Besieged by the Bay

Beset by skyrocketing tax assessments and wary of encroaching development, property owners in San Leon-Bacliff wonder if their "poor man's Riviera" may soon go the way of other waterfront zones along Galveston Bay.

The model for what might eventually happen can be found a short distance to the north along the Clear Creek Channel to the bay. In the early 1980s, Kemah looked a lot like San Leon and Bacliff still do. But the funky atmosphere has given way to a more moneyed air. What was once called "Saigon Harbor" because of the plethora of Vietnamese fishing boats docked there is now an exclusive marina crowded with pleasure craft. The modest houses that lined the bayfront have mostly been replaced by fancy homes with private piers and yacht slips. And after the Landry's chain recently purchased the four waterfront restaurants it didn't already own, Landry's chairman Tilman Fertitta announced plans to transform the strip with retail shops and possibly a boardwalk and a Planet Hollywood or Hard Rock Cafe.

With Kemah locked up, it's to be expected that the search for prime waterfront lots for development has turned south -- toward San Leon and Bacliff. The rumor is spreading around town that Fertitta has purchased the prime lot occupied until recently by Bacliff By The Sea, a restaurant that burned several months ago. Fertitta says he hasn't.

Regardless, those who are buying on the water are paying top dollar for the land. Priced beyond the ability of most people to pay, the poor man's Riviera may soon go the way of other waterfront zones along the bay, or any other exclusive community. Middle-class inhabitants such as Rick Handley may last awhile, scrimping to pay escalating taxes and other expenses, but their clocks are ticking.

"Eventually," Handley laments, "it'll be like West University."

Sandy Peck bought a pair of San Leon waterfront lots on Avenue A 1/2 in 1989. A teacher in the Clear Lake schools, Peck had always desired a home on the bay and picked San Leon for one reason. "It was cheaper," she explains. She lived in a tiny rental house across the street with her daughter while working several jobs to save enough for two adjacent lots, which she bought in 1994. To keep costs down, Peck built her own house on the property with help from her friends.

Peck hoped to leave the place to her daughter, who recently graduated from college and now lives in Houston. But the meteoric rise in property values -- the assessment on her land tripled this year, from $25,710 to $79,530 -- will make that difficult, if not impossible. "Down the road here, it's gonna have to be sold," says Peck. "I can't stay."

Ironically, the Galveston CAD is using Peck as an example of how property values have increased in the area. For her second two lots, according to CAD records, she paid $44,000, or $7.85 per square foot. Averaging that and other sales in the area, says the CAD's director of appraisal operations, Jerry Daum, the current value of waterfront property stands at about $6.50 a square foot.

One little problem, says Peck: The CAD figure is wrong. "That isn't what I paid," she says, placing the price at closer to $36,000, not including closing costs and other expenses picked up by the previous owner. But even using her figure, Peck still paid $6.42 per square foot for her land -- close to what the CAD says it's worth.

Other sales in the area would appear to push the number downward. A large waterfront tract recently purchased by local businessman and developer Chuck Jardina, for example, sold for close to $2 per square foot. But Jerry Daum notes that a chunk of land as big as Jardina's generally sells for less per square foot than smaller lots. Besides, for every sale below $6.50, there's another one higher; $6.50 is the average, Daum says.

Explaining how CAD appraisers arrived at specific values is a tricky process, especially since every property seems to have adjustments for size, location and other factors. "It's a very complicated thing," says Daum. "Not too many people can handle it. Not too many appraisers can handle it."

This may explain why so many of the taxpayers who have complained to the CAD about their property values have come away frustrated. Jean Helton, whose family has owned 4.75 undeveloped acres on the bay since the 1940s, saw the property's value more than triple in 1997, from $225,000 to almost $700,000. When she and her son Pat went to the CAD offices for an informal meeting with an appraiser, the first of two steps in the appeal process, she was rebuffed. "He wouldn't do anything," says Helton. "He said, 'That's it.' "

Others have had more success. Jardina brought a real estate expert to his informal hearing, and his assessment was reduced to $355,540, about half that of Helton's for almost the same amount of land. CAD land supervisor Mark Meyer explained that Jardina received discounts for the size and depth of his property, plus a 30 percent "marketability" discount because "it's harder to sell anything on the water."

Asked why the property was deemed less marketable, given that Jardina had just bought it several months earlier, Meyer grew impatient. "I don't know what else to tell you," he snapped. "Any other questions?"

Jerry Daum had a different explanation. Since Jardina had only paid about $350,000 for the land, it didn't make sense to assess it for much more. But the CAD had to use the $6.50 base line figure, Daum says, so the appraiser had to justify the adjusted figure. Thus, the extra 30 percent discount. "They're using a percentage to get to the value they perceive to be right," he says.

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