Tag Archives: Austin affordability

San Francisco’s Affordability Crisis – Is This The Future For Austin?

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By Bill Oakey – March 31, 2016

golden-gate-bridge

You can surely expect to find San Francisco on many historic lists of America’s most charming cities. But these days, the City By the Bay is in the throes of a major affordability crisis. That long ago dream popularized in the 1960’s by Tony Bennett with the words, “To be where little cable cars climb halfway to the stars,” today feels more like a nightmare to many longtime residents. If we think affordability is bad in Austin, which of course it is, then we need to look to San Francisco and ask if there is still time to keep things here from getting a whole lot worse.

The recent HBO documentary, “San Francisco 2.0” lays out the sad reality of a once diverse and progressive city falling victim to the encroachment of too much wealth and the perils of the economic divide. Here are a couple of snippets from the synopsis on HBO’s website:

“San Francisco has long enjoyed a reputation as the counterculture capital of America, attracting Bohemians, mavericks, progressives and activists. With the onset of the digital gold rush, young members of the tech elite are flocking to the West Coast to make their fortunes, and this new wealth is forcing San Francisco to reinvent itself. But as tech innovations lead America into the golden age of digital supremacy, is it changing the heart and soul of their adopted city?”

“Alexandra Pelosi (filmmaker) has always been proud of San Francisco, in particular its ‘long tradition of embracing nonconformity.’ She sets out to explore how the arrival of innovators – the so-called “IT invasion” – is reshaping its iconic neighborhoods and forging a tech paradise in the City by the Bay. Pelosi talks to a range of subjects, from ambitious trendsetters bringing an unprecedented wave of wealth, to the entrenched communities of artists and immigrants who are hoping to hold onto the place they call home.”

Then There Was the Recent New York Times Article

Early in March, the Times published an article entitled, “In San Francisco and Rooting for a Tech Comeuppance.” It’s not much of a stretch to think of similarities to Austin. These short excerpts explain it well:

“The consequences for people who do not make their living from technology are increasingly unpleasant. The city is bulging at the seams, adding about 10,000 people a year to a record 852,000 in 2014. A one-bedroom apartment goes for a median $3,500 a month, the highest in the nation.”

“Signs of distress are plentiful. The Fraternite Notre Dame’s soup kitchen was facing eviction after a rent increase of nearly 60 percent. (It was saved for a year after its plight received worldwide publicity). Two eviction-defense groups were evicted in favor of a start-up that intended to lease the space to other start-ups. The real estate site Redfin published a widely read blog post that said the number of teachers in San Francisco who could afford a house was exactly zero.”

“All the renters I know are living in fear,” said Derrick Tynan-Connolly, a teacher at a high school for pregnant teenagers and young mothers. “If your landlord dies, if your landlord sells the building…and you have to move, you’re gone. There’s no way you can afford to stay in San Francisco.”

San Francisco has even had their own short-term rental battle, only theirs came in the form of a referendum. The proposition, which would have placed some restrictions on Airbnb got crushed  under the weight of big money. There were 1,959 minutes of airtime opposing it, compared to only 16 minutes in support.

The Clock Is Ticking for Austin…

Austin Photo By Bill Oakey

Austin Photo By Bill Oakey

The best thing we can do as a community is stay informed and engage with our local officials. One thing that does not bode well for us is that we do not have California wages here. And we have a State government that seems hell-bent on continuing to rely on local property taxes to support schools. Not only that, the declining enrollment in AISD fueled by families with children fleeing the city is destined to get much worse. Portland school enrollment took a steep nosedive in the 1980’s when their boom cycle began pricing families out.

We Need Comprehensive Affordability Solutions

City officials are seeking public input for a new housing plan that is now being developed. You can check it out and see a schedule of public forums,  ATX Housing Community Conversations. Then please check out my recent blog posting, “Saving Austinites From Losing Their Homes – A Homeowner Retention Initiative.” And finally, we can look forward to the comprehensive affordability report to be released next month by the local nonprofit, Liveable City.

For some musical accompaniment to this blog posting, listen to “I Left My Heart In San Francisco” by Tony Bennett, 1962 and “San Francisco (Wear Some Flowers In Your Hair),” by Scott McKenzie, 1967.

Homeowner Retention Initiative – Saving Austinites From Losing Their Homes

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By Bill Oakey – April 12, 2016

I have presented this proposal to the Austin City Council and two City Council committees:

Homeowner Retention Initiative

Overview: One of Austin’s biggest affordability challenges is the displacement of existing residents due to the rapid acceleration of property values, resulting in unaffordable property taxes. The housing cost spiral has helped fuel Austin’s status as the most economically segregated major city in America. One way to approach this problem is to explore creative solutions such as shared equity mortgages and shared appreciation mortgages. Local government officials should create a strong public outreach initiative so that citizens who feel at risk of losing their homes will know where to turn to seek assistance. Below I have listed both new and existing strategies that should be considered. All non-native long-term residents were newcomers when they first arrived. They are just as vital to the community, its culture and its economy as today’s newcomers.

Options to Review for Consideration

A. Shared Equity Mortgages and Shared Appreciation Mortgages

These are financing arrangements that allow a third-party investor to invest in a percentage of the equity in a home, thereby lowering the payments for the homeowner. When the house is sold, proceeds are split based on the equity ownership percentage. This mechanism should be explored both for renters seeking first time home ownership, as well as a refinancing option for long-term homeowners squeezed by high property taxes. And it could be applied to landlords needing lower mortgage payments or taxes, to facilitate lower rental rates.

­Online Resources For Shared Equity and Shared Appreciation Mortgages:

  1. “Facilitating Shared Appreciation Mortgages to Prevent Housing Crashes and Affordability Crises” – The Brookings Institution
  2. H.R. 3519 – Preserving American Homeownership Act of 2015 (See Attached Bill Summary)
  3. “Shared Equity and Housing” – Andrew Caplin, Economic Data Engineer, New York University
  4. “Shared-Equity Mortgages, Housing Affordability, and Homeownership” – Andrew Caplin, James Carr, et. all
  5. “Housing Partnerships: A New Approach to a Market at a Crossroads” – Book by Andrew Caplin
  6. “The Mortgage Mess, the Press, and the Politics of Inattention” – Andrew Caplin

Note: Determine if the concept of shared equity home ownership can be extended to older homeowners whose mortgages are paid off, but they still face an unaffordable burden of high property taxes. Can shared equity arrangements be worked out with investors willing to share the cost of property taxes?

B. Other, More Traditional Home Financing Arrangements:

  1. Shared equity with land trusts and various model comparisons – This website has a tremendous catalog of information and should be considered must-read.
  2. Co-ownership of a home – usually involving relatives or friends
  3. Reverse mortgages – should be approached with caution through consumer-based organizations

C. Continue phasing in the full 20% City of Austin general homestead exemption.

D. Consider supporting improvements to State law allowing over-65 homeowners to defer their property taxes:

  1. Reduce the annual 8% annual interest rate on the deferred tax amount.
  2. The over-65 property tax deferral option is subject to approval by each homeowner’s mortgage lender. We need to find out what criteria the lenders use, and to what extent the current climate for Austin homeowners favors or disfavors approval of tax deferrals by most lenders.

E. The City of Austin and Travis County should index the over-65 and disabled homestead exemption. They each need to adjust it annually.

F. Make sure that the current City review of a tax swap arrangement with AISD includes an offsetting adjustment to lower the tax rate for over-65 homeowners. Their school taxes are frozen when they turn 65. So a tax swap with the City without an offsetting adjustment would violate the intent of that law.

G. Seniors should be able to opt out of the City’s upcoming composting fee on our utility bills. The fees that we already have are burdensome enough, without making it worse.

H. Research and review the housing affordability and homeowner retention strategies of other cities. See this news article from Portland.

The Decline of Homeownership – Is a Single-Family Home The New Luxury Item?

Please read this disturbing article from CNBC. With homeownership at risk more so than at any time in recent history, isn’t it a good idea for Austin to step up to the plate and seek some innovative solutions?

U.S. H.R. 3519 – Preserving American Homeownership Act of 2015

(Referred to the House Committee on Financial Services. No further action to date).

Sponsored By Rep. Keith Ellison (D), Minnesota
Co-Sponsored By Rep. Louise Slaughter (D) New York
Co-Sponsored By Norma Torres (D) California

Note: A similar version of this bill was introduced in the Senate in 2014 as S. 2854 by Sen. Robert “Bob” Menendez (D), New Jersey

Bill Summary

Requires the Director of the Federal Housing Finance Agency and the Federal Housing Commissioner each to establish a pilot program to encourage, through assistance provided under the Home Affordable Modification Program under the Secretary of the Treasury’s Making Home Affordable initiative, the use of shared appreciation mortgage modifications that: (1) are designed to return greater cash flow to investors than other loss-mitigation activities, including foreclosure; and (2) result in positive net present value for the investor.

Requires a shared appreciation mortgage modification to: (1) reduce by specified action the loan-to-value ratio of a covered mortgage to 115% immediately upon modification and to 95% within 3 years; (2) reduce the interest rate if such a principal reduction would not result in an affordable reduced monthly payment; (3) reduce to a specified amount any periodic payment the homeowner is required to make; (4) require the homeowner to pay the investor, after refinancing or selling the real property securing a covered mortgage, up to 50% of the amount of any increase in the value of the real property during a specified period; and (5) result in a positive net present value for the investor after taking into account the principal reduction and, if necessary, any interest rate reduction.

Requires the Director to: (1) provide that an enterprise may negotiate regarding a shared appreciation mortgage modification of a covered mortgage with any mortgage insurance provider for a mortgage on the subject property, and (2) allow advanced claim agreements with respect to such mortgage insurance policies.

Watch The Video – March Regional Affordability Meeting

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By Bill Oakey – March 31, 2016

The Austin Regional Affordability Committee met Monday March 28th. You can watch the video here. The Committee includes officials from the City of Austin, Travis County, Central Health, AISD and others. Among those are City Council Members Delia Garza, Ann Kitchen and Ellen Troxclair, Commissioner Brigid Shea, and former State Representative and current Central Health Board Member, Sherri Greenberg.

A highlight of this month’s meeting was an affordability presentation by the local nonprofit, Liveable City. This organization sponsored a collaborative gathering of citizens who divided into groups for a day-long affordability forum. The Regional Committee on Monday will also be discussing their ongoing efforts to develop an Affordability Strategic Plan. In the video, you will also see the introduction of my Homeowner Retention Initiative, along with a presentation on the critical issues facing renters from the Austin Tenants’ Council.

We have a tremendous opportunity to join together and work towards real, tangible solutions to Austin affordability. The issues are diverse and complex, but I believe that Austin abounds with the creative and innovative spirit that can truly make a difference. Hopefully, the topical elements and the results of community input obtained at the Liveable City forum will help the Committee build their Strategic Plan.

Click here for more information on the Austin Regional Affordability Committee.

Taxpayers Stuck For Construction Workers’ Wage Increase

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By Bill Oakey – March 24, 2016

This seems to be week for “Holy Cow! Did I Read That Right?” news stories. Here’s one I woke up to this morning. Are you ready for this?

Capital Metro Gives Developer a “Wage Waiver,” (A New Breed of Fee Waiver)

Capital Metro and the Endeavor Real Estate Group negotiated a deal for the construction of the 10-acre Plaza Saltillo development downtown. When the dust settled after Tuesday night’s board meeting, the developer walked away winning their original offer of $11.39 per hour minimum wage for the workers. And yet the workers won also, because they will be getting paid $13.03 per hour. That’s because Capital Metro agreed to “share” part of the difference with money that would otherwise belong to the taxpayers. The shared portion will be 50% of the wage increase  The net taxpayer loss is estimated to be $500,000.

Capital Metro will be leasing the 10-acre tract of land to the developer for 99 years. The “shared” portion of the workers’ wage increase will come in the form of a subsidy in reduced lease payments.  The lease subsidy benefits the developer the same way that a fee waiver would. So, I suggest that we label this groundbreaking event the dawn of the “wage waiver.” History will remember that the era began on Tuesday March 22, 2016.

The Tuesday night board meeting played out with the typical drama of an Austin showdown between a developer, government officials and citizen activists. Members of the Workers Defense Fund were justifiably upset because the agreement lacks sufficient worker safety provisions and many workers will be denied worker’s compensation insurance. According to an article in the Austin Monitor, the Workers Defense Fund may oppose the zoning change for the development when it goes to the City Council.

And what will the developer have an opportunity to ask for at the zoning hearing?

Fee waivers, of course!

So, Where Does All of This Leave the Taxpayers?

The worst thing about this first “wage waiver” is the dangerous precedent. $500,000 is “only a little bit of money” out of a big contract. But what about the next contract and the one after that? Every developer that goes into a construction and lease deal will want the same thing. Think about the massive complex of buildings being planned for the land owned by Central Health. What we witnessed this week was the opening of Pandora’s Box.

Pandoras-box

The Straw That Broke The Camel’s Back – Are You Ready For This?

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By Bill Oakey – March 21, 2016

In a February blog posting, I discussed the need for the City to compile a list of all their expensive project plans, publish them for public input and discussion, and then set some realistic and affordable priorities on them. What I did not happen to mention is that obviously Travis County needs to do the same thing. In fact, the City and the County need to work together and then bring the community into this discussion.

Just try to imagine Amy’s Ice Cream, Whole Foods, Dell Computer or any other business of any size trying to operate without knowing the cost of all of their plans. Publicly held companies’ shareholders would never stand for it. If anyone reading this blog can find a single City or County office holder or staff member who can identify all of their master plans and project plans and tell us the total cost, I would be very surprised.

Are You Ready for This?

There is a Britney Spears slot machine in Las Vegas where she struts across the screen offering a bonus prize and asks, “Are you ready for this?” Well, ready or not, here comes something that is not nearly as much fun. In fact, I’d say this is the straw that broke the camel’s back.

$620 million for a new Travis County Expo Center!

$620 million for a new Travis County Expo Center!

Yes, you read that right – a price tag that is over twice as high as the failed bond proposition for a new civil and family courthouse! You can see the high cost estimate that totals up to $620 million in this PDF from Page 33 of the County’s draft report. There may be some lower estimates out there in Consultant-ville, but why not factor in the highest estimate and assume that the routine cost overruns will hit that amount in the long run?

Are You Ready for Some More?

Oh, and just when you thought that the plan for two commercial golf courses at Walter E. Long Park had been put to rest, guess what. They’…rrre…back!! The same developer who brought up the original proposal has launched an expanded version that includes a host of other grand ideas. And the Austin Parks Department is about to start…here we go again…a brand new master plan for the park. So, the awesomely expensive new Expo Center would only be one piece of a much bigger package. The neighborhoods near the park have waited for over 30 years for some well-deserved improvements. But a grand scheme for luxury development would only bring on more California-style gentrification. (Quick note on the golf courses – Keep in mind that the Austin City Charter clearly states that no City parkland can be leased or “otherwise alienated” without voter approval).

Last year I addressed the big picture planning cost issue in another blog posting that conjured up images of the multiplying brooms in “The Sorcerer’s Apprentice.” Today I am still haunted by those images of a hapless office apprentice carrying two buckets full of planning reports. As the music gradually rises to a crescendo, the brooms take over his duties and they begin to multiply. A dozen buckets full of plans morphs into hundreds. Our only hope is to wake up the City Council and the Commissioners Court before it’s too late.

Brooms

Click here for a stereo video of “The Sorcerer’s Apprentice.”

Joint Ownership Options Could Help Keep Austinites In Their Homes

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By Bill Oakey – February 24, 2016

One of the biggest problems facing longtime Austin residents is the high cost of property taxes. In recent years we have seen skyrocketing property appraisals that are literally pricing people out of their homes. Neighborhoods across that city that were once affordable are constantly seeing older homes bulldozed and replaced by very expensive luxury housing. This cycle of resident displacement and gentrification is difficult to overcome. Many of the affordable housing options being discussed by City officials consist of fee waivers to developers or geographic tax abatements that ultimately end up shifting the costs to other taxpayers. There are no easy solutions.

Joint Home Ownership Might Help Solve the Problem

Relatives and friends can legally enter into agreements that allow them to share ownership in a home. For example, you could ask a wealthy uncle to buy a 40% stake in your home. One simple way to do that would be for him to put up 40% of the equity that you have have in the home. Then from that point forward, you would pay 60% of the monthly mortgage bill and he would pay 40%. You would also share a 60/40 split on other expenses such as insurance and property taxes. And you would split the Federal income tax mortgage interest deduction. Neither one of you could sell the home without the other’s agreement, but you could sell your interest in the home. If the home is eventually sold, you and your uncle would do a 60/40 split on the proceeds.

Of course, not all of us has a relative or a trusted friend who would be interested in becoming a joint owner of our home. Perhaps the City of Austin should explore new and innovative ways to make joint ownership available for people who find themselves in danger of losing their homes. Right now, you as a homeowner cannot call up your mortgage lender and offer to sell an interest in your home to that lender. There is not a real estate office that you can call and ask to list a percentage of your home for sale on the open market. But if systems like that could be put in place, it might help a lot people be able to afford to stay in their homes.

High housing costs and property taxes also make it difficult for renters to be able to buy a home. Since the end of the recession, the rate of home ownership in the U.S. has declined. Tighter lending standards and student loan debt have made a harder for first-time buyers to get a home loan. CNBC recently published an article entitled, Is a Single-Family Home the New Luxury Item? The same could be asked about condos and townhouses, especially in Austin. A joint ownership option could help reduce the barriers to first-time homebuyers, including the down payment.

I would like for our City officials to consider this idea and discuss it with members of the real estate community. Joint home ownership is legal in Texas, but expanding it to real estate brokers and mortgage lenders could require changes to state or Federal laws. It seems like it would be a boost to the economy and quite helpful to many Austin residents. Many of us might be willing to give up a portion of the investment in their home for an opportunity to enjoy a lower burden of expenses.

Our Local Leaders Need to Stop Planning And Add Up The Costs

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By Bill Oakey – February 22, 2016

One way to at least take a stab at the affordability problem is to look at how many “plans” our local officials have stacked up on various office shelves. And just remember, every time you hear about one more ambitious plan, remember this. Every single one of them comes with a hefty price tag.

Our “new” City Council has now passed their first year in office. We have seen a few notable stumbles on the affordability front. They passed a huge affordable housing initiative, without first realizing that it will cost about $100 million against our water bills and property taxes over the next 20-30 years. And just recently, they accepted the word of a private appraiser, who now estimates that it will cost $360,000 apiece to buy out the latest batch of flooded homes in Southeast Austin. Council Member Ellen Troxclair cautioned her colleagues from the dais that this appraisal figure is highly inflated. She has since confirmed that fact with the Austin Board of Realtors. I have asked the City Council to reconsider these inflated appraisal amounts.

The bottom line is that too many big ticket items are slipping through without the proper amount of due diligence. It was the flood buyout and mitigation program that reminded me of the alarming cost of the growing mountain of city plans. Yes, there is a Flood Mitigation Task Force. And yes, they are working on sort of a plan. It is called “Options for $100 Million Additional Funding.” We can pay for it with up-front cash out of the drainage utility fund or with borrowed money to be repaid from property taxes or the drainage fees.

Close your eyes and try to imagine how many different sets of plans the City has, sprinkled across every office in every department. Suppose the City Council asked the City Manager to make the rounds, gather up all the latest reports on these plans and bring them into a single room. I would like them to do this in the open and invite the public to come down and see how it all turns out.

There is absolutely no telling how many plans there are! That’s the whole point. I am going to formally ask the City this week to lay out all of the published plans and tally up the total cost of every single one of them. Then they need to meet and discuss how to prioritize the plans. Once that step is complete, they should consider reviewing every one of the plans to see which items within each plan are considered essential and which ones can either be postponed or eliminated. From what I can tell, there is no way we could possibly afford the cost of all of the plans, at least not anytime soon.

You might be wondering if I am “planning” to show a list of the plans that I have uncovered. The answer is yes, but I want to warn you first that looking at it might make you a bit dizzy or queasy. So here goes:

1. Bicycle Master Plan (2014) – $151 Million. Here is a teaser from Page 16:

“The cost of priority unfunded investments includes 200 new miles of on-street facilities for $58 million, at an average cost of $290,000 per mile. The cost per mile for on-street facilities varies greatly upon the type of treatment and is accounted for in the estimate. The estimate also includes 47 new miles of Urban Trails at $93 million at an average cost of $2 million per mile.”

2. Sidewalk Master Plan (2009) – $120 million. I am not sure how much of that is left to pay for.

3. Aquatic Master Plan (2016) – $41 million. Aquatic refers to swimming pools. The $41 million estimate is from last year, but the assessment will not be complete until sometime this year.

4. South Central Waterfront Initiative – Master plan due by June 2016

Other examples include:

Urban Forest Plan
Parks and Open Space Plan
Austin Resource Recovery Plan
Urban Trails Master Plan
Community Climate Plan
Watershed Protection Master Plan
Airport Boulevard Corridor Plan
Burnet Road Corridor Plan

It’s Time for a Reality Check!

A complete list would be impossible to assemble by relying on Internet searches alone. The City staff needs to gather these plans up and present them to the City Council for a major overview and affordability assessment. We need a timetable and yearly tax impact determined for every one of these plans before any further planning takes place.

The City needs to realize that voters have turned down bonds for AISD, “Urban Rail” and a costly County Courthouse. We are not living in the 1980’s anymore. We cannot afford the flashiest and the most elaborate park-scapes, street-scapes, and every other kind of urban “scape” that anybody can think of. Many thousands of us are struggling to afford the amenities that the City has right now. It might be nice to have a perfect “zero-waste” resource recovery system. It might be super to have the snazziest, most beautifully landscaped lakeshore in the Western Hemisphere. There is no end to the fantasies that various consultants, committees and task forces could come up with.

But until the current batch of plans is vetted and scrutinized by the City Council and the community, it’s time to call a halt to the creation of any more planning initiatives.

Musical accompaniment for this blog posting:

  1. “50 Ways to Leave Your Lover” – Paul Simon, 1975
  2. “Making Plans” – Porter Wagoner & Dolly Parton, 1980

 

Taxpayer Shock – City Forgoes Tens of Millions in Federal Home Buyout Funds

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By Bill Oakey – January 11, 2016

About a month ago, I suddenly became curious about the money being spent on home buyouts in the Onion Creek area related to the 2013 and 2015 floods. It occurred to me that none of the news reports addressed the question of where all of the money was to come from. How much of it, I wondered, was coming from local dollars, and how much of it was being matched by Federal grants? The local funding for these flood-related projects comes from the monthly drainage fees that we pay on our utility bills.

After doing some research on the topic and submitting questions to City officials, I received a detailed and disturbing response. The City’s Watershed Protection Department replied to my questions with a partially complete summary of the flood mitigation spending that actually goes back to 1999. So, here’s the bottom line. For the projects included in the response, the total cost is $170.17 million. Out of that total, only $55.77 million will ultimately come from Federal matching funds.

The chart below, provided by the Watershed Protection Dept. shows the breakdown of the Federal and local spending on these projects:

Lower Onion Creek Flood Mitigation Project

Lower Onion Creek Buyout   Total Project Local Funding  Federal Funding  Pending Federal
Project                                       Cost                Share                Share                    Reimbursements

Corps Project Area*                $73.2M          $18.9M             $54.3M                  $22.9M
25-Year Project Area               $35.5M          $35.5M                     0                             0
100-Year Project Area           $61.47M          $60.0M             $1.47M                  $1.47M
Totals                                     $170.17M        $114.4M           $55.77M                $24.37M

*Note: Values are for the overall Corps project since 1999 for all phases: buyouts, ecosystem restoration and recreation.

In an email from Stephanie Lott, Public Information Specialist from Watershed Protection, she states that the above chart does not include all of the flood mitigation projects since 2013. Most disturbing for local taxpayers is the additional comment, “From asking some of our managers, it doesn’t sound like there are any other flood mitigation projects since 2013 that included federal funding.”

The response leaves a number of critical unanswered questions:

  1. Why did Austin receive such a tiny share of Federal reimbursements for these projects?
  2. Did the City take advantage of every possible opportunity to apply for Federal funding?
  3. Should the City be eligible for any State matching funds for the home buyouts?
  4. Did the City work with the State to submit a flood mitigation plan to FEMA that included all of the anticipated Onion Creek home buyouts? (See “The Federal Grant Application Process” below).
  5. Why does the City assume that none of the remaining home flood buyouts since 2013 will  receive any Federal funding?
  6. Has the City Council been fully informed about the limited, and in many cases nonexistent Federal funding for the large number of previous and pending home buyouts?
  7. What plans, if any, does the City have for applying for Federal funds for future buyouts of flooded homes?

 The Federal Grant Application Process

It was not difficult to track down the Federal guidelines for assistance in home buyouts in flood prone areas. See this link entitled, “For Communities Plagued by Repeated Flooding, Property Acquisition May Be the Answer.” Below are some excerpts from the document:

“For eligible communities, FEMA typically funds 75 percent of the cost of property acquisition with the municipality and state contributing the remaining twenty-five percent. FEMA does not buy houses directly from homeowners. Buyout projects are initiated and administered by local and state governments with grant funding support from FEMA. “Additional federal funding may also be provided by the Community Development Block Grant program administered by HUD.”

“To qualify for federal funding for the acquisition of flood-prone properties, a state must create a flood mitigation plan, which is then submitted to FEMA for review and approval. In its mitigation plan, the state identifies communities that have experienced losses due to repetitive flooding and, once the plan is approved by FEMA, notifies those communities that funding for property acquisition may be available.”

Also, see how the Harris County Flood Control District handles the grant application process. Note the sections entitled, “Federal Funds for Voluntary Buyout,” and “Federal Eligibility Requirements.”

Mayor Adler and the City Council should review these guidelines and pose some hard questions to the Watershed Protection Dept. If FEMA and HUD funding is available to cover “typically 75%” of flooded property acquisitions, then why has the City been relying on local drainage fee funds to cover the entire cost? If, in fact, the City Manager and his staff have dropped the ball to the tune of tens of millions of dollars, then who will be held accountable? And how soon can the City set about correcting these deficiencies to the future benefit of Austin utility ratepayers?

Stay tuned for an update on this issue as soon as any response from the City becomes available.

Leslie Pool Takes The Lead In Battling Fee Waivers

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By Bill Oakey – November 23, 2015

City Council Member Leslie Pool sponsored a resolution last week that will help protect taxpayers from the burden of subsidizing special event fee waivers next year. Ms. Pool took the time to call me in response to my previous blog posting regarding public safety spending for 2016 special events. The key point as she explained it is that she has tracked down another funding source that will not come from taxpayers. There is a Business Retention and Enhancement Fund that is being considered for this purpose. This fund contains the $2.4 million returned to the City from White Lodging, as a result of their lack of adherence to their incentive agreement.

I will take this opportunity to apologize to Council Member Pool for not contacting her before I published the blog posting on the resolution that she sponsored. She has made it clear that she supports a long-term solution that will reduce or eliminate taxpayer subsidies for fee waivers. This has been a long and treacherous affordability battle, and it’s great to know that Leslie Pool is in our corner and taking the lead on this issue. The resolution that she sponsored and got passed is an important first step in the right direction. Now it is up to the City Manager to follow through with a plan for alternate funding sources for special events and the permanent elimination of fee waivers – finally!

The Fee Waiver Controversy Gets A Brand New Twist – And It’s A Humdinger!

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By Bill Oakey – November 11, 2015

We all remember the big brouhaha over special event fee waivers that has raged in the press and at City Council meetings over the past couple of years. It’s a twisted tale of a City Council resolution seeking “alternate funding sources” for the multimillion fee waivers for SXSW and other large event promoters. Of course the money to pay for these waivers comes from you and me, the taxpayers.

So, here’s a quick recap. In May of 2014, Mayor Pro Tem Kathie Tovo got a resolution passed unanimously to direct the City Manager to develop a plan to remove the local taxpayers from the fee waivers and pay for them with alternate funding sources. Her suggestions included surcharges on ticket sales and possibly a portion of the Hotel Occupancy Tax. The first resolution deadline of August 2014 came and went with no action. Then a November 2014 memo surfaced, promising a new deadline of August 2015. When that deadline slipped away, I asked for help from a City management contact person.

Mr. William “Bill” Manno in an office called “Management Services” sent me an email this past July 10th, stating that a draft report responding to the Council resolution would be delivered to the City Council by “October, if not sooner.” On Tuesday of this week I emailed Mr. Manno and asked him to please send me a copy of the report.

City politics is a lot like participating in a real life novel of mystery and intrigue. The level of gamesmanship that goes on behind the scenes is stunning. One of my best inside sources at City Hall alerted me today of a fascinating twist in this saga. First, let me mention one quick thing. The City Council accepted my appeals not to include any funding for special event fee waivers in this year’s budget. All along I’ve been hoping that my compromise proposal for alternate funding sources might have a chance.

Well, take a look at these two items coming up on the Council’s Nov. 19th agenda:

67. Approve an ordinance amending the 2015-2016 Fiscal Year Budget to provide funding for public safety during South by Southwest.

( Notes:   SPONSOR – Council Member Leslie Pool )
68. Approve a resolution directing the City Manager to create a long-term plan to address overall public safety during the spring festival season.

( Notes:   SPONSOR – Council Member Leslie Pool )

You will notice one piece of terminology that is conspicuously missing from these items. You guessed it, the phrase “fee waiver” do not appear in the agenda verbiage! Someone with Karl Rove’s knack for political maneuvering decided that “public safety funding” sounds a whole lot prettier and nicer than the dirty old ugly term “fee waiver.” But the end result to the taxpayers is still the same. Instead of requiring event promoters to pay their own fees for City services, or using ticket surcharges or Hotel Occupancy Tax funds, the problem can be solved by simply passing a budget amendment. Let the taxpayers subsidize the additional public safety services.

Since Leslie Pool was not on the Council during the loud public controversy over fee waivers, perhaps she was seen as an easy target by the special interests who have worked behind the scenes to protect the status quo on fee waivers. But the cat is now out of the bag and we still have time to push for adoption of the alternate funding sources originally conceived in the 2014 Tovo resolution.

Here Is My Proposal for Special Event Funding

Compromise Funding Proposal for Special Events By Large For-Profit Companies

By Bill Oakey – November 11, 2015

  1. Do not approve any designated “public safety funding” for special events until a policy is adopted pursuant to Mayor Pro Tem Tovo’s Resolution # 20140501-036. This was the resolution calling for the City Manager to develop an alternate funding plan for special event fee waivers. Please note that Mr. William “Bill Manno” in the Management Services Office made a commitment this past July 10th that a report would be delivered to the City Council by “October of this year, if not sooner.” Providing public safety funding for special events equates to the same thing as granting fee waivers, regardless of whether the “fee waiver” label is used.
  1. Do not approve any multi-year agreements with special event organizers until a non-taxpayer supported funding policy has been formulated.
  1. Ask City staff and the appropriate task force / committee members to develop and recommend a compromise funding strategy with the following three elements:a. A portion to come from the Hotel Occupancy Tax funds. (This would require amending City Code Chapter 11-2, Section (B) (3) that allocates 15% of Hotel Occupancy Tax receipts to the cultural arts).b. Surcharges added to ticket prices for those events. A study could be done to estimate the amount that could be generated from the surcharges at various levels, such as 25 cents, 50 cents, one dollar, etc.

    c. Require the special event companies to pay a portion of their own fees. As a part of this component, the outside companies that piggy-back on SXSW should be required to pay a reasonable fee (or an increase in their current fees, if there are any) when they apply for their permits. SXSW itself may not be entirely to blame for the entire funding gap that has been attributed to them.

Please note that the City’s total service costs for special events exceeds the cost of the current fee waivers. The funding gap was $4.2 million in 2013, per the City Transportation Dept. Report. That’s because the City does not set the fees high enough to cover the actual cost of all services provided. Therefore, the new funding policy that replaces the fee waivers should be formulated sufficiently to completely eliminate any funding gaps. That would result in a zero-cost impact on the local taxpayers. That is what we need. The bottom line is that local taxpayers can no longer afford the cost of the fee waivers. The current fee waiver system is one of the most unpopular programs in all of City government.