Thursday, April 4, 2019 by Jo Clifton

Property tax bill could cost soccer club

Senator Paul Bettencourt, R-Houston, has introduced legislation that could put a crimp in the plans of anyone leasing municipal property for a new sports facility – such as a soccer stadium – and planning not to pay property taxes to other local governments. The bill, SB 1771, is aimed directly at Precourt Sports Ventures and its agreement with the city of Austin.

Former county auditor Susan Spataro told the Austin Monitor Wednesday that she asked Bettencourt to carry the legislation, which attorney and former County Judge Bill Aleshire helped write. Both believe that Precourt is getting an unfair tax exemption from the deal it made with the city. They believe the legislation – which is narrowly drawn so it will not affect other stadiums and concert venues – will remedy that.

In December, the city signed a lease agreement with Precourt allowing the company to build and operate a Major League Soccer stadium at city-owned McKalla Place. Precourt agreed to pay a rental fee of $8.25 million over 20 years but will not pay city taxes.

Under current state law, property owned by the city is not subject to property taxes from any entity.

But apparently, Precourt did not seek any kind of agreement with Travis County, Central Health, Austin Independent School District or Austin Community College concerning taxes. That leaves those entities without obvious recourse, although Travis County commissioners asked Travis County Attorney David Escamilla to do research on legal remedies.

Aleshire told the Monitor that he helped Spataro write SB 1771. He said some people might be surprised to learn that he and Spataro collaborated on the bill because they have disagreed on many issues in the past. He gave Spataro credit for “doing the heavy lifting.”

SB 1771 adds a section to the state’s tax code allowing a county, school district or other local taxing jurisdiction to levy a tax on “a leasehold or other possessory interest in real property,” such as the one Precourt has for McKalla Place. An entity such as Travis County would have to approve the exemption through an action by the Commissioners Court. The same would be true for AISD, ACC and Central Health. Each one would have to approve the exemption of taxes that are estimated to be several million dollars.

When asked, Mayor Steve Adler seemed unfamiliar with SB 1771. After reading the bill, he provided the following statement: “Whether or not property put to a public use, like a stadium, concert hall, arena, sports facility, or visitor center, is subject to property taxes is a function of state law. Right now they’re not because the law encourages construction of public uses.

“A change in state law might make such facilities around the state less likely in the future, but it won’t impact the city’s soccer agreement. The city did not give any special, separate or additional exemptions from property taxes and the soccer agreement specifically provides the city isn’t responsible for any taxes that might be due,” the mayor’s statement concluded.

From Adler’s point of view, the city did not promise Precourt that it would not owe any taxes, other than city taxes, and the city specifically protected itself from the possibility that Precourt might try to get the city to help pay county or school district taxes, for example.

The legislation specifically would not apply to any concert hall, theater or stadium that was completed before January 1, 2019. A spokeswoman for the city’s Intergovernmental Relations Department said the city is monitoring the legislation but  has taken no position on it.

Aleshire insists that SB 1771 does not threaten any other facility, including one or more that are almost complete. He noted that he believes the bill will be amended to move that date to May. He has been protesting the city’s decision to lease the property to Precourt since last summer and calls the deal between the city and the soccer club “a rip-off” of the taxpayers.

“The bill is intended to make tax exemptions for concert stadiums and sports stadiums on the same par as tax abatements,” he said. “It gives the same choice to the other taxing entities that they have for tax abatements. If exempting the soccer leasehold is a great idea, let the county, the school district, Central Health and ACC vote on it,” he concluded.

Another Houston Republican, Rep. Jim Murphy, has introduced HB 4528, which is identical to Bettencourt’s bill. Bettencourt is the chair of the Senate Property Tax Committee and Murphy is a member of the House Ways & Means Committee. Their respective bills have been assigned to those committees.

Rendering courtesy of Gensler/Precourt Sports Ventures.

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