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County panel on tax abatements gets extension, additional tasks

Thursday, May 19, 2011 by Kimberly Reeves

Travis County Commissioners, who were slated to make a decision on tax exemptions for historic properties on Tuesday, instead postponed the vote until early July and added a new varied list of tasks to for the Local Tax Working Group to accomplish.


A year after the group was commissioned and multiple briefings later, three members of the Local Tax Working Group – Leroy Nellis of Planning, Budget and Operations, Dusty Knight of the Tax Assessor Collectors’ Office and Elliott Beck of the County Attorney’s office – addressed the commissioners Tuesday.


Tuesday, Commissioner Sarah Eckhardt argued vigorously that the charge to review the tax impact of historic preservation abatements should be expanded to a broader goal. That charge, with a more significant mix of stakeholders, would be to create goals and guidelines for a county-wide preservation program.


Commissioner Karen Huber, who often has joined Eckhardt on the topic, also voiced concerns.


“I’m really, really frustrated on this myself,” Huber said, noting that suggestions she made a year ago had yet to be incorporated into a work plan. “I don’t know if it’s that the court has not given direction to staff or what the problem is, but we’ve been on this a long time, and I don’t think we should rush and not do it right. I hope we have the time to deal with this.”


County Judge Sam Biscoe, who at times curtailed Eckhardt’s comments during the two-hour discussion, finally landed on a number of directives that will be added before a final vote on July 12: determine whether local policy might curtail the eligibility for federal grant programs; pin down where Austin was on its guidelines and timelines; and decide whether a case can be made for a county-defined qualification of “need” to determine abatements.


And, even more intriguing, county leaders might explore spending up to $100,000 to help the Travis County Historical Commission complete a county-wide survey of historic structure, with the ultimate goal of creating a historical preservation plan that is more county-wide in scope.


Biscoe appeared open to a potential ongoing relationship with the county group in terms of historic preservation, given that the county has no full-time employees for preservation. Eckhardt had suggested using money swept from downsizing abatements to pay to underwrite the survey.


Nellis, however, noted that any savings would have to be used to bring down the county’s effective tax rate. In order to create a zero sum gain, and still maintain some benefits from cutting the exemption, it was Nellis’ suggestion to sweep the abatement savings into the county’s current exemption for the elderly and disabled. That would raise their homestead exemptions from $65,000 to $75,000. The survey would be a separate new expenditure.


The working group’s recommendations, which were outlined in April, were slightly refined after additional stakeholder input: Use state historic landmark criteria to determine eligibility for the tax break. Maintain the current un-capped historical tax exemption level for commercial property. And peg abatements for historic homes to pending city-set limits, which would cap abatements at $2,500 annually, minus the county’s 20 percent homestead exemption.


Nellis has argued that the county’s historic tax abatement program, which costs $1.1 million a year, should not be as generous as the city’s for any number of reasons. He said the county has a heavier reliance upon property taxes, a generous 20 percent homestead exemption already is offered to all homeowners, and, without any sales tax or hotel-motel tax returns, the county sees few benefits from added tourism that a thriving historic district or prominent landmarks might bring.


The members of the working group also remained unconvinced that reducing or eliminating the tax exemption would mean fewer historic homes.


“If, in fact, you reduce your current amount that you’re allowing for a historic exemption, as the committee has recommended, will that result in historic properties applying to be undesignated so those properties are not protected?” Nellis posed. “When AISD dropped its exemption, how many of the 560 homes and commercial properties applied to get rid of their exemption? I believe the answer is zero.”


Homeowners of landmarked properties who testified before the commissioners, however, argued that the only reason homes were not being de-designated was because homeowners who did so were required to return three years of the tax abatement back to local jurisdictions.


Biscoe promised a memorandum on the new directives on Wednesday, with a potential new working group tied to the tasks. An update is expected in two weeks, and no doubt Eckhardt will be drafted for some of the work. Nellis also promised to provide as many answers in writing as possible to the court from his end.


The Local Tax Working Group, as Eckhardt pointed out during discussion, started as a general review of the county’s tax exemption structure and landed on addressing the costliness of historic abatements. Concern over how and under what circumstances the county granted historic abatements was exacerbated by a recent lawsuit filed by Alfred Stanley, Dominic Chavez and Mike Levy over the merits of the city’s program.


Stanley, who addressed the commissioners on Tuesday, has argued that the city grants tax abatements based on the need to help homeowners preserve historical properties, but many who are granted the abatement have no particular financial hardship and no need to benefit from the city’s largesse.


Hence, Eckhardt had significant concerns over whether a definition of need could be created for the county. Those who supported the historic abatements, however, had difficulty defining concrete defensible criteria for “need.”

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