Travis County Commissioners Court
Tuesday, May 31, 2011 (Agenda)
Item 13
13. Discuss and take appropriate action on recommendations made by the local tax policy working group, especially regarding tax exemption for historical structures.
>> maybe we should indicate up front mr. Nellis and mr. Knight that we did invite the city of all the historic at exemption staff as well as the state of Texas so it may g good to have them first if they can so if they have other responsibilities to which they need to return, we can free them up to do so.
I feel a whole lot better having county personnel sitting at the table, too, mr. Nellis.
>> [laughter]
>> fantastic.
actually it goes right to that computer and if we can get media to come in and assist with the powerpoint presentation.
thank you.
thank you.
>> we need media assistance -- media, can we get somebody to come in and help out on the presentation?
all right.
thank you.
you want to introduce our guests.
>> I will allow them to introduce themselves.
>> my jame is jerry roastoven with with the city of Austin planning and review department.
I am manager of current planning which includes the historic preservation program.
I am joined by alice son mcghee who is the city preservation officer.
>> thank you very much.
welcome both of you.
>> thank you.
>> judge and Commissioners we are here to give you a presentation that we gave to the city council on April 28th of 2010.
the -- in my presentation I will go over the city council resolution that was passed last year.
I will go over the economic benefits of historic preservation and ms. Mcghee will go over the proposed changes to the city's historic preservation program.
in June of 2010 city council passed resolution directing city manager to prepare analysis of the economic benefits of historic preservation to identify the best practices for identifying designation and ensuring preservation of historic properties to work with the historic landmark preservation to limit recommendations to total amount of property tax exemptions for each property each year and to work with the historic landmark commission to prepare recommendations on any others a sects of the program.
the reason this resolution was passed was, I am sure y'all are aware, in late January of -- sorry, late 2009, the city had flood of historic landmark applications.
there was an individual who was serving as an agent for system people, we had about 25 cases -- 27 cases in one month.
we usually do about 25 cases in a year.
so this individual was doing these cases on contingency basis, and they were -- the cases were concentrated to one neighborhood in pemberton heights, the city council passed a resolution to limit the amount of historic cases that can be done at any given time, at the landmark commission meeting to no more than three per month and make it illegal to do these cases on a contingency basis and passed resolution which directed us to work with landmark commission to look at total revamping of the program.
we presented our findings to the city council at the end of April of last year and the city council has a pending item on if agenda which I will cover at the end of the presentation to make changes to our program.
I will start off by talking about economic benefits of historic preservation.
first would like to thank dr. William kelly of the university Texas who prepared his own report from the heritage society of Austin.
I read his report and delved further into the studies he cited to identify the economic benefits of preservation.
specifically there were 11 studies identified.
these studies concluded that preservation impacts tourism, increases property tax values, generates economic activity and creates jobs.
the next slide shows a list of the 11 studies that I went ahead and read and some summarized them for you tonight.
I have a copy of these studies if anybody on the court would like to see any of them.
with regard to one of the benefits of historic preservation is heritage tourism.
the state historical commission sanctioned study in 1997 that identified $1.43 billion economic impact in the state of Texas on heritage tourism.
impact from the city side is.
increased sale tax revenue as well as hotel occupancy tax.
the studies I read found that heritage tourists spend more and stay longer.
on average spend $623 on atrial versus 457 for normal tourist.
>> hold on, 1.3 million is statewide and with regard to sales tax?
>> it is 1.43 billion in total economic impact.
that is with regard to jobs, hotel occupancy, tax, as well as sales tax.
>> this is all attributed to.
>> heritage tourism.
>> to the historic.
>> to heritage tourism, defined as a person making visit to a historic site which is a principal part of their journey.
>> wasn't there testimony at the city of Austin when you gave this presentation with regard to the question of -- the questionable likelihood of historic tourism for residential properties?
>> yes, yes, I did.
>> that the residential -- really the historic tourism was with regard to commercial properties.
>> largely with regard to commercial properties as well as, you know, state-owned properties such as the capitol, the governor's mansion, et cetera.
it is not focused so much on the individual homes that we have but we are talking about the program in general which cover both the commercial as well as the residential properties.
>> with regard to $1.43 billions statewide, is there any breakout of how much of that is attributable to sales tax?
>> I could -- let me contact the historical commission to see if they have that data.
I was going to report that they had the university and u.t.
lbj school address as a whole.
I will see if it is broken-down by next types.
the city obviously benefits from hairtain tourism by occupancy tax, hotel tax revenue as well as job creation.
being we have historic districts on sixth street, we have a warehouse district on congress avenue and obviously we benefit a lot from being the state capitol with regard to this.
there is a lot of people who come into town to visit the capitol with their children and whatnot.
with regard to property values, the studies that I have read show on average, historic preservation increases property values between 6 and 20%, with average of about 20% seeming to be the average.
the statistical meths were meths were used in these reports to show the decreases are due to designation and not to other variables, specifically the studies seem to address most often historic districts as opposed to individual landmarks.
they found hick districts provide the greatest -- historic districts provided greatest increase in overall property values and comparisons made with historic districts and homeowners associations, so somebody buying a new home in a new subdivision, they know when they buy the house, there is mandatory membership in the homeowners association which has a mandatory fee they have to pay every month, what they get in exchange for that membership is certainty.
they get certainty that the neighbor next door is not going to paint their house bright purple because there is architectural review committee.
they have certainty in restricted covenants, the layouts of what a person can and cannot do in their neighborhood.
folks that are in local historic districts don't often have a homeowners association due to the age of the subdivision but when we have local historic district with with approved design standards, we especially have the same thing as architectural design committee so if you buy a house in hyde park or travis heights or castle hill west of here, you probably bought into that subdivision because you like the older look and feel of the neighborhood.
with historic district you are sure the person next door to you is not going to tear down the house and put up a bright stainless steel box.
so in exchange for that certainty, people are willing to pay a premium, just as people are willing to pay a premium to a homeowners association in a newer subdivision.
that premium is in the form of increased property values.
we -- the studies have found the benefits include even noncontributing homes within a district.
in other words your house doesn't have to be the historic ones within the district to benefit and least expensive homes receive the least benefit of historic district.
>> can I double back on historic districts.
that is essentially a zoning tool.
correct?
>> correct.
>> so of the tools that the city of Austin is looking to utilize, we have -- the city of Austin has robustly utilized a maintenance certificate -- and I used this term from document, a maintenance incentive as opposed to rehabilitation incentive and not just been able to robustly use the district rezoning tool but you are looking to use the historic district tool much more robustly.
>> yes, exactly.
that's one thing we are speaking to go in a moment.
we are willing to change emphasis of our program of one of individual landmarks to one of historic districts.
one, we found this is kind of best practice across the state of Texas as well as the united states.
and also because of the tax implications of it.
when the program was created in the mid to late '70s, it was aimed at saving individual buildings that the community was -- there was uproar about because they were being torn down in the first great economic boom here in the late '80s and so temp cis was on saving individual buildings, and so over time we have 500 landmarks both commercial around residential and historic district program that was created in the mid 2000s that is just now getting to the point where we are getting up and going on it.
we have the castle hill district just west of here, on the other side of lamar.
we have the hyde park district and we are working on several other districts.
the main difference between the two, besides one covers a whole neighborhood and the other a individual house or building is the tax implications are are drastically different.
with landmark, we are currently exempting a portion of the property values for the individual property within the building.
when we do a district, just because you are in a district, you do not receive a tax benefit, by virtue of being in the district.
if you are contributing structure within the district, you can take advantage of what is called a rehabilitation incentive that would provide a tax freeze for a period of 7 years, sump that if you do an edition or remodeling work, your taxes would increase for that period of 7 years and then the exemption will expire.
>> let me pause for a second here.
if you intend to use the historic district -- let's say that you have -- because we have had individuals to come down and testify before the court, for example, who has residential property that actually could be -- well, actually it is historic, but they would rather foot the bill themselves to maintain it rather than receive an exemption.
the question I am asking you is if you have a district, how do you determine -- and if the determine is -- I am assuming that the district will generate money for these particular structures that are within that district, what happens if a person do not want to participate in that amount of moneys that being charged with within the district and say, hey, I the will deal with myself?
how do you deal with that.
>> within a district, first of all, to start off the equation of the district, the city requires at least 51% of the property owners sign a petition saying they want a district formed in their neighborhood.
then the city, we go through review process with the staff.
the folks proposing the district propose a set of design standards and then the city council votes to create the district.
so, again, once -- if you are just within a district.
if you have a house in hyde park today that is an older home, let's say, what we call contributing structure, an old bungalow within hyde park, you do not receive a tax benefit just from being within that district.
what we are saying is we think the district, over a period of time, we created district last year, but over a period of time, the protection that district gives the homeowners within hyde park -- in other words, a set of design standards if you have that bungalow and want to do something drastically different to the outside of it, you have to go to the landmark commission to get approval.
you do not receive a tax benefit just by being within that district.
what it does provide is the other people within that neighborhood the certainty you are not going to take your home and demolish it or make it drastically different than what it already is.
so we think, over time, what the studies have shown, we will see if it works out here or not, is that certainly results in increased property value.
people are willing to pay a premium for thoughing when I move into this nice older neighborhood, it will stay nice older neighborhood and there won't be a drastic change where the majority of houses within it being torn down and made new again.
>> and you had found in y'all's research that other peer cities were much more engaged in historic district and rehabilitation incentives effort rather than what we have -- what we have done for the last 30 years, which is a maintenance incentive for individual structures?
>> yes, I think other cities fair to say, other cities have a maintenance program like we do, but the majority seem to have morph of historic district approach, combined landmark approach, too.
there is definitely a need sometimes to -- to save an individual building to landmark an individual building but a lot of the emphasis to save old neighborhoods as a whole, if district approach is much better than going in there and trying to landmark every individual house within a neighborhood.
obviously that is not real us the tick because one, every house within a neighborhood is not a landmark, doesn't meet the criteria and, too, tax implications of current system would be unsustainable.
>> do you also get the benefit of an assurance that the public dollars foregone are actually going toward rehabilitation?
>> well, what we have right now is a --
>> the public dollars the tax burden shifted is going to rehabilitation?
we.
>> we don't have direct high dollar for dollar rehabilitation.
but if the house is worth 200 grand today and you do a rehabilitation that causes it to be worth $225,000, but, one, you have to do at least $25,000 worth of work but, too, the tax would not be assessed on additional $25,000 of value for a period of 7 years.
so it is not tied dollar per dollar, rebate for every dollar you spend on the rehabilitation.
rather, it is a freeze that does not add value to your home after the rehabilitation is done.
>> but it is -- it is tied factually to the rehabilitation rather than the fact of the home being historic?
>> yes.
yes.
there is a requirement that you do at least a $25,000 rehabilitation to qualify for the exemption.
>> thank you.
>> so with regard to the other economic benefits of historic preservation, total not including traditional heritage tourism as well as preservation, $1.75 billion impact to Texas economy.
we found historic district homes -- sorry historic districts result in increased reinvestment in the neighborhoods and for every 1 million invested in preservation, 18 new jobs created vs.
versus 15 for new construction because historic preservation jobs require more specialized labor, skill labor, and a lot more of the work is done by hand as opposed to purchasing already completed trusses that come in on a truck from out of town.
so now I would like to turn it over to ms. Allison mcghee who will talk about the proposed changes and the historic program --
>> before you turn it over, let me ask you this following question: how do you determine -- and I am speaking basically residential property -- historic property.
how do you determine when that property is visited by the tourism aspect of this particular presentation?
there are some -- there are some residential properties here that of course -- I won't call out the names but have some significance but then there are others under the historic exemption, residential, that is, and I am trying to question in my mind how do you -- not police, but how do you monitor homes that are under residential historic exemption designation?
how do you do that?
how -- how do you determine those?
we have no way of determining that with an individual property.
we do have walking tours that are conducted by the Austin convention and visitor bureau have walking tours.
the accb has put out brochures for people who go to the visitors center for walks they can do.
there are individual neighborhoods such as hyde park that have their own historical tours every year, but we don't have the data on an individual house how many people are visiting it.
we acknowledge we don't think folks are making a special trip out of time to visit any one of the particular homes you see on that particular list.
we think it's more than about tourism.
it's about our community values of wanting to save our heritage and our history, but we are saying that we do think there are folks who do come in from out of town to visit, say, the capitol or governor's mansion when it reopens and these people are more likely to stay at, say, one of our local historic hotels such as steven f.
Austin or the finances at judge's hill and these people have a tendency to spend more than average tourist when they come town to visit these types of sites.
>> okay.
I wanted an answer to that.
>> and here is proposed one before the city council right now.
>> hi, I am allison mcghee and deputy historic preservation officer for the city of Austin.
the process, then, the staff went through was to work with the operations subcommittee of the historic landmark commission, staff reviewed more than 40 programs or programs from more than 40 other cities including a number of them from communities within Texas.
and I will be covering 4 points there.
we looked at designation of historic landmarks.
the process for designating historic districts, the taxing incentives for historic landmarks and also developed additional recommendations for the program.
>> the staff recommendation of the historic landmarks is to revise the criteria, to require high level of significance for individual designation but also incorporate provisions to allow the designation for vernacular architecture.
we wanted to make sure that some of the more vernacular homes that represent it is cultural history of the community can still be considered for individual designation.
as jerry had pointed out the focus of Austin programs since 1974 was really on individual landmarking.
however, we do want to provide for more emphasis on local historic districts and this was not available to the city until 2004, when an ordinance was passed allowing for local historic districts.
many other communities around the country had been designating local historic districts for many years or even decades, so our focus has really changed from individual designation to the designation of districts, with the goal of protecting not just individual properties but more of the context of neighborhoods.
>> which is what actually threatens the historic properties f the context around that property changes so significantly that someone has a market incentive to bring the structure down, I could see how that focus would be much more advantageous.
>> yes, there is also the issue that you could be save saving individual properties but losing entire neighborhoods.
we want to protect the greater fabric of our heritage.
we are also recommending adding provisions to the -- requiring the properties have have achieved their significance -- or that properties have that have achieved their significance within 50 years would not be eligible for historic zoning unless they are of exceptional importance.
this is to protect a situation where property may be over 50 years old but the historical event or individual for which it has historic significance or someone is claiming historic significance have occurred more recently within 50 years and we want to protect against that so the historical event or individual would need to be more than 50 years old as well as the property itself being more than 50 years old.
we also are proposing provision so that properties and local historic districts not be eligible for individual designation based on architectural significance, based on that criteria.
it would need to at least meet two of the other criteria in order to be individually designated.
and, also, include more specific language regarding integrity to require a higher level of integrity for individual designation.
and the recommendations on the historic landmark commission is to adopt the staff recommendations.
related to historic district designation, staff recommendation is to allow owners the 51% of the land or 51% of the owners to sign and support a petition for a local historic district.
for contributing properties and national register, historic districts staff is recommending instituting advisory design guidelines and requiring a certificate of appropriateness for demolition or demolition delay of up to 180 days for those contributing properties.
again, we want to encourage local historic districts, contributing properties within a national registered historic district.
now the review by the historic landmark commission is advisory only.
and we feel that by developing advisory design guidelines for those districts, it could assist those districts in becoming local historic districts, and requiring a separate ticket of appropriateness or demolition delay will also help in.
moving those -- in moving national registered districts into local historic district status.
but, also, can help protect some of those properties so that there isn't an incremental loss of contributing properties within the national registered districts that would, then, possibly make those districts ineligible to become local historic districts in the future.
again, the goal to transition into local historic districts.
>> the historic landmark recommendations was to adopt the staff recommendations and in addition to establish of funds to help neighborhood groups hire to look at local districts groups and local historic nominations.
>> how would -- what would be the source of funding for such a thing?
>> we haven't identified a source of funding.
that was something that the historic landmark commission would like to -- would like staff to pursue in some way.
related to the historic landmark tax exemption.
staff recommendation is to retain the existing formulas for calculating the exemptions, we is 100% of the value of the structure and 50% of the value of the land for residential properties and 50% of the value of the structure and 25% of the land more commercial.
>> [one moment, please, for change in captioners]
>> the exemption for the homestead, and if you run the numbers on that on a-million-dollar property.
I think it would be $80,000 that would be assessed as far as appraised value and it ended up being 300 some-odd dollars.
the point I'm trying to bring -- and I'll get staff to give those numbers again on an example that you just mentioned as far as current, the taxable value as it was assessed was really, really low compared to what another person would have to pay, I think about 10 times as much as that.
so that's significant.
>> it is.
>> it's very significant.
hold on one second.
>> can you go through that scenario on the million dollars.
I think that's very important because the numbers haven't changed as far as the recommendation is concerned, especially with the 100 -- as far as their current exemptions on the historic.
could you just run that real quick on that-million-dollar scenario?
>> if I could point out, we also are recommending a cap on the amount.
>> I know, but I want to make sure we get the numbers right for the record.
so hold on just one second.
>> Commissioner, while I locate that, why don't you allow her to proceed and I'll -- as soon as I locate it, I'll interject.
>> go ahead.
he's helping find the numbers, but go ahead.
>> the staff recommendation is also to cap owner-occupied landmark exemptions at $2,000 with a recommendation also to increase up to $2,250 for properties over 100 years old.
at 2,000-dollar cap it would affect 120 of the existing 270 residential landmarks currently.
>> how many?
>> 120.
>> 120.
>> yeah, it would lower what their current exemption is.
we also looked -- staff looked at a number of other options for the cap, and for example, at a 2,700-dollar cap it would only effect 264 out of the existing 270 residential landmarks.
>> have you all done any analysis to see the interplay between the maintenance incentives and the creation of historic districts.
because I would think that someone would be loathe to give up a maintenance incentive in favor of a tax freeze scenario for rehabilitation in an historic district.
>> in the landmarks that are considered historic by the city of Austin are eligible every year to apply for the tax exemption.
they have to go through this process every year requesting an exemption, getting an inspection and getting approval by the landmark commission to get their tax exemption every year.
what we're trying to do -- so those properties have historic zoning and historic zoning stays there until the city council takes it away.
the city council can change or the court or anybody can change the amount of exemption that is given to somebody as a part of the exemption program on a yearly basis.
but the historic zoning would remain.
>> you might want to tell the heritage society that.
>> but the existing zoning would remain.
so the protections we have stay there regardless of how many exemptions they get in a year.
what we're trying to do -- we're not talking from the city's standpoint, the staff's perspective, is not taking away existing landmarks.
it's changing the exemption that is given every year and changing the direction of the program so that from here forward we still have a landmark program because we still through there are individuals buildings that need to be saved and meet the criteria, but rather emphasize the historic district approach to neighborhoods that are looking to maintain that look and feel.
the district program was created because back in the mid 2,000's, we had an issue where property values were real hot here in town and we had folks coming in and they were doing demolitions in older neighborhoods and building houses for people who live there really didn't like, the mcmansion living issue as well as just the modern look of some of those buildings.
so what happened was every time there was a demolition permit for the buildings, they would go to the landmark commission and get them to initiate an historic zoning and the city council had a tough choice to have that individual tear down the home he bought and build a new one versus the community's desire to keep the look of say the bouldin neighborhood.
so what we wanted to do was to emphasize from here on out instead of trying to save the neighborhoods one house at a time, which is just impossible, is to try to do this district approach, which still has the mandatory design guidelines that people have to follow, but has a much reduced impact taxwise irregardless of whatever change were made to the program, but has much less of an impact as far as the tax exemption goes.
and still maintains a look and feel that people seem -- they're telling us that they want to maintain.
>> but as your report to city council -- I think it was page 16.
it says today's Austin historic preservation program faces more challenges from the use of historic landmarks and threats of demolition of historic buildings.
I guess what I'm going for is since we have 500 designated landmarks that the point with about half of those being residential, and most of those residences being in -- clustered in three sip codes, isn't that reduce the probability that in those three zip codes historic districts will be created because those folks aren't going to want to give up the maintenance exemption in favor of the historic district.
>> if the folks already have -- if they already own an existing historic landmark, then that existing landmark status does not go away if a district were placed over in that neighborhood.
>> but that tax incentive, the maintenance tax incentive would go away, would it not?
or would they be eligible for the maintenance tax incentive and the freeze for rehabilitation?
>> they would be subject to existing maintenance exemption, but like I said, we can change that on a -- every year if we wanted to.
>> but under the current recommendation, though, if -- I live in clarksville, for instance.
and 78703 has a very large percentage of home designations.
compared to the rest of the city.
and there are -- there is two -- there are two historic districts in the clarksville area, correct?
>> two national registry districts, yes.
>> so under the current recommendations to the city council an historically designated home, prehistoric district, that is also a contributor to the historic district, would be eligible for both the maintenance incentive and the freeze for rehabilitation.
>> that is true, but we're also proposing to reduce the amount of the maintenance exemption at this time.
>> to a capped 2500, right?
>> yes.
>> 2000.
>> yes.
>> the staff recommendation is 2000, we think the council is leaning towards 2500.
>> so my statement stands, though, an historic home in my neighborhood that's also contributing home toward a district, would be eligible for both the 100 percent -- 100% on improvement, 50% on land, capped at 2000 or 2500 depending on what the city council does, and in perpetuity, but capped.
and a freeze on incremental increase in value based on rehabilitation.
>> were there to be a local historic district there, that is correct.
there is not at this time.
>> wow.
>> thank you.
>>
>> I didn't understand that.
>> that's what I alluded to.
and I guess let me ask this timelinewise, when this came -- when this last item came before the Commissioners' court a little bit ago, I made some definite statements and I'm going to hold feet to firefighter that we make a decision on this, this particular issue before July 12, July 11 of this year.
I do know that the city council, y'all are in the process of doing what you're doing now.
you brought a real good report, I think, as far as the material and information for us to look at and review.
however, my concern is the involvement with the city in this and they may not be -- have an opportunity to dispose of all the things that they need to get rid of as far as moving forward to be in concert with the direction I would like to see the county go in as far as an action is concerned.
so with the recommendation and the presentation that you both have made today, would -- is it still possible for the city to make some decision in concert with what I'm trying to do here as far as my timeline, is make a decision in July of this year or by July of this year.
>> not at this time.
at this time the city council (indiscernible).
right now this item is set before the city council on July 28th.
so it would be -- it would not be before July 12th.
>> anyway, leroy --
>> Commissioner, I did find the information you requested on an assessed homestead assessed at a million dollars.
for Travis County we give a 20% homestead exemption, which is a 200,000-dollar exemption.
for over 65 we give 65,000 exemption.
in this example that I distributed to all the court previously, we made an assumption that the-million-dollar assessed value was broken up into 300,000 for the structure and 700,000 for the land.
under that scenario the historic exemption under Travis County current policy would be $650,000, which would take a-million-dollar structure homestead owned by an over 65 or handicapped homeowner to a taxable value of $85,000.
under the city of Austin's current policy on that same-million-dollar assessed value, they do not give the 200,000-dollar home said exemption, they give 51,000 for over 55 versus Travis County's 65,000.
they give the same $650,000 for a taxable value of $299,000.
now, the tax impact, the property tax paid to Travis County is $358 as compared to paid to the city of Austin of $1,258.
>> I just want to make sure that you heard that because I would think all of this is significant and of course, when this came before the Commissioners' court last year we looked at this and of course we looked at it and kind of rolled over, rolled over, but as far as the timeline on this, and we did hear from staff as far as getting things done in a timely manner so tcad could have time to deal with this situation.
so we're under the same situation that we were last year.
and this is why we're really hoping that the city could be -- do something with this in a timely manner.
I don't know if it has to go different boards and commissions with the city.
I really don't know.
could they fast track it, I don't know.
but I don't want to be left -- I do not want to be left short of a decision, again this year when it comes to dealing with this historic exemption designation, so that's basically why I posed the question as I did.
>> I suggest at this time that we let the city of Austin representatives complete their presentation because we do have somebody from the state, right?
>> yes, sir.
>> and we make sure we give them some minutes to do their presentation prior to the lunch recess.
>> so if y'all could complete your presentation and then if we have questions we'll ask them after that.
>> okay.
again, the cap we are -- that staff is recommending is a 2,000-dollar cap for residential properties, owner-occupied residential properties.
and making that cap effective January 1st of 2013.
extending the local historic district rehabilitation tax incentives to the individual landmarks and no cap for commercial properties.
commercial properties would remain as is.
the historic landmark commission recommendations were to base the formula for residential properties on the combined assessed value of land and improvements, adopt staff recommendations to cap the exemption for owner-occupied properties at 2,000 and to conduct a five-year reevaluation of that cap to determine if it needed to change.
no cap for commercial properties.
and basing the formula for the value based on 50% of the historic structure and 25% of the land as it currently is.
adopting staff recommendations related to the rehabilitation tax incentives and also to request that the city manager initiate dialogue with other taxing entities to encourage their participation.
>> staff had additional recommendations, including establishing a fund to provide plaques for every landmark in the city and establishing a new fee for landmark applications to cover the cost of the plaques, with the idea that each individually landmarked property should have a plaque on it that is visible to the public indicating their status.
and staff also recommended establishing a revolving low interest loan program for low income landmark homeowners for smaller rehabilitation projects that may not reach that threshold whereby they could take advantage of the rehabilitation tax exemption.
and also for facade rehabilitation on commercial properties within the commercial business district.
and there was -- staff had not identified any source of funding for that, but it was something that staff would like to have investigated.
the historic landmark commission further recommendations were to adopt the staff recommendations regarding establishing a fund for the plaques as well as the revolving low interest loan program, but also to establish a more thorough inspection process for the historic landmarks and receiving the tax exemption and also to establish an inspection b, which could possibly be exempted for low income owners.
they also recommended providing technical and loan assistance programs to promote rehabilitation of existing structures and to adopt revisions to designation applications to provide more information on the history and integrity and require applications be complete prior to placing them on the historic landmark commission agenda.
and this item is somewhat dealt with in some of the earlier staff recommendations regarding language related to requiring a higher level of integrity for individual landmark status.
>> so judge and Commissioners, if I may, we presented this report to the city council at the end of April based on all our work with the landmark commission and various stake holders and the city council has put on their agenda a resolution which I attached to the back of the report that I handed out to y'all.
so what the city council is recommending at this point is to go ahead and tighten up the criteria as suggested in the report for landmarks, but cutting to the chase is the tax exemption part, which I know y'all are most interested in.
at this point the city council is proposing to cap the property tax exemption for an owner occupied structure at no more than $2,500.
today we have a cap of $2,000, but that cap has a clause that allows for the greater than $2,000 or half the city taxes.
so for some of the large high value properties, especially some of the ones that have come in the past several years, they do receive more than that $2,000.
so what the city council is proposing right now is a hard 2,500-dollar cap that anyone who has an historic landmark owner-occupied residential historic landmark that they would receive no greater than 2,500-dollar tax break.
to establish an index to automatically adjust that cap based on increases or decreases due to inflation, deflation.
to modify the formula for tax exemption to be a combined assessed value of both the land and improvements rather than separating them both out.
and that this new formula would be phased in over a period of five years.
the staff is going to recommend not combining the land and the structure values, but rather to leave the formula as it exists today.
but to have that 2,000-dollar or 2,500-dollar cap still apply.
and the staff recommendation is that we not wait five years.
that we possibly wait one or two years before we implement this rather than the full five.
this item was on the city council agenda on may 12th and also on may 26th.
at both meetings the city council postponed the item.
on may 26th they postponed the item to July 28th.
and the reason the council postponed the item is the city is currently being sued by mike levy, dom neck chavez and alfred stanley in a lawsuit relating to a portion of the state law that relates to historic tax exemptions regarding a finding of need.
so we've hired beverly reeves as outside counsel and she's advised the council twice now to the to take action on the specific resolution pending more discussions with the plaintiffs in the lawsuit.
so I'm available for any questions.
>> was there any discussion among staff or with city council about partitioning of the historic portions of these properties for application in the formula.
because application in the formula is 100% exemption for the improvements, but of course not all of the improvements are necessarily what is historic about the site.
>> that was discussed in the operation subcommittee meetings and with the historic landmark commission.
so there was -- there was concern about that.
>> was there -- is there any recommendation with regard to partitioning?
>> for commercial properties it was -- that staff would recommend --
>> but no partitioning was recommended for residential properties?
>> it wasn't discussed as specifically the concern was more on the commercial properties where large towers are being added to otherwise three or four story commercial buildings.
that was where there was more concern.
>> with regard to the 250,000-dollar-- the 250,000-dollar proposed cap, that translates to a value of -- property value of 750,000, is that correct?
>> it was a cap of -- the staff recommendation is a cap of $2,000 for the city portion.
>> 2500 --
>> 2500 for --
>> [overlapping speakers]
>> but am I correct in that, that the 2,500-dollar cap translates to a property value of 750,000?
>> ballpark, yes.
>> and that based on y'all's documents, 87% of the residential properties are valued at $400,000 or more.
so really that cap will only kick in for --
>> I don't have the exact spreadsheet.
I know that in my presentation I do have it at $2,700, it would apply to --
>> $2,000 is about 120 of the 220 residential.
of the 500, 270 are owner occupied residential.
with the 2,000-dollar cap we propose it was 220 out of 270.
what the council is proposing will be somewhat less than that.
64 was the 2700.
>> yeah.
and considering 87% of the residential properties are valued at above 400,000, but it doesn't -- the cap wouldn't kick in for -- until you get to the top 25% -- 27% are valued at one million dollars or more.
>> it would stop the ones that are getting the 7, 8,000-dollar tax exemption because of the greater than clause in our existing cap.
our exit of thing cap is not a hard cap.
we're proposing a hard cap that nobody get over 2500.
>> has there been any analysis of why it is that the residential properties by and large have a significantly higher -- their property values are significantly higher than the surrounding properties?
>> well, because -- I think a lot of it is by nature of the fact that they are landmark properties, the types of properties that they are.
you know, these are properties that were architecturally significant.
they're very grand yois, very nice looking.
or they're -- have been owned by historically important people to our town.
and therefore they're larger, much nicer, older properties.
>> but even to like properties.
>> that could be attributed to the statistics that show that landmarking does increase property values.
>> but presumably the statistics that you were citing is that it increases property values for the neighboring properties as well, but what we're seeing is the median values in neighborhoods of like residences, of like residences, the historically designated homes have significantly higher market value.
>> we could look into that.
it is driving up the value for home a even though home b doesn't have the designation and it was built around the same time.
>> you gave up an executive summary of recommendations.
>> any questions?
>> I want to say the city has appreciated county's participation in the program since the 19 70's and hopefully we can work something out with y'all.
idges thank you very much.
you brought a lot of valuable information with us.
now, we have a representative here from the state of Texas if we could get you to give your name to us and be ready to share with him some of the questions the court had last time we discussed this item.
>> sure.
>> good morning, Commissioners.
my name is matt senich.
I currently serve as the acting state coordinator for the Texas certified local government program at the Texas historical commission.
as you're probably aware, Travis County is listed as one of our 66 certified local governments around the state.
and because of that you have access to additional financial and technical assistance from the Texas historical commission and I was asked by Commissioner Eckhardt's office to be here today to help answer in sm questions that you may have about the county's tax abatement proposal.
so at this time I'll take any questions that y'all have.
>> matt, one thing that we were looking at is the Texas historic commission has been very generous with Travis County's historic commission in providing dollars and most often federal pass-through dollars from the federal parks to do surveys of portions of the county.
one thing that we've looked at with regard to our exemption policy, which has been in place for three years and almost all of the designations are within the city of Austin with the exception of two, I believe.
if we were to step up an effort to complete a county-wide survey and put -- put the historic -- our local historic commission in charge of that, would that adversely impact our ability to pull down federal money through the Texas historic commission because of the way the funds come down?
>> no, it would not at all.
the clg money that you're referring to is 10 percent of our total federal allocation that we receive as an agency.
that money has to go every year to the 66 clg's around the state.
we generally give between 10 to 15 grants a year.
and the active clg's, as Travis County is, scored better in the scoring and have a better chance of receiving funding every year.
>> and along with that clg mup, there are also rehabilitation -- clg money, there are also rehabilitation incentives that are federal dollars.
>> correct.
>> can you tell us about how the federal rehabilitation incentive as opposed to a maintenance incentive operates?
>> the federal tax credit is for national registered listed properties that are income producing.
that does not apply to residential properties.
unlike other programs that are based on the 50 year criteria, the federal program is based on properties that were built before 1936.
when the tax credit was written in 1986, 50 years before the historic cutoff was 1936.
instead of having a rolling time frame, they selected 1936 and so unfortunately a lot of the properties that are built between 1936 and 1961, which would now be considered historic, but not eligible to participate in that program.
>> and so it's 1936.
it's not available for residential properties?
>> is not available for residential.
there are -- from time to time there are movements at the federal level to do a residential tax exemption and there's talk of it right now, but in the past those have always failed.
>> and that federal rehabilitation incentive is at 20%, I believe?
>> there's a 20% tax credit and it was also a 10%.
>> what's the difference.
>> the 20% requires a much higher level of integrity for the property than the 10% does.
both of those tax credits are administered through the Texas historical commission's division of architecture.
>> so when we refer to the state program it's actually the federal program?
>> that program is a federal program, yes.
>> the state has a separate one?
>> the state does not have a tax incentive program because the state does not have an income tax.
so we do not have a mechanism for doing tax abatements at the state level.
>> other states do have tax incentive programs, but they come out of their state income tax.
>> but you have the grant level, grant with the state level.
>> yes.
we have the federal grants and we have some state grants as well.
>> did you get any funding for the state grants this year?
>> [ laughter ]
>> we're not sure yet.
>> [ laughter ]
>> and with regard to -- with the state designation, what comes with -- first of all, what does it take to get state designation?
>> the state, there are several different levels of designation.
we have the state archaeological landmark designation, the sal.
that's the highest level of designation that we offer.
for those properties they must be listed on a national register of historic places to be considered -- to be listed at the state level.
and with those come protection for the property.
the property owner has to get a permit from the Texas historical commission to make any interior or exterior modifications to the structure or site.
the other designation that we offer is the recorded Texas historic landmark designation and that designation protects the exterior of the building from changes.
the property owner is required to notify the thc of any exterior modifications, but it does not impact interiors.
>> and with regard to the Texas criteria -- well, since it tracks the federal, that's 50 years or older.
it doesn't track to the 1936 for the federal rehabilitation incentive.
it tracks to the 50 year federal requirement, right?
>> that's correct.
it follows the national register criteria.
>> and the national register criteria is roughly has to be 50 years or older.
>> 50 years old or older.
it could be a building that's associated with a significant person or event.
the building itself is a representation of a good architectural style or a well-known architect, a frong lloyd wright building, for example -- a frank lloyd wright building, for example.
>> and one of the criteria is to provide significant archaeological resources.
so if there's open land that there's evidence of encampments or things of that nature on it, then that site could possibly be listed in the national register and also get state level protection.
>> does the state have any goals or targets for the number of -- let me back into this.
I'm assuming that the glc is so that the state can compile a statewide goal for what should be preserved and how much of that should be preserved.
is that a fair statement?
>> the clg program is a partnership between the federal government, the state historic preservation office, which is the thc, and also the local government.
and really it's a federal program that was initiated to encourage historic preservation at the local level.
the national register is an honor dleef ific dezavala ition nation.
I could list it today and knock it down tomorrow without any penalty.
I'm not recommending that, but that is the fact.
and so the clg program is designed to help the local level governments establish stronger preservation programs because across the country preservation really takes place at the local level.
>> so if a property for archaeological reasons or for historic significant person or event and architectural significance reasons gets designated under the national register it really needs -- it really needs the state to also bless it and the locals to do something about its preservation.
>> yes.
when I help cities write preservation ordinances, one of the clauses that we write is that all national register and state designated properties become local landmarks as well because then they fall under the purview of the local review commission.
they are not a review process in place for historic properties at the state level.
>> we were given a document that says certified local government frequently asked questions.
those answers really represent most of what we need to know about the state program.
>> for the most part.
counties are a little different than cities when it comes to certified local government because counties do not have the same level of zoning control that is city does.
so the cities are expected to pass a preservation ordinance and have a review commission and do some of those requirements that counties are exempted from because you don't legally have that authority.
so the big thing that we like to do with counties that are in the clg program is support survey efforts like we've done with Travis County for the last several years.
and Travis County recently got a fiscal year grant to continue the survey work and I've talked with bob ward and barry hutchison at the county historical commission to continue in future cycle to work on increasing that survey effort.
>> if we were able to put local dollars toward expediting that local effort, we have the opportunity to be reimbursed by clg grants or would the fact of our already funding them locally knock us out?
>> you would be eligible to apply in every round.
the one --
>> even if we had already completed the work?
>> no.
the work has to start at the beginning of the grant period.
you can phase the project so I know they've done -- I think they did the 290 kind of manor area and then the webberville corridor.
those are faces of the survey.
so you can continue to phase out the overall county survey and apply for grants for each round.
>> but if we were to expedite it with local ground that would knock us out for future reimbursement.
>> that would not be there for further reimbursement.
>> so it's really a grant program.
>> correct.
>> any other questions for mr. Senich?
we appreciate your input and your patience.
>> really appreciate it.
>> what's our deadline?
>> tcad has informed us that actually July 5th is the deadline.
I had mentioned, I think, July 12th.
we thought that was adequate, but we verified that with tcad.
so in order to integrate it into the certified roll, the court needs to make a decision by no later than July 5th.
>> of all the documents that we have received regarding the city of Austin recommended changes, is there a one or two pager that would highlight specific recommended changes and the impact?
>> well, in your packet it has numerous bits of information that the members of the court had requested.
we did go back and on a front and back sheet and revised our recommendation in conjunction with a discussion we had at the last Commissioners' court.
that -- if you count from the front of the packet, it's one, two -- it's the first sheet behind -- it's the third sheet of the packet behind my memo of may 24th and dusty's.
that summarizes what the committee's recommendation is to the Commissioners' court as of right now.
>> our -- what our committee recommends.
what the Travis County committee recommends.
>> I beg your pardon?
>> that summarizes what the Travis County committee recommends.
>> that is correct.
>> I was asking more of the city of Austin recommendations.
because there's a whole lot of them.
' I'm trying to determine what impact.
you don't have to answer it right now.
>> we could take our recommendation, that two page recommendation, and we can annotate that with the city of Austin's recommendation as indicated today.
then the attachment that was prepared by the tax office, that was attachment number f to your current backup, which is the text to the last sheet, you will see that the tax office has given you the formula that you asked that if in fact the recommendation of the committee being 2,500-dollar cap on residential less your 20% homestead exemption, that gives you the amount of the historical exemption under the recommendation for 100,000, 618,888 and a million and 2.6 and 6.6.
you will see the recommendation for homestead properties, attachment f.
the last shiite is attachment -- the last sheet is attachment f, which they have addressed some of your legal questions.
the next sheet forward is the theoretical historical exemption.
>> but with regard to what the city of Austin will be considering in late July, that -- mr. Rusthoven provided us with at least the draft resolution.
>> do you to postpone this --
>> [ inaudible ].
>> city of Austin brought the resolution that the city council consider it -- did they pass that resolution?
>>
>> [ inaudible ].
>> is the Travis County historical commission reviewed this?
aren't they meeting the eighth?
the Travis County historical commission.
>> I believe that's what the information was that they were going to be meeting on the eighth.
>> judge, the city council postponed this last Thursday to July 28th, the resolution.
I need advice -- they need advice of outside counsel pause of the lawsuit.
>> the city council now has two staff persons assigned to the program or more than that.
>> yes.
we have two staff people and one administrative assistant.
>> I'm the manager of this program as well as several others.
>> some of the recommendations require a whole lot more work than we've done historically like the inspections, etcetera.
is the intention that daicialg staff will be -- that additional staff will be provided?
>> that is one thing that we are considering.
I can't get into too much detail right now because of the lawsuit.
but we are considering the possibility of adding an f.t.e.
for historic preservation inspector so we can be more thorough with the inspections to be sure that the people receiving the exemptions are doing what's required of them.
>> okay.
>> if you wanted a summary, we have seven recommendations that I think with the city's help I can summarize.
I mean, very quickly, the difference between our recommendation and the city.
I think there's no requirement in the city's recommendation to be -- that the structure be built before 1930, isn't that correct?
>> our requirement is 50 years from the time (indiscernible).
>> so it would be -- the age of the structure would be older under our recommendation that a structure and land receive historical exemption no more than 10 years would be the committee's recommendation.
I do not believe there's termination under the city.
the current city's staff recommendation is 2000, as I understand.
our recommendation was 2500, less the 20% homestead exemption.
so that's the difference there.
and then we also in conjunction with the city did not have a limit on commercial buildings.
we recommended that the calculations be the same as they are currently.
and I believe city staff has recommended that.
so there's very little in my estimatelation difference between the recommendation of the committee with the exception of those items. I mean, the committee I'm sure would accept lowering our recommendation to 2000 less the 20%, if that were the will of the court.
>> if I could point out that the staff recommendation was 2000, but the current city council resolution is for $2,500 also.
>> you're thinking more like a councilmember, mr. Nellis.
>> [ laughter ]
>> leroy, does the staff recommendation -- was the staff recommendation not also to only recognize rez I guess nation by the -- designation by the state of Texas.
>> that is correct.
that is correct.
we've made the larger designation -- that's up to the court.
one of the things that was asked, I believe, by you, Commissioner Eckhardt, had to do with the number of other city's historical districts.
and we did -- the committee did distribute this analysis that shows how many historical districts any number -- and this is very quick.
dallas has 16 according to this study.
el paso has nine.
fort worth has 11.
houston has 16.
san antonio has 26.
boston has 85.
charlotte, north carolina has 334.
>> let me go back.
boston has nine local districts.
charlotte, north carolina has six.
denver, colorado has 50.
portland, oregon has 17.
and seattle has seven -- portland as seven and seattle has seven.
that was the question raised about local districts.
other urban areas around the country and Texas rely very heavily on historic districts, more heavily than the Austin area.
>> leroy, with regard to implementation of the recommendations put forth by staff, it seems that if we were to be recognizing state designations, we might want to revisit your 1930 numbers since the state designation seems to track the national registry which puts it at 50 years.
>> it more coincides with the city of Austin.
narcotic.
>> so from an implementation standpoint if we're going to recognize the Texas designation, you should probably just recognize the Texas designation period.
>> right.
>> but it tracks the national register.
>> judge, I want to throw this in the mix.
I don't think anyone received it.
I may have been the only one.
I had asked early on several people who were involved in historic designation for their own proposal that would help us marry the issue of historic preservation with our tax equity.
>> they had a one-page recommendation for substitute historic tax incentive proposal.
I would like to distribute that through the court and your team, leroy, maybe you can push that up against what's already out there.
>> okay.
thank you.
>> I will have some legal questions this afternoon.
we will not take final actionn this today, but mull over it.
so when we go into executive session, I would like to have those legal questions answered and that will give me over lunch an opportunity to review what mr. Beck has provided to be -- did you send those electronically or hard copy?
>> both.
>> both.
>> were you using your anonymous -- that name or your real one?
>> I forwarded with the electronic backup was included the attachment that included elliott's.
>> the email is from leroy nellis.
you know I put your email on hold.
>> the agenda request, that's correct.
>> you know I hut putt your email on hold.
>> [ laughter ]
>> I'll look at that over lunch.
with that do we want to come back at 1:30?
>> 1:45.
>> we have a full afternoon.
let's recess until 1:45.
we appreciate your input today.
all in favor?
that passes by unanimous vote.
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