City Hall Hustle: You, Too, Can Be Historic
If you think this is a Hustle, you might live in Pemberton Heights
"You are going to hate me for this," Spelman said, after dozens of zoning applications were read into the register, "but I would like to pull Items 60 through 84 for collective discussion. ... These are all the historic zoning cases."
Historic zoning dominated last week's agenda, with some 25 requests for historic zoning allowances before the council – more than the council had taken up previously in the entire year. The backlog partially pertained to the date; to enjoy the historic-zoning tax benefits – a 100% abatement on the home itself and a 50% abatement on the land or $2,000 credit, whichever is larger – applications must be approved by the first of the year. But city staff said there was another reason.
"What we've heard anecdotally," said City Planning Manager Jerry Rusthoven, "is there is an individual who was able to get historic zoning for their house and they are assisting others in filing for historic zoning applications. ... My understanding is that person is charging a fee for their services," Rusthoven continued, "and they basically have convinced a lot of people in one particular area of town to submit historic zoning applications. And we've had those all in the last half of this year."
Indeed, 14 of the 25 cases in question were facilitated by Suzanne Deaderick, a Pemberton Heights resident who handles the legwork required to ascertain whether a home is historically significant – a process accounting for age, appearance, architecture, previous inhabitants, and more. "I gather everything, and I present it to the city staff, Historic Preservation Officer Steve Sadowsky, and he determines whether the qualifying criteria is met." For her services, Deaderick charges a contingency fee (payable only if she's successful) of 25% of the applicant's last property-tax bill.
With so many requests, Spelman said, "I'm uncertain as to whether or not the homeowners actually understand the obligations they are undertaking," which include historical maintenance and upkeep, "in exchange for the tax benefits, which I'm fairly certain they do understand." And after floating a postponement of the cases into the new year – which he admitted would give some folks "a lot of fits" – council approved all cases on first reading but ordered staff to perform "spot checks" with applicants, ensuring they understood the ramifications of the abatements. (Deaderick says, "I'm always extremely clear with everybody about their restrictions, because I would never want someone to get this designation and then find out later that they couldn't do something that they wanted to do, including even changing the color of the house.") The cases return this meeting, Dec. 17, and Spelman says: "If there are a significant number of people who didn't know what they were getting themselves into, I think we need to go back to all 25 of them and verify, in fact, that 'you knew you didn't know.' And we might end up having to pull some cases."
Like the Water Utility's soon-to-shutter toilet rebate program, historic tax abatements have become a victim of their own success. Rusthoven estimated that 2009 cases would cost about $120,000 in lost revenue, in addition to impacts to other taxing jurisdictions like Travis County and the Austin Independent School District. So it's not surprising council's looking closely at Deaderick's services to make sure they comply with the law. "Randi [Shade]'s been following up on the issues as to whether or not a contingency fee ... is actually legal," says Spelman, adding, "I'm not certain it is." Shade says she's raised two issues: whether contingency fees are legal and whether the services (which Deaderick says are offered by other researchers also) qualify as lobbying, and therefore must be declared as such. "I don't have any answers to those two things," Shade says, but she "did ask the questions" of the city's legal department. (Deaderick says: "I know of no reason why my fee structure isn't appropriate for the work that I do. The other agents that I know charge similar fees. ... As for lobbying, I don't lobby anyone, and I never have. ... I do the research and pull together all of the materials required by the city.")
While acknowledging the importance of the issue, council dismissed making immediate sweeping changes; Mayor Lee Leffingwell said he felt uncomfortable "[changing] the rules in midstream" – and impacting all the applicants – "just because all of a sudden we recognize we have a problem." But last week should serve as a wake-up call on this once sleepy subject. "If it's relatively easy for an old house to meet the threshold of historical worth," says Spelman, "then we might have hundreds of these things every year, and we might be talking about enormous amounts of money."
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