Commercial property foreclosures in Dallas are expected to wreak havoc on the county budget, which is already burdened with an expected deficit of $60 million this year.
According to analysts, Dallas may be more burdened by commercial foreclosures than residential foreclosures because of the record surge of defaults in the commercial sector. Over the past year, Dallas has been able to control the effects of foreclosures in the residential sector because home prices did not shoot up during the housing boom as high as in other cities clobbered by home foreclosures. Commercial foreclosures, however, have been different.
According to an Addison research firm, around 250 commercial properties in the Dallas metro area representing over $900 million in development loans have been scheduled for public auctions in March.
These commercial listings foreclosures are expected to lower further property values and cut down county revenues from property taxes and other taxes resulting from the use of these commercial assets. Analysts estimate commercial property values in the Dallas area to fall further by 9 percent in 2010.
The rate of commercial foreclosures in Dallas has been so overwhelming that the candidates for county judge of Dallas have focused their campaign on the impact of the foreclosures on the county budget.
Incumbent judge Jim Foster reassured Dallas residents that he will not resort to increase in property taxes to cover the budget shortfall. Similarly, the other Democratic candidates, attorney Clay Jenkins and school board chief Larry Duncan and GOP candidate Wade Emmert, said they are not going to increase taxes to raise funds.
Other remedies being looked at are budget cuts, intensified imposition of traffic tickets and use of federal funds from the economic stimulus program. Three large housing nonprofits working in Texas received more than $53 million from the second funding round of the Neighborhood Stabilization Program. The recipients were Habitat for Humanity, Chicanos Por La Causa and El Paso Collaborative for Community and Economic Development. Habitat received almost $28 million, the highest amount among the three nonprofits.
With the expected use of these funds to rehabilitate properties in government foreclosure listings and in other distressed listings, the funds can trickle down and help stimulate economic activity in communities.
Commercial foreclosures in Dallas are not the only ones driving up total Texas foreclosures in the commercial sector. Record numbers of commercial properties in Austin, San Antonio, Richardson and Houston have also been going into default and foreclosure.
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