Tax abatement rush causes Council to put off historic landmark cases

The hot-button issue of historic preservation took center stage at yesterday’s Council meeting, with 25 proposals for historic designation being put on hold so members and city staff could reassess the process by which a home becomes a historic landmark and re-evaluate who, exactly, is allowed to take part in that process.

 

Each year, applications for historic landmark rezoning status jump in December, as homeowners scramble to take advantage of accompanying tax abatements before the New Year. The fact, however, that 25 such rezoning proposals were on yesterday’s docket – more than the Council has ever approved in a single year – and the fact that 14 of those proposals were generated by a single third-party agent, gave Council Member Bill Spelman enough pause to propose that those items be pulled from the Council’s consent agenda and looked at more closely.

 

Council Member Randi Shade, who raised the issue two weeks ago, was equally concerned about the ramifications of so many historic cases.

 

Their concerns are two-fold. The first is financial. According to the Historic Landmark Ordinance, homes with historic-landmark status are granted a 100 percent tax abatement on the structure of the home and a 50 percent abatement on the land where the home is built. The maximum abatement is the greater of $2,000 or 50 percent of city tax.

 

Which means that Council approval of the 25 properties up for rezoning yesterday, added to the 20 homes granted such status so far this year and three more homes up for consideration next week, would result in a loss of more that $115,000 for the city next year. 

 

In addition to this loss in city tax revenue, Travis County, Austin Community College, and the Austin Independent School District would lose substantial sums as well. According to Spelman, AISD alone stands to be out $200,000 in revenue for the year.

 

“We’re gatekeepers for the county, ACC, and AISD,” Spelman told In Fact Daily, “and it’s important that we look at these designations and these abatements and figure out if they’re the right thing to do.”

 

Spelman’s second concern, one echoed by several other Council members, has to do with the practice of using agents on a contingent-fee basis to see one’s application for historic zoning through the legislative process. According to city staff, 14 of the 25 homes up for consideration yesterday had their applications filed and represented by a single agent.

 

Spelman told the Council and Jerry Rusthoven of the Planning and Development Review Department that he is worried that homeowners who go through the historic landmark zoning process with the aid of a third party might understand the tax benefits of historic landmark status but be unaware of the obligations they face when their home achieves that status.

 

For example, Rusthoven told the Council, when a home is zoned historic it cannot be demolished, it has to be maintained at standards set by the Historic Landmark Commission, and any changes to the house – from additions to repainting – must first be approved by the commission.

 

Unsure that all homeowners were aware of these guidelines, Spelman proposed postponing the Council’s vote on the 25 rezoning ordinances until next year “to make sure people know what their obligations are.”

 

“By postponing and going over these applications,” he continued, “we avoid trouble down the line concerning remodels and such.”

 

But Shade and Mayor Lee Leffingwell expressed their reluctance to postpone until next year. Both pointed out that the applicants whose homes were up for consideration had played by the rules and met the criteria the city had set up and therefore shouldn’t be punished at the last minute.

 

“The Preservation Office looked at these applications,” said Leffingwell, “and I don’t want to change rules in midstream just because we realized we had a problem.”

 

One person surprised to hear that the Council had a problem with the third-party agent system at all is the unnamed agent in question, Suzanne Deaderick, a homeowner who won historic landmark status for her Pemberton home in 2008 and has since represented dozens of homes in her neighborhood and neighboring Old Enfield and Edgefield in the rezoning process.

 

According to her Web site, www.HistoryOfYourHouse.com, Deaderick does the necessary historical research on clients’ homes before presenting their applications and other documentation to the Historic Preservation Office. Upon approval by that office, she takes the application before the Historic Landmark Commission, the Planning Commission, and finally City Council. Her fee is 25 percent of the client’s last tax bill.    

 

“I was surprised by the tone of the Council meeting,” Deaderick said. “In my experience going to meetings, I’ve heard so many positive comments about the fact that we’re helping to preserve Austin’s history. I’ve never heard any complaints before.”

 

Responding to Spelman’s concern that homeowners who use third-party agents might be unaware of the obligations they would have, Deaderick said, “Those obligations are the first thing I talk to clients about. I make sure they understand the responsibilities they have, that even if they just want to repaint they will need approval. There is no doubt that I cover that very thoroughly.”

 

Should the Council decide to institute new regulations concerning third-party agents, the issue of lobbying might be the main point of contention. For Council Member Shade, the concern lies in the city code, which states that “no person shall retain or accept employment to lobby on a contingent fee basis or in any manner engage in lobbying activities on a contingent fee basis.”

 

The issue, of course, is whether what Deaderick does can be considered lobbying. According to code, lobbying involves soliciting “a City official, by private interview, postal or telephonic communications, or any other means other than public expression at a meeting of City officials open to the public … directly or indirectly by a person in an effort to influence or persuade the City official to favor or oppose, recommend or not recommend, vote for or against, or to take action or refrain from taking action on a municipal question.”

 

All of which, Deaderick claims, she doesn’t do. She told In Fact Daily that she follows city guidelines exactly: She takes the application and appropriate documentation – “deeds, deed chronologies, historical documents, biographies of former residents, pictures of the house, tax certificates,” she said – to the Historic Preservation Office in a binder and sits there while an officer does a review.

 

“I would never lobby,” Deaderick said. “I don’t try to talk them into it; I just present the documentation. They are trained professionals and they know what to look for.”

 

If this issue does come up, it will most likely have to wait for the New Year. After deliberation, Council decided to approve Spelman’s proposal to postpone final action on the 25 ordinances until Dec. 17 and to direct staff to “spot-check” those cases involving a third-party agent to make sure applicants understood their obligations. In addition, the proposal directed staff to study the possibility of a monthly or yearly cap on historic-landmark rezoning approvals and the issue of equity concerning the number of historically designated homes in different city neighborhoods.

 

The postponement of approval of all 25 ordinances, including those not involving an agent, frustrated homeowners at the meeting.

 

Owner Ethan Stead, who lives on Enfield and who represented himself through the process and did his own research, told In Fact Daily, “It’s frustrating. Our house was built in 1921 and we’ve put in a great deal of investment in historic preservation. She (Deaderick) is running a business, but it’s done in such a way that has an impact on the city, which could be positive, could be negative, but it’s kind of causing citizens who actually care about historic preservation on a personal level and care about the impacts to (suffer). … Maintaining a house to its historic level is a lot more expensive, but it’s a personal kind of involvement rather than this kind of outsource thing.

 

“Citizens who put the effort into it personally should be in a different category than those who had (an agent).”