Summary: The SCWF TIRZ Is a Waste of $278 Million of Our Property Taxes.
Good city financial stewardship demands—and state law requires—the City of Austin not to use tax increment reinvestment zones (TIRZs) to subsidize private developments that would occur anyway without our taxes. The SCWF will redevelop without tax subsidies, making the TIRZ both a tax giveaway and illegal.
Why Is the TIRZ A Tax Giveaway? Because the SCWF will Redevelop Without Our Tax Dollars.
The SCWF will redevelop on its own without the use of property taxes—making the TIRZ a gift to the developers and investors. There are a number of reasons: the prime location of the land on the shores of Lady Bird Lake just south of Downtown; Austin’s incredibly rapid growth, especially for centrally-located plush development; and, most importantly, the city’s proposed zoning entitlements through height and FAR increases of an additional 4 million square feet of space. Developers typical provide their own infrastructure on redevelopments such as this. In addition, the city’s own analysis from 2016 shows that private developers would redevelop the SCWF even without our tax subsides.
What is the South Central Waterfront Plan?
The SCWF District is 118 acres of some of the most valuable real estate in Austin. It lies just south of Lady Bird Lake, from South First to several blocks east of South Congress. The City’s SCWF plans envision the area as Austin’s “Second Downtown.” It would add an additional 6.2 million square feet in lavish office, hotel, and residential towers . The well-known Statesman property at 305 South Congress constitutes 18.3 acres of the district. This parcel is owned by the billionaire Cox Family Trusts, and its developer, Endeavor, is the largest in Central Texas.
Who Was Originally Paying for the SCWF Infrastructure in the 2016 Plan? The Developers.
The SCWF plans envisions a glamorous, new development with beautiful parks, streetscapes, new and improved roads, and plentiful bike lanes and sidewalks (“SCWF infrastructure”). The 2016 plan indicated that the private developers would pay for the $73 million in infrastructure improvements through a Public Improvement District (PID)*. The developers also were contributing 527 “affordable” housing units at their own expense. The 2016 SCWF plan did NOT divert our property tax dollars to pay for the district’s infrastructure.
Why are Taxpayers Now Being Asked in 2022 to Pay for the SCWF Infrastructure?
Five and half years after the 2016 plan, the city staff rolled out in December 2021 its SCWF TIRZ plan. This plan still called for the same vision of a second downtown with an additional 6.2 million square feet in high-end development. But without explanation, taxpayers now were picking up the cost of the new infrastructure through a TIRZ. There was no mention of the city’s 2016 financial analysis that showed the developers could and should pay the infrastructure costs.
Why Has the Infrastructure Cost Quadrupled in 5 Years to $278 million?
No explanation or detail has been produced to date for the SCWF infrastructure costs swelling from from $73 million to $278 million.
Where Is the SCWF TIRZ in the City Process?
The City Council unanimously (and ominously) approved establishing the TIRZ Preliminary Plan on December 20, 2021 during the holiday season. Council, however, delayed voting on setting the TIRZ recapture tax rate (the amount of your taxes that would go to the SCWF) until this Spring.
What Does Texas Law Require for City to Establish a TIRZ?
Texas law requires that before a city can establish a TIRZ that it must demonstrate that but-for the public investment (our tax dollars), the properties (the SCWF) would not redevelop in the foreseeable future: Texas Tax Code, Section 311.003(a) states: “The governing body… may designate… a reinvestment zone to promote development or redevelopment of the area if the governing body determines that development or redevelopment would not occur solely through private investment in the reasonably foreseeable future.” This finding has not been, and cannot be, met for this massive, luxury development with its prime location.
The Council Should Reject the SCWF TIRZ
TIRZ are often abused by special interests and gullible cities, as studies in our resource section show. Before the City Council votes to provide massive tax subsidies to the SCWF developers, there should be a clear and compelling case that the SCWF needs our taxes develop. There isn’t.
The SCWF will redevelop without tax subsidies, making the TIRZ both a tax giveaway and illegal.
*A Public Improvement District (PID) is a partnership between a city and area property owners. The property owners assess themselves fees to pay the city for providing them infrastructure and other services. Unlike TIRZs, taxpayers don’t pay for the infrastructure, the developers do.