City Hall Hustle: History Abated

With all apologies to the State Board of Education, we can do a dustup over historic standards pretty well ourselves here in Austin.

The quandary over historic landmark zoning returns to City Council this Thursday, June 10, albeit in a more proactive manner than the last time it received similar scrutiny. That would be toward the end of 2009, when in one meeting council was inundated by 25 historic zoning requests intended for approval before the beginning of 2010 – so the tax benefits granted to historic properties could take effect.

Those tax exemptions provide a 100% exemption on the structure itself and 50% on the land, up to the greater of $2,000 or half the property taxes before any exemptions. And the break doesn't only apply to the city tax rolls but also to Travis County, Austin Community College, and Austin Independent School District ad valorem taxes. (AISD halves its cap to 50% of the structure's value and 25% of the land.) While ostensibly offered to offset the cost of maintaining the property in historic style, most landmarks are sited in tony neighborhoods like Pemberton Heights and Old Enfield – historic ones, you dig? And with an overall tax drain estimated at $1 million to the city, council is poised to put limits on its previously permissive program.

Item 29, proposed by Council Member Bill Spelman, would act on recommendations Planning and Development Review Department Director Greg Guernsey made to council last month: limiting owner-initiated historic landmark nominations to three a month (a number "more in keeping with the number of landmark designations in years past," Guernsey writes), limiting the number of cases in existing National Register historic districts or local historic districts (like landmark-choked Pemberton Heights) to one per month, and limiting the yearly property tax exemption to a set amount.

Spelman's item does all that via a code amendment, set to expire at the end of 2011, that creates the three- and one-month limits. In the meantime, it directs the city manager to work with the Historic Landmark Commission in crafting "recommendations concerning allocation of city resources for historic preservation purposes and the formula for tax incentives for preserving historic structures," with that proposal due by the end of 2010.

But while the two-part proposal – immediately capping abatements while allowing for a more nuanced view to emerge – looks like a compromise, council member and neighborhood association champion Laura Morrison is concerned that abrupt changes may impact the economic benefits of historic preservation – federal Preserve America grants, robust property values, and the like. "While I can appreciate the thought of trying to get a bigger picture look at what we're doing with tax exemptions, we really need to think about it in the broader context. The bottom line is historic preservation brings many benefits to the community, not only in terms of character and sense of place, but also economic benefits." Morrison says she'll move that "we look at an economic analysis in the broader context, to look at costs and benefits, not just the cost."

But while Morrison is worried the proposals may go too far, others fear they don't go nearly far enough. ChangeAustin activist Brian Rodgers, whose organization has recently trained its sights on tax appraisal inconsistencies and property tax protests, writes that Guernsey's recommendations – which don't address the arguably light criteria for historic landmark zoning status (being at least 50 years old and possessing some architectural, historic, archaeological, or community "significance," etc.) – are "virtually meaningless." In Rodgers' opinion, problems with the program are numerous: "The criteria for 'historic' [are] too low; homes that have been altered and don't even comply with the city's flimsy requirements have received historic zoning," as approved homes can make several interior upgrades if they don't interfere with the home's historic street appearance; and more. "There is no worthy public policy behind granting tax breaks to these homes, as they are not at risk of demolition because the highest and best use of these West Austin mansions is continued use as a single-family mansion. So why give tax breaks to homeowners who don't need them and who would be maintaining the property anyway?"

Rodgers also contends that limiting the number of historic zoning approvals will mean homeowners "with the best lobbyists or 'consultants'" – individuals that will see a homeowner's application through the city, in exchange for a portion of the tax abatement – will receive the tax breaks, "making the unfairness even worse."

This latest tax abatement debate arrives in the shadow of yet another looming gap in the city budget, estimated between $11 million and $28 million for fiscal year 2011. This week, City Manager Marc Ott issued a memo listing dozens of potential budget cuts totaling $28.5 million – old standbys like cutting library hours, parks maintenance, and public safety. Many of the cuts, Ott says, "present difficult choices that would negatively impact services – in some cases significantly." (See "Naked City.") This Thursday, council has the opportunity to begin fixing a system that bestows tax breaks on homeowners that need them least and expensive properties that benefit the most.

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For the latest council history, visit the Daily Hustle at austinchronicle.com/tdh.