Travis County Commissioners Court
October 30, 2007
Item 33
Let's call 33 up and that is to consider and take appropriate action on request to approve amendment of economic development agreement between Travis County and simon property group, inc., current owner of the domain.
>> again, harvey Davis, manager for the Travis County corporation. And this amendment is -- has two parts to it. One is the affordable housing section and the other is the timing of the payment. So if it's okay, I will explain the affordable housing section of the amendment. The basic provision of the affordable housing requirement of the domain is that 10 percent of the units have to be leased to families whose income is below 65 percent of the Austin area median family income, which is about $32,370 a year. And that the tenants have to be certified each year. And if the tenant's income is more than 10 percent of the income limit, then that unit does not qualify towards the 10% requirement. The domain -- as you know, the city of Austin has a similar affordable housing requirement with this project, and the domain wanted to try to get the two -- some of the paperwork necessary to be Moore -- to be similar with the city's. So we've met with the city and with the domain people to try to make it to where things were a little bit more similar. And so we've made a couple of changes I think that make sense that don't affect the basic goal of the agreement. And one is that we would calculate the income based on the tenant's current year's income instead of the prior year. This makes sense that we're really interested in what a tenant is making today versus what they made last year. And then some of the documentation, that is they have to secure to approve what the tenant's income. We've changed some of that documentation to be -- to be what the city of Austin also asks for in there when they certify the tenant's sfk income. So that's basically what the affordable housing changes are that we're asking you to approve.
>> now, I had said this morning that we approved the domain agreement three years ago. Actually, it was four years ago, August 26th of 2003. Mr. Benedict, would you like to address the court on this item? By the way, I did phone mr. Ford and let him know that we were calling it up this morning. He said he understood and I confirmed to him that the agreement was executed in August of 2003, and he simply wanted to register his opposition to tax abatement agreements similar to this, but said he would probably not come back down this afternoon.
>> judge, can I ask harvey a question? How many total units, living units are there in the domain? 10 percent is how many?
>> I was thinking that somebody might ask me that question. 300. Like 302 or something like that.
>> how many?
>> 302.
>> yes.
>> okay. I think it's 302 total units in. And the affordable housing would be 30 units.
>> the agreement was execute understand '03, but there hasn't been a single payment made under it yet, right?
>> yes, sir, right.
>> the first payment will be due in '08?
>> it will be due no later than October 31st, 2008. It would be reflected in the fy '09 budget.
>> may I ask a couple of questions? They're clarifying questions. One is the provision requiring Travis County to notify some of the properties within 30 days of receipt of the annual report and revenue notice if there are any material issues to be resolved. And I was just wondering if we don't notify within the 30 days, what do we waive?
>> I'm not sure where you are.
>> it is... 1.2.2.
>> then I assume we're accepting the report as correct.
>> okay. And on the tenant's --
>> there's a way to to be the accuracy? But if we call that to the attention that they made a mistake, they wouldn't dare insist that it remain there, would they?
>> oh, I think we would then negotiate it and work out whatever disagreement there was, it would be connected to the agreement and the failure to meet some requirement of the agreement. That's what we would go back and look at. Or a failure to make a full report according to reporting requirements. There would be several different areas, but we would go back to the agreement, determine what needs to be done.
>> okay. And on the provision regarding tenants have to be recertified annually if their income increases by 100%, and I didn't -- I confess I didn't find the particular site. And I'm wondering if that's an increase of 100% in a year.
>> I think that's over the required level.
>> right. Tbld over the required level.
>> if they go 100% over the minimum that we allow.
>> so it doesn't have to be over a year necessarily.
>> okay.
>> it can be over two or three years so they would then no longer qualify. That's the point at which the company has to get someone else.
>> so if it's a single person, for instance rltd their income would have to increase to 64,600 or would it just have to increase by two x, whatever the actual income is?
>> no. Double what the threshold is, yes.
>> okay. At any point, whether it's annually or at any point that they're living there if they hit the 64,000 threshold they're no longer an affordable unit.
>> right.
>> and the company would have to put another qualifying tenant in.
>> let me add that we do have a representative for the domain this year and it will help us answer any questions.
>> they don't requalify people each year. The county will look at them each year and be sure -- not that someone doesn't improve themselves a little bit, but if they make that drastic an income, then we could bring in another eligible tenant.
>> okay.
>> has it been clarifying or confusing?
>> well, I understand what you're talking about this, I think. My name is wes benedict and I'm chair of the Travis County libertarian party. I understand what you're looking at today are technical changes to a contract to enforce the rules on this and I think that's fine if that helps make it a better agreement. I do want to express my opposition in general to these kind of deals. And a lot of folks are opposed to these kinds deals. And if there's something that you can find that maybe the domain is not holding up their full end of the deal, I think some people that have talked to the Austin city council have had that impression and so if there's any way that you can find a way to reduce these subsidies or back out of this deal for whatever reason, I would encourage you to do that. I understand y'all don't have the exact same it philosophies on operating things as I do, but I don't know how you can justify this deal where you just voted to raise taxes or raise the budget for all the citizens in Travis County recently. And then you give a tax subsidy to this development that includes a neiman marcus. I mean, these 30 affordable units for people who make $30,000, I don't see how you can raise taxes on everyone in your precinct and then do deals like this where you give subsidies for people who shop and live next to neiman marcus. That doesn't make sense to me. I don't see how it would make sense to you if you really understood this deal completely. And there are people that would like to meet with you, nicer people than I am. Again, I'm the Travis County libertarian party chair, so I'm no charge of recruiting opponents for each of you every time we have elections come up, so maybe I'm not the best one to meet and discuss this in detail, but I believe jeff heckler and some others were interested in going into the details on this and maybe pointing out some problems that they may have found that you may not be aware of. Thanks.
>> thank you.
>> we'd be happy to chat with them, except they can -- they can chat with one or two of us outside the Commissioners courtroom. It's hard to get a whole lot of work done in court unless we respond sort of formally. But I would contact one or two of us and sit down and any points you need to make or they need to make, I think we'd welcome them.
>> okay.
>> wes, do you recall what the vote when was we voted for this?
>> no. Who voted for it and against it, I don't recall. Do you?
>> yes.
>> I'd be interested to hear. Irltd I voted against it -- I voted against it.
>> I'm proud of you. I thank you for that.
>> and I think one wasn't here when it was voted on.
>> I think it was after you talked with him, mr. Benedict.
>> [ laughter ]
>> you know, I agree, wes, that these 380 agreements -- so that people know what we're talking about, the whole abatement, rebate deal with taxes, maybe it's not as hard to sell as the toll road plan was, and part of what I think most of us know is that it's hard to put some of these things on a bumper sticker as to how they're set up and why they're even set up. I think the design behind a number of these abatement deals would best be really understood by people because it's real easy to excite people about, like you said, why would you give -- how many times do I listen to it on 98.1 in the morning? Why would you give neiman marcus a tax abatement? I mean, boy, that fits on a bumper sticker. You can get people agitated about that. Just like do you think that you need to use tax dollars to give overweight people surgery? It fits great on a bumper sticker. You being the position that you're in and especially as bright as you are, wes, I would hope that some of the libertarians and just some of your friends at least understand some of the dynamics about some of the thing that we vote on and why we vote on them. You and I have known each other a little bit for a little while, and I think that you would find that I'm not somebody that's just flippantly votes for things that some people think why be in the world is he voting that way? But people like you do have a responsibility, as do i, to try to get the word out and to explain as to what we're trying to get done. Unfortunately as we spent all morning discussing a subject matter where we just had different opinions, not that any of us weren't trying to do the right thing. I mean, I will tell you that whenever we look at things like this, we're not just looking for ways to give money back, you know, to people that probably -- in a lot of people's opinions don't deserve it, but there's more to it. I've become somewhat anecessary ta sized to the notion that I cannot put every vote that I make on a bumper sticker. I wish that I could because I think it would be more helpful for all of us, you, your party. Because quite frankly I don't care what party it is. I think that people expect to us do things and make decisions based on good public policy. And sometimes we just -- we differ from one person to another. But also the reason I wanted to know if you remembered the vote is because it's real easy to say, well, so wes, did you go down there and give them a piece of your mind? And you go well, kind of. Which ones did you give a piece of your mind to? Well of them. Somebody might say guess what, Daugherty didn't vote for the thing. But I knew that, that you didn't probably remember the vote. But just bear in mind that we don't sit up here and try to conjure up sinister things to do. I mean, quite frankly, I -- it's hard enough making these decisions, but I will guarantee you it doesn't go unnoticed when somebody like you comes and says, hey, I just differ with this. I respect your opinion, always have. And even when somebody is going to go out there and promote somebody running against me, because quite frankly that's how the system works and good luck to you on that. I do want it you to know and anybody else that's listen to go channel 17 right now that even the people, the three people that are on this court sitting up here right now that voted for it, didn't vote for it because they thought that they delight understand messing somebody over. I mean, that's not -- that's not what we do. And I would hope that we could find a way in this community, and it doesn't just need to be in this community, but we had better change some dynamics in this country about how people are willing to infer and to talk about and to talk down to and at folks because we've got to make decisions. I mean, I for one guarantee you that I go home every Tuesday night wondering whether or not somebody was really upset about a vote that I took. But I guarantee you I don't go home and delight over anybody being upset about a vote that I made because that's not what any of us do. So you obviously have touched a hot button with me, but I appreciate you, wes. You've always been a good informed nern this community and a lot of people listen to you and they should because you're a smart guy. But I hope that we can all find a way to deal with these things differently than what we have witnessed in the last couple of years.
>> and could I just make one more small comment? I appreciate your comments. I would hope that Commissioner Davis and Gomez would be more likely to be against this kind of deal than someone like Gerald Daugherty who has been promoting development and things. This will fit on a bumper sticker, okay? I bought a 46-dollar pair of underwear at neiman marcus yesterday, and you raised Texas taxes on all of your citizens to help subsidize clothes for me that cost $46. And I went inside macy's and neiman marcus at the domain mall and there wasn't a single black person inside one of those places shopping. Later I Wednesday to highland mall and wal-mart and that's where they're shopping, and they're not getting subsidized there. So when someone comes up with a 30-unit affordable housing proposal, I encourage to you look at it with skepticism because you may be hurting a whole lot of people just to do something that may sound good on paper, but it's not good sound economic and it's not good for your voters either. Thank you.
>> mr. Benedict, we do a financial analysis before we make these agreements. We look at what we abate or rebate and what does the county get. And if the county does not get a sizeable sum in addition to what we're getting today, I don't vote for it. So -- and most of the time the bigger the project, the more we get. You look at samsung and even this domain project when you look be at it, the county would get millions of dollars in revenue and we've exceeded projections, last I heard. I don't get a weekly report, but it was about 90 days ago the amount we received in revenue from the domain project greatly exceeded for taxes. And luke at a facility like samsung, capital investment, the number of jobs, plus the economic ripple effect in the community, you're talking about an additional millions of dollars. That's what make the difference. That's why other communities do the same thing. Now, I do agree that there ought to be fairly strict standards that enable us to say yay or nay, but in my view it comes down to capital investment and money. But the other economic benefit, other businesses is enormous depending on the kind of project that it is. So we look at three, four, five factors that I think are important before making the decision. And I have not been to neiman marcus myself, not that I won't go, but historically I have not shopped there. I'm shopping if I go there they will hire african-americans. And if I'm one of the businesses at the domain, my rates wouldn't keep me from going to get their business. I was at the grand opening, but I didn't go inside any of the retail outlets. I was in the open area where the celebration was and you I was impressed and I looked around and I saw millions of dollars in the county could haver. I didn't see Sam Biscoe going in all of those places, but there are people who will go and as they go and the real property value of that project increases, our share increases also. So you're talking about millions and millions of dollars in the end in the county coffers. Do you see what I'm saying?
>> I've heard that argument a lot. That's how most of them are sold.
>> but we ought to have dollars to show. The league of women voters were making that point. This ought to be part of your budget process where you show the revenue that you get from tax abatement projects, and last week we voted to do just that in our tax abatement agreement and tax rebate agreements, to annually show revenue received from tax abatement agreements. And residents ought to want to see that and be shown that by us.
>> I think some of those -- all of those economic analysis don't take into account other effects that are happening, other burdens that are place odd the infrastructure and other services in Travis County. If the deals were good for our taxes should be going down 'but we've done these deals and done them, and maybe one day when we're as big as houston or dallas, is that when it will pay off as tax cuts?
>> we did seven or eight over the years and some of them went under. Conquest airlines said they needed the help to come here, be and I guess they did because they only lasted two or three years. And we could have done without them, but as a hub, they did all right for a short time. So that didn't pan out for them or us. But in terms of we don't have the utilities that we could provide most of the time the infrastructure is already there, sometimes we speed it up. When samsung went on palmer, palmer had been on the list of projects to do for years, and we expedited that really to accommodate them. But the revenue that we receive from that particular project really has been enormous. That's why I'd like to sit down and maybe in advance get some questions so we can pull some of the facts from the projects that we've approved so we can not only talk philosophy, but also talk economic impact and facts. Because if I'm wrong and we don't get substantially more revenue, then I agree we probably ought not do them. How's that? As an snawfer.
>> I would like to look at some of those deal, the full economic analysis of them. I was offered that in the past from the city and we've never got together on it. But I would like to see the whole analysis where you say this is how it benefits. I understand more tax revenue comes in when the population grows and more businesses get here, but I think -- I would look at it and point out some of the costs that you're not identifying on those pieces of paper where you add up all the numbers, costs, the benefits, I think there are secondary effect that are probably not included in those analysis.
>> mr. Benedict, would you -- have you looked at all of the redistribution effects of a project like domain? The point I'm getting to, which I too am troubled by and interested to see any kind of statistical way to track is while we are seeing the domain exceeding projections in revenue as far as the increased tax valuation where they're located, it may an redistribution effect from one side of mopac to the other. Is that anything that you have looked at?
>> that's one of the arguments against doing these kind of deals if you subsidize in one particular area, that takes away from others.
>> I'm suggesting that argument in your favor.
>> that's what I'm saying. I agree that that probably happens. I believe northcross mall and highland mall are hurt when they're paying a full tax rate, I assume they are. I don't know the history of their deals, but I assume every other retail establishment is paying normal tax rates and they get hurt. You're moving business away from them to the domain when you give the domain a subsidy. And that's why I think there's like 300 small businesses and maybe they're not all small, in thawn have in thawn have signed up on this moment to open retail deals like this in the future. I'm opposed to all special subsidies for any kind of business group, but this is retail in particular, and we're for keep Austin weird or keeping it unique or shop local, well, you're subsidizing the on sit of that. I'd say don't subsidize either and when it n. Doubt let retail alone, let the market work it out.
>> there's some question that the retail is -- you're right on point with that, wes, which was probably the biggest reason why I had a real issue with it. You've really got an unlevel playing field. I don't know how long it takes simon to come to us and ask for 100-million-dollar upgrade at Barton Creek or highland because that, quite frankly, puts them right back in there. Your point is well taken. I think -- there are plenty of reasons why you really need to ratchet down on this kind of stuff and look at it. And the secondary impacts and things like that from traffic to just basic infrastructure do have some deals. But we do have the models in place. I've got the bigger issue with I don't know how effective we are at being able to follow up on these things, which is another mechanism that you've really got to have in place, but you bring up some good points.
>> thank you. Move approval of the proposed amendment. Is there a second?
>> second.
>> discussion? All in favor? Show Commissioners Gomez, Davis, eckhardt and yours truly voting in favor. Voting against, Commissioner Daugherty.
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Last Modified:
Wednesday, October 31, 2007, 18:30 AM