Travis County Commissioners Court
Tuesday, June 15, 2010,
Item 35
item number 35, consider and take appropriate action on property tax considerations for travis county. A, anticipated collection rate. B, debt buy-down. C, optional homestead exemption. D, over 65 or disabled optional homestead exemption. And e, historical exemptions. We had this item last week and we brought it back for further discussion. There may be questions by court members.
>> judge, i wanted to -- really i needed an additional week from last time because of the significance of these things. And of course some of the historical information on this, historical exemptions rather, i needed a lot of clarity on those and i needed a little more research done on that. And of course, i have had a chance to meet with leroy and we walked through a whole bunch of these things in regard to each one, but basically looking at the historical exemptions, which i think is quite significant even though we have other a through d of this particular item that's applicable i guess to both -- i won't bring up the health care district, but anyway, this is real significant, i think, in this overview. So i guess when we get to the historical exemption portion of this, i may want to bring up some things that i think i discussed and some research that was done under the historical exemption concept.
>> okay. Move approval of a, b, c and d.
>> second.
>> we'll call e up separately.
>> that would be fine.
>> any discussion of that motion? Seconded by commissioner davis. All in favor? That passes by unanimous vote. E is the historical exemptions.
>> commissioner davis indicated he had had an idea that he asked me to do some kind of quick calculations, and the list of the historical exemption parcels that i shared with members of the court yesterday that essentially list all of those parcels that have historical exemptions, including the land market value improvement value, appraised value and taxable value. Now, one of the things that the commissioner asked me to do was kind of take a very high level look of what it would -- if we were using not the individual values on here, but just go to the end of the 508, i think, parcels and take a look at what the historical exemption would be if in fact there was a dollar, fixed dollar amount, say, $250 allowed for all those parcels that were 300,000 and below. And a 500-dollar tax credit, more or less, for all those properties 300,000 and above. And i did a real quick estimate. I can tell you that -- and i'll share those numbers with you. What i have found as we go in to the individual parcels as i've done since i did that real quick high level analysis is that it is not quite as clear as taking totals off of the bottom of this list. Ie, that just because the total appraised value of a residence, say, is $500,000 on here, it doesn't mean that the taxable value on two pieces of property end up the same. And i just noticed that, as a matter of fact, yesterday evening and this morning in conversations with dusty and some of his staff, but if in fact the numbers were taken in a very high level and you took for every parcel that was valued at 300,000 and below and gave a 250-dollar historical credit, so to speak, and everything above 300 there would -- and i used 509, but i think there's actually 508 parcels on this list. It's about $231,000. Of tax dollars that you would be giving for historical exemption. The current calculation, and there again it's very rough, but it's about 1.7 million that you're giving now under the current policy. So the savings in that would be about $1.4 million. Now, the savings when you decrease an exemption for historical are calculated into the effective tax rate calculation, which means it spreads at all the taxpayers in the tax base. So that 1.4 million approximately would be spread across the entire tax base, and that would -- that would take -- i did a real fast calculation on that and tim was able to confirm that i was close in my calculation with the model. But we have an effective tax rate currently with the numbers we're dealing with of .4496 is the effective tax rate. My calculation earlier this morning was .4480 or .0016 reduction in the effective tax rate. To give you an idea on the effect of that on an average homestead, it was about $3.68 per year on an average taxable homestead of about a 230,186. So that's the effect of that calculation. It is about a 1.4-million-dollar savings for the consolidated taxpayers. What we did find when we started looking at the parcels that it is not quite as straightforward as using high level balances, the totals off of this, this parcel list because immediately you could see that there are parcels on here that have the same appraised value or close to the same. Some of them have taxable values and some of them don't. And that is the effect of having the 10% cap, we're told. There are other things in this list that i think really at this point need further research before the court takes action on a proposal. And as you appointed the committee to look at the tax effect equity issues, we did briefly, we met last friday and this was one of the items and obviously in a proposed charge that we'll be bringing back to the court on the 22nd to finalize. So i think we do need additional research before we take action to make sure that we understand the moving pieces. The devil in this is really in the detail. And it's been done, the analysis that the commissioner davis asked me to do was done at a very high level and it does show -- i think that the principle is there and even though the numbers may not be -- they are generally in the ballpark. So that if you did a fixed amount as a could concept for an historical exemption, you would have -- you would have a situation where there's about 1.4 million that would be spread on the average about $3.68 to an average homestead. But i do think that there needs to be additional research before you take action. I would assume that the court may very well want to put it on your agenda for a public hearing and have some type of input. If in fact you wanted -- one differences between what the city of austin does on historical exemptions and what travis county is that we use the same algorithms so to speak in calculating the historical exemption. The major difference is that the city of austin puts a 2,000-dollar cap on residential historical exemptions. And travis county did not. When you voted to go along with everything else with the city of austin, you did not put the cap on. So --
>> so how is that 2,000-dollar cap applied?
>> dusty?
>> okay. Well, if in fact -- under the residential -- under the residential calculation on the historical homestead, which is calculated by tcad, the theory is that you would get 100% on the improvement value of a resident zoned as historical. You would get 50% on the land value. So say that you had a-million-dollar improvement --
>> where does the $2,000 come in?
>> the $2,000 would come in that if in fact after applying that formula to come up with a taxable value of the property, if in fact the benefit exceeded $2,000 to the property owner that the benefit -- the historical exemption would be reduced to not give in excess of $2,000.
>> so most of these would be -- these are residential and commercial.
>> that's correct.
>> commercial has a little different rule. The commercial currently is under the city of austin historical exemption there is no cap on historical. The difference is the historical exemption for commercial is that they only give 50% of the improvement value instead of 100% on residential and there's no cap.
>> i hear you say in order to do this right they need to do additional research.
>> this is exactly --
>> i do agree. I think it's significant enough to have at least one big public hearing to give the hundreds of people impacted and who have benefitted historically an opportunity to come down and address us. Ms. Peterson, we didn't -- we know you had important words to share with us. We certainly didn't mean to discourage you.
>>
>> [inaudible - no mic].
>> see, it was significant.
>> and for the city of austin's commercial historic exemption there is no discount on the dirt? It's just on the improvement, correct?
>> it's 50% of the structure and 25% on the land.
>> 25% on the land. And i'm wondering just from an historical preservation perspective, why have the land value considered in the calculation? I mean, i'm assuming that the intent is to promote the preservation of historic structures.
>> right. And other -- there are other entities that do not give any kind of exemption on the land.
>> go ahead.
>> and i guess then after discussing this earlier when i had some concerns about the historic exemptions, i wanted to make sure that this is included, that we were talking about commercial as far as what i'm suggesting here, we're talking about a fixed amount as far as the exemptions are concerned. This is for the residents and also the commercial properties, so it's both. And if we can just bring it back -- as you said, the devil is in the detail on this; however, let me ask this question: how long -- as far as this properties are concerned, i know we're wanting to have a public hearing on this and the judge brought that up and you did too, but as far as the timelines of doing what we're doing here as far as scheduling is concerned, would that be any impact on any scheduling process during the tcad type situation?
>> the deadline, as i understand it, is that tcad needs your decision on this exemption prior to certifying the tax roll. We got an e-mail this morning on i think they're intending to certify august 4th or the week of august the 4th. It is beneficial, though, if in fact to not to wait until the last minute to make the decision. The court has any number of options that you could do. You could go one additional year with the current historical exemption, which would allow tcad to proceed with preparing the certified roll. One baby step and maybe you want to step into this would be that you take the city of austin's 2,000-dollar cap and apply that 2,000-dollar cap, which katy in her memo to the court had a dollar amount that that would yield. That would start working toward a parallel process for determining the historical exemption. Or we could -- we could work between now and the first week of august or in july. Now, the complicating thing on this period of time is obviously between now and when they certify the roll. We will be dropping on july the 26th your preliminary budget. And to the extent that there's need for any type of budget hearings with the court, you will be tied up in hearing either on a tuesday or otherwise scheduled. Some of these issues we have to determine before we go into the preliminary budget. So the time is pretty tight between now and when they certify. And we can definitely bring this item back to the court after you've had some time to think about kind of where you would like to land on this. I'll be glad to come back next week, if that's enough time to consider what action you want to take. I mean, what road you want to go down on this for this coming year.
>> well, i guess looking at a possibility of reducing the effective tax rate is very appeartizing to me. It's something that i think we need to really give a lot of strong consideration. However, the public hearing i guess is larger and i guess, judge, that's the appropriate thing to do is to do that if --
>> i'm thinking about doing it for the budget cycle, we ought to give leroy and the committee time to look at historical exemptions. We need to be able to state it in such a way that the residents who have been benefitting will be able to understand what we're doing and why. And we need to have a public hearing.
>> it sounds like we really don't have the luxury of time to do it for this cycle. It sounds like something we need to take a look at for our next cycle. The time frame is just too short.
>> it is. It is very short. Actually, rodney reminded me that tcad actually needs maybe a two-week lead time to load whatever that y'all decide on the historical exemption in order that they'll be able to run tests before patrick certifies the rolls. So if -- we're at june 15th. If he needs the decision by the 15th of july and you had a public hearing on july the 7th, i mean, it's almost like we don't have any time to work on, do the research between now and the time that patrick brown will need your decision. And so i -- i tend to agree with commissioner eckhardt that perhaps we need to have a committee look at this over a length of time and do an in-depth study of the ins and outs on this and if the court would feel comfortable with continuing the current historical exemption for one year, that that perhaps would be the most visible recommendation at this -- advisable recommendation at this point.
>> it seems to make sense too and allow us more time and allow people who have been benefitting from the historical exemption an opportunity to respond to specific language that we are considering adoption. Adopting rather. And unfortunately you're talking about built-in time for each step we take, it looks like. Plus i think the committee needs an opportunity to do thorough work. The more time we take, though, i think the more definitive we can be if we're going to roll back the exemptions. So instead of taking the baby steps you mentioned a few minutes ago, i think we ought to take one giant step and do it.
>> and the advantage of that recommendation would be that i know that i've read that the city of austin is looking at their historical exemption procedure at the same time. And so we could perhaps work in combination with the city in seeing what they're thinking.
>> let me ask this question. There may be some situations that -- i guess the austin -- city of austin historic commission i guess basically grant historic designations. Looking at this, i'm wondering how many of those are in the pipeline right now. I mean, i guess it doesn't matter, but there may be a lot of those in the pipeline at this time as far as wanting to be awarded historic exemption, especially if there may be a challenge to -- for -- i don't know how we're going to land or where we're going to land on this, but it's a lot of details still out there that still need to be brought to the table. But if the county ends up looking at more of a fixed cap, per se, whether it's just a fixed amount of money or a cap, the word is out. Just azure as we're sitting here today, the word is out that the county is probably going to be looking at this and also the city of austin. My question is that the historic commission itself, how are they going to start looking at this knowing that if those particular applicants that come forward to get designated historic designation, how many of those are in the pipeline? Right now we're at 508. And i'm just wondering how many they have before the panel in order that the city and -- i know travis county, but i can't really speak for the city of austin, but i can speak as far as what we're doing. And my concern is what they're going to do.
>> well, i think that's the reason that we may need longer time to do the research than to try to quickly do something that in retrospect after we see what the historical commission and the city of austin are doing, it would make more sense to wait and continue at the current exemption for one more year.
>> why don't we do that, but why don't we put an item on the agenda for next year declaring a moratorium on new exemptions until we have put a policy in place?
>> yeah.
>> i think we have to bring that back.
>> right now a lot of folks may be rushing to the table.
>> but would we have an issue with the moratorium? Because then it would put people in like circumstances and different --
>> we can do that, but i haven't done any research on that.
>> we'll have it on the agenda next week and either we can or can't do it.
>> i would be concerned about an equity issue with taxation if someone -- if someone had the benefit and someone else didn't have the benefit, although they were in the same circumstance, although the city of austin has put a limit on the number of historic homes that can be designated in a month period. I understand that was recently voted.
>> but whatever we would do, we do early enough for them to be covered by the next tax year anyway. Right?
>> right. As long as you're going forward this year.
>> yeah.
>> which you did last year and just planning.
>> so the new policy would apply to current beneficiaries as well as the new ones.
>> okay.
>> and so the added benefit is that it sort of forces us to go ahead and act early in the fiscal year instead of -- so we wouldn't be looking at the same issue this time next year.
>> the exemptions that you voted today, the other exemptions and this exemption are the ones that are applied to the january 12010 values. So these actions you're taking now are retroactive to the tax base that will determine the tax bills that come out in november and that are due by january the 31st of '11. The same time next year we'll catch those that have gone through the system during the calendar year 2010.
>> i think we ought to get legal advice on it and think about it so we will know the practical impact on it. As it is now, i'm suggesting the resident cover the hole immediately, we say we're not going any deeper, we're going to hold everything and try to figure out what kind of band-aid we'll use and play that band-aid on the current one as well as future ones and try to have that band-aid in place i would say november or december. It's kind of slow in october and november. But if we want to partner with the city of austin, it sort of turns on whether both of us acting in tandem. If we urge it, it may happen. We can always just do nothing. I think the moratorium also would get out the word. If you've been benefitting from the exemptions, travis county is looking at the historical exemption and revising it and there would be an opportunity for a public hearing and so, you know, be on the lookout.
>> the word is out.
>> we don't have to decide about the moratorium today, but we ought to post it. If we can do it, if we can't -- but it looks like we need to give ourselves more time.
>> that's correct.
>> therefore i move that we approve the existing historical exemption.
>> second.
>> indicate our intention to take action next year and have another general item next week. Is that friendly? Any more discussion? All in favor? That passes by unanimous vote.
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Last Modified:
Tuesday, June 15, 2010 2:35 PM
