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Council to study homestead preservation districts to boost affordability

Thursday, February 13, 2014 by Michael Kanin

Austin City Council members are set to consider a measure today instructing city staff to begin evaluating whether the city could use homestead preservation districts as a tool to promote affordability. Council Member Mike Martinez is the sponsor of the resolution.


Council has been down this road before. In 2008, Council members approved a homestead preservation district for East Austin that would have used various tools, including a tax-increment finance, or TIF, district and land banking to protect affordability in regions of the city that were rapidly gentrifying.


However, the move was contingent on approval from the Travis County Commissioners’ Court. There, Pct. 1 Commissioner Ron Davis has held fast in his opposition to the idea, and the 2008 district never materialized.


New Council action would be broader. This time, the resolution asks staff to examine five possible homestead preservation districts identified as potential targets for the practice by state legislation to affect affordability in the region. Staff would bring results of a study back to Council members in August.


Council members would then have until the end of the 2014 calendar year to approve any TIF associated with the plan. Such a move would lock in 2014 property values.


City Neighborhood Housing and Community Development head Betsy Spencer described the idea for Council members at their regular Tuesday work session. “We see this as an opportunity to take existing information…and being able to utilize the existing information and get current data so that we can understand the financial impact for this Council if they chose to create any of these districts.”


Current city policy limits the use of TIFs at up to 5 percent of the city’s tax base.


Later, Spencer added that any use of a homestead preservation district would compliment current affordability programs. “We don’t want to compete with other programs, we want to work in concert with those programs,” she said. “We would be looking to where our preservation programs would complement those efforts.”


City Deputy Chief Financial Officer Greg Canally added that such an effort – if it came to pass – would be something of a first. “The TIFs that we have implemented in the past have been project-specific—for Mueller, for Waller Creek,” Canally said. “Certainly, legislatively, the tool is there to use. But…we have not used a TIF in a manner that has been allowed by the legislature under this (provision)—so that, in itself, is a little bit different. That’s why we want to do the studies.”


Mayor Pro Tem Sheryl Cole wondered if the new application might bump up against the city’s cap on TIF use. Canally said that it was too early to tell. “That is part of the analysis that we need to do,” he said.


“One of the main reasons to undertake a market study is to see the projected increase in (assessed value) so then we can take that back into our overall tax rate modeling.”

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