Travis County Commissioners Court

June 26, 2012 - Item 8
Agenda

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>> Number 8, consider and take appropriate action on assumptions for Travis County regarding the following property tax considerations:
A, historic exemptions for fiscal year 2013, and b, over 65 and disabled.

>> Leroy nellis, planning and budget, and I do have with me a representative from the historic preservation department city of Austin, jerry rusthoven.
And what I would like to do is go over just briefly kind of where we are on this and then entertain any questions.
Of course, jerry is here to help us with the revised policy that the city adopted in December of 11.
You recall that last summer about this time the Commissioners court did receive the recommendations from the task force that was working -- working on this issue.
And at that time the court voted to leave our exemptions in place pending the revision of the city's ordinance pertain to go the historical preservation exemption.
I did attach in your backup that revised ordinance.
Essentially the city, and I'll let jerry go into it once I do kind of a general outline, the city basically set some dates in their ordinance that any property that was designated as an historical landmark before December the 1st of 2004 and changed ownership after November the 30th of '04, but before January 1st of 2012, or property was designated as an historical landmark after November the 30th, 2004, but before January the 1st, these properties had a cap the amount, the tax benefit to the greater of $2,000 or 50% of the ad valorem tax that the city would otherwise levy.
The percentage of assessed value exempted in the revised ordinance, subsection a, may not exceed a personal that was result in a tax exemption greater than $2,500 if the property was designated as an historical landmark before January the 2nd of 2012 and changed ownership after December the 31st of 2011, or the property was designated as an historic landmark after December the 31st of 2011.
So there's a more restrictive cap, dollar amount, in this -- this second instance.
It capacity at $2,500, is my understanding, which previously it -- the ceiling of their cap had to do with 50% of the total amount that they would assess.
And jerry, do you want to speak to that?

>> Sure.
If I could, jerry rusthoven.
Basically what it is, judge and Commissioners, we have a three tier exemption system.
People who received a landmark prior to 2004 have basically the full exemption that we allow in our code which is 50% of land value, 100% of structure for residential properties, nonincome producing properties.
There is a second tier, which is the people between 2004 and the beginning of 2012, and they have what I call the soft cap or the greater than cap that causes confusion because there was a cap of 2,000, but 50% or more was greater of that you received the greater of the two.
What city council has done is simplify that and says we now have a hard cap of simply $2,500 across the board will be the maximum tax exemption.
However, what they did do, they said if you are existing so, that applies to all future landmarks or all landmarks since January 1, 2012, of which we've only had -- we've only done two in the past year.
So the amount of exemption or landmarking has gone down a lot.
But the council said that the changes, you move from one bracket, the no cap, the soft cap or the hard cap to be subject to the hard cap would take place upon a change in ownership.
So they did not retroactively go back and take people that have existing exemptions and change that exemptions, however, when you sell a property, the new owner would be subject to the hard $2,500 cap.
So we kind of have a three layer system right now with the thought that eventually all these properties will change hands at one time or another, some sooner than others, but eventually everybody will be subject to the $2,500 cap.

>> Remind me of what happened.
Did you grandfather those in with the exemption prior to January 1 of this year?

>> Yes.
It was the folks who were prior to January 2nd, 2012, yes.
They were grandfathered in.
So they either have the soft cap or they have no cap at all depending on whether they got their exemption before or after 2004.
But everybody after -- everybody from this year followed has the hard cap.

>> Okay, so between 2004 and the end of 2011 would have been no cap?

>> No, it would be a catch 2,000, but it would have had the greater than clause that said if 50% of taxes was greater than 2,000, you would have to greater than and we got rid of that and went with the simple $2,500.

>> But you didn't get rid of it for people between 2004 and 2011.

>> Correct.
So there's still three tiers.
The difference is over time as they change hands, everybody will be subject to the hard cap.

>> So what's Travis County staff recommendation?

>> Well, the -- the task force last year we have attached that recommendation that was more extensive than the recommendation from that task force recommended that you establish a cap of $2,500 less the 20% homestead exemption.
At the time that we delivered that recommendation there didn't seem to be a whole lot of interest on the court in pursuing that recommendation.

>> You sense that that's changed, leroy?

>> That -- I think the interest at least from my reading takes co-chair of that committee was that the court was very interested in seeing what the city of Austin revised their historic homestead preservation exemption.
And I can tell you that I did have t cad run the current numbers and the difference between the revised city of Austin exemption ordinance and the Travis County's current exemption is a total of about $23,429,704 that the county gives more than the city of Austin in exemptions.
So --

>> That's property values?

>> Those are the dollar amount of the exemptions above what city of Austin gives.
Because Travis County does not have a cap, period, on the amount.
And so the -- the task force also recommended that any savings that you have from reducing the amount of the exemption be applied to the over 65 exemption which Travis County has not increased since 1994, it was set at 65,000 when the average taxable homestead was $84,000.
Our taxable homestead for the current year is 215,000.
So the -- the tax benefit to your over 65 and disabled taxpayers is almost decreased by 50% since 1994 because it hasn't been increased.
If, in fact, the court accepted the city of Austin's revised ordinance on historic preservation, you could -- you could raise the over 65 by $560, so it would be 65,560 as opposed to 65,000.

>> When do we need to make this decision?

>> What tcad has indicated they would like a couple of weeks to input the decision.
We're looking for a certified roll the latter part of July.
So I would assume that if we got a final decision from Commissioners court by the middle of July 12th, I guess is a Tuesday, that that -- that would give us enough time to give that information to tcad.
I do not have, I did ask the hospital district, john stevens, to run this by his administration and board to see exactly where they are.
I have not heard back from john on that so we'll need his and we will also need to set the road district's.
So for the word, seems on me it would name all the sense to adopt a policy that the city has in place.
The last time we had a public hearing we had people to show.
If we're going to do what, I think we ought to post it for at least some public input, one, so we can explain what we're doing, two, the reasons why, three is that it would be good, I think, for us to hear what residents say regarding how they will be impacted.
I mean, even if we degree, I guess -- and I strongly feel we really ought to give them that opportunity.
In order for to us meet a July 12th, we're looking at July 3rd or July 10th.
If we make the decision on the 10th, is that soon enough?

>> I think so.

>> I mean, I just -- I think it really is dramatically different than we were discussing when we had our public hearing.
And if nothing else, I think if we can contact the ones who came down and provided input, if we would give them actual notice and an opportunity to be heard along with a one-pager that describes, I guess, what's the city of Austin's policy and with a notation that we're thinking of doing similarly if it looks like a majority of the court is so inclined.

>> In terms of similarly -- I'm looking at the tops consider under one.
I -- the options to consider.
One would be a $2,500 cap less the homestead but proactively.
And then we would continue to look at the grandfathering situation along with the city of Austin.

>> Less the homestead?

>> Less the homestead.
That's the option, the first option that's detailed in the backup.
Is that --

>> This is confusing because it's got last year's backup information in there and I've had a hard time -- I mean from the work group last year too and it's not this year's current in-house -- working groups issues.

>> Right.
The reason I put the task force's recommendation, that's the last time the task force met.
And it was the last recommendation out of that task force.
I don't think -- I just put it in there as a point of reference.
Like I say, that the last time that this court discussed this, it appeared to me that you were leaning toward mirroring whatever the revised city of Austin historic preservation was.
And that's the reason I put that in as backup so that the court could give us some direction.

>> The reason -- the reason why I think option 1 is the closest mirror is that when you don't deduct the homestead, you are not mirroring proactive.
It not less the homestead retroactive so it's closer -- well, it's -- if the point is to mirror the city of Austin's proactive position, I think that that would be the calculation.

>> Going forward.

>> Only going forward.
As I understand, there's only been to the past year.
So this would be a very small impact.

>> But going forward as property changed hands.
Can I just clarify real quick.
We're only talking about the owner occupied single-family homes.
The city did not adjust the commercial at all.

>> Right, and we did not make a recommendation to adjust the commercial.

>> Any comments?

>> There's 577 parcels that currently have some type of homestead preservation exemption on them.
I believe -- renee, I believe the tax office last time sent a short note to all parcel owners of a public hearing.

>>

>> [inaudible].

>> Okay.
Is that the desire of the court to say that the court will be reconsidering the historic preservation?
And I thought I heard the judge say that we would be looking at something that mirrored the city of Austin city of Austin; however, Commissioner Eckhardt has brought up the provision of going forward like the city had a new provision January 1 of 12.
And what Commissioner Eckhardt suggested that we take the 20% homestead exemption off of the $2,500 cap.
Is that what I was hearing you say?

>> Yes, because my understanding was of the options that planning and budget office laid out, that was the first option that seemed to most closely mirror what the city of Austin's prospective policy is.
It's a hard cap.
Rather than a cap calculated on.

>> % of the property value or in our instance it would be an additional 20% of the property value.

>> Yeah, and the difference in that recommendation is that city of Austin does not give a 20% homestead exemption so their cap, the exemption amount that a property owner that's residing in an historical parcel would be getting the maximum of the $2,500 going forward from January 1.
In our case, there are many homes that would not get any historical exemption because we give a 20% and that exceeds $2,500.
So I just need direction on what you would like us to notify the historical property owners.
I can be as simple as attaching -- we can attach the backup that we supplied to the court or direct them to the website where the backup is located.

>> I think a simple one pager is what they need to see.
And if we want a short paragraph dealing with our 20% homestead exemption and how that impacts them, then I would do that.
But from where I'm sitting, I mean I think they ought to know that in terms of a policy we want to mirror the city of Austin because it makes sense to do it.
But if we want to go ahead and factor in our homestead exemption, then we ought to do that too and let them know.
And if our position is that if we factor in the homestead exemption of 20%, I guess plus the over 65, then you probably will not have an amount exempted.
Does that make sense?

>> The committee did not factor in the over 65.
So what -- what the committee -- I can -- we can send a notification of public hearing with the intent -- with the city of Austin's revised ordinance with the possibility that their historic exemption could be reduced for those going forward January 1 of 12 by the 20% homestead exemption as a possibility.

>> What if we say the court may factor in the homestead exemption of 20% so, are we taking away the over 65 or disabled?

>> No, we're not touching that.
You mean the fact of the savings going into that?

>> Right.
I think that we need to see the draft flier or letter.
And if a member of the court disagrees with it, then unfortunately we need to bring it back next Tuesday.

>> Okay.

>> And I guess we can legally do this without a running quorum, walking quorum, or violating open meetings act.
But I'm really looking at wordsmithing.
But if there is disagreement on the part of one court member, then we simply bring it back next Tuesday for formal action.
It just reduces the time that we have to send it out.

>> Okay.
I'll get you a draft in the next --

>> Am I making sense there?
I'm thinking that the letter if it follows our directions what the county is sort of saying, educate the public on this possibility and let the public know that we will receive public comment on July 10th and plan to take action that same day in order to meet a tcad deadline.

>> Okay.

>> So I'm thinking if the one-pager sets out possibilities that we're considering starting with the city of Austin's adopted policy, factoring in our 20% homestead exemption, and I know we'll get questions about the over 65 or disabled.
So we may as well say in a third paragraph basically how that would be factored in and impacted them.

>> Okay.

>> And get public comment on those three things.

>> Can we just use these two sentences as the jumping off point, set the dollar amount for residential at $2,500 less the amount of tax dollars granted the property by the 20% homestead exemption, utilize any savings from the revision to increase the over 65 and disabled exemption?

>> If that's your proposal, I'd rather see pro proposals out there.

>> That isn't quite mine.
What I would start off by saying is what the city of Austin's policy is.
Then I would address the county's 20% homestead exemption.
Then I would address the over 65 and I would address those number 2 and 3 in language that says the court will consider and make.
You see what I'm saying?
Because I don't think we ought to make that decision until after we have given the public an opportunity to provide input.
But I would make it clear in that letter that we plan to formally act on it after the public hearing on that same day.

>> Okay.

>> Because tcad needs to hear from us on the 12th of July.

>> By the 15th.

>> Here's what the court will consider and my guess is those that understand that one-pager will want to come down and provide some input.

>> Okay.

>> Now, we may want to say, leroy, too, this morning I became firmly convinced the three-minute time limit needs to be in place.
The county judge says there will be a three-minute time limit.

>> Okay.

>> Unless I legally do not have the authority.
And I'll initial that while I still remember this morning's discussion.

>> I will get a draft to you tomorrow and then be glad to -- if it looks like that we need further discussion next Tuesday, we'll post it for further discussion next Tuesday.

>> Do we want to post it anyway just in case?

>> I think so.
Let's post it.

>> If we don't need it, we can easily postpone it.

>> Those are directions from court.
Thank you very much for coming over from city of Austin.
We know how busy your schedule is.

>> Thank you.

>> Okay.

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