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City pays Domain owners nearly $1 million in tax rebates

Friday, October 31, 2008 by Austin Monitor

As Austinites flock to the polls to vote not only on who will be the nation’s next President, but also on the Stop Domain Subsidies charter amendment, the city has quietly paid Simon Property Group, the owner of The Domain, more than $970,000 in tax rebates.


The first payment comes less than a week before the citywide election on Proposition 2, which would block the city from making future tax rebate payments to the Domain and affect other city economic development agreements.


Rodney Gonzales, acting director of the Economic Growth and Redevelopment Services Office, told In Fact Daily that the developer had met all of the terms of the 2003 agreement with the city, which had been determined after a compliance review.


Gonzales wrote in an email, “The City is making its payment to Simon Property Group today in accordance with the Chapter 380 performance-based economic development agreement. The agreement requires the City make its payment to Simon by October 30, 2008.”


The bulk of the payment, $946,964, is made up of sales taxes. Under the agreement, the Domain is entitled to a rebate of 80 percent of the sales taxes collected on the property. The first rebate covers the period between September of 2007 and April of 2008. The agreement also includes a component for a rebate of property taxes, but that will not take effect until October of 2009.


The city required an independent review to determine compliance with the terms of the agreement. That review showed that developers had met their target of setting aside at least 10 percent of the residential units within the project for families at 65 percent of the region’s Median Family Income. The contract also called for the creation of at least 861 jobs, and data from the Texas Workforce Commission showed 1,647 jobs associated with the project.


In order to help small and locally owned businesses, the Domain was also required to establish a $1 million fund to cover the cost of design and finish-out for spaces within the shopping center for those businesses. The city confirmed that the five businesses assisted under that program were still tenants at the Domain.


The agreement also calls for an additional rebate of 2 percent of the sales taxes collected at the Domain, which amounted to $23,674. However, Simon Properties is not allowed to keep that money. Instead, it is required to make an equal contribution to the city’s Neighborhood Housing and Community Development Office within two weeks. That money will go into the office’s general fund to support its mission to promote affordable housing.


As part of the campaign in support of Proposition 2, Stop Domain Subsidies founder Brian Rodgers today plans to deliver ceremonial “rubber checks” to people he describes as “community leaders”. Each $1 million check, he said, would be signed “Overburdened Austin Taxpayer”. “We don’t have to pay,” Rodgers said. “The losers are the taxpayers of Austin.” Rodgers expressed outrage at the idea that the city would make the first payment before the Nov. 4 election.

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