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Austin looking for new tax sources

Monday, July 28, 2003 by

Some Lake Austin homes likely to be added to tax rolls

The city is currently taking a look at all possible sources of revenue, and that could include putting some million-dollar homes on Lake Austin on the tax rolls.

During the course of auditing revenue streams for the city, City Auditor Stephen Morgan’s office has pointed out that the city failed to put between 800 and 900 parcels of property on Lake Austin on the city’s property tax rolls. However, that was not because the city overlooked the properties. Deputy Auditor Taylor Dudley told In Fact Daily, “(The properties) aren’t all 100 percent exempt…there’s a demarcation line…when you look at the ordinance….it shows what percentage of the property is excluded.

The City Council exempted a wide swath of parcels on Lake Austin in 1986 because city officials did not think the city could extend city utilities that far. The exemption was not very scientific: the city simply picked an elevation and homes above that point were exempted from taxation.

“This ordinance was put in place 16 years ago,” Deputy Auditor Taylor Dudley said. “We were a much smaller place at that time. We weren’t prepared to argue that they could deliver services to everyone—potentially, it might still be too expensive—but if anybody should be profitable, it would be these houses.”

The auditor’s office has completed audits of both sales taxes and property taxes for areas annexed into the city over the last four years. The city completed major annexations in 1997 and 2001. The discovery of the Lake Austin properties was made during a review of appraisal records.

Morgan says the audits have uncovered few serious problems.

“Overall, I would say the controls for property and sales taxes appear to be working,” Morgan said of the two audits. “Yes, there appear to be a few glitches, but those were the exception. Most of it appears to be working well.”

The Transportation, Planning and Sustainability Department is now reviewing the parcels noted by the auditor’s office to see which might be eligible for utility service and, of course, property taxes. Utility connections are probably viable for some; other connections may still prove too expensive. Still, the parcels are one of the bigger sources of new revenue the City Auditor’s office has found in its audit of sales taxes, property taxes and city fees.

Dudley said when TPSD has finished its analysis, the City Council will be asked to decide which homes should be added to the tax rolls.

The observation on Lake Austin homes was part of a larger audit report on whether those areas annexed into the city were included in the city’s tax base in a timely manner. The auditor cross-referenced Travis County Appraisal District records with data from the city’s Geographic Information System, or GIS. According to the data, no property was omitted from the tax roll without reason.

Some sales tax revenues uncollected

An audit of sales tax revenues of recently annexed areas shows that almost 30 percent of businesses annexed into the city between 1997 and 2001 were not incorporated into the tax roll in a timely manner. The number of businesses is not especially high—only 37—because the city has annexed primarily rural land, with an eye to future development.

Dudley estimates that 220 businesses were coded incorrectly; or more to the point, coded for other jurisdictions when Austin should have claimed them. Some of the businesses were in the city, and others were part of the recent annexations. Another 30 businesses or so were not credited to the city in a timely fashion, according to an auditor’s review of businesses in annexed zip codes.

The city is responsible for notifying the Comptroller’s office when businesses are annexed into the city. The Comptroller had 180 days to put the businesses on the tax rolls. The audit does not address whether the city or the Comptroller’s office was at fault for not doing so. The Comptroller can bill a business for up to four years of back taxes.

It’s impossible to estimate how much revenue the city may generate from the audits, Morgan said. A state law prohibiting the city from reviewing the Comptroller’s tax records for businesses compounds the problem. The city is still uncertain just how much revenue businesses annexed into the city, but never put on the tax rolls, may actually owe.

Dudley said the state handles all collection and enforcement of sales tax and would be responsible for sending a notice to those businesses that were annexed but not collecting sales tax for the city. If, on the other hand, the business has been collecting the tax but the Comptroller has been sending it to the wrong jurisdiction, the Comptroller’s Office would change the amount Austin gets in the future and automatically credit the city for revenues not collected in the past. “Because the state is very careful to note that it is the applicant’s responsibility to know whether (city tax) was due….I don’t think we’re talking about Wal-Marts or HEB s ( but) mom and pop businesses,” Dudley concluded.

11th and 12th Street

Plan changes slightly

The Planning Commission approved a number of minor variances to the Austin Revitalization Authority’s (ARA) urban renewal plans for 11th and 12th Streets last week. The changes will not significantly alter mixed-use plans for the East Austin area, according to ARA Executive Director Byron Marshall, who referred to the changes as “tweaking the plan.”

Revitalization of the area is finally picking up speed, Marshall said. “It was slow, but it’s moving very, very well now. Even given the bad economy, we’re seeing a fair amount of private investment in the area.”

On 11th Street, two additional houses and some minor existing commercial space will remain; some additional parking space and residential units will be added. The changes will preserve more of the existing business and make a better transition between commercial and residential properties, Marshall said.

City staff, the ARA and the Urban Renewal Agency have all signed off on the variances. The changes also met with approval from area neighborhood associations.

When construction is complete, three office buildings with ground-floor neighborhood retail will be built on the north side of 11th Street between Curve and Lydia. Two of the three buildings—one four stories and the other three stories—are close to construction and 62 percent pre-leased. The third is still on the drafting boards.

The city has invested a total of $4.4 million in the two buildings. The ARA has borrowed another $7 million from Chase Bank and rent is expected to repay the loan. The buildings, which contain a combined 57,000 square feet of commercial space, should open next June.

The three buildings are being placed on cleared land. In other areas, the ARA intends to preserve existing neighborhood retail. A liquor store, a car wash, a convenience store and two clubs will all remain in existing locations for the short term. Marshall said the goal is to enhance, and possibly renovate, existing businesses such as Shorty’s.

In the next couple of weeks, the city will demolish a number of dilapidated buildings on the north side of the street between Branch and Curve. The city bought the buildings back in 1997 and helped relocate the retail tenants to other sites. The ARA will be looking at a set of plans for a new mixed-use development on the site in January, Marshall said.

“We’re looking at mixed-use development that can mirror what we want to do here,” Marshall said. “It may have housing on the top. It could have restaurants and service businesses.”

The planning process for 12th Street will kick off on August 5, with a Neighborhood Night Out party. The ARA intends to work with business owners later this year and early next year to review current plans, which haven’t been updated since 1998. Marshall said he is currently in the process of refining market demand studies for the area, which should be completed early next year.

©2003 In Fact News, Inc. All rights reserved

Redistricting is dead, but . . . Legislators may get to go home—or not—depending on when Governor Rick Perry decides to call a second special session. Tuesday is the final day of the current one and a sufficient number of House members are expected to return from San Francisco to establish a quorum. Last week, Senators approved an amended version of HB 82, which would transfer assets of the State’s Aircraft Pooling Board to the Department of Transportation, including land adjacent to the Mueller Airport redevelopment area. After consultation between Senator Gonzalo Barrientos and the Governor’s Office, a compromise was reached concerning that property. The House must concur in the changes . . . Two views from party leaders . . . From TexasGOP.org: “ Lt. Governor David Dewhurst said that the congressional redistricting process appears to be dead for now, but said that sooner or later a fair plan would be passed . . . Governor Rick Perry may call a second session to correct the current unfair, gerrymandered map. While Lt. Gov. Dewhurst and Republican senators have sought Democrats’ input in the map-making process, Democrats remain absolutely obstinate and unwilling to listen to the voice of the people—a majority of whom have voted for GOP congressional candidates” . . . The Democrats say . . . “Despite overwhelming opposition from Texans and mounting costs for a state in budget crisis, Gov. Rick Perry is proving to be a divider and not a uniter by saying he may call another special session in a desperate attempt to push through Tom DeLay’s political agenda” . . . Cystic Fibrosis Foundation gala . . . The foundation is hoping to lure us to 2003 Culinary Flavors of Austin this Thursday at 6 pm., at the KLRU/Austin City Limits Studios (26th St. & Guadalupe). Fifteen Austin restaurants will dish up their best cuisine to sample, including Bistro 88/Noodle Ism, Bitter End Bistro and Brewery, Chez DeWitt Catering, Cool River Café, Crimson, Granite Café, Kenichi, La Traviata, Louie’s 106, The Brown Bar, Mansion at Judges Hill, Nutty Brown Café, Ranch 616, Travis Restaurant at Lakeway Inn & Resort, Wink and Zoot Modern American Cuisine. Individual tickets and sponsorships may be purchased through the Cystic Fibrosis Foundation. Call 328-1744 for more information.

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