Revenues from Waller Creek project TIF district fall short of projections

Revenues from the tax-increment finance, or TIF, district intended to pay for the Waller Creek tunnel project are behind projections after two years, but not enough to cause the city serious concern, a city budget official said last night.

 

Chief Financial Officer Leslie Browder presented an overview of the TIF at the Waller Creek Citizens Advisory Committee. In addition to her presentation, she also provided four pages of responses to questions posed by the advisory committee, which covered everything from the TIF’s geographic boundaries to the issue of potential “upzoning” to cover tunnel costs.

According to Browder’s presentation, tax revenue collections are about $200,000 below what was projected in the initial financial analysis. One year, FY 2009, was far below projections, while FY 2010 actually has yielded more than initially projected.

 

Tax collections were better than expected, Browder said, because the tax rate was higher than projected. Property values also were higher than expected.

 

What tends to protect the Waller Creek tunnel, which will have adjusted financial projections this year, is that cities will tend to adjust tax rates, Browder said. If property values go down, taxes are raised. What is more difficult to guarantee, Browder admitted, is the amount of development that will occur in a given time frame.

 

Waller Creek does benefit from the fact that the downtown Austin real estate market is more robust than most areas of the city, Browder said. Downtown real estate has held its value, for the most part, and that’s translated into fairly stable revenue for the Waller Creek tunnel project.

 

“The good news is that the downtown real estate market still remains a bright spot in the current economy,” Browder said. “The purpose of the new projection, which we should finalize in the next couple of weeks, is whether we’ll see declines.”

 

The Waller Creek tunnel bonds are on a 30-year term. The TIF district, however, is based on bonds based on a 20-year term.  According to Browder’s presentation, the taxing of incremental value increases must cover about $100 million to cover both construction and operation of the tunnel.

 

Browder was informed on Thursday that further land expansion of the Convention Center was off the table. That means that no additional land will be taken off the books for public use for the time being, Browder told commissioners.

 

She said that the calculation of initial values did not over-step the most conservative estimate. For instance, the tax-exempt Lakeside Apartments were not included in any calculation of increased value, Browder said.

 

The emphasis of the ongoing master plan could be a help to values, Browder said. In a number of places, the corridor emphasizes condos and apartments. In investment circles, single-family construction is considered a more stable investment than the tourism investments originally encouraged along the creek.