This is an example of gentrification. Maybe not the classic example, but it is an example.
If home values have been stable, and families incomes have been stable, and the local government hasn't raised property tax rates, then people budget for a stable situation regarding their tax bills.
The rapid rise in property values due to this change will hurt property owners. We saw this in the early 2000`s when in some locations property values doubled in a few years. Long time homeowners said they would not be able to afford their current home if they were trying to move into the neighborhood.
Many times a local government will trigger a rapid rise in taxes without a rise in property values, when they implement a special taxing district to pay for a localized improvement. Those special taxes are harder on families becasue they have to pay more each year, under the hope that in the future they will see a rise in property values.
The local government has several options, these may take changes to the local tax code, but it may be possible becasue it is likely that zoning changes will be needed to build such a structure.
- They could create a special tax district that slows the increase to no more than the average for the city as a whole. They could defer additional value until the property is sold.
- They could put a several year delay until implementing the change, this would give homeowners time to adjust. They should still tell homeowners how much it would have been without the delay so they can be ready for the jump.
Loans generally wouldn't work, because the homeowner would still be paying for the tax increase. Home equity loans wouldn't be easy becasue the homeowner might not have enough equity. In some jurisdictions the value of the property for taxing purposes is unrelated to the property value on the resale market, so the mortgage owner would have to get a new appraisal. Families without a loan would have to apply for a loan.
Interest in those home equity loans wouldn't be tax deductible under the new tax law becasue the money would not be used to buying the home, or to improve the home.