East Austin tax increment zone moving closer to reality

The process of forming a Homestead Preservation District and Reinvestment Zone to provide for long-term affordable housing and preserve family homesteads in East Austin is a step closer to completion. A report at last week’s Council meeting indicated that final approval could come by the end of the year.

 

Margaret Shaw, director of the Neighborhood Housing and Community Development Department, said the district is in an area encompassing central East Austin, bounded by Airport Boulevard on the north, Lady Bird Lake on the south, I-35 on the west, and various streets on the east. It contains two Transit Oriented Districts, the MLK Boulevard and Saltillo Plaza TODs.

 

“The intent of the legislation is to assist low income owners and essentially central East Austinites to remain in their homes,” Shaw said. “Property values in that area of the city are growing at a faster rate than the rest of the city, in some cases 300 to 400 percent over the last eight years. This legislation was intended to assist them to remain in this very popular area of town.”

 

The measure is based on legislation passed by Rep. Eddie Rodriguez (D-Austin) in the 2005 legislative session designed to increase home ownership, provide affordable housing and prevent the involuntary loss of homesteads by existing low and moderate-income homeowners. The City Council passed an ordinance in 2007 establishing the local district.

 

Shaw said there are three main elements to the District:

 

• A Homestead Land Trust to preserve affordable housing permanently in the District;
• A Homestead Land Bank that allows the city to make land acquired through tax foreclosures available for affordable housing development; and
• A Homestead Preservation Reinvestment Zone using Tax Increment Financing, or TIFs, to fund affordable housing. Travis County must vote to become an equal financial partner.

 

The East Austin district contains 6,815 land parcels, with 464 of them within the two TODs. The taxable value of the area is $1.12 billion in the city of Austin, and $1.02 billion in Travis County. The taxable value of the land within the TODs is $115.6 million.

 

The formation of a TIF to fund the district could generate annual average revenue of $96.2 million over a 10-year period, with an additional $8.2 million coming from the TODs, according to Shaw.

 

That money would be spent based on a formula set forth in the legislation:

 

• 25 percent of funds would benefit households at 30 percent MFI or below;
• 50 percent of funds would benefit households at 50 percent MFI or below;
• 5 percent of funds would benefit households at 70 percent MFI or below;
• 10 percent for nonprofit housing developers and the Land Bank; and
• No more than 10 percent may be used for TIF administration.

 

Eligible uses for TIF revenues include acquisition, construction and renovation of affordable properties and related infrastructure. Project costs will be funded as TIF revenue becomes available, as no debt will be issued.

 

Council Member Mike Martinez said the five years of work to reach this point was worth it.

 

“The bottom line is affordable housing and what the homestead preservation district does and will do is more important than ever now — preserving affordability in the core of Austin,” he said. “The legislation was drafted specifically so that the neighborhoods that it impacted had to be adjacent to a central business district. Because what we saw in urban city after urban city is the flight of those folks who had traditionally lived in the urban core being pushed further out and further out and . . . being taxed out of their neighborhoods. So I think, more than ever, we certainly need to get this up and running.”

 

To be effective, the TIF must be also approved by Travis County, which will match the total amount of revenue generated by the city. Shaw said her staff would brief the County Commissioners at today’s meeting regarding the district and the TIF.

 

Council is scheduled to hold a public hearing and take action on approving the TIF for the district on Dec. 18. Travis County could vote on approval on either Dec. 23 or Dec. 30.