Tag Archives: Austin affordability

Courthouse Dilemma Calls for Creative Solutions

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By Bill Oakey – November 9, 2015

New Courts for Families - "We need a safe environment for women and children."

New Courts for Families – “Yikes, the rats! We need a safe environment for women and children.”

Many Travis County taxpayers breathed a momentary sigh of relief after the votes were counted, showing that the $287 million courthouse bonds were defeated. But in the halls of the Travis County Commissioners and in lawyers’ offices downtown, the mood was very close to panic mode. They are all still reeling. A recent law passed by the Texas Legislature places the County in a veritable straitjacket. They are prohibited from issuing any debt for projects in a failed bond proposition for three years.

It is too late now for County officials to ponder what went “wrong.” What needs to happen quickly is a major shift in thinking about the new courthouse.  The voters have spoken. They chose not to spend that amount of money on the type of facility that was proposed. Here are some of my thoughts on how to move forward with new plans for the courthouse:

1. Downsize the Design Ambitions for the New Courthouse

Travis County has probably spent in excess of $10 million on consultants and staff time for the courthouse planning to date. The most basic starting point for any such plan is determining how big of a courthouse that we need. The County staff worked up a report that estimates we would need space for 35 judges and 33 courtrooms between now and 2035. But how seriously did anyone question those estimates? Today we have 19 civil and family courts. It does not appear to me that we have added new courts in recent years at such a rapid pace that a target number of 33 is justified. Do we really need a courthouse as tall as the Frost Bank Tower?

The new courthouse was envisioned to be a state of the art facility with every modern innovation in place. One point in particular caught my attention. The hallways were planned to be several times wider than what exists in the current courthouse. It’s one thing to build something that is less cramped and more safe for those visit the courthouse. But floor after floor of the new building should not require enormously vast hallway space. From an affordability perspective, the taxpayers would probably prefer the building to be much better than the old courthouse, but something less than a Cadillac standard of perfection.

2. Take a Fresh Look at the Security Needs for the New Facility

It is true that family violence, child custody and divorce cases can pose a serious security risk. Abuse victims should not have to ride in the same elevator or sit next to their perpetrators in the hallway. Children especially should have a safe and secure place to stay while in the courthouse. But there are large numbers of civil cases that do not come with the same high level of risk. Think about issues like insurance disputes, eminent domain cases and various other civil matters. Even adoption cases are fairly low-level in terms of security needs. Why couldn’t the building be divided into high security and lesser security sections? It is my understanding that the vast amounts of thick and heavy glass in the construction design contribute the most to the high cost. In a hybrid design scenarios, the internal and external construction materials for the lesser security sections would be much less expensive. Such a configuration could require some judges to move between sections to try different types of cases. If that should become necessary, then so be it. All reasonable measures to bring down the courthouse costs should be considered.

3. Work with the Legislature to Try to Amend the Debt Restriction Law

Three years seems like an unreasonable time to have to wait for another bond election. Perhaps our County officials could work with the Legislature to come up with an amendment to the law for constitutionally mandated functions like building and maintaining adequate court facilities. The sooner the law could be changed is in January 2017. That’s a little over a year away. We could potentially have another election in May or November of 2017. At least that’s better than a three-year wait.

4. Take the Time to Tally Up the Land Sale Revenues and Other Offsets to Reduce the Bond Price

Travis County Commissioners were wise to consider the sale of several County-owned properties to generate revenue to offset the cost of the bonds. However, those sale transactions could not be completed in time for this year’s bond election. Now, however, there will be sufficient time for the properties to be sold before the next bond elections, thus allowing the size of the ballot initiative to be reduced. In addition, County officials should factor in estimates for the potential parking revenues and the lease receipts from private usage of excess space in the building. Another significant revenue stream will come from the sale or lease of the second half of the property that the County intends to put out for bids to private developers. Once all of these revenue sources have been nailed down and summarized, the voters can be presented with a much clearer estimate of the tax impact of a new courthouse.

Is There Any Possible Way to Build a New Courthouse Without Waiting Three More Years?

On the surface, the answer would seem to be no. The financing options appear to be limited to a choice between bonds or certificates of obligation, or else cash appropriated straight out of the annual budget. However, there is one other option that has been used in other places. In Long Beach, California a new courthouse opened in 2013 that was built with upfront funding from a private consortium. The $340 million cost plus interest will be repaid by the State of California over the next 35 years. Of course, Texas does not pay for county courthouses. And I’m not sure if it would be legal for Travis County to bypass the voters and enter into an agreement with private developers to build a large courthouse. It would still be a debt-based transaction and could run afoul of the newly passed law requiring the three-year waiting period.

An Offer of Desperately Needed Help for the Judges and Lawyers

During the recent bond campaign, residents were treated to large glossy postcards featuring pictures of monster-sized rats. These hideous creatures reminded me of the B grade 1959  horror film, “The Killer Shrews” (See the YouTube trailer here, or the entire movie here). While I cannot speak for all of the taxpayers, the County certainly has my personal permission to invest in a few packages of rat poison, if not a friendly call to a pest control service to alleviate the problem. The same goes for fixing the leaky roof. However, I would hesitate to suggest hiring a consultant to develop plans for those endeavors.

Travis County’s HUGE Wake-Up Call – So, Where Do We Go From Here?

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By Bill Oakey – November 4, 2015

It is hard to overstate the historic significance of the failure of Travis County’s bond proposition for a new civil and family courthouse. In the 44 years that I have lived in Austin, I can’t think of another time when a major Travis County bond proposition failed. The voters here have consistently approved bonds for new infrastructure, whether it be for roads, buildings on land acquisition. But this time was different…Why?

That is the question that the Travis County Commissioners and their staff should be asking right now. Rather than pounding their fists and insisting that the voters did the wrong thing, they really need to take a few deep breaths and think about why the bond proposition failed. In the minds of the pro-bond fundraising groups there was only one side to the argument – We need a new courthouse, the old one is dilapidated. End of discussion.

The reality is that most Travis County residents do not disagree that we need a new courthouse and that the old one has long since outlived its useful life cycle. But that reality just happens to bump up against another one – affordability. This year’s round of sky-high tax appraisals hit everybody like a punch in the gut. When people are seriously scared about whether they will be able to afford to stay in their homes, their willingness to vote for tax increases becomes severely strained.

So, Where Does Travis County Go From Here?

There is no question that heads are rolling downtown at the County offices. As much as the County Commissioners would like to find a quick solution for the badly needed courthouse, there is a new State law that will probably slow them down. Apparently, a bill that was passed in last year’s Legislative session mandated that counties must wait 3 years after a  bond election to issue any new debt for a project that fails. County officials are working as we speak to determine exactly what their options are for pursuing any construction of a new courthouse.

The Big Missed Opportunity That Helped Lead to the Current Mess

The date was September 10, 2013. The Travis County Commissioners held a regular meeting on that date. Agenda Item # 18 addressed several items related to the proposed new courthouse. The 4th bullet speaks to my recommendation that the courthouse should be conceived as a “national model of cost effectiveness and efficiency.”

From the Commissioners Court Minutes for September 10, 2013

18. Consider and take appropriate action regarding the costs and engineering and architectural features of certain recently constructed civil and/or family courthouses.

Members of the Court heard from:
Belinda Powell, Capital Planning Coordinator, PBO
Roger El Khoury, Director, Facilities Management Department (FMD) Bill Oakey, Travis County resident

Clerk’s Note: Judge Biscoe circulated a memo requesting staff to ascertain certain information regarding recently built courthouses in other jurisdictions.

MOTION: Approve the information listed in Judge Biscoe’s backup memo plus five additional points:

o Delivery method;
o Soft costs and hard costs;
o Any cost reduction measures;
o Strive to achieve a national model of cost effectiveness and efficiency

and;
o Whether Furniture, Fixtures and Equipment (FF&E) are included in the
total cost.

The Motion Passed Unanimously. But What Happened Next?

The answer is simple and most unfortunate – Nothing!

In 2014 I was appointed to the Community Focus Committee for the proposed new courthouse. I was under the impression that this committee would function in an advisory capacity. However, we never performed any advisory role and we never interacted with the County Commissioners. Instead, we attended meetings where we were briefed by the staff and two sets of consultants on the progress and status of the courthouse planning efforts.

I brought up the fact that the County  Commissioners adopted my stipulation that the courthouse should become a “national model of cost effectiveness and efficiency” on at least two occasions. But no one ever brought forth any cost containment strategies. No discussion of alternative cost scenarios was ever presented to us. In fact, our committee was never even briefed on the estimated cost of the courthouse until the same week that it was scheduled to be presented to the Commissioners Court.

Shortly after the high cost of the proposed courthouse was announced, I submitted my resignation from the Focus Committee. It’s too late now, but if the taxpayers’ concerns about affordability had been taken seriously, perhaps the courthouse bond proponents would be celebrating a victory this week instead of wringing their hands in defeat.

It’s Time For Taxpayers To Contact The City Council – Watch Out For The Budget!

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By Bill Oakey – August 20, 2015

Many thanks to Council Aide, Michael Searle in Council Member Ellen Troxclair’s office. He provided me with a document that shows the current status of proposed cuts and additions to City Manager’s proposed City Budget. Today it is available online. You can read the details by clicking the link below:

City Budget Concept Menu Aug 20

There Is Good News and Bad News

One piece of good news not noted in the chart is that, according to an information request from  Council Member Troxclair, there are no funds budgeted for special event fee waivers. If this position holds, it will be a major victory. It is long past time for the City to pay for special event services from sources other than local taxpayers.

The bad news is the bottom line. This current “budget concept menu” calls for $30.7 million in increases to the General Fund budget, with only $13.4 million in spending reductions. It should be noted, however, that several of the budget change suggestions from Council members have not been quantified yet by City staff. Those items are labeled, “TBD” – To Be Determined. So, in all fairness, the jury is still out on whether this current menu would offer pain relief to taxpayers or serious indigestion.

A Closer Look At Some Of the Highlights

  1. Item 2.13 – Council Member Troxclair recommends freeing up $9.7 million in Budget Stabilization Reserve funds. This would lead to taxpayer savings.
  2. Item 2.14 – Huge Kudos for Troxclair! This item would end three layers of utility subsidies for “economic development” (giveaways for corporate recruitment) to the tune of $11 million. This would lower our utility bills.
  3. Item 2.4 – Thanks to  Mayor Steve Adler. Debt financing of select capital expenses would free up $12.9 million in reserve funds that could lead to tax savings.
  4. Item 2.3 – Thanks to Council Member Don Zimmerman. Implement a sliding scale for City employee pay raises. This would save a total of $7 million. Why should the fat-cats at the top of the scale get continuous big raises every year, while tens of thousands of Austinites struggle with stagnant wages?
  5. Item 2.2 – Thanks to Mayor Steve Adler. He offers an alternative plan for the tiered pay increases that would save $4.7 million.
  6. Item 2.23 – More thanks to Ellen Troxclair. This item calls for a staff pay increase structure that would save $6 million. We need to press the City Council to adopt either the Adler, Zimmerman or Troxclair plan!
  7. Item 3.3 – Thank you, Mayor Pro-Tem Kathie Tovo. Increase Development Services fee to 100% of cost of service. This would save us $1.4 million.
  8. Item 3.6 – Huge thanks to Council Member Sheri Gallo!. Increase Senior Homestead Flat Exemption to levels comparable to 2005 property valuations.
  9. Item 3.13 – Troxclair again! Freeze utility rates and fees to this year’s levels.
  10. Item 2.18 – Still more kudos to Troxclair. Limit additional police positions to 53. The staff’s ambitious increase in police is too much for one big jump in this year’s budget.

Here Is What You Can Do to Help!

This is our big chance to really make a difference in affordability. We need to let every City Council member know that we want meaningful reductions to the budget without being totally swallowed up by budget increases. In other words, tangible relief in taxes, utility rates and fees.

So, please take the time to email the Mayor and all Council members, using this one-click email link. Then, please send emails, texts, Facebook and Twitter postings to as many neighbors and friends as you have on your lists. If we all join together, we can score a nice victory in the new budget. Time is very short, so let’s get the action started now!

A Challenge To The News Media: Monitor The City Council For Budget Affordability

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By Bill Oakey – August 13, 2015

The City Council is now knee-deep into their budget deliberations. All of you reading this are wondering about the answers to some critical questions. These are questions that the news media should be asking the Council members, to find out how seriously affordability is being taken into consideration so far:

  1. How many cost-saving proposals have each of the Council members brought up so far in the  Budget Work Sessions?
  2. Which cost-saving proposals have they recommended so far?
  3. How much money has each Council member asked to be cut from the City Manager’s proposed budget?
  4. Has anyone on the City Council suggested an affordability goal for reducing the budget?
  5. Has anyone on the Council suggested a target for reducing taxes or fees in the budget?
  6. Has anyone on the Council suggested reducing the huge increase in staff in the City Manager’s proposed budget?
  7. Has the Council agreed to use a sliding scale for City Staff pay raises, after City employees received two separate raises this year? Or, do they plan to capitulate and offer all employees 3% raises, including executives with lofty salaries at the top?
  8. Have any of the Council members’ proposals for new spending have been offset with corresponding cuts, to ensure a zero impact on each new funding request?
  9. Affordability was often listed as the biggest issue in last year’s City Council campaigns. Has the importance of affordability been front and center so far in the budget deliberations?
  10. Which Council Members appear to be taking the lead on affordability throughout the budget deliberations?

A Few Bad Signs To Be Concerned About

  1. According to a recent article in the Austin Monitor, the City Manager’s budget proposal would RAISE TAXES ALMOST TO THE LEGAL MAXIMUM! That is called the “rollback rate,” which is an 8% increase over the current zero “effective rate.” Specifically, Marc Ott’s proposal would raise the tax rate to 48.14 cents. The legal maximum rollback rate is 48.26 cents.
  2. We would see some relief from the new 6% general homestead exemption. But the bad news is that the proposed budget does not include any specific spending cuts to offset the revenue gap from the homestead exemption. In other words, taxes would need to raised to make up that difference!
  3. Andra Lim with the Austin American-Statesman wrote a City Hall Blog piece entitled, “5 Things We Learned As Austin Officials Started Hammering Out the Budget.” Unfortunately, three of those five items relate to NEW SPENDING that Council members would like to ADD TO THE BUDGET.  While these programs may be worthwhile, and some appear to be, where are the cuts needed to offset these changes?
  4. Earlier this week, I was at City Hall for a meeting with a City Council aide. While walking down the hall, I encountered another aide who delivered some disturbing news. He told me about a trend that has emerged during the budget talks. Every time someone brings up a plan to cut some part of the budget, another Council member has a pet project ready to absorb that new-found money.

There is a simple three-word message that needs to be conveyed to the City Council:

Remember the Taxpayers!

Remember affordability! Remember the map of the City almost totally blanketed with double-digit tax appraisal increases for this year. Most homeowners will face the 10% appraisal cap, and any difference left over above the cap will be pushed into next year. Probably causing yet another back-to-back 10% increase in taxable value.

The Biggest Obstacle That Taxpayers Face is Business As Usual

It doesn’t take long for new City Officials to become absorbed into the status quo. A good word for that is “INERTIA.” Here is Merriam-Webster’s official definition of “inertia”:

: lack of movement or activity especially when movement or activity is wanted or needed

: a feeling of not having the energy or desire that is needed to move, change, etc.

“Business As Usual” was an appropriate title for the groundbreaking album by the Australian rock group, Men at Work, released in 1981. It stayed at number one on the Billboard music chart for 15  weeks and sold 15 million copies worldwide.

But here in Austin in 2015, we can no longer afford Business As Usual at City Hall!

business-as-usual-4f745d7d29bf1

City Council Approves Taxpayer Impact Statement

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By Bill Oakey – August 6, 2015

On Thursday the Austin City Council voted unanimously to approve a proposal by this blog to produce a Taxpayer Impact Statement as part of the upcoming City Budget. This marks a major step forward for truth in taxation. When the final budget is adopted, taxpayers will be able to determine the actual dollar amount of any tax increase for a range of home values at various levels of appraised value increases. The Taxpayer Impact Statement, which will be included in the budget document and published online, will also include the estimated dollar increases City in utilities and fees. An amendment to the resolution calls for a set of “budget highlights” to be listed on the statement.

Many thanks go out to Council Member Elken Troxclair, who sponsored this item as a resolution, and to the co-sponsors, Mayor Steve Adler and Council Members Ann Kitchen and Sheri Gallo. And of course we are extremely grateful to the entire Council for their unanimous approval!

The Next Step Is To Ask Travis County to Follow the Example

On Thursday morning I contacted all five of the Travis County Commissioners and asked if they would consider supporting a similar Taxpayer Impact Statement for their upcoming budget. Commissioner Margaret Gomez was the first to respond, and she has gladly agreed to help. The best-case scenario would be universal adoption by all of our local taxing entities. Once all of their budgets are finalized, we should ask for a combined statement of the impact on taxpayers. I believe that good transparency will lead to a better appreciation of our affordability challenges, and hopefully, an eye toward more prudent budgeting.

American-Statesman Editorial Board Endorses This Reform

Here is an excerpt from their editorial:

WE SAY: AUSTIN CITY BUDGET
Tax deliberations need transparency, sensitivity for homeowners
Posted: 12:00 p.m. Thursday, Aug. 6, 2015

By Editorial Board

“City watchdog Bill Oakey, who writes the “Austin Affordability.com” blog, has put together what he calls a ‘Taxpayer Impact Statement’ that spells out much of that data for city taxpayers. That is a good starting point.”

“And, if all five taxing jurisdictions put together such impact statements that also detail the total taxes and fees taxpayers are shelling out annually to those entities, it might generate the kind of sensitivity — and sensibility — needed in budget and tax deliberations. At the very least, such transparency would illuminate how spending decisions by elected and appointed officials affect taxpayers’ wallets from one year to the next. And that would enable voters to hold their elected officials more accountable”

 

Budget Op-Ed In The Austin American-Statesman

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Austin City Budget Needs Affordability Makeover

Wednesday August 5, 2015

By Bill Oakey – Special to the American-Statesman

Every year at this time, Austin homeowners grit their teeth and wonder whether the City Council will remember their skyrocketing tax appraisals as they deliberate on the budget.

This year the tax appraisals were stunning, with double-digit increases as high as 27 percent in some areas. When the newly formed single-member-district City Council asked the city manager to submit a lean budget with responsible cuts, his response was pitifully weak and it suggested closing a fire station. What part of affordability does he not understand?

At the end of July, the city manager issued his official budget recommendation. In Volume One, the word “affordability” appears eight times. But the word “tax” appears 290 times and “fees” 134 times.

Property taxes would go up $40 annually for a “typical” median homestead, with the new 6 percent homestead exemption included. But that “typical” homestead is only valued at $232,272. Many longtime residents in single-family homes haven’t seen tax appraisals that low in about 15 years. Even more disturbing is the onslaught of utility increases and “add-on” fee increases averaging $7.98 per month. For most of the past 40 years, these “add-on” fees were included in our property taxes.

Here are several ideas for cost savings. Each year with our growing economy, we tend to have budget surpluses. The old city council spent nearly all of those in between budget cycles, with little or no public input. A budget is a budget, and any surplus should be used to reduce taxes, unless there is a public safety emergency.

It is long past time for city taxpayers to stop subsidizing for-profit public event companies, like South By Southwest. We could save $4 million every year in the budget with a compromise proposal. City services could be paid from three sources: funds from the Hotel Occupancy Tax, surcharges on ticket sales, and making the event promoters pay some of their own fees.

The council should consider awarding staff pay raises on a sliding scale. The city’s recent across-the-board raises, combined with bonuses and other perks, well exceed the stagnant wages of tens of thousands of other Austinites. Another opportunity for substantial cost savings involves the annual transfer of funds from the Budget Stabilization Reserves. Instead of spending more than $20 million on “wish list” items as the previous council did, the new council should time the purchases of new capital items over several years. Some of the surplus could be used to offset the cost of recent flood-related repairs, thereby cutting the budget and saving money for the taxpayers.

For better transparency, I have proposed a truth-in-taxation plan that includes a “Taxpayer Impact Statement.” This would be a chart that shows tax appraisal values from $100,000 to $1 million, in $50,000 increments. Categories should include the general and over-65 homestead exemptions. There should be columns showing the dollar amount of taxes due and the increase above last year’s amount. Taxpayers should be able to look across the chart and estimate their tax increase, based on various levels of appraisal increases up to the 10 percent appraisal cap. In my discussions of this proposal with both Austin and Travis County officials, some have suggested that the County Tax Office could help by creating a standard format for all taxing jurisdictions.

The city has a flawed policy of cramming the budget process into a few short weeks after the city manager’s recommendation. Travis County begins their budget process in February. The council should consider adopting an earlier schedule for next year. In light of the current tight deadline, they should not accept the city staff’s request to add 347 new positions, compared to only 151 that were added last year. Such a big change should require much more discussion and community input.

The tax-supported general fund has grown 38.9 percent in the last five years. Keeping the budget lean will be necessary if the new City Council wishes to achieve their goal of implementing a full 20 percent homestead exemption over the next few years. This first budget is their opportunity to prove that they are ready to quit talking about affordability and show us some real action.

Oakey is a retired accountant and writes at AustinAffordability.com.

 

Firestorm Erupts Over 100,000 Housing Unit Target Issue

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By Bill Oakey – August 4, 2015

The reaction to Monday’s posting on this topic has been swift and fierce. The same reaction fell upon Marty Toohey after his blog posting in the American-Statesman. Austin has indeed hit a tipping point that in some respects mirrors the national divide over wealth inequality and wage stagnation. Your viewpoint on a variety of issues depends on where you sit along the economic divide. Politics also enters the picture. Nationally speaking, I have made my position clear. I am an official Elizabeth Warren Person In Waiting.

As for the uproar over the affordability and sustainability of Austin’s current boom, I would just suggest this question to ponder, What comes after a reckless boom without any foresight or careful planning? Here in Austin, we have seen that movie more than once before. The crash at the end of the 1980’s sent many out of town landlords, well, back out of town for a pretty good while. And a great many of us were not sorry to see them go.

This blog welcomes a wholesome discussion from all points of view. See the comments below. Everyone is entitled to their opinion and everyone else is entitled to agree or disagree. We should do so with passion, but in a polite and civil manner. In my view it is unduly harsh and insensitive to sacrifice a community of several hundred thousand people for the benefit of an encroaching wealthy class. To not expect the citizens who have invested decades of their lives in their community to fight for their homes and their neighborhoods is unrealistic, at the very least. Yes, gentrification can be a natural consequence of “free market forces” or “supply and demand.” But in a democracy, we govern ourselves. We get to decide how we want to interact with our elected officials. And what values we want our elected officials to incorporate into their policies.

We certainly need new housing, and of course we cannot call a halt to all growth. That has never been my argument. The challenge and the controversy involves how to incorporate new housing into the planning process. We need to find some way to allow existing neighborhoods to thrive and co-exist with new housing. The CodeNEXT rewrite of the land development code should complement rather than replace current neighborhood master plans. Developers are pushing hard to build housing with little or no zoning regulations. The wrong kind of planning can lead to gentrification rather than preservation of existing neighborhoods. Housing that is already affordable cannot be torn down and replaced in every corner of the City, if we want to be fair and reasonable to longtime residents. We have seen an abundance of discussion on how and where to build new housing, and even how best to make that new housing affordable. But there is no official policy or planning effort directed toward preserving the existing affordable housing that has not yet been scraped off the lots.

Austin has historically seen battle lines drawn between developers and real estate interests versus neighborhood and environmental interests. We call ourselves a “progressive city” that welcomes diversity and embraces social justice and equality. However, we are not immune to the immense power of money and influence that infects all levels of government. I was both saddened and appalled to learn recently about yet another City ordinance that passed two years ago and then fell into a black hole. In 2012 there was a public outcry after a balcony collapsed at a low-income apartment complex. Investigative reports from the Statesman revealed that Austin had one of the poorest sets of policies and enforcement to help this class of vulnerable residents. The landlords got away with shabby conditions and disrepair year after year. So, the City Council wrote a tougher ordinance and demanded action on enforcement from the City Manager. But guess what…Here we are two years later, and the new ordinance is not being enforced.

Another hot button issue is short-term rentals. Here again, peaceful neighborhoods with hard working residents ate being disrupted by rude, late-night partiers who could care less about anyone else around them. And the  “entrepreneurs” who own the commercial short-term rental properties often get by without proper registration and with wildly excessive occupancy levels at their party-pads. We could just back off and say, “Let the free market rule.” But what kind of “freedom” would that leave for the neighborhood folks who are stuck with the noise and the parking issues. One part of this problem could be solved easily. The City should require that a valid license number be included in every website, blog, social media and print ad listing. But I can only imagine a bitter battle with the special interests over such a simple and logical suggestion.

I will end back where I started by mentioning that Austin is at a tipping point. We simply cannot afford to continue on a path that puts growth for the sake of growth ahead of common-sense planning. Choices will need to be made that will determine whether an “Austin for Everyone” means truly everyone, or just the outsiders without regard to what happens to current residents and their neighborhoods.

One final thought. Whether Austin can defy gravity and keep booming forever depends on its capacity to sustain the costs of the boom. This may sound like a wild idea, but we could…just maybe…consider adding up the total cost of all the plans that Austin, Travis County, CAMPO, Central Health and the other entities have already approved. Then, simply measure that total cost against the taxpayers’ likely ability to absorb it. There isn’t a private business or corporation of any size that would dare embark on an unbridled expansion without careful planning with cost projections and analysis. Cities, on the other hand, are more apt to march their citizens to the edge of a cliff. Before someone finally shouts, “Hey look, we might have a problem here!” Then after the crash, the leaders all sigh and say, “Gee, it’s not our fault. None of us ever saw it coming.”

How Do We Respond To The Developers’ 100,000 Unit Target?

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By Bill Oakey – August 2, 2015

While relaxing in a chair a couple of evenings ago, I was hit with an emailed blog posting with the craziest juxtaposition of terms that I’ve seen in a long time:

The Premise: “Austin Rents Are Too High. That Is a Serious Affordability Problem.”

The Cause: “It Is a Simple Problem of Supply and Demand.”

The Solution: “Build 100,000 New Housing Units As Fast As Possible. That Will Magically Make Austin More Affordable.”

The blog posting in question was fired from a cannon on Friday by American-Statesman reporter Marty Toohey. The main theme of the blog is that the Real Estate Council of Austin (RECA) has established a 100,000 target for the number of new housing units that will transform Austin into an affordable city.

At Long Last! Relief is Finally On the Way!

In the old days, the Alka-Seltzer pain reliever ads promised to bring us a lifetime of happiness. Their slogan was “Relief Is Just a Swallow Away.” The Statesman blog posting suggested that Mayor Steve Adler has already swallowed RECA’s affordability potion. But I have to wonder if he read all of the fine print in the warning messages that accompany their prescription.

alka-seltzer

The Number One Goal, In Fact the Only Goal, Is to Build “An Austin for Everyone”

Those of us who attended the Austin Monitor’s CodeNEXT panel discussion on July 27th, got a jaw-dropping introduction to the “come one, come all” approach to meeting the challenges of Austin’s growth. In the most unabashed manner imaginable, panelist Steve Yarak from a group called AURA repeatedly championed the mantra, “Let’s build an Austin for everyone.” His entire storyline from beginning to end was that every facet of Austin planning should focus on bringing as many people here as possible, as quickly as possible. To accomplish that one and only goal, we need to build, Build, BUILD – as many housing units as possible, with reduced regulations and as few zoning restrictions as possible. Build, build, build. Do it now. Do it fast. And don’t let anybody or anything stand in your way.

This unapologetic fervor on the panel was followed by sprinklings of applause, delivered in slices by pockets of followers who had swallowed the potion. Others in the audience who came out of curiosity or to learn how CodeNEXT might affect their neighborhoods, saved their applause for panel members Jim Duncan and Jeff Jack. Both of them have long histories in Austin and hard-earned reputations for balancing the exuberance of growth-at-any-price against neighborhood preservation and the interests of long-term residents.

More Growth at a Breakneck Pace Is the Solution to Affordability…Really?

Let’s put that proposition to a test with this list of questions:

1. Austin has grown tremendously since the 1970’s. Is the city more affordable now than it was in the 1990’s? the 1980’s? the 1970’s?

2. A major push to build more rental units was undertaken last year. Did the increased supply lead to lower rents? (Average rents actually increased 6.6% to $1,172 in the past year).

3. When new luxury housing units are built in older established neighborhoods, do those neighborhoods become more affordable as a result? Or do they become gentrified, with taxes rising so fast that older residents are forced to leave?

4. Transportation is the second leading component of affordability, behind housing. Is transportation more affordable in Austin as a result of rapid growth? Has growth led to improvements in traffic congestion?

5. The fastest growing cities in the country include Portland, Seattle, and several major cities in California. Are any of them more affordable now than they used to be?

Is There Some Way to Address the Challenges of Growth, While Admitting the Realities of Affordability?

Like any other problem in life, the first step toward solving it is to admit that there is a problem. Then that problem needs to be approached with openness, honesty, and a willingness to balance the needs and desires of everyone. Austin has been designated the most economically segregated city in America. It is clearly not affordable for several significant categories of people:

1. People who work for low wages, who need to be paid more for what they do, and who deserve better opportunities for better jobs.

2. Older people on fixed incomes, or who retired from jobs paying much less than today’s market salaries. These people make up a growing percentage of Austin’s population.

3. Long-term residents who struggle to make ends meet, as their neighborhoods become gentrified and they face high transportation costs if they move to the suburbs.

Here Is the Biggest Question That Many of Us Would Like to See Answered In a Positive Way…

Will our new mayor and our first 10-1 district City Council spend as much time and energy addressing the needs of long-term residents and existing neighborhoods as they do in answering to the whims and wishes of big business, the developers and the real estate industry? It takes six votes to pass an item on the City Council agenda. It also takes six votes to defeat one. Everyone has an opportunity to influence those votes and to take note of them after they have been cast.

We also know that five Council members – Greg Casar, Sheri Gallo, Delia Garza, Leslie Pool, and Don Zimmerman will be up for re-election next year.

If anything in this posting leaves you feeling a bit uneasy, don’t take any medication without reading the warning label. As an alternative, you might consider reaching for a drink, while listening to Eddie Noack’s 1959 song, “Relief Is Just a Swallow Away.” (Later recorded by George Jones).

The Whole Truth About The City Manager’s Proposed Budget

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By Bill Oakey – July 30, 2015

On Thursday morning the new City Council members were treated to something they have been  eagerly awaiting all summer long – the proposed FY 2016 City Budget. If you would like to get an overview, you can see Volume One right here from the City’s website.

We have all known since the spring that property tax appraisals shot through the roof for most Austin homeowners, to the tune of mid to high double digits in many local zip codes. So, my approach to analyzing the taxpayer impact of the new budget will be different from the spin that appears in the budget’s executive summary. The word “affordability” appears a total of 8 times in Volume One, while the word “tax” appears 290 times, and “fees” appears 134 times. Here is the opening statement on the first page:

“This budget will raise more total property taxes than last year’s budget by $36,413,252 or 7.7%, and of that amount $13,926,299 is tax revenue to be raised from new property added to the tax roll this year.”

It is easy to see from those figures alone that the City intends to spend more money much faster than the growth in new population. Imagine what would happen to the tax impact on long-term residents if that trend continued for the next 10 years. Another disturbing tidbit is that the City Manager proposes adding 347.4 new staff positions, which is more than double the number of 151.25 positions that were added last year. Also, utility and fee increases averaging $7.98 per month are included in the budget.

So, What’s the Bottom Line On This Year’s Proposed Tax Increase?

The fairest and most truthful way to answer that question is to look first at the tax appraisal map from TCAD that was published in the spring when the new appraisals went out. Click to enlarge the map.

Notice this statement that appears next to the map, “The average market value for houses with a homestead exemption in Travis County went up 11% on average to $355,312.” Because the map includes several areas that are outside the City of Austin, it is hard to tell exactly how much the average appraisal increase is for Austin residents. But we can see that almost every Austin section on the map will, on average, hit the 10% tax appraisal cap.

However, the City told the Austin American-Statesman that “The owner of the median-valued homestead worth $232,272 would pay $1,051.08 in city taxes, up from $1,011.24 this past year.” That works out to a very modest-appearing tax increase of only $40. This includes the new 6% homestead exemption approved by the City Council.

What’s Wrong With This Picture?

Here is a comparison between the data in the current FY 2015 Budget (Vol. 1, Page A-16) and the proposed FY 2016 Budget (Vol. 1, Page A-13). But this comparison is not accurate, as you will soon see.

FY 2015 FY 2016 $ Difference % Difference
Median Home Value $202,254 $232,272 $30,018 14.8%
Property Tax $973 $1,051 $78 8.00%

It turns out that the data presented in each of these budgets only allows an “apples to oranges” comparison of the numbers. After conferring with the reporter of Thursday’s article in the American-Statesman, I obtained the missing number needed to derive the $40 tax increase for the “median value” homeowner. The “median value” of $232,272 for a home in the FY 2016 budget is actually the “median homestead value.” They used that value because the City has adopted a 6% homestead exemption. So, in order to calculate the tax increase, we need to know the “median homestead value” for FY 2015. That number, which does not appear in either of the budgets, happens to be $210,279. Thanks to Andra Lim with the Statesman for tracking it down from the City.

With all of the required figures in hand, here is how to calculate the estimated tax increase:

  FY 2015 FY 2016 $ Difference % Difference
Median Homestead Value $210,279 $232,272 $21,993 10.5%
Less 6% Exemption $0 $13,936    
Taxable Value $210,279 $218,336    3.8%
Tax Rate Per $100 0.4809 0.4814    
Property Tax $1,011 $1,051 $40 3.9%

The median homestead value only includes owner-occupied homes, and not the ones being rented. So, there is a vast difference in the variety of residential properties on the tax rolls. A $40 annual tax increase looks small, but the median value numbers above include small units in multi-family properties such as condos. The biggest tax burden is borne by single-family homeowners, who make up a large percentage of Austin’s long-term residents.

We have been told that the City Manager’s budget proposal calls for a tax rate increase from 48.09 cents to 48.14 cents per $100 valuation. But that doesn’t tell us the percentage increase above the “effective rate,” which would take the appraisal increases into consideration.

A Taxpayer Impact Statement Would Be a Good Tool for Truth In Taxation

My “Truth In Taxation” proposal calls for the City to produce a Taxpayer Impact Statement that includes a chart of home appraisal values in $50,000 increments. The chart should include the following information:

1. A column showing last year’s taxable values, with no homestead exemption, plus columns showing the standard homestead exemption and the over-65 and disabled homestead exemption.

2. Additional columns showing this year’s taxable values at various appraisal levels, up to the 10% cap. And the dollar amount of taxes due at each appraisal level.

3. Columns showing the average amounts of utility and fee increases.

4. A final column showing the estimated grand total of tax, utility and fee increases.

It is time for the City to finally bring the full, complete and truthful impact of the budget out of the shadows and into the open!

Page A-11 of the budget spells out the frustrations of the people in the results of a citizen satisfaction survey. Here is just one example:

  • When asked to rate “Overall value for city tax dollars and fees,” 40% of citizens responded that they were satisfied or very satisfied, four percentage points better than the national average. However, 30% of respondents expressed dissatisfaction. Satisfaction is down nine percentage points from previous years, indicating that residents and business owners may increasingly be feeling the pinch of higher tax and utility bills.

Austin And Travis County Should Announce Joint Affordability Initiative

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By Bill Oakey – July 15, 2015

In about 7 weeks the City of Austin and Travis County will each have to finalize their Fiscal Year 2016 budgets that will take effect on October 1st. For the past several years, citizens throughout the area have been clamoring for major steps toward affordability. Today I am calling upon City and County officials to make some decisions on what affordability measures and proposals they will include in their new budgets, and to make a public announcement telling the citizens what their affordability plans are. As I have said many times in public presentations – the time for talking about affordability is behind us. The time for action is now.

The Austin American-Statesman has repeatedly editorialized on the need to slow down the growth of the City Budget in particular. Austin’s downtown has added countless high rise buildings that should be adding to the tax base and making it easier to pay for expanding City Services. The same is true for neighborhoods all over town that have seen gigantic new resort-style apartment structures that take up a full block. Traditional neighborhoods in all parts of Austin have seen older homes scraped off and replaced with expensive luxury housing.

So that leaves us with a fundamental question. Where is all the increased tax revenue from all of those high-priced new buildings going? Why are our property taxes continuing to rise so rapidly that people are being priced out of their homes?

What Is the Bottom Line On the Growth of the City and County Budgets?

What you are about to see is not a pretty picture. Notice the rapid increases in the general fund in both of these budgets. That is the fund that is paid for with property taxes, sales taxes and some of the fees

City of Austin
  2010 2015 % Increase
General Fund $614,915,000 $854,040,000 38.9%
Total Budget $2,747,105,000 $3,493,973,000 27.2%

Travis County
  2010 2015 % Increase
General Fund $455,661,280 $650,897,476 42.8%
Total Budget $655,140,525 $910,988,941 39.1%

Has Affordability Been Addressed In These Past Budgets?

You will find that word sprinkled quite liberally throughout the current FY 2015 City Budget. In fact, in Volume 1, it graces the pages no less than 29 times. On Page A-8 within City Manager Marc Ott’s cover letter, he issues the following pronouncement with italics included:

“Carefully balances the service demands of a growing community with ongoing concerns over affordability by proposing a full penny decrease in the tax rate.”

That statement contrasts with the opening sentence on the very first page of the Budget:

“This budget will raise more revenue from property taxes than last year’s budget by an amount of $29,970,162, which is a 6.7 percent increase from last year’s budget. The property tax revenue to be raised from new property added to the tax roll this year is $8,375,296.”

What that means is that existing property owners paid the overwhelming bulk of the tax increase, to the tune of $21,594,866. The word “tax” appears 298 times in the first volume of the three-volume document. The word “fee” shows up 277 times. But, alas, on Page A-15 “affordability” gets its own section heading, with the title “Maintaining Affordability.” Most of the initiatives listed pertain to subsidies and assistance to low-income and senior residents. These are, of course, very worthy programs. But the bottom line for the average homeowner is that total property taxes for all of the taxing entities in Central Texas increased 6.1%, as shown on Page A-16. And that does not include the relentless forward march of the various “add-on fees” that appear on our utility bills.

What Can the Taxpayers Expect Over the Next Five Years?

You would probably be less frightened by spending a weekend alone in a haunted castle during a thunderstorm, while reading a Stephen King novel. But if you care to take a look, here is a glimpse of Page 60 in the City’s current Five Year Financial Forecast:

City of Austin Property Tax Assumptions

Fiscal Year Projected Assessed Valuation Growth Projected Total Tax Rate Projected Operations & Maintenance Revenue
FY 2016 9.0% (actual amount is 11%) 0.4782 $385,500,000
FY 2017 7.0% 0.4850 $420,900,000
FY 2018 7.0% 0.4860 $452,500,000
FY 2019 5.0% 0.5008 $492,700,000
FY 2020 5.0% 0.5192 $540,100,000

This chart assumes that property values and tax rates would both increase at the same time. If that were to happen, it would be in stark contrast from current policy, which has been to reduce the tax rate somewhat, to offset the increase in property assessments. In any case, the City’s O&M revenues are projected to increase 40.1% over the five years. When you look at percentage increases, keep one important factor in mind. As the base dollar amount continues to increase, the percentage applied to that base derives a progressively increasing amount. The same is true of your home valuation and your tax increases. The taxable amount of your home value is capped by law at 10% per year. So, if your home started out a few years ago being valued at $200,000, the 10% cap meant that you could only be taxed at $220,000. That’s a $20,000 increase. But once the value of that same home has doubled to $400,000, then the 10% cap yields a taxable value that is $40,000 higher. This year, as the TCAD map shows, Austin has many zip codes with home appraisal increases into the double digits. Click or tap the image to enlarge it.

That’s all the more reason why our City and County officials need to come together and decide on an affordability agenda to be incorporated into their upcoming budgets. A failure to adopt meaningful near-term and long-term reforms would only intensify our already critical economic divide.

Should We Vote to Approve Bonds for a New County Courthouse?

There is no question that Travis County needs a new Civil and Family Courthouse. It is my understanding that no other area taxing entity will place any additional bonds on the November ballot. The current price tag is pegged at $291 million. But Travis County officials are working feverishly to come up with strategies to offset the cost. Discussions have included using fees from after hours parking at the courthouse, certain rental receipts from other County properties, and the sale of other County owned land. Between now and the November election, we will know more about the total amount of those offsets. In addition, the firm that is awarded the contract to build the courthouse could potentially make some design changes that would make the project more efficient.

No decision has yet been made as to whether this blog will endorse the courthouse bonds. But I am hopeful that both the City and the County will join together and demonstrate to the community a serious commitment to affordability. The Travis County Commissioners that I have met with have laid out some innovative ideas for cost-savings, through County-specific initiatives as well as cooperative strategies with the City. Both bodies have appointed representatives to the Regional Affordability Committee. At my suggestion, that committee has embarked on the development of an Affordability Strategic Plan. If the local voters are shown that affordability efforts will finally bear fruit with tangible results, then they are much more likely to stand behind the County Commissioners’ recommendation and vote to approve the courthouse bonds.