Friday, April 25, 2014 by Michael Kanin

Martinez proposes that city issue debt to buy out flooded homes

Austin City Council Member Mike Martinez will announce a proposal at 10 a.m. today that would have the potential of greatly accelerating buyouts for homeowners whose houses were damaged or destroyed in last year’s Halloween floods on Onion Creek.

 

Martinez’ plan targets homes in the Onion Creek region not currently covered by the city’s buyout program. City taxpayers would finance the proposed buyouts with an increase in the Drainage Utility Fee of about 75 cents a month.

 

Under the plan, the city would ultimately issue Certificates of Obligation to purchase between $90 and $108 million worth of homes.

 

Both of the numbers include a proposed $30 million debt issuance that could be brought forward to Council as soon as June and issued as soon as August. It would cover 142 homes not currently included in an area designated by the U.S. Army Corps of Engineers for a federal buyout program.

 

That amount counts on a $5 million match from the Federal Emergency Management Agency. Should those funds not materialize, staff is reportedly ready to bring back a $35 million debt for the first issuance. Martinez expects that amount of the debt would not result directly in any sort of fee or tax increases.

 

Martinez also proposes to extend the buyouts by a subsequent debt issuance of either $60 million or $78 million. The former number would reflect purchases of “all 229 homes in the 100 year floodplain”; the latter would include another 72 homes in the Williamson Creek floodplain. That portion of the program would be backed by an increase in the city’s Drainage Utility Fee.

 

For the smaller of the figures, area residents would see a 57-cent monthly increase in their monthly drainage fee. The larger figure would result in a 75-cent fee hike, he said.

 

Martinez, who is running for Mayor, said that he would support the larger figure, and promised an item from Council instructing City Manager Marc Ott to prepare to raise the drainage fees to support the $78 million number.

 

“We have heard overwhelming feedback from the community that more help is needed from the city to address long-term needs in the flood recovery efforts,” Martinez said. “City staff has worked tirelessly to come up with a solution to help make these families whole, and I’m incredibly grateful to them for their efforts during this process.”

 

He expects State Senator Judith Zaffirini (D-Laredo) – whose sprawling District 21 covers the slice of Austin that contains Onion Creek as part of a district that stretches to the Mexican border – to join him at the news conference.

 

“As the state senator representing the Dove Springs and Onion Creek neighborhoods, I saw firsthand the devastating impact last fall’s flood had on families, many of whom are still living in temporary trailers in front of their damaged homes,” she said.

 

A representative from State Rep. Eddie Rodriguez’ (D-Austin) office is also expected to attend.

 

Martinez’ plan will require at least two votes by the Council. The first, approval of the initial $30 million in Certificates of Obligation, would come in June under his timeline. The second, for either the $60 million or $78 million would come in September as part of Council’s approval of the FY2015 budget.

 

City observers will note that the $78 million more or less matches the amount of an unsuccessful bond election for affordable housing that failed in 2012. Certificates of Obligation do not require voter approval.

 

In this case, unlike with affordable housing, Martinez could argue that the buyouts represent a pressing health and safety matter, an argument used frequently to justify quick action.

 

Martinez also argued that, despite the total price tag, the effort is affordable. “Ultimately, Council will decide the best way to move forward,” he added. “We believe these plans give us an affordable option for residents that will allow us to meet the needs of the flood survivors as expeditiously as possible while potentially preventing future devastation.”

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Key Players & Topics In This Article

certificates of obligation (COs): These bonds are issued directly by the borrowing entity. Though not subject to popular vote, their issuance can trigger tax increases. That, in turn, can trigger a petition--if the tax increase is beyond the year's rollback tax rate--and a potential bond election.

City of Austin Drainage Fee: The City of Austin assess a drainage fee per household, per month to City of Austin residents.

Halloween Flood: A devastating flash flood that struck the Onion Creek area on October 31, 2013. At least five residents were killed.

Onion Creek floodplain: The Onion Creek floodplain includes portions of southeast Austin and Travis County. Homeowners in the area suffered a major catastrophe in late October, 2013 when the region suffered massive flooding. Both the City of Austin and Travis County are engaged in efforts to buyout homeowners.

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