Greetings and welcome back to that cast your official podcast for local government nerdery after an extended summer hiatus. are back and better than ever. Patrick. How was your vacation?

Man, I'm so glad the kids are back in school. The last week of productivity has been amazing.

You Yeah, it's, we're at the stage now where it's not really a summer vacation. You know, even, even the, like the vacations that we take are not really vacations because the kids are just running around all over the place and having fun and crazy. And it's a lot of fun, but it's not restful. So.

Right. Can we have a conversation about the last ⁓ quote unquote vacation you just took?

Sure. Last weekend?

Okay, yeah, last weekend y'all went and you saw Wicked, right? So you flew to New York, saw Wicked, okay? And then the one thing I wanna talk about, and I noticed the pictures, right? But were you in a costume for the Lady Gaga concert?

No, I was not. I was wearing a shirt very much like this and my black joggers and I had a I found a really nice light Chelsea football club jacket ⁓ while I was there, which is good because I didn't realize it was going to be quite as cold as it was. ⁓

Okay. Right. Right.

Not that it was necessarily like objectively cold, but coming from, you know, upper nineties into the hundreds here in Texas and then going up there where you got lots of shade and you got wind tunnels through the buildings and stuff. even in like the mid seventies, it felt chilly at night. ⁓ so yeah, found a nice little jacket there. That's, was my, my costume. was not dolled up like many of the attendees, but so yeah. ⁓

I just noticed like you were in a picture but it was like only like a side view and you couldn't really tell if you were in a costume or not. So I really thought I would hold this. I wanted to hold this question for the podcast to like get you on the record of whether you went. Okay. So

Mm-hmm. No costume. So this was supposed to be just a father daughter trip because with my daughter's dance schedule and the sort of limitations on my wife, you know, being the only one who can go there and help her get dressed and do all the stuff. ⁓ She spends a lot more time with my daughter than I do. And so I get the boys and that's fun, but we wanted to have a little one-on-one trip. So we were going to go just me and her to New York. Go see some museums, go do some shopping, ⁓ go see Wicked, just have a little trip. And then Lady Gaga announced her tour and that she was going to be in New York the same weekend. And so my wife jumped on board our trip and of stowawayed, stowed away ⁓ and added that to her. She did. ⁓

Did she sing the Bradley Cooper song? Okay, was that pretty awesome live? I mean, that's what I would want to see personally.

Yeah, I was hoping that she had also sing the Top Gun song. Um, but it was funny cause like, you know, she has this new album out and so the whole concert is like this theme. Um, it's like a story that she's telling. And so she goes through like the first three acts and then it's almost like she gets to her almost like sellout phase where it's like, all right, here's this song that I did with, or for this movie. And then here's the song that I did with this artist and then this other artists like

Okay.

These are not like my songs per se. Like they're totally different than the other songs that she'd been singing. ⁓ so I was hoping that maybe she could fit in the Top Gun song too. ⁓ but, but she didn't then she kind of just went back into the rest of her thing.

didn't yeah okay last question on this topic before we move on to like some meat and potatoes and also known as college football because it starts this weekend ⁓ really important question here the the movie that she did with Bradley Cooper was the name of that movie the stars born okay released before or after Covid?

A star is born. I'm sure it was before.

Okay. Wow. I was, I was getting my haircut last week and we were having this conversation in the barbershop and we were specifically talking about this song and I was like, Oh, it had to be like 2021. felt like that was a COVID movie. It's not, it's like 2017, 2018. think. Yeah. It's wild. Nothing makes you feel older than like where those movies are. Uh, Johnny cash, the Johnny cash movie walk the line. I think so even before that, I think it was like, five maybe.

Nah, yeah, 2018. Walked the line. That was like, what, 2008, 2007? Yeah, 2005. Yeah. So my fridge went out this week and I had to have someone come in and take a look at it. I thought it was maybe four or five years old, which sadly at this point is still a good lifespan for a fridge. And the guy's like, Oh, well, yeah, you've had this since 2017. I'm like, I've had this for eight years. I only had one kid when we bought that fridge. Yeah. So time, time starts to fly as you get older.

It's crazy. Yeah, it's terrible. Yeah. Well, and they've gotten so expensive and they've gotten so expensive now that like the repairing them is somewhat worth it. You know, we were, I feel like in like early 2000, we were at this stage where, okay, you could pay like $400 to repair a fridge or you could just go buy a new one for, you know, 650 or 800. And now like fridges are not cheap. They've gotten very, very expensive. They got fancy too, right? So.

Yeah, but.

You may have been my first friend ever to like buy a fancy fridge. Didn't you buy the one that has like the camera on the inside that shows you

Yeah, but we didn't buy it because of the technology. In fact, I didn't want that fridge, but it was so much cheaper than the other ones. It was on sale for some reason, probably for a reason. ⁓ But I mean, was like $1,200 cheaper than every other fridge. So I was like, okay, we'll see how this goes. And the fridge itself has been fine. It's just that the cooler radiator, whatever it's called, it just overheated and it's dead now, so.

Right. Yeah. Right. Well, I would like to tell everybody before we jump into college football, I would like to tell everybody that ⁓ because of summer, we haven't been doing podcasting. But the reality is, is I think we've just been so busy. ⁓ it's been a very, very rigorous budget season. It's been a very, ⁓ tough legislative session. And so I think we've just really been bogged down in the minutia of some details that are flowing out. So, let's talk, let's talk. I want to, I want to take on SB 10 first, and then we'll jump into college football as kind of a separator between the two topics that I have today to talk about. so we're in special session right now and in special session, the governor basically can call what he wants to discuss and talk about. And one of the things that he put in his call on top of the redistricting, ⁓ is SB 10, and, or specifically that he wants to further lower, ⁓ property taxes and revenue generation in the localities and the governmental entities that are in his call. It's everybody. But what is really transpired is it's basically cities and counties and it leaves out almost all your special districts. So your emergency services districts are left out of SB 10 right now ⁓ and ⁓ your like mud districts, municipals, freshwater supplies, those type of things are also left out. ⁓ So originally, the bill passed the Senate. SB 10 kind of flew through the Senate. It was going to take the three and a half percent M and O cap. So maintenance and operations tax, still no cap on the I&S side, M and O cap and lower it to two and a half percent. So that's what passed out of the Senate. The House took the bill and man, did they make some changes. ⁓ But basically, the House took the bill and amended the bill multiple times. And to kind of give you the gist of what has happened, they amended out the 75,000 and up or below provision, right? But they only amended it in one side of the bill. And so, and then they also passed an amendment to exclude public safety cost. Now that is pretty well defined in the amendment. Now that I've seen the language, I think originally I looked at this and said, public safety could really be talked about. But the amendment basically looks at this and says, whatever your public safety cost is at the end of July of this year, verse what your public safety cost is at the end of July next year will be taken into account in your truth and taxation calculation. as a credit before you start looking at what the increases in your ⁓ voter approval rate are, right? Which another amendment also took the voter approval rate from what SB10 originally was, which is two and a half percent down to one percent. ⁓ but it left a bracket in the bill of 75,000 and up, which was not the intent. So right now, the way the bill is written out of the House, if the Senate was just to pass the House version, which we do not believe is gonna happen. I've had some conversations with a couple senators. I just don't see that happening. But right now, the way the bill is written is that if you are a city or county of less than 75,000 in population, you will have a 1 % cap. If you are a... city or county with a population of more than 75,000, you will have an exemption for your public safety cost before the 1 % cap. ⁓ So obviously extremely detrimental to cities of less than 75,000, which in most cases we all know cities of less than 25,000 are typically faced with ⁓ public safety costs that are higher than they actually generate in their M&O taxes, right? ⁓ And so, you know, I think this is kind of interesting. The other side of this is it is a bazooka size loophole in the bill. And frankly, I think some of the staff members on the Senate side are going to do the math ⁓ and they're going to look at this and go in most cases, this would actually allow more of an increase ⁓ than the current three and a half percent cap that we have in place now on the and O side, right? The, we call the VAR the voter approval rate. ⁓ So We are going to see this go to conference committee and I think we're going to see another floor vote in both the house and the Senate. But there are some discrepancies and there's kind of some weird things that are going on. One, I'm not sure SB 10 in it's clean form would have passed the house at two and a half percent. And I, I can't figure out if that's because two and a half percent is too low for them or not low enough. Like there are different factions and there's not a lot of compromise. But the amendments that were put in place were put in place to make people happy because they needed a, for lack of a better term, they needed a populist message that they were going to cap local government spending at 1 % for everything except for public safety. Even though anybody in a city management or finance business of cities would realize that if you just think that through logically, it's probably more than 3.5 % increases that you're getting today. So. but it's a better message than say, we're gonna cap it at two and a half percent. So. That's the gist of what we know about SB 10 now. We're on a very tight deadline. Almost every legislator that I have talked to has said they want to be home by Labor Day, which is just a few days away. ⁓ they don't want this. There is more time on the special session than Labor Day, but they want to be done by Labor Day and they want to go home. So we fully expect there to be a compromise that goes through ⁓ goes through the committee process and or the reconciliation process between the two, the house and the Senate. And then we fully expect them to basically probably for the house to adjourn and just go home. It's gonna be a fun couple of days in the meat grinder. So we'll see what ends up coming out of this bill. But I think for cities, I would say you need to expect some difference than what you have right now in today's world. You need to expect that the cap is gonna move down. from three and a half percent to two and a half percent or somewhere in that range. And there may be some type of flare that comes out of the house side to get them to agree to it because they're looking for a different message. So we may have like multiple calculation methods that we have to do. Any questions, Chad?

Good, I mean. ⁓ So, I don't know, having laid everything out, where do you want to go with this conversation? I don't think that it's probably all that helpful for us just to complain about it and about the fact that the legislature doesn't seem to understand anything or even care about local governments, which we've known for a long time. So, like, that's not news. ⁓ a 1 % cap on property tax growth. is insane. Like we all know that. So maybe it's best to talk about like what should cities be looking for moving forward to mitigate all of this drama? do we need to be, are we gonna turn into California and we need to start feeing everything? Like, are we gonna have to increase our permit fees, increase our park rental fees, know, start charging for library cards, you know, is it gonna cost like $400 to adopt an animal from your shelter? Like, is that the road that we should start looking at? because we're going to have to make up this revenue somehow. You can't operate on 1 % overall growth on your existing values.

Yeah, are we going to start sinning?

Do we just have to start cranking out new developments so that we can, first of all, increase the compounding? So like 1 % on a higher base is more than 1 % on a lower base. Plus, you get the full value of new developments. like, should we just start letting everything get developed and set aside some of the public criticism of new developments or apartments or whatever comes down the line and just let this stuff happen? Because we we have to make up for this cap in some way.

Yeah, I think this is one of those things where everything will start rolling uphill, right? I think cities will start looking at more. they will start looking at the services that they provide and they will get down to the nuts and bolts of what is required to provide it. And then within those services that they provide, they're gonna figure out a cost of service system where everything is thought of as an enterprise. I think that's the initial reaction that I've heard kind of from most folks in the city management field is, you the comment of, You know, your property tax isn't really paying for the library. So we're just going to charge everybody who uses the library 60 bucks a year for a library card fee, right? Everything's going to become a subscription. You know, your property tax pays for the base rate of that police officer. But if you have to call that police officer because your car got broken into, we're going to send you a bill for $125 for the call for service. Right? Like those are the types of things that ⁓ I think are coming down the pipeline. And eventually it's going to get to a point where cities are going to have to consider for themselves whether they even want to be in this specific business of law enforcement. Right. Most people forget this. But ⁓ in a state of Texas, if a city doesn't have law enforcement, it's the responsibility of the county sheriff to enforce that law. Right. So you're going to get into ⁓ into that and then you're going to have crime increases because you're just you're going to have less touches. Yes, the worst possible solution.

Yeah, that's like the worst possible option that we could have. Not to mention that the county also has this 1 % cap.

Caps. Yes, correct. The county also has the cap. So, ⁓ you know, I think you'll eventually have a movement. ⁓ you know, we, like, have CCPD sales tax to pay for police. think you'll eventually have like a separate movement for like a public safety district that would pay for police, which should be a separate tax. So, you know, residents are not going to go, they're not going to allow crime to get out of control. They'll they'll go to the polls and vote. ⁓ There's a reason why the smaller like emergency services districts and things like that have been cut out of the bill. And that's because of the political fear that those folks have of directly being able to shown to cut public safety. But there's a point in which the penalty for cutting public safety that's in the statute now, because you can't defund quote unquote defund the police department in Texas. There's a law that penalizes cities, but there's going to be like this. you know, this return issue where you're going to have to have a conversation with yourself that it's actually probably better for you to start to look at those cuts and take that penalty maybe down the road. Um, you know, because you, you, you, you're eventually going to get to a point where you're cutting in a bone, which means all you have left is your public safety services, right? You basically have administration, right? Your internal flow departments and your public safety services. Uh, and then you're going to shed a lot of those other services or turn them into enterprises, right? So I mean, I think from a city perspective, yes, we need to start thinking about those. I think also from a city perspective, we need to start educating voters. We need to on a local level, start educating voters with what is actually occurring, right? When watching those Senate Bill 10 hearings, it is laughable to listen to some of these elected politicians saying out loud that all of these evil cities and counties out there are just going to the three and a half percent rate every single year. And there's like no, no background to that, right? Like they're not providing any factual information or statements to that truth. They're just saying it. It's just a statement, right? The reality is, is, you know,

Well, we live in a post-truth era right now.

100 % just say it and it is true, right?

and it's gonna go away in five minutes anyway. No one's gonna fact check you.

Right. And so I asked this question of our finance team, which, know, we do finances for 30 plus cities in the state of Texas and budgets for them or work on budgets with them. We have very few clients that are going to the full three and a half percent. Right. Most people are going a percent or two or they're at the no new revenue rate. ⁓ And I actually address this on my personal Facebook page, which is not normally where I talk about these things, but The issue here is that people's taxes are going up. Let's not, so cities are collecting one or 2 % more and people's taxes are still going up. And we as cities, as government entities, as city council members need to do a better job of discussing what is happening. Because if we don't, we're gonna continue to get these just really stiff revenue caps that are being placed on us because the politicians don't understand how to fix the system. And it's not, they're not going to go learn, right? They're just, they're going to do the easy populist thing and they're going to keep blaming the evil local governments that are there by the way, predominantly conservative led, ⁓ from a local politician level, right? Local governments, ⁓ notice that they don't talk about, ⁓ you know, they don't talk about the Abilene Texas is or the Waco Texas is, or they always point out Dallas or Austin, right? Or Houston. as the evil people that are out there, right? ⁓ The reality of it is, that cities are not really increasing taxes all that much. They're bringing in maybe one or 2 % more revenue, yet who's paying for that revenue is changing, right? Because of appraisal methods, that is changing. And we have to do a better job of explaining that to our residents and explaining it to, we have to feed it up to state legislators. We have to feed it up to state senators. We have to explain to them that if a commercial property appraises for zero or 1 % additional value and residential is at, I'll just give you the example that we just did for the city of the colony. The city of the colony was increasing the residential value by 10.84 % per year. And residential was at that standard one to 3%, right? They have since 2018, residential customers in the city, a residential, citizens in the city are paying for nine and a half percent more of the city services than they were in 2018 because of the burden shift, because of the changes in appraisal. But the colony is not really collecting from existing properties. They're not collecting all that much more money, right? It's just residents are picking up the burden while commercial and business properties are getting significant tax decreases in most cases, tax decreases. And that's because of the appraisal system. And until we go get at that specific issue, we're gonna be in trouble. And I do wanna take just a minute. to talk about this from a standpoint of what the math is. So sorry, I gotta pull this up.

⁓ It's always a fun experiment when Patrick is going to go through the math and then not only when Patrick's going to go through the math but also on a podcast. So buckle up ladies and gentlemen.

Yeah, exactly. So. Okay. So I want to, I want to talk about this real quick so everybody can hear this. And here is the algebra of what happens because of appraisal methods. Okay. Let's say your city or county collects a hundred dollars in taxes in 2024, $50 from the residential class properties and $50 from the business commercial class of properties. Then in 2025, they go collect that same hundred dollars in taxes from those existing properties. Right? So this is the no new revenue rate. Okay. residential appraisals went up 8 % in that year and commercial properties went up 1 % in that year. The net effect is a shift in the tax burden. Residential customers will now pay $51.73 of that $100 and commercial will pay $48.27 of that. So residential properties see a 3.47 % tax increase and commercial business properties see a 3.4 % decrease. It works that way because it's exactly a hundred bucks, right? But that is the no new revenue rate. So the city is collecting 0 % new revenue from those existing properties. But because of the appraisal methods, residential property is paying almost the current cap. Right? And commercials getting a decrease. Now take that compounded over 10, 15, 20 years, and that burden shifts dramatically over that horizon. That is what we need to tell people. We need to tell residents that when they come to our city council meetings, and we need to know from a city perspective, what our burden shift is. We need to go back and look five, 10 years. with these appraisals and what has happened and we should be able to tell them, yes, we understand. We have collected zero new dollars or whatever that number is. And yes, we understand that you are paying for nine and a half percent more of the services. There's absolutely nothing we can do about it except inform you so that you can go have a conversation with your state rep or your state senator. There is a very simple solution, very simple solution. And that is when we're going in and fixing the state tax code, If they want to keep the appraisal methods that they have, because I don't think we're going to get rid of that, but if they want to keep it, then they should split the millages. We should look like Florida folks and we should split the millages, which means if we want to collect the same amount of money from residential that we collected last year, it should have its own tax rate and business, personal and industrial. However, we want to split those should also have their own tax rates so that we can do that. That is easy to calculate. but we should collect the same amount of revenue from the same class under a no new revenue rate every single year. And that is really, really, really easy to do. And it's a very easy fix and it will stop screwing residential taxpayers. Cause that's what's happening. Cities are not collecting more money. The appraisal system is screwing over your voters. And I think we need to tell that story. We got to do a better job of telling that story so that we can actually get this job fixed. They are not going to stop picking on cities until they figure out what's wrong and they are guessing wrong right now. So my two cents.

The only thing that I wanted to use a chat GPT word delve into a little bit on your commentary here is this ⁓ idea that the residential property owners are getting screwed. Okay, like. When you lay it out like that, which we've done many times on this podcast and in other places, it is 100 % true that the way that the system works right now, the burden shifts to the properties that are growing in value faster. You cannot get around that. However, There's an expectation when you buy a house that it's going to appreciate in value. And the faster it appreciates, the better. In a vacuum. Right?

In a vacuum. creates all types of affordable housing issues, but yes, in a vacuum. Yes.

course, yes. Well, we've already got ours, so we don't care about that.

Sorry, 24 year olds.

The question is, is it healthy to have sustained growth in single-family residential homes of 5, 7, 8, 10 percent a year for multiple years? Is that an indication of a healthy city or an unhealthy city?

100 % it's an indication of an unhealthy city that has major planning issues.

But we celebrate it. Oh, home values are up 7%. And of course, means that taxes are going to go up. But what is that an indication of is that you don't have

the real estate industry, which is loud. Right.

Among other things, you don't have any kind of equilibrium between supply and demand in your housing.

Nor is there, yeah, so hold on, know you're talking the housing issue and I wanna stay on that, but nor is there a mechanism for cities to fix that issue. Most cities say, well, we have homestead exemptions to try to go fix that issue, but that doesn't really work, right? Because the percentages don't math out.

Right. And then that's the same kind of bandaid that the tax reform is, right? The underlying problem is this cognitive dissonance that homeowners have that their home value should go up forever and their property taxes should stay the same or go down forever. And you cannot have both. So we can't change the sort of psyche behind homeownership as like the primary store of wealth and the main way is like forced savings, right?

Correct. Agreed.

Even though if your valuations didn't actually go up more than even inflation and you're paying off your mortgage, like you're still gaining equity in your investment, right? You don't just need ⁓ appreciation in the value to gain equity, although that helps.

Correct. We've never studied this, ⁓ put a pin in this for the revisions we're making in the property tax module right now, but we've never studied what that actual healthy number is. If you had a ⁓ green and red kind of thing here, is that healthy number inflation or is that healthy number actual growth? Because I mean, look, as the American economy since the 50s, I know you hate this, but I'm gonna say it out loud. the American economy is extremely dependent on the growth in a home's value, right? There's whole industries that are built that way too. And so I would think that number would probably be what we would consider higher than inflation. But if that number's nine, 10, 11%, then I think there are some structural issues within that community that need to be fixed in order to encourage more building to happen, right? Like we don't play the supply and demand game within our permitting processes very well.

No, there's too much politics involved to do that. And there's also other things with financing and things like that that are challenging that we have no control over either.

Agreed, let's right but should there be like a should there be like a permit pipeline on the number of approved houses that are going to be constructed and you know if if

Yeah, like if my home values go up by 8%, then I'd increase my new permits by some percentage to start to try to mitigate that growth.

Correct. Right. Like that seems like something that could be analyzed. Right. You could see that within the TAD values, the taxable appraise values that come in. You would be able to see that on a year to year basis so that you could in the next year say, Hey, we want to hit a larger target with our council, with our planning and zoning boards and things like that to, get a larger lot developments, you know, put in or whatever that may be. Like we should be able to have these targets for affordable housing that are put in place and are measured based on the growth of appraised values. ⁓ This is more of an affordable housing conversation than it is a taxation conversation, but the two really do play hand in hand, right? And I think what...

If residential properties and commercial properties are appreciated at around the same rate, then this burden shift would be far less pronounced and we'd have a lot fewer legislators trying to fix the problem every single session.

Well, I will say, I think from a market perspective, they do appreciate pretty similar, right? Land values, improvement values, all those types of things. They appreciate. The problem is the appraisal methods are different, right? That's why they don't necessarily appreciate in somewhat of a tandem. You're still gonna have market downturns. Like right now you have market downturns that are occurring like in office space, right? You're still gonna have like cyclical downturns that are that occur within each industry, you're seeing it right now in housing. You're seeing a significant flattening in housing, probably some negative territory, maybe not in all markets in Texas, but in some. ⁓ You're seeing some of that in the housing side, mainly due to interest rates, because at a seven to 8 % mortgage rate, it's just kind of locked up people buying houses. Or locked out is the better way to say it. So I think there are some things to like, to consider there that are extremely important. But I thought you brought up a really good point there on if appraisals on residential houses are going up 10 plus percent, and it's probably lower than that. It's probably like unhealthy at seven and half or eight. I'd love to do some Gavin research on that one and see what we came up with. But if it's going higher than that, then there are some structural issues in the city that need to be fixed from a management perspective to build more. ⁓ At the same time, we have these new growth caps with SB10 that are almost gonna discourage some of that growth as well. I think you're gonna have, or at least discourage you from growing a little willy-nilly. Let's put it that way.

Here's a- Yeah, yeah. Well, it would. So and I said this about Prop 13 in California as well. So in Prop 13, the two ways that you can really this is so funny because we went to this this luncheon in the San Diego area a couple weeks ago and there was a lot of discussion about the Prop 13 impacts for all of those communities in Southern California and you know they're growing. They can only grow at 2%. the valuation can only grow 2 % for every kind of property unless there's a change of ownership or it's a new development. And so, you know, all of these cities are getting their numbers from the assessor and they know they're going to get 2 % for the most part. I think they said there was like what 20,000 or something properties that were actually less than 2 % and so they got some kind of refund on their appraisal. Yeah.

Yeah, they get a prop. They get a prop eight refund. There's another prop that they get the decline as well.

So millions and millions of properties in the San Diego County area, like a small, small fraction of them grew. The market value grew less than 2 % from year to year. the cities already know they're going to get their 2%. And then the only other way to increase that is if a lot of people sell their houses, which isn't happening right now, and houses are really expensive anyway, or if you have new development. So even though Prop 13 is terrible policy. In theory, it should create some incentives to build. I think the same is true for even at a three and a half percent cap, certainly at a two and a half percent cap, and I think definitely at a one percent cap, public safety exemptions notwithstanding. ⁓ Because at that point, the really the only way for you to increase your property tax revenue is to build new value, put new value on the ground.

The problem is not from the city perspective. The problem becomes the customer demand because what happens, what's, what's happening in California's market because of prop 13 is everything is prop 13. Right. And so an investor property gets bought and it only goes up by 2%, but new construction has gone up maybe 30 % over that same period of time. And what I'm saying is, is, you you had like 10 % increase and then you have like a 30 % increase on the cost of new construction. It is cheaper for somebody to rent. in an investor owned property, that investor still make a profit than it is for that person to go buy a new home. So it almost discourages people to go have home ownership. And it encourages large corporate trust business within the home realm, right? so it causes that structural market manipulation that Prop 13 and what it's done is it's caused people not to want to go buy a home.

Prop 13s had almost 50 years to really ingrain all those ⁓ market skewing impacts.

Right, and it's not like a, know, in Texas terms here, Prop 13 is not like a homestead, right? They have, yeah, so Prop 13 is across all ⁓ market types, right? And so because of that, it...

No, they almost have no homestead.

you know, it encourages exactly that. Like you don't have this like mentality where, hey, I'm in my early twenties and I'm gonna be a quote unquote renter. And then eventually I wanna become a home owner. Like that progression that we're very like Texan used to doesn't occur in California because the move between renter and investment owned property and a owned property is such a huge gap in cost that there's no way for you to justify spending that money unless you just want the principle of home ownership, which doesn't make a lot of sense in that market dynamic.

Yes. Right, so you're renting a home, say the person who bought it bought it 20 years ago for a much lower price than it could sell for today. Their property taxes.

Right. And they put it in a family trust so that multiple levels of the family could just keep the home there. Yeah, can pass it down.

can pass it down. The tax assessed value has only grown 2 % a year. If you were to buy that house today, maybe it's 30, 40, 50%, maybe 100 % more than ⁓ what it was paid for then, or the purchase price at that point. So the basis for the landlord is much lower than it would be for the new homeowner, which is why in this... ⁓ Even though rent is also very expensive in California, ⁓ a couple of years ago, we went to San Diego on a vacation and my wife and I were like, man, we should like, we want to retire here. Let's look for some houses. Maybe we can find a way to buy a house and we can rent it. ⁓ And then, you know, that can pay for it. And then that way we'll get the benefit of Prop 13 when we retire in 15, 20 years. But every house that we looked at, was so expensive and the expected rent was so low that like you can we can never make it pencil so we ignored that idea pretty quickly.

which creates great opportunity for old school wealth, right? And it doesn't have to be like huge, like in Texas terms, like oil money wealth, Like, but it creates opportunities for families who have lived in California for 80 years, right? Like, or at least 50 years of Prop 13. If they own multiple properties back then, their wealth creation is just significantly easier because of the way that that system works. It puts them at an extreme advantage in real estate market. Whereas in Texas, like everybody's on a level playing field right now. From a development perspective, anybody can go buy land and subdivide it, hire an engineer, build lots, build houses. I mean, it's really more or less just a risk tolerance issue. In California, it's not that way. So just to really... different market and different perspective on that. thought that was a, I think that's a very, very important point that you brought up. ⁓ And so, you know, I still, I still think at the end of the day, we have to do a better job though, in Texas of two things, exactly what we just talked about, right? We have to do a better job of explaining what is happening. And that means each individual city needs to understand who's paying the burden of the services, which we, it is not like, you don't go to an MPA program. We don't teach this at UNT. They don't teach it at UTA. They don't teach it at Texas Tech or at A &M. Nobody teaches anything about tax burden. Right? So we're not looking at that. You know, we teach about like, your five pennies pay for this service and pennies pay for this service. And like, yes, we teach that, but we don't teach who's actually paying for the city services that are there. And I think if cities would go research this and look back to 2010 or 2012 or however far you want to look back, I like looking back to the, you know, the 2008 real estate downturn. It's kind of a good, you know, point in time. But if you go back and look back, I think people would be astounded with how much burden or the cost of providing services has shifted over to residential customers. So I say to city managers and city councils and finance directors, you have people coming in your meeting, crying about high taxes because they're actually being hit with high taxes. That is really actually occurring. You have a house, I have a house. We all have houses. We know we're paying more. What's happening is, is that somebody is paying less. The city is still receiving the same amount of revenue or 1 % or 2 % more than they did the year before. But ultimately those residential taxpayers are getting hit with significantly higher tax bills because of what has occurred. The second side of this is, and this is a super important point that you make all the time and I don't really talk about it or give you credit for it. There is another side of the solution, which is we need to build more housing. It just it has to happen. We have to do it fiscally responsible, especially if they're going to put us under a two and a half percent, you know, revenue growth cap here. So you certainly don't want to build a residential neighborhood that's going to cost you money. Think about that. Do a fiscal analysis on what you're going to build, but you still have to build more housing and we may have to think differently about housing than we have in the past. Did I do a good job of wrapping that all up. Yeah, so.

Yeah, excellent. A plus.

Well, we actually talked about both topics in one there. So I'm to move right on to college football so that we can wrap this up. First weekend of college football coming up. You got a big game, Chad.

Actually, well, I guess technically it's like the first full week we did have a week zero last weekend.

Yeah. Yeah.

somewhat ugly game over there in Ireland.

didn't go well. Yeah, there was some, you know, and apparently some after after parties got a little, a little crazy in the streets. They, they, they went out to the, they went out to the yard. Did you hear about that one?

saw that, yeah. I heard, so I saw that Kansas State's quarterback, his dad and his brother got into a fight.

His dad. Yes, they took it. mean, look, that's, you know, I'm an Irish family. We took it to the yard. We took care of it and they did it in the homeland. story there. I, not, I'm not this, razor edge, but as I used to be the first time I ever took my wife to see my family in Pennsylvania, ⁓ right outside of Philly and you know, she's a Texas girl, old school German. Texas girl and we get up there and my brother and I get into it and my dad tells us to take it to the yard and we get right into it in the middle of the family picnic, right? And I mean, I'm like 22 years old. Maybe my brother's like, maybe I'm like 19 or 20 and he's like 25, but and we get after it. And my wife looks at me and says, never again, never again. We weren't married at the time we were dating, but it was an experience. So I get going back to Ireland, just, you know, you gotta be Irish, right? So it's fun. But you were the number one team in the country this week.

We are for now until at least about what? 2 30 central time and then we'll see what happens.

Yes. All on the record, what's your prediction? You're playing the number three team in the nation, Ohio state. What's your prediction?

Okay. With the caveat that there are a ton of variables, both teams have new quarterbacks. Ours has at least started some games. There's getting his first start. Traditionally, a quarterback getting his first start against the number one team almost never wins. ⁓ Both teams lost a bunch in the draft. Both teams are rebuilding their offensive lines. Our defense.

Mm-hmm. Yes.

Except for the line, our linebackers and secondary did not lose a ton that they weren't able to replace. Obviously we lost a bunch of really good cornerbacks and Thorpe Award winner and ⁓ some good safeties.

Yeah, secondaries, your secondaries almost was obliterated.

⁓ No, it wasn't because the guys that are still there are very good and got lots of playing time. ⁓ Our secondary is very deep and this one of the reasons they were so good last year is because they could keep rotating. ⁓ So I think defensively, we're probably in a better position than than offensively. There's some question marks at receiver and offensive line. ⁓ And then how well Arch is going to handle the pressure of being the guy. ⁓

Okay.

I would put our quarterback situation ahead of theirs just because he does have a little bit more experience. ⁓ I'm interested to see how the relationship between Arch and our receivers has gelled over the summer and fall. ⁓ So like completely in a vacuum, I would say I think that we have the edge even though it's in Ohio State. It is in the big noon kickoff, so it won't be quite as rowdy as it would be if it was a night game. ⁓ But we played each other like that was our last game is in the cotton ball. so ⁓ they probably have a better feel for how to how to defend certain things. ⁓ How we're going to approach them. I mean, because we basically took the number one receiver out of the game and he got like one catch for three yards. ⁓ So they probably have a little bit better idea how we will handle their their attack offensively. ⁓ But the wild card difference between that game and this game is that. Arch is so much more mobile than Quinn. And so, like, the sack that ended the game in Dallas, or in Arlington, sorry guys, ⁓ never gonna happen with Arch. Like, he's not gonna be tracked down from behind by a defensive lineman like that. Or not in that scenario. So, point prediction. ⁓

Alright, so point prediction. Texas wins by...

31-21 Texas.

Okay, cool. I'm Texas by two touchdowns. So Texas by 14. That's, ⁓ that's what I'm after right now. I don't know what the, no, it really doesn't. I'm a big fan of Arch Manning. I've told you this from day one. Like I've never, you know, I, I changed my tune a little bit. I, I'm not looking at the team. NIL has changed me. I'm looking at the player, right? Arch Manning has had an entire summer to know he's the starter.

It must really pain you to say that.

he didn't do anything but work with those receivers all summer long. Those receivers were literally at Arches House. They were at the Manning Throwing Passing and Throwing Program. They got...

And he went with them to like a family party in St. Louis. He was with them nonstop.

Right, like I mean, I'm telling you man, the level of training that these guys, like I would not have been shocked if Randy Moss was working with these wide receivers, right? It's a Manning and the Manning Pass Academy is the gold standard for any quarterback at all levels and Arch was there all summer long with his wide receivers. I'm sorry, it's just, it is what it is. yeah. I think Texas by two touchdowns. will also make a season prediction that Arch Manning will be in the top five of the Heisman and probably win There you go. So.

I'm just hoping that we're number one on Saturday night. We'll move on from there.

Yeah. So we're not going to make a, you know, we're not really going to talk about the Aggie Texas A&M UTSA game. I think we are probably going to win that one handedly. But we are going to talk about the week two matchup that A&M has against Notre Dame. ⁓ And your thoughts on the Texas A&M Notre Dame game.

Mm-hmm. ⁓ Is that is that in college station? Okay

No, I was in College Station last year, remember, because we can never win with game day in College Station.

You can really never win with gameday, period.

anywhere. Yeah, it's rough. It's rough.

They were the runner up last year. They were in the final against Ohio State. ⁓ Do they still have Riley Leonard?

Yeah. yeah. yeah. Very good. Very good football team. You know, don't know. I don't know.

or they have a new quarterback. ⁓ so here's, here's, I really appreciate that. Let me, let me preface my comments with a sincere appreciation for your candor and your, willingness to suck it up and. and not just instinctively criticize Texas. With that being said, I am really skeptical about Marcel Reed. ⁓

arm strength or what?

Arm strength, Decision Making.

Right. Okay.

From what I saw from him last season, I just hope that he's taken a step in the off season. ⁓ Some of the videos that I've seen on Twitter have looked good. Some of them have looked very bad, ⁓ even throwing against air. And so I'm hoping that those just got posted onto my feed because they were bad and they were not representative examples, for your sake. But I mean, Ultimately, it's going to come down to him. Is he going to be a ⁓ plus quarterback or is he going to be kind of a mediocre guy who's going to win you some games and lose you some games? ⁓ So that's one big variable. I mean, your defense is going to be good, right? But ⁓ for me, it's all about Marcel Reed and Colin Klein. I am not a huge fan of Colin Klein's offensive philosophy.

Is that because you've had so much trouble with it in the past?

No. I just, it just doesn't interest me. ⁓

He's got a lot of proving to do to me after the Texas game last year. Running the same play three times in a row.

So the thing about. Colin Klein to me is a little bit like ⁓ Mike Leach in one way, which is that Mike Leach's offense and Art Briles is the same way.

against the Sark defense is just dumb.

It is designed to take three stars and make them competitive against five stars. It neutralizes those advantages. He's not playing with three stars at A&M You guys have four and five star talent. And so to me, I think it possibly will be limiting for y'all. ⁓

Right. Right. think for me, and this is, you know, cut from the cloth I am, it's disturbing to me that we don't establish a power run game with as good of an offensive line as we have. Right. ⁓ and, frankly, I, I told you this last year, the reason I thought Texas was so good last year is because the established run, right? Like you could always get yourself out of any situation because I can't remember who that running back was, but man, I was just so impressed with that running back last year. Weissner. Yeah. It's really, really good player.

Weisner.

and, so that's, that's kind of my complaint about calling Klein. ⁓ you know, is, is that he doesn't really take our quarterback out of the pressure cooker. He kind of leaves them in it for no reason when we have such a great line and we, have great running backs and I just feel like we could do such a better job, but he runs everything out of this, you know, out of the spread. never gets into a power formation. So therefore we're always outnumbered in the box. And so when he does run the ball, it's like he's running off of the RPO fake and you know, we're always outnumbered on the RPO. Like it's, it's a read, but we're always outnumbered in the box. it's three, four yards unless somebody's making a couple of mistakes. ⁓ and I think we gotta do, we gotta be better than that. ⁓ I actually think A&M wins. I'm going to, I'm going to be a Homer here for a minute. think A&M wins at Notre Dame. think it's going to be a very close game. I don't think it's going be a blowout. But I do think we're able to pull off the win mainly because Notre Dame's had a lot of changeover and I think they got a little bit fluky last year. I felt like Notre Dame got really fluky last year. I did not think and I said this all season. I did not think Notre Dame was a very good team last year. So

I thought they were above average. I did not think that they were gonna make it all the way. Because they had so many things that kind of went their way.

Yes, they put it together, they put it together, right. And because of the schedule that they play, like it's just, it's, it's so conducive for them to prepare for a game three weeks out, right. Which, sorry, Doug, when you hear this, you just can't do any SEC, right. If you can't do it, you can't go play Arkansas, but be preparing for Mississippi State. Like you're going to get beat by Arkansas if you do that. ⁓ And I think Notre Dame can go play what like a Syracuse or whoever's on their schedule and get away with that and prepare for who they're going to see two rounds deep into playoffs.

⁓ Notre Dame.

Next year schedule is actually harder, I think, than this year's

see they got. Opening at Miami. They got Purdue, Arkansas. USC But then yeah, they got Syracuse Stanford who's terrible Pittsburgh Boston College Navy Yeah, so they got like the back half the back half of their schedule

Yep. Right. Which they got beat. They got beat last year by Boston College. They got beat by somebody last year.

They got beaten the opening week versus who was it? No, it was the second week Northern Illinois. Yeah. If Northern Illinois can beat them at home in week two, surely you guys can.

That's right. OK, yeah. Well, mean, look, the answer to your question is that they've got a new quarterback. ⁓ We don't. I don't disagree with you on Marcel Reed until he proves it to me. I'm different. I will tell you, my feed is all about how his arm strength has gotten stronger this year. And you know, is what it is, right? Like your orange blood stuff is he's the worst guy since sliced bread. ⁓ I think he's a good running quarterback. I am a little skeptical he can get to a third read in the offense. think he's a really good to read guy, but he has a really hard time getting to a third check. ⁓ And I'm not sure his arm strength is strong enough to really get the ball downfield. And so the safeties are able to play underneath a lot. And that's a real problem. So, so we'll see if that arm strength is improved or not. That was the thing about Johnny Menzel was he could throw over the top. mean, he is for his size. He could throw the ball a mile, right? On the run on one foot out front from any angle. And so if you were a safety, you couldn't risk somebody behind you. And where Marcel Reed is right now, like the safeties really can risk it because he's got to float the ball. He can't throw the missile, right? And if he's going to float the ball, the safeties have reaction time to get to the ball. ⁓ so they can play, you know, 35 yards deep and

Yeah, from any angle. Off balance.

if a guy's 10 yards behind them, they're probably going to have time to catch to get to it and they can get a little risky, which you couldn't do that against some of the, like the better Aggie quarterbacks. So yeah, we'll see, man. I think we'll be in good shape. Um, I don't think we're going to be eight and four this year, I think, I think we're going to be a little better than that. I laugh at this cause Chad sent sent me, I don't know, probably 10 joke memes over the last three months about us being eight and four. ⁓ And so I think we'll be a little.

all culminated on August 4th.

Right, right. think we'll, thank you. I appreciate that. National Aggie Day, appreciate it. I think you actually convinced my son that there was a National Aggie Day for about five seconds before he figured out the joke. But yeah, I think we'll be in good shape this season. know, typical Aggie. I'm feeling the pride right now before we get started.

National Aggie Day. This is the beginning part of the season roller coaster where you're like.

Well, we call it BAS in our circles, right? Battered Aggie Syndrome. There's a whole video that you can watch on YouTube about it. But yes, I'm at my peak right now. I'm at my peak. So we're good to go. anyways.

It's never good to start at your peak before the season.

Right. Because Doug's not on the podcast. Can we go ahead and make a prediction about Nebraska this season?

gonna throw that out there. ⁓ so. When we went to San Diego the other day, we ⁓ gave our probability forecasting talk. ⁓ And I just so happened to find ⁓ an example, like a real life example, of a true best-case to worst-case scenario forecast. Like in the wild, you've never seen an actual forecast, best-case, worst-case, that really leans into the definitional meaning of those words. And this guy had posted his best case worst case for the SEC schedule. And literally everyone's best case was undefeated and everyone's worst case was winless. So like to me, this is just, this is a thing of beauty. ⁓ since Doug is not on here and since we've been going for almost an hour, I'm going to say that my prediction for Nebraska football is that worst case.

Alright.

I'm going see how long it takes for him to drive up here and punch me in the face.

I'll tell you what, ⁓ he's coming all the way from Weimer, Texas, bro. He's on his way. So as, as he, ⁓ he was complaining the inter

I take it back. take it back. I take it back. I'm to give him one win on the last game of the season. The refs are going to give him one second at the end of the game. He'll kick a game winning field goal. Just like we did, just like we did in the big 12 championship.

Uh-huh. against Cincinnati. So, ⁓ so the game tomorrow night with the Kelsey's on the sideline, I'm sure I bet you Taylor Swift will be there showing off that new ring. ⁓ they play Cincinnati, ⁓ tomorrow night at eight. So that should be, that's, that's kind of like the opening Salvo college football, right? So I think that's going to be a pretty fun game to watch, but yes, ⁓ looking at their schedule, man, they, they're going to get at least two wins. They've got Akron and HCU in week two and three. think they'll, they'll, they'll get those wins in. after that life looks a little rough. Maybe they get Maryland for a third win. ⁓ They get beat by Minnesota. Maybe they beat Northwestern.

You think they're gonna get beat by Minnesota?

i think Minnesota beats them ⁓

I tell you what, man, if Iowa gets a quarterback who can throw the ball, look out.

I'm telling you what, Iowa, is their last game. It's their after Thanksgiving game, November 28th. So that'd be a good one too. But, ⁓ yeah, it's, it's, it's going to be fun. I learned, I learned a new, Canadian saying from Doug this week. ⁓ we probably should have like one that we bring up on our podcast every time, especially when he's not on our podcast. He was really upset about the Senate hearings on SB 10 and what was being said in the room. And he said to me, I'm gonna throw the kitchen at him. Apparently that's like a cuss word in Canadian. I'm going to throw the kitchen. Yeah. Throw the kitchen. So my new Canadian saying of the week. So I've used it in my personal life on numerous. I told my kid yesterday, if he doesn't drink his protein after his workout, I'm going to throw the kitchen at him. He kind of looked at me like with side eyes. It was fun. But anyways, that's it, man. You ready to wrap? All right, cool. Let's wrap it up.

Throw the kitchen. File that one away. We can wrap. All right, well thank you for listening. If you enjoyed what you heard here, ⁓ let me rephrase that because most of the stuff that you heard here today was awful stuff. So if you appreciated the conversation, please feel free to give us a glowing five star review ⁓ and we'll be back here soon. We're back in the saddle now. We're gonna get back into our normal routine. So keep an eye on that feed and you'll see us again soon.

Awesome, see ya.