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Homestead preservation district still being debated by residents and city leaders

Monday, February 23, 2009 by Kimberly Reeves

Four years after the first piece of legislation was passed, Rep. Eddie Rodriguez (D-Austin) continues to hammer out details on East Austin’s homestead preservation district, an effort that has taken far more work than expected. On Wednesday, the effort was discussed at a community meeting in East Austin.

The homestead preservation district is aimed at low-income residents in East Austin. Participants own their houses, but not the land under their homes – which belongs to the land bank.  The program is intended to keep housing affordable in the fast-gentrifying area, even if land prices continue to rise.

Under one preservation district program, a homeowner threatened with foreclosure could agree to sell – or donate – the land under his home to the land bank in order to maintain ownership. Outstanding taxes, or mortgage payments, would then be solely based on the value of the house and would not include the land underneath it.

It’s not surprising that the effort has been slow-going. The homestead preservation district is new to Texas, a state that tends to value property rights over affordable housing. It’s even been a tough sell to some East Austin residents who view any kind of program to reclaim land with suspicion. When it came time to vote on the boundaries of the district, county commissioners heard from residents who were concerned the project might condemn their homes.

Ultimately, the county put off the vote to participate in the TIF, or Tax Increment Financing, given the number of questions involved about the project specifics.

Those delays mean Rodriguez has yet to get both the city and county on board with the TIF, which he needs to fund the program. Still, Gomez, on behalf of the county, said last night the county still was very open to approve the TIF boundaries. He said it was important to know income limits and the ultimate impact the diverted taxes might place on the county budget before voting on the TIF.

This was a concern in the neighborhood, Andrew Bucknall said at the meeting, because neighbors are afraid that wealthy people, who have gentrified a once-modest neighborhood with $300,000+ homes, might find a loophole to avoid contributing their portion of the support for affordable housing.

Rudy Williams said the homestead preservation district was a limited solution to a broader problem, one that required a significant solution like appraisal reform. Williams said that too many Austinites were being taxed out of their life-long homes in East Austin. “Our tax system needs a conscience,” he said to applause.

Rodriguez said he understood the plight. In fact, he said he had filed legislation that guaranteed he would never hold higher office. Rodriguez supports an income tax.

And Rodriguez is expected to file another bill this session to address additional issues raised by the homestead preservation district. Those concerns include equal participation by city and county – based on percentage – as well as representation on the oversight commission. Bradford also raised questions about controls over city spending of accumulated funds.

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