City Council will hold its last meeting of the year today, Dec. 9, with an agenda that includes an assessment of costs to build housing in Austin, costs to provide parental leave to all public safety employees, and the potential costs of adding more land to the tax financing district intended to spur redevelopment at the old Austin American-Statesman site and surrounding parcels.
The last one is the most complicated, as staff tries to interpret state law governing tax increment financing and to forecast how Texas Attorney General Ken Paxton may retaliate against the city if it runs afoul of one specific provision. On today’s agenda, Council is set to approve an ordinance creating the city’s 19th Tax Increment Reinvestment Zone, to help pay for public amenities (including streets and open space) at the South Central Waterfront – the 118 acres of land near Riverside Drive, South First Street, Barton Springs Road, and South Congress Avenue that has been eyed for transformational redevelopment for years. The city adopted an ambitious plan for the area in 2018.
At the Snoopy PUD, a 15-story office building is already under construction, that will be on the property tax rolls in 2022. This could strain the argument that redevelopment would not occur in the area “but for” public investment.
Financing that redevelopment will be accomplished through a variety of private and public avenues, including creation of the TIRZ, which uses increases in property and sales tax revenues generated by new development to pay for public infrastructure and acquire properties within the zone. The improvements are funded up front through bonds; a designated percentage of tax revenue generated in the zone is used to pay them back.
With prior zones, Council has set that percentage at 100%, but for the South Central Waterfront TIRZ, staff is recommending that only 46% of revenues be captured, with the remainder continuing to flow as normal into the General Fund. This is motivated by the Texas Legislature’s 2019 lowering of the city’s property tax revenue cap, which has led the city’s finance office to project General Fund deficits beginning next fiscal year. Staff is fretting over the fees that will be required to service the $7 billion in bonds to finance the Project Connect transit system buildout; new bonds for SCW projects would add more fees to be paid from the General Fund.
A different SCW topic dominated discussion at Council’s work session, Dec. 7 – why the TIRZ map was drawn to exclude the new building that’s replacing the old Hooters at 425 W. Riverside Drive. This tract is known around City Hall as the Snoopy PUD – “Snoopy” because the property was owned by the estate of Peanuts creator Charles Schulz, “PUD” for “planned unit development,” a zoning category allowing for major deviations from the city’s normal land-use policies. The “planned” part is why, staff explained to Mayor Steve Adler and Council Member Kathie Tovo, whose District 9 includes the South Central Waterfront. The state statute governing TIRZ creation requires that cities reserve them for areas that would be unlikely to experience the desired increases in economic activity “but for” the public infrastructure funded by the TIRZ.
At the Snoopy PUD, a 15-story office building is already under construction, which will be on the property tax rolls in 2022. This could strain the argument that redevelopment would not occur in the area “but for” public investment. As Assistant City Attorney Leela Fireside told Council, “If we add in the Snoopy tract, it affects the ‘but for’ analysis. … The Texas A.G. will look at that very closely.” The unspoken part of that legal assessment: Why would we want to give Ken Paxton another reason to harass Austin if we can avoid it?
Further complicating matters, if the Snoopy PUD is added to the TIRZ, staff would have to redo its financial analysis for the item that’s on this week’s Council agenda. Adler said he just wanted to preserve the option to add the Snoopy PUD following further legal and financial analysis and Council discussion. But that simple request created its own issues; the item posted on the Dec. 9 agenda doesn’t include the Snoopy PUD in its TIRZ map, so the mayor directed staff to advertise a public hearing for a new version of the map, with Snoopy included, before a to-be special called meeting around Dec. 17.
If the stars align, Council will hold the public hearing and approve the TIRZ plan, with the Snoopy PUD, before an end-of-the-year deadline; next year, Council can amend the plan to remove the Snoopy land if it so desires. “I’m not trying to decide those questions now,” Adler told staff, “but it’s a discussion we can have before we go out for any funding or financing” within the TIRZ.
Elsewhere on the agenda, a resolution from CM Ann Kitchen directs staff to study options for providing paid parental leave to all sworn public safety employees – none of whom currently receive any paid leave after becoming a parent. The resolution directs staff to return to Council with a cost estimate for the plan within 30 days, but with the Austin EMS Association currently in talks with the city on a new labor agreement, and the police and fire unions preparing to do so next year, some on Council have wondered if a policy like this should be handled through labor negotiations.
A resolution we reported on last week, from Mayor Pro Tem Natasha Harper-Madison, asks staff to study the costs that homebuilders incur when building various types of housing in Austin. It appears to have enough votes to pass despite reservations from CMs Kitchen and Alison Alter, who at Tuesday’s work session said she was unclear on what exactly staff would be analyzing, given the number of different fees and programs, like parkland dedication and street impacts, that apply differently throughout the city. Kitchen wanted to know how much a comprehensive study would cost and if a more limited scope could produce useful data sooner than the December 2022 deadline in Harper-Madison’s resolution.
Finally, two resolutions directing staff to draft Land Development Code amendments we’ve reported on in recent weeks are set for approval. One is an Adler/Alter proposal allowing for residential development in most commercial, office, and retail zones; the other is a Tovo resolution, which could streamline the permitting process and increase development of accessory dwelling units.
Council Slows Staff’s Roll on South Central Tax District
A version of this article appeared in print on Dec 10, 2021 with the headline: Council Slows Staff’s Roll on South Central Tax District
This article appears in December 10 • 2021.