'Landmark' Lawsuit Rises Again: 'Broken Promise'

The city changed its rules after the last suit, but the plaintiffs argue nothing changed

Westgate Tower
Westgate Tower (Photo by Jana Birchum)

Dominic Chavez, Michael Levy, and Ed Wendler Jr. are not about to surrender. Their lawsuit against the city (and now Travis County and the Austin Independent School District) over the historic landmark tax abatement program is back – and apparently this time, they're not backing down.

According to the three plaintiffs' lawyer, Jim George, historic tax abatements exist for one reason – to help homeowners rehab and maintain threatened historic homes. So Chavez, Levy, and Wendler are not fond of Austin's interpretation of the state statute, under which the city routinely grants tax abatement to homes and buildings that are in excellent condition.

"There are millionaires who claim they can't afford to restore houses that they've already restored," said George. "Everybody else is paying to let these people have subsidized housing."

The lawsuit is nothing new. In fact, about a year ago, the plaintiffs came to an agreement with the city over this same policy. At the time, George said that he and his clients understood that the city would make individual assessments of taxpayers and their homes and evaluate the real need for restoration abatement. Instead, says George, "They haven't factored in the need at all."

Historic Preservation Officer Steve Sad­ow­sky disagrees. Homeowners "have to provide an affidavit now. That's a result of the last lawsuit," he said. The affidavit, which follows the tax code, asks owners to affirm that there is a need for an exemption. However, Sadowsky said he didn't know whether any abatement had been denied because the cited need was unconvincing.

In fact, city officials told the Austin American-Statesman last month that they had never denied tax breaks to historic property owners who maintain their properties according to city preservation rules, making the historic zoning cases the real determination of who gets a tax abatement. AISD (the biggest tax bite) and Travis County also grant tax exemptions, but with no preservation offices of their own, they have traditionally relied on the city to determine merit.

In the past year, there have been historic-zoning cases that have certainly chipped away at any faith the city was taking a needs-based evaluation of tax abatement seriously. In March, City Council approved Historic Landmark status for a meticulously maintained West Austin estate valued at just under $2 million. All told, tax abatement on the property from the city, school district, and county totals about $20,000 a year.

And during the summer, the Historic Landmark Commission voted unanimously in favor of historic zoning for the West­gate Tower – a 1966 solid block of a building at 12th and Colorado that obstructed the view of the Capitol for many Westsiders – thus inspiring State Capitol View Corridors legislation that restricts similar view-blocking high-rises. The notion that this $34 million apartment building (home to Lt. Gov. David Dewhurst, among other high-rolling insiders) needed a tax abatement had those opposed to the program (and some sympathetic to it) nearly apoplectic. Because the building is divided into individually owned condos, tax abatement would apply to each residence separately. Facing public pressure, the applicants withdrew their case in advance of a visit to the Planning Commission, despite staff recommendations and support from the Historic Landmark Commission.

Heritage Society of Austin Executive Direc­tor Jacqui Schraad says the abatement exists to compensate property owners for their loss of development rights. She also points out that other tax exemptions offered by the city do not require a demonstration of need. "It's very expensive to keep these properties up, and they've given up all development rights on the property," said Schraad. "So they've been asked to give up a lot in exchange for doing this."

"We would see potential for a lot of loss if these abatements went away," she continued.

Responded George: "I would like the city of Austin to follow the state statute like everyone else in the state of Texas. Texas has a history of not encouraging tax subsidies."

Schraad doesn't think that's a lead the city should be following. "I don't know if we necessarily want to become Houston and Dallas," she said.

George said he and his clients are not inclined to reach another settlement with the city. "They don't seem to have kept their promise. It's kind of like if a boy calls you up, asks you on a date, and stands you up," he said. "You don't take a date the second time."

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