Can Austin Taxpayers Afford To Build A Whole New City?

By Bill Oakey – July 9, 2014

Late in the spring, tens of thousands of Austinites were stunned by the high property tax appraisals that they received in the mail.  Even if your appraisal did not increase at all, you were treated to daily newspaper stories about a looming City tax increase, two types of upcoming water rate increases, a 4.4% Austin Energy fuel increase for the second year in a row, a parade of utility add-on fee increases and so on.  Even Texas Gas Service managed to slide in a $1.69 monthly increase.  But the homeowners who saw their tax appraisals spiral out of control are the most worried, and rightfully so.  AISD would have to lower their tax rate to break even with last year’s revenue.  But they won’t because they are thrilled to have the extra money coming in from appraisal increases.

Then we were told that a double-decker boatload of bond propositions will come at us in November.  $1 billion for urban rail and roads, plus another $386 million for ACC.

What If I Told You That All of That Is Just the Front Edge of the Tip Of the Iceberg?

Between 2011 and 2013, I began compiling archived material on affordability with the intention of publishing a comprehensive report.  That report, which you can read here, ended up being just a bump in the road.  When I published it last August, I had no way of knowing that the avalanche of planned cost increases would soon reach levels that look not only unsustainable, but so wildly unimaginable as to be absurd.

Let’s cut to the chase and look at some examples:

1. The Capital Area Metropolitan Transit Organization (CAMPO) estimates that it will cost $32.4 billion to build roads, rail, and other transportation infrastructure between 2015 and 2040.  That comes out to $1.3 billion per year.  And, here’s the craziest part.  The local government share of those costs is pegged at 80%!  If you haven’t fallen off your chair yet, click here and see the projections on Page 7 of this report.  Even a good science fiction or fantasy writer would not abuse his readers with that level of tomfoolery.

2. The Travis County Downtown Campus Plan calls for over a billion in spending:

New Civil and Family Courthouse: $200-$300 million

Criminal Justice Center expansion and renovation: $512 million

New Central Booking Facility: $192 million

Renovation of Sweatt Travis County Courthouse: $92 million

Renovation of Ned Granger building and parking garage: $29 million

Plans, Plans, and More Plans

For every local taxing authority, there are ambitious and aggressively expensive plans.  Attempting to digest all of them at once would not be advisable for health reasons.  But they are highlighted in the discussion below, if you care to wade into them cautiously:

1. Imagine Austin Plan.  This is the all-encompassing Master Plan that envisions a new future city, divided into “mixed-use activity centers.”  This one is closely tied to the CodeNEXT zoning replacement plan and the Project Connect Strategic Mobility Plan.  In a nutshell, these plans call for clusters of super high-density multi-family housing units located near proposed rail stops.  One example of an “activity center” would be the ACC Highland Campus with private business partners and row after row of “new urbanist” apartment and condo buildings along Airport Blvd.  These might have some merit in theory.  However, the plans are designed to attract hundreds of thousand of new residents over time, and you and I will be asked to contribute billions of dollars in taxes, utilities, roads, trains, and buses to help pay for them.

2. The Corridor-ization of Austin.  This future city that will probably still be called Austin, is already being reshaped into “corridors.”  You’ve probably heard that the City is working on a major re-write of the Land Development Code.  CodeNEXT was and still is supposed to accomplish that.  However, it is gradually being implemented even before it is formally adopted.  I have been told that this is being done legally, through the use of “overlays.”  The zoning jargon is not my area of expertise, but suffice it to say that we are being CodeNEXT-ed before the new code policy is formally vetted and approved.  From the taxpayers’ perspective, we were given a clue on June 26, when the City Council adopted Chris Riley’s Resolution # 20140626-089.  The key phrase for taxpayers and utility ratepayers is this one:

BE IT FURTHER RESOLVED:

“The City Manager is directed to report the timeline for getting financing for public infrastructure on the mall site such as streets, streetscapes, water and wastewater amenities in place by the end of 2014. The report should also include a single point of contact for the partnership, a timeline for the form-based code for the Highland Mall site and the corridor, as well as plans to finance improvements along the corridor. This report should come to Council by August 1, 2014.”

My Comment:  We know that many other such corridors are already in the works.  To the extent that some of the activity centers might foster job training and paid internships, they could fulfill a useful purpose.  But there is certainly a limit to how much existing residents can afford to contribute  for new trains, buses, utilities, “streetscapes,” and other amenities for tens of thousands of high-density, mostly luxury housing units.

Do You Need a Calculator to Figure This Out?

No, not really.  It doesn’t take advanced math skills to determine that Austin would have to defy gravity and the rest of reality in order to sustain the costs for this litany of plans.  There are others, such as the University of Texas Medical District Master Plan, which calls for replacing Brackenridge Hospital and the Frank Erwin Center.  Travis County recently passed a Growth Guidance Plan.  And there’s the Downtown Austin Plan, which envisions turning Congress Avenue into the Champs Elysees, among other things.  And nobody knows yet what AISD will do about the bonds that failed to pass last year.

What we do know is that Austin’s hyper-growth may be showing signs of strain.  Forbes Magazine reports in its June 27 issue that Austin’s housing prices are the fifth most overvalued in the country, at 13%.  None of our local leaders want to consider the fact that successful private businesses never practice the policy of “build like crazy and hope for the best.”  If they continue to ignore the public’s ability to pay in all of their planning processes, I suppose they will eventually discover that Austin can’t defy gravity after all.

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3 thoughts on “Can Austin Taxpayers Afford To Build A Whole New City?

  1. Larry Sunderland

    Growth is not a given. If we think growth is bad wait until we have no growth. An uptick in interest rates, higher energy costs, the next bubble bursting, all of these and more will force us to realize that here in Austin we are not exempt from the laws of nature. We are not blameless here. Our elected officials reflect the same thinking that we citizens embrace. The road goes on forever and the party never ends.. I will not support the bonds because I think it’s is high time we step back, sober up, and realize that we have a difficult and unfunded future ahead of us.

    Reply
  2. SToddJones

    Moving anywhere else sounds like a good plan for me. Doing everything at the same time is not affordable nor practical. Todd

    Reply

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