Opinion: Who Pays $278 Million: Austin Taxpayers or Private Developers? Council Shouldn’t Vote To Divert Municipal Tax Money To South Shore Property Owners – Columns
On March 3, City Council will vote on whether to allow developers of 118 acres of prime real estate just south of Lady Bird Lake (from South 1st to East of Congress) to embezzle $278 million in property taxes from the city’s general fund to pay for infrastructure for their development. If approved, this diverted revenue would no longer be available for libraries, parks, public safety, affordable housing and other public needs throughout the city.
City staff proposed in December that a Tax Increase Reinvestment Zone (TIRZ) be created for the South Central Waterfront District (SCWF). Staff estimate that $278 million in property taxes would be diverted from general revenue to pay for streets, water, sewer and drainage facilities and area parks instead of following the standard practice of developers providing this infrastructure.
Before the Board votes to award these massive tax grants to SCWF developers, we believe there should be clear and compelling evidence that these freebies are actually needed and what exactly the money will be used for. So far, the only financial analysis of the city shows that the TIRZ is not necessary and that developers can make a significant profit by paying for their own infrastructure.
The SCWF is envisioned as Austin’s “second downtown”, featuring luxury office, retail and residential towers. the Statesman The property constitutes 18.3 acres of the SCWF district and the most valuable part. This parcel is owned by the billionaire Cox family and its developer, Endeavour, the largest in central Texas.
In 2016, the city approved a SCWF Vision Plan based on developer and community feedback. It called for 6.2 million square feet of new development with beautiful parks, streetscapes, new and improved roads, and plenty of bike lanes and sidewalks (“SCWF infrastructure”). The plan now includes a Project Connect transit stop.
The 2016 plan included a financial feasibility study. This analysis shows that the SCWF district could be redeveloped profitably through rezoning, and with developers paying for parks, roads, and other infrastructure. Developers could also provide 527 “affordable housing” units. SCWF landowners — not Austin ratepayers — would pay for the then-estimated $73 million in infrastructure through a public improvement district (PID).
Five and a half years later, city staff rolled out their new SCWF TIRZ plan. The 2021 plan still called for an additional 6.2 million square feet of development. But now taxpayers would pay for the new infrastructure through a TIRZ. And, inexplicably, the cost somehow jumped from $73 million to $278 million.
Days before Christmas 2021, Council gave preliminary approval even though the city’s only feasibility study showed there was no need for taxpayers’ money. Notably, the TIRZ plan made no mention of the 2016 financial analysis. If anything has changed since the 2016 analysis, it’s that the value of prime downtown real estate has skyrocketed. , which makes it even clearer that SCWF developers can and should pay their own way like all other developers.
But even worse, to have any chance of legally using this special funding provision of the Revenue Code intended for underdeveloped or degraded areas, the Council will have to formally find that the development of this prime real estate “would not happen only through private investment on reasonable terms for the foreseeable future” (Texas Tax Code Sec. 311.003(a)). Given Austin’s booming economy and the incredible value of this area, no reasonable person can make that conclusion in good faith. If there’s one property in Austin that will be redeveloped “in the reasonably foreseeable future” without taxpayer freebies, it’s the South Shore of Lady Bird Lake in 2022.
But with the influence of developer lobbyists at City Hall, this huge diversion of our municipal tax dollars to South Shore property owners could be felt on March 3 if there isn’t an outcry. voters. Join us and Taxpayers Against Giveaways to end this latest mess. Tell the mayor and council no.
The authors are Austin attorneys and civic activists with a combined experience of more than 80 years in Texas municipal, environmental, land use, and open government law. Bunch is executive director of Save Our Springs Alliance; Aleshire is a former Travis County judge now in private practice; Lewis runs Community Not Commodity. Bunch and Lewis are part of the newly formed group Taxpayers Against Giveaways. The column represents our personal opinions and not those of a group.