Or at least-

I would say that

... it would-

Burden with existing values.

Yeah, it would remain-

Yeah

... more consistent across time than it is now.

Correct.

Right? The other thing is, guys, residential values are going up in large part because we aren't building enough. Like, there's more demand than supply, so the value of a home goes up, right?

Mm-hmm.

And that is partly causing tax bills to go up, even if rates are being compressed. So with that in mind-

Let's talk about the next-

Let's segue to our next topic

... unwinnable boogeyman battle.

Which is-

Yes

... guess what, cities? Zoning reform is coming next session.

Yep, which, to be fair, you foreshadowed this two podcasts ago, maybe three?

Uh, I brought it up.

I mean, I think we've talked about it for quite a while. Yeah, you've brought it up a couple of times, and-

It's the benefit of trolling the TPPF, is that I get al- see also other stuff that they do.

If you haven't caught that yet, you gotta follow Chad on Twitter, uh, because lately, Chad and the Texas Public Policy Foundation-

I, I've only done it... I, I did it on one property tax- they, they, they wrote a-

Ah

... property tax article, uh, or they commented on a news article, and I went in and found the person who was being interviewed and found where he lived and looked at his appraisals, and then debunked the article.

Yeah.

It took about five minutes, 'cause everything is public, which is wonderful.

Yeah.

But mostly, uh, I was trolling them on the city manager salary question.

Yes.

So.

Yeah, when they said that $475,000, um, a year was too much in salary for the city of Austin.

Yeah.

Which-

The problem was-

It's crazy, guys

... the problem with these, with these brand feeds is that they just repost the same thing over and over and over again, in case you didn't see it the, you know, first or the 12th time. So it just kept popping up in my feed, and I was like, every time, I got to just, like, say something about it, like post a picture of the Buc-ee's-

Yeah

... board, where the Buc-ee's manager makes, like, 250, right? Like, the Walmart-

Yeah

... uh, s- you know, manager making 470,000 or something like that. So anyway.

Yeah. I mean, congratulations to TC for getting that Austin job, by the way. Uh, he's a UNT alum. Congrats to him. You could not pay me a million dollars to take that job-

No

... let alone 475.

Yeah.

So.

So the point is, it's in the air, it's swirling around, we're gonna have some kind of zoning reform, whether that is, um, reducing or, or eliminating minimum lot sizes, uh, whether it's full scale... Like, I, I, I don't think it's gonna be, like, full scale and you can't have zoning anymore, but there's gonna be some changes to what cities are allowed to do with regards to land use.

Yeah, it's gonna be detached residential units, I think is probably gonna be one of the areas that's there, right. It's gonna be, like, lot size requirements, probably gonna be some adjustment there. It's gonna be detached residential units, very similar to what just happened in California. Um-

And it might possibly be, um-... although I, uh, part of me thinks that this is not likely in this session, but it's- there's a possibility that you could see, uh, no more single-family zoning, right? Like, you can't restrict things like duplexes or triplexes-

Right

... um, out of a certain area. Yeah, I think that would be-

If it's residential, then it could be residential. I think that would be a very far pendulum. I, I think, uh, I think there's a possibility for some really strong HOA reform, where they basically take away the ability for HOAs to also govern that. I think, uh, Montana is the state where we saw that. It didn't pass when they had HOAs protected, and it did pass when HOAs were removed from that conversation. Um, and, and you can, you can kind of look at, like, some very, like, cowboy conservative states, and then you can look at some, like, really liberal states, and you can kind of see where Texas is gonna land in the middle right now. You see that in the education conversation as well. Um, but we're hearing the same message from the left side of the aisle as we're hearing from the right side of the aisle. It's all about affordable housing, right? It's all about the cost of housing. It's all about affordable housing. The right is interested in this for the simple reason of they're trying to push down the inflationary impact on housing, right? So they're- and their idea-

Well, also, you're not gonna bring... Even though people are moving from California to Texas, and they're getting a huge discount on their houses, like you- if you're still gonna be trying to import new businesses-

Jobs

... and be, be the Texas miracle, like, they have to have- people have to have a place to live, right? So-

Which, uh, which Austin, to be fair, has shown some success with this lately.

Which we talked about last time.

Right. We, we talked about it last time. Um, and, and so just to recap that real quick, but Austin has allowed a lot more multifamily units to be built than they have in the past, and they made some, you know, minor zoning changes to get there, and their rent rates have fallen, you know, precipitously over the last year. Uh, and that's, like, the first time we've seen that happen in Austin in generations at this point. So, um, so I, I think the right is looking at this from a standpoint of trying to push down the cost of housing, uh, from a standpoint of taxation. If they can push down the cost of housing, then taxes will fall as well, and they see that as another mechanism to control property taxes. Um, the left looks at this as an affordable housing issue. It's a, "If we can build more, uh, and if we can build in smaller formats, and we can build in duplex, triplex, m- you know, multifamily, and smaller lot single family, and there's no restrictions for that in these communities, then we can diversify the communities, especially the suburbs and exurbs, from what they are currently," right? Which is larger lot, larger tract, homes that really affordability is, is a major concern, right? From a standpoint of, like, you can't, you can't build a home on a half acre in today's world and not pay seven, eight hundred, nine hundred thousand, uh, if you want just a little bit of grass. So, um... Or if you want the amenities of those communities that are being built out there, so forth and so on. So, but once again, we shouldn't spend our time saying no. We should spend our time talking about the benefits. We should treat this like a city manager treats something coming before city council. We have this proposal. Here's the pros, here's the cons. Let's talk them through, and let's try to make a smart policy decision. It is our job as city officials to assist in the policy development, not to make the policy decision, but to assist in the development of that policy. I think we've lost our way on that because we've just come out... It doesn't matter whether we're talking about school districts or we're talking about local governments, none of that matters. Every single one of the professionals in the field right now are just in this no position. "Well, they're just gonna screw us anyways, so we're just gonna be against it." Now, we've got to change that topic. We've got to change the, the, the dynamic of the conversation, uh, because the reality is, is I think some of them look at it, and we saw that in, uh, disannexation reform, you know, not in ETJ reform or annexation reform, but the disannexation stuff that came about. Um, you know what? Props to Granbury, Texas, on this because, uh, there was a bill that was put in specifically basically for Austin that would have done statewide, gone statewide, and it was, you know, if you don't have streetlights in a neighbourhood, then that neighbourhood can disannex. Well, basically, Granbury came up and said, "Hey, how much value are we gonna lose based on the neighbourhoods that we have if everybody that could qualify would disannex?" I mean, you- and when you sit down with your state senator and you say, "Hey, I need you to look at this. Like, we're not gonna be able to make bond payments," I don't know if that was the case in Granbury, I'm just saying out loud, "but we're gonna lose so much value, we're not gonna be making bond payments on our I&S rate, and, you know, you're basically gonna, you know, cripple, uh, this throughout the state," they'll start thinking again about it. But there's not somebody there who's educated and providing that data and talking to them about that like you would a city council member. We have to start treating these state legislators, these state reps, these state senators, we have to start spending more time with them and educating them on these issues and how they actually impact overall operations, and we have to stop being seen as people who just want to bring in more money, right? They see us like we're 1970s city managers. They see us like we're trying to grow money and grow FTEs, and we need to start showing them that, no, we're more strong Townsend. We're trying to be sustainable and efficient. That's what we're after.

Yeah.

And I think if we can start to have that conversation, we can really have an impact in Austin.

Yeah. The people need a place to live, and they're gonna live in cities. So it's be good-

Hundred percent

... for them to have to be around, right?

Yeah, absolutely. And, and look, uh, you know, ETJ reform is... Nothing is gonna increase tax burden more than ETJ reform. Um, I'm gonna- I'll say that right now. It's only been around now for, like, six months, and I'll say it right now, you are seeing more special districts, mud districts, freshwater supplies, all the above go into ETJs. Nothing will increase it more. You are seeing more developers that are in ETJs that wanna go into cities, but they're negotiating for PIDs and, you know, other stacking tax obligations because they know they can negotiate for it. Because if they're not gonna go into a city and get a PID, they're just gonna go out of a city and get a dollar twenty-five mud.... right? That's what we're seeing. So, but we didn't talk about that. We didn't tell the legislature that, "Hey, what you're doing is actually gonna cost significantly more money. And oh, by the way, they're probably gonna buy their water from us anyways, so we don't really care about the utility side. We'll just become a wholesale provider of that water, and they can go do what they wanna do on that 2,000 acres and just buy water and sewer from us, right? And we'll just transport that to the general fund." So I just- we need to have that... We, we never had that conversation. We never talked about that. We just said, "Oh, how dare you take away my ETJ? I can't believe it. What are you doing?" Let's go talk about the financial impact to the taxpayer and to the city, and I think we can really have a better conversation there.

Yep.

Am I- Can, can I get off the soapbox now?

Yeah, that's fine.

Okay.

Um, no, I, I think you're right, though. We need to be... We can't just stand there saying no. You've gotta find some way to be part of the conversation, otherwise we're gonna be left out of the conversation.

Mm-hmm.

The other thing is, we need to start preparing, just like in property tax when you can see the writing on the wall, you've gotta find some way to get to work around it, to change your operations, to change how you do things, so that you can aff- afford to operate, uh, in a s- scenario where over time you're gonna have less money than you would have otherwise expected. If the writing is on the wall here, let's start, like, looking at our neighbourhood ordinances, let's start looking at how we are building, so that we can find ways to change that's going to be complementary-

Mm

... to things like eliminating minimum lot sizes. Like, how can we build places that will allow us to adapt over time, right? Like, our typical s- suburban residential neighbourhood is not a flexible place.

No.

It is not built to adapt to any kind of changing scenario. It's pretty much just there. That's what it's gonna be. You can't repurpose a bunch of winding cul-de-sac neighbourhoods easily. Like, certainly not any more easily than you can repurpose an old shopping mall.

What got in the way? Here, here's a really good question for you. What got in the way more than anything in Hudson Oaks, in the redevelopment of the 1954 areas of Hudson Oaks? Nothing made that more difficult than the deed restrictions that were placed on the property back in 1954.

Yes, because we had to get a lot of signatures.

Yes.

Yeah.

It, it-

I forgot about that, 'cause I hadn't, I didn't actually have to do that. But yes, that was-

Thank you.

That was a nightmare.

Yeah. It, it was, it was an absolute nightmare. We had to go get, uh, 51% signatures, basically from everybody, in a very specific timeframe and term. Um, and it just made it so difficult. So not only is our single-family method right now not adaptable, but our legal mechanism within development does not allow for that a- at all either, right? Um, and we should encourage a more free market approach to growing wealth within a community. We actually cap our growth because we basically say it can't be anything but-

Such an important point, like the amount of pent-up wealth, and therefore tax revenue-

Yeah

... that we are just throwing away because you can't, you can't grow up anything that exists, is-

I mean, let me put this-

Unbelievable

... let me put this into perspective. Yeah, let me put this into perspective. Deed restrictions, folks, were put into place for a lot of people via racism.

Yes.

Right? We've adapted that now to basically keep out everything we don't want. I mean, that's basically what they've become. So cities, go have a conversation with the state. When, when this zoning reform comes up, this is a real opportunity to get away from this just closed-off development system that we have right now in Texas. We, we don't have the adaptability right now in many of our communities because we're so restricted on deed restrictions. You say, "Well, I mean, those deed restrictions really can't be enforced anymore." It doesn't matter. If it's in writing, whether it can be enforced or not, you can't get financing, you can't get, um, uh, you can't get title insurance. If you can't get those two things, you can't redevelop, right? I mean, that's what we found out with the developments that we're, that we were doing, right? Yeah, nobody was gonna come and sue, right? But even if the city got in the way and said, "Hey, we'll take the bulk of the law, like we'll reinsure a possible lawsuit for you," right? Because remember, we tried to negotiate that on some of those deals, too.

Mm-hmm.

It still came down to those Harvard attorneys saying to us, "Yeah, that's not enough," right? "We're gonna need an actual deed restriction waiver for the use that we're putting in here." And man, it just slowed it down. I mean, it took two years of process, and just slowed everything down because of it. Now, we have an opportunity. We know this is a problem, we know it's a pain point for cities. Let's go have that conversation: "Hey, why don't you allow redevelopment to occur and deed restrictions not to forbid that redevelopment within that mechanism?"

Uh, uh, you can stop me if this is gonna push us too long, but it's a, it's an interesting, uh, thing that you kind of are hinting at, is that don't look at this as sort of an imposition, but an opportunity.

Mm-hmm.

Right? How many people in actual planning departments or city managers' offices or budget departments would actually like to have redevelopment happen, but we can't because we can't get through the- those hurdles? Now, this is a potentially an opportunity to push those hurdles away-

Yep

... and, and sort of unlock this, this opportunity, this potential. So-

Oh, I think it's huge. I think it's a huge opportunity if we go, if we go take this, you know... If we go take Bevo by the horns here, Chad, it's a huge opportunity.

Well, how many, how many cities are actually part of their, uh, long-term strategy involve significant redevelopment of what's on the ground today? Landlocked cities, maybe.

Yeah.

Big cities, probably.

Yeah.

But, like, how many of your fringe suburban cities are even, even have that as part of their plan, right? It's new, new stuff. This is our greenfield space, right?

I, I, I would, I would agree with that. I think we're seeing more and more. I think this is a movement in the strong townsman world, I think in Texas-... we have something to do with that, right? And there are managers that, uh, that we feed off of as well, that have something to do with that. I think there's a cultural change there, but I think you're right. For the most part, a suburb is concerned about new green space, 'cause it's easier, right?

It's much easier.

But-

And once, once it's built, it's, it's there.

So I just talked to a landlocked community that we just did a brick-and-mortar audit for, and they have a large Walmart store that just converted their Walmart store, right? It was a 200,000 square foot of store, now it's 100,000 square foot of store and 100,000 square foot of automated warehousing, right? Uh, which is the new conversion that Walmart does. They just went through that whole process, and they went to Walmart and they said, "Hey, you know, first off, you never used half your parking lot, right? You're now not gonna use... We know you're on a decline for actual vehicular traffic at your store."

Mm-hmm.

"Right? Even though the sales tax is still the same and it's still growing, why can't we pad out, you know, two or three pads at the end of the parking lot?" And Walmart came in and said, "No." "Okay, what if we worked with the state and we said, 'Hey, in these parking lot deserts that we've built all over the state of Texas, you know, you've got to show a usability of that parking lot, or you've got to show some type of revenue generation on there, or you've got to have a penalty in your property tax assessment, because it's unused, not to highest special property.'"

Unproductive, yeah, unproductive land use.

Unproductive property tax, right? Boom! All of a sudden, you're gonna create a new market for redevelopment.

You're creating land, right? You don't have to go-

That's correct

... find it, it's there.

But we can't do that because we can't find the right person at Walmart who has the right mindset and the right thought to get that done, right? Um, I mean, to be fair, we've had a lot of conversations with H-E-B over the years about multi-family complexes wrapped into grocery developments, and I think they have adapted to that. If you look at everything they're basically doing in North Texas, they've, they've actually built quite a bit of stores-

Yeah

... directly adjacent to multi-family, and they have figured out that that's a benefit to them.

Yes.

But before-

All the, where those people in the shop when the store is right across the street.

100%.

Yeah.

But before that conversation was had and they were kind of pushed into that, they were reluctant. But with H-E-B, they're a local Texas company. Yeah, they're huge, don't get me wrong. But guys, I can pick up the phone and call a vice president at H-E-B right now, and they're gonna answer or respond to an email, right? Like, they're super easy to get a hold of. It's kind of impressive, to be honest, how flat an organization they really are. But you can have those in-depth conversations with a major retailer. We need to be able to do that with other players.

Yeah.

Targets, Walmarts, those players who have all of this parking lot, just see a parking lot desert, and we need to redevelop it.

Yeah. The other thing too is, that those, those locations are in high traffic areas, like in, on major arterials.

Yeah.

And if they're gonna get converted from an actual store, which is still ugly, it's still a big concrete box-

Yeah

... but to a literally an empty warehouse that's running, has robots running around it, at least let's use the unoccupied parking space and, and do something better with it. So there are-

Yes

... less major commercial areas are not warehouses all of a sudden. They don't shift from being retail to just warehouse.

Yes.

Like, that would devastate that'd be devastating, uh, from a like, what is my city standpoint?

A lot of food-

Is it we don't have a commercial corridor anymore, we have a warehouse.

Yeah. A lot of food for thought there. Um, as you can tell, we actually prepared for this episode. So, um, but that's pretty much... I mean, we've, we've gone almost an hour here-

We personally, yeah

... so we probably, yeah, so we probably need to wrap this one up. Uh, love your thoughts. Uh, we'll put some of this information in the show notes so you guys can listen to that Y'all Takes podcast. There's also a, a Texas Tribune article, um, that specifically references the zoning reform issues that are moving forward. Uh, and so it's kind of in that mainstream as well now, and so we'll put that out there so you guys can stay adept. And if you have any, uh, questions, or comments, or anything like that, you know how to get a hold of us, either by email, um, you know, through our, our LinkedIn pages, or as always, a lot of our clients have our cell phone numbers, so feel free to reach out. Uh, with that, Chad, I'm gonna wrap this up, man.

All right. Good talk.

Good talk, man. See you next time.