All city tax revenue from most properties that a government, nonprofit or religious organization sells to a private buyer in the future — meaning those parcels begin to generate property tax dollars — would go toward affordable housing under a proposal from Austin City Council Member Kathie Tovo.
Tovo said her proposal, which the council will consider Thursday, comes at a time when the state, the Austin school district and Travis County have talked about selling some of their properties. She said her proposal should have minimal impact on next year’s city budget, which city officials have already warned leaves little room for spending on new initiatives.
“We have a great need for affordable housing in this community, and it is, I think, one of our most pressing issues in this city,” Tovo said. “So identifying funding streams to support affordable housing initiatives is really critical.”
But city officials said that, in future years, Tovo’s proposal would mean a “significant” redirection of money from the city’s property tax-supported general fund that pays for city services such as parks, police and libraries. Without knowing what properties might be sold in the future, officials said they couldn’t give a specific estimate.
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Council Member Ellen Troxclair wondered out loud at Tuesday’s council work session about taking money away from other departments that provide city services that new developments require.
“Those people are going to need city services, police response and water service, all the other things we use property taxes to provide,” Troxclair said. “So how do you argue for the loss of that revenue to other parts of the budget?”
Tovo said the council could choose in any year not to send the new property tax revenue to affordable housing and instead put that money toward other purposes.
Right now, only tax revenue from formerly city-owned parcels in the city’s Desired Development Zone, which is roughly the entire area east of MoPac and steers growth away from the Edwards Aquifer, goes into an affordable housing fund. But a 2000 council resolution directed 40 percent of tax revenue from all properties in the zone and not on the tax rolls of 1997 into that fund, not just ones the city sold, Tovo said.
The council last year voted to raise that amount to 100 percent for formerly city-owned properties and allocate the tax revenue in a different way: 40 percent would go to the housing trust fund, 40 percent would go to affordable housing in gentrifying areas, and 20 percent would go to affordable housing in high-opportunity areas near good schools, jobs and amenities.
“I think the council that passed that initial resolution back in 2000 had the foresight in terms of identifying a source of revenue that would be a reliable revenue stream, and it wouldn’t be one where you’re taking funds from another critical need and moving them over to affordable housing,” Tovo said. “It was really new tax revenue.”
Tovo said her proposal likely would only apply to properties newly on the tax rolls as of Jan. 1, 2016, with one exception to include a recently sold property: the 75-acre tract in Central Austin that ARG Bull Creek Ltd. purchased from the state in 2015 for $46.8 million and plans to develop with a $500 million mixed-use project called the Grove at Shoal Creek.
This year, property tax revenue from 11 properties is going to the housing trust fund, mostly from the W Hotel and Silicon Labs properties. The city has increased the amount of money annually going into the housing trust fund over the past eight years, from $202,624 to $896,978.
Council Members Greg Casar, Sabino “Pio” Renteria, Leslie Pool and Ora Houston are co-sponsoring Tovo’s proposal.