Tiffing Over the TIF

illustration by Doug Potter

"We all need to take a cold shower on this Waller Creek deal," said Robert Knight, a property owner along the creek, early Monday morning. Knight, who has been organizing creekside property owners for several weeks, says that the current frenzy surrounding Waller's revitalization is premature. And, strangely enough, before the council had a chance to meet again, his quip had become prophecy. After three solid weeks of warring city hall factions spinning implementation strategies for the revitalization of Waller, nothing besides an outside force could have doused the spreading fires of debate. Fortunately for councilmembers, just as they were preparing to march onto the dais this Thursday for their first public display of antagonism, their own citizen appointees forced them to chill out. Included in the council's Nov. 6 package of downtown resolutions was a directive to the city manager to explore funding options for a flood abatement tunnel and "amenities" along Waller. Everyone seems to be in agreement on the tunnel as sine qua non for creekside development. But guessing just what is meant by "amenities" is the latest parlor game along Congress Avenue, somewhat akin to "What would you do if you had a million dollars?" Only, instead of a mere million, city management has suggested that council divert more than $93 million in tax dollars over 20 years into a special fund dedicated solely to the downtown banks of Waller. Councilmember Beverly Griffith and others at city hall fear that the $93 million will quickly become a slush fund for the unfulfilled wish lists of council and city staff alike. However, it's an argument over the method of raising the money which has incited the current knock-down drag-out at city hall.

In January, Assistant City Manager Jim Smith brought forward three funding options for the tunnel and amenities, although by his own admission, he stacked the deck in favor of using the combination of a two-cent increase in the bed tax to couple the tunnel's construction with the expansion of the convention center, and the creation of a tax increment financing district (TIF) to fund the as-yet unspecified amenities. While the bed tax has widespread support because its assessment comes at the expense of tourists rather than residents, the TIF - which would cap the property tax on properties within its boundaries at 1998 rates, and divert that money away from the city's general fund - has spurred considerable debate.

In the first place, Councilmembers Griffith and Daryl Slusher both campaigned their ways into office in 1996 in part by speaking out against another, similar TIF idea which would have swallowed up the property taxes of the entire downtown area. Now, Griffith is once again out in front of the anti-TIF campaign, asking for a property owner contribution to fund the tunnel and revitalize the area. Slusher, too, though uncharacteristically squeamish about protesting the TIF, has quietly added his doubts to Griffith's.

Slusher's half-hearted support, however, may not be enough to save Griffith's funding plan from the shredder. In the spring of 1997, Griffith took over what she saw as a flagging effort to revitalize Waller by calling a weekly meeting which included Director of Finance Betty Dunkerley, Director of the Drainage Utility Mike Heitz, and property owners along the creek such as Knight and his partner Perry Lorenz, whose land at the foot of Waller is the top pick for a proposed convention center hotel. Griffith's team crafted a plan which hinged on her number one priority - a $5 million up-front contribution by creekside property owners to the construction of the tunnel. But, just when she was gearing up to present her plan to council, another plan emerged which let property owners off the hook.

"As we were forming Beverly Griffith's plan, there was always the idea of a TIF," says Knight. Because the TIF would only take the property taxes that the property owners have to pay anyway, as opposed to the extra contribution which Griffith wants, the possibility of the TIF has always found favor with the owners. Griffith was surprised by the appearance of this fully-formed Plan B, however - the one which Smith recently presented to council.

Griffith's closest ally on the dais, Councilmember Bill Spelman, has been cautious during this debate, but emerged early this week to offer what he feels is a compromise. He has approached Mayor Kirk Watson's office with suggestions of a Public Improvement District (PID) that would assess an extra 10 cents for every $100 of property tax increase which occurs following the construction of the tunnel and amenities. "The idea is that I felt that the people who were for the TIF and against the TIF were actually closer together than they thought," Spelman says. The mayor's office was more than happy to consider a PID as a means to appease Griffith's call for a property owner contribution. Griffith's office is unhappy with the small amount of cash the PID would collect - only $200,000 a year - because of only being assessed on the increment of the property tax increase created by the redevelopment along Waller, as opposed to the total amount of property tax. But Spelman says he's satisfied, because the PID could generate enough for trails, lighting, and maintenance costs along the creek.

The question is, if those kinds of creekside improvements are taken care of, what does the city need to do with the millions collected by the TIF? Especially when, as Griffith is sure to point out, the TIF is projected to skim as much as $1.3 million over 20 years out of the general fund - which pays for police, parks, and libraries.

And that is precisely the question which ground this debate to a halt on Tuesday when the council's appointed Downtown Development Advisory Group (DDAG) raised questions about the effect the TIF would have on the general fund. Advising the council to "proceed with care when considering whether to adopt a TIF," the DDAG's resolution caused the TIF and PID funding ideas to be quickly yanked from the council's agenda, leaving only the bed tax intact. "If a PID will do it for us, why then also add the TIF district on top of it?" wonders Leslie Pool, a Texas Department of Transportation planner who sits on the DDAG.

Mayor Watson has an answer for that. "A PID probably can't get you sufficient funding based on some of the things we've talked about wanting to do," he says. What are those things - the amenities, or "gravy," as Watson called them in Sunday's Statesman? Watson says he doesn't know yet. In fact, nobody seems to know, but there do seem to be a lot of ideas floating around about things which could be funded by a TIF. Griffith's aide John Gilvar says he has heard rumors of "wild deals" flying through city hall. Although the TIF is being sold as a way to build trails, benches, and lighting, the word is that each councilmember was asked what he or she wanted to make happen with the Waller TIF money in return for their support for the TIF on the dais. "This looks like a Trojan horse for a bunch of ideas other people have had, and I want to see what those ideas are," says Spelman.

By some accounts, Councilmember Gus Garcia has tacked on long overdue funding for the Mexican American Cultural Center (MACC), and Slusher has asked for a light rail stop inside or near the Convention Center. Garcia calls talk of deals "bullshit," arguing the legitimate need for the MACC. Slusher says he supports the MACC too and adds, "I'm not going to go for anything just because of a rail station." Councilmember Jackie Goodman admits that such negotiations are common, though. "It's not a deal in the sense of a deal, but it's more like everyone should have a piece," she says. Goodman says her own interest is in bridging the development of the Waller region through to the Eastside, especially through the revamping of Palm Park.

One council aide confirms that deals are being made office by office, but explains there is nothing unusual about it. "That's just the way business is done," the aide says.

What exactly the TIF is meant to fund may come to light now that the DDAG has put on the brakes, and probably before the TIF concept comes back to the dais. On Griffith's suggestion, a community-planning exercise, or charrette, is already in the works and both sides of the debate seem eager to gauge the public's reaction to the proposed list of amenities. "One of the reasons why I want a plan in place before we make a commitment on the TIF is because this whole shadowy `gravy' thing will be brought to light. I don't know what is on that shadowy list because I'm not privy to it," Spelman says, adding that his impression is that it's a "pretty long list."

But TIFs are not only made up of city property taxes; they rely on contributions from other property taxing entities as well. In fact, Dunkerley says that if the city cannot sell any partners - Austin Independent School District, Austin Community College, or Travis County - on sacrificing all or part of their property taxes to the TIF, then there's no point in the city's proceeding on its own. To bring in these entities, the city is going to have to sweeten the pot a bit, and rumors are flying about just how the city plans to do it. Supposedly, siting a magnet school for the arts in the Southeast part of downtown at the base of Waller Creek is the selling point that Smith concocted for the school district. "It's just `brainstorming without judgment.' We haven't approached the school district yet," Dunkerley says.

But school board president Kathy Rider doesn't think a school board contribution to the TIF is very likely. "Generally speaking, school boards do not give away tax revenue," she says, pointing out that the school district has all the schools it needs for the central area. Besides, she adds, "this community has not been in support of an arts magnet, historically," and the last time the subject came up, in the late Eighties, the idea was soundly defeated.

Travis County commissioners do not seem to be any more enthusiastic about a TIF than the school board is. "There's a whole lot of stuff happening downtown right now that has occurred without anyone offering a TIF or anything," points out Commissioner Karen Sonleitner, citing the building boom at Sixth and Lamar. "Heck, that happened on its own."

Selling the TIF to the school board and county commission, however, is now the least of council's worries. It will be lobbying their own appointees on the DDAG over the next several weeks, a board that will tell the tale as to how Waller Creek gets developed in the future. Watson says the DDAG's reticence means "the process is working." But it cannot escape proponents of the TIF that just when it looked like Griffith's argument was going to be lost, forces outside of city hall raised the same doubts Griffith has been entertaining.

The DDAG isn't necessarily taking Griffith's side, however. At the same time that they issued their caveat on the TIF, they also recommended that the council "refrain from taking action" on Griffith's Policy Guidelines for Ground Lease of City-Owned Land. Suggesting that the guidelines - which call for open bidding processes and appraisals on public land before negotiations begin with developers - "may have a negative impact on the timing and substance of current and future negotiations," the DDAG essentially endorsed the city's current projects to develop downtown apartment complexes. Griffith subsequently pulled the guidelines from this week's agenda.

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This Week In Council: Two funding questions are up for debate - the Austin Revitalization Authority and the Austin Music Network. Also up for approval is the holding of an election to assess two cents more bed tax to fund both the Waller Creek tunnel project and the expansion of the convention center.