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City inches Homestead Preservation Districts forward

Tuesday, June 9, 2015 by Elizabeth Pagano

Technically, Austin has had a Homestead Preservation District for years. Last week, City Council decided to do something about it.

Council members voted 9-0-1 to move forward with actually using homestead preservation districts as yet another way of addressing Austin’s affordability crisis. Council Member Don Zimmerman abstained from the vote and Council Member Delia Garza was absent.

Though the city established one district, “District A,” in 2007, it has never been used by the city. Thursday’s action allows city staff to get to work on establishing a Homestead Preservation District Tax Increment Reinvestment Zone (TIRZ) in that district and begin creating three additional districts. Council must pass a separate ordinance to draw the districts, but last week’s action got the ball rolling.

The homestead preservation resolution comes from the Housing and Community Development Committee, from which Council Member Pio Renteria led the charge to get the process moving. On Thursday, Renteria explained that the goal of the resolution was to increase homeownership, provide affordable housing and prevent residents with low- and moderate incomes from losing their homes. Though there are several tools available to the city under the Homestead Preservation Act, right now the only one on the table is use of a TIRZ.

“I’ve seen a lot of families that have been displaced because they simply ran out of options,” said Renteria. “We are talking about making Austin more affordable, and here we have a way to actually move toward that goal and help the people who need it the most.”

Charles Cloutman, who is with the Austin Housing Repair Coalition, spoke in favor of moving forward with homestead preservation districts. He explained that such a program and the associated funding would help them keep people in their homes, “repair them right where they are at and let them age in place.”

“It’s a huge tool for us that we could use in District 8 District A right now. … We are always underfunded and overwhelmed with need,” said Cloutman.

That funding would come from the creation of the TIRZ. Under this type of funding mechanism, the city would be allowed to use tax increment financing to capture a portion of the taxes on homes in the Homestead Preservation District and required to reinvest that revenue within the reinvestment zone.

In order to qualify as a Homestead Preservation District, potential districts must have a poverty rate twice that of the city at large. Right now, that qualifying percentage is about 40 percent. Additionally, each census tract must have a Median Family Income of less than 80 percent of the city’s MFI. Right now that is less than $50,938.

Given that and other criteria, the city has proposed three new homestead preservation districts in addition to the existing one.

East Side activist Gavino Fernandez spoke against the resolution, bringing up long-term community fears about land-banking, which he called “scary.” He said that, as a landowner, he wanted to make sure that he had the discretion to opt out.

Renteria reassured Fernandez that the city was not considering land-banking at this time, and that the current decision “had nothing to do with land banks.” Though land banks are an option under the Homestead Preservation Act, Council voted to move forward only with the initial stages of creating a TIRZ and the new districts.

“District B” is in the East Riverside Corridor planning area and includes the Montopolis and Pleasant Valley neighborhoods as well. The area has a population of 35,486. “District C” is much smaller, with a population of 4,354. That district includes the Johnston Terrace neighborhood and portions of the Govalle neighborhood planning area. And “District D,” with a population of 8,334, consists of the Windsor Park, North Loop and Coronado Hills neighborhoods.

Zimmerman said he was not prepared to vote on the item, and commented on the complexity of the laws governing homestead preservation districts. He also questioned the underlying philosophy of tax increment financing, which relies on increased values of properties.

Mayor Steve Adler pointed out that homestead preservation districts were just one way to address affordability in the city. He noted that it would benefit some districts more than others, just as other affordability measures — like the homestead exemption — would disproportionately impact other districts.

“I think that what’s happening with gentrification in this city, is having an expense citywide,” Adler said. “We’re losing people, and we’re losing communities in this city.

“Affordability is an important item on all of our agendas and all of our districts in our city,” he continued, “and it means different things to people in different parts of the city. … I think we are kind of joining together to find tools that are going to work, and not every tool is going to work for everybody.”

Image courtesy of the city of Austin.

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