Modified Homestead Expemption Proposal

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Steve Adler
Posts: 306
Joined: Fri Jan 16, 2015 2:12 pm

Modified Homestead Expemption Proposal

Post by Steve Adler » Wed Jun 03, 2015 8:58 am

Following conversations with Council members, including at work sessions, CM Casar and I will lay out a modified homestead exemption proposal that continues this council’s efforts to address fairness and affordability. Such a proposal would show this council’s continued ability to work together, and combined, the two elements roughly cost the same as for a 6% exemption. However, this proposal provides that council approve a 5% homestead exemption at this Thursday’s meeting, and at next week’s meeting, we consider a resolution affirming the council's commitment during the budget process to dedicate 1/5 of the incremental cost of that 5% homestead exemption (paid for with a rate increase) to programs that directly assist vulnerable renters in our community. Combined, these two elements would roughly equal the incremental cost of a 6% exemption. At this time, we believe the most effective program would be our existing Tenant Based Rental Assistance Program, however the specific programs to be funded would be identified through the budget process and the eventual funding level for such a program or programs is not necessarily capped with this initial commitment.

We believe a homeowner’s exemption and this type of assistance for renters in need are but two of the many tools we must use to address our affordability crisis. We cannot look at any one of these tools in isolation, but rather must view such tools as a part of a continued effort to help all people across our community who are dealing with our city’s affordability crisis. Not every tool will help every person, but each tool will advance our fairness and affordability focus.

This council looks forward to working with city staff and our community to identify and implement other tools to address fairness and affordability, such as:
- restructuring the drainage fee,
- challenging commercial appraisals,
- enabling homestead preservation districts,
- increasing the supply of housing,
- making changes to the permitting process and rewriting the land development code to facilitate construction of more housing that is affordable, and
- creating a substantial fund to preserve currently affordable housing units, among many other possible tools.


Don Zimmerman
Posts: 168
Joined: Fri Jan 09, 2015 11:05 am

Re: Modified Homestead Expemption Proposal

Post by Don Zimmerman » Wed Jun 03, 2015 9:50 am

Mayor Adler, thanks for posting the proposed amendment. I appreciate you wanting to consider the vulnerable renters in the community, as we all do. Earlier this year (2015), didn’t the Council approve about $6 million (grant money masquerading as “loans”) to subsidize low-income housing? Most of the subsidized housing projects already pay ZERO in property taxes, which shifts a higher tax burden to other non-subsidized property taxpayers, including renters. Also, doesn’t the Housing Authority of the City of Austin ("one of the nation's leading public housing authorities") already assist over 19,000 people?

I certainly agree that increasing the supply of non-subsidized housing helps reduce rents and housing costs. However, increasing the supply of subsidized housing has the opposite effect for the previously stated reason.

I believe that the City Council has already appropriated millions of dollars of taxpayer money to support renters. It is time that the City Council stand up for home owners. I will support amendments increasing the exemption to a maximum of 20%, as I promised voters in the District 6 campaign.
Don Zimmerman
Council Member District 6 (northwest Austin)

Michael Searle
Posts: 12
Joined: Thu May 28, 2015 3:48 pm

Re: Modified Homestead Expemption Proposal

Post by Michael Searle » Wed Jun 03, 2015 10:30 am

Below is our amendment to the Homestead Ordinance. Please review carefully and we hope that you will strongly consider supporting this approach.

WHEREAS, according to data collected by Texas A&M Real Estate Center, the median-value home in Austin has experienced a 68.4% increase in City property taxes from 2005 to 2014 while the median income has remained relatively flat; and

WHEREAS, Travis County currently offers homeowners the maximum 20% homestead exemption on county property taxes, and other major cities in Texas, including Houston and Dallas, offer homeowners a 20% homestead exemption city property taxes; and

WHEREAS, according to the City’s 2015 Financial Forecast a full 20% homestead exemption would save homeowners and their families $32.5 million per year; and

WHEREAS, the savings of $32.5 million represents less than 1% of the entire City of Austin budget for Fiscal Year 2014/15; and

WHEREAS, a 20% exemption at the effective tax rate would save the median-value homeowner more than $250 on City property taxes; and

WHEREAS, according to a recent report released by the City, 79.4% of homesteads are valued at $400,000 or less; and

WHEREAS, the homestead exemption mechanism allowed under state law is a percentage based exemption, up to 20%; and

WHEREAS, a full 20% homestead exemption is an impactful tool at the disposal of the City Council to address homeowners ever increasing property tax bills; and

WHEREAS, a full 20% homestead exemption can be easily incorporporated into the City’s budget without raising the tax rate, shifting the tax burden, increasing spending, or impacting basic city services through the budget opportunities outlined below; and

WHEREAS, the City Financial Services office projects that new construction with a total expected value of $2.9 billion will generate an additional $13.5 million in additional property tax revenue to the General Fund; and

WHEREAS, the City’s 2015 Financial Forecast projects a 5% increase in Sales Tax Revenue to the General Fund which is projected to be $12.1 million; and

WHEREAS, according to the City’s most recent vacancy report, the City has 126 staff positions that have been vacant for at least 12 months and some as long as 8 years, and funding allocated for those vacant positions totals $8.6 million per year; and

WHEREAS, adopting a tiered wage increase structure, giving the largest raises to lower paid workers, rather than across the board wage increases to city staff could result in up to $9.5 million per year of savings; and

WHEREAS, the Council has the authority to appropriate the amount dedicated to property tax reductions for large businesses through 380 agreements and those incentives will total $16.9 million in Fiscal Year 2015/16; and

WHEREAS, the budget options described above total $60.6M, significantly more money than necessary to implement a 20% homestead exemption, without affecting city services or shifting any tax burden; and

WHEREAS, the City Council should provide homeowners with much needed tax relief by implementing a full 20% homestead exemption;

THEREFORE BE IT RESOLVED, the ordinance below is amended as follows:




PART 1. Council finds that Texas Tax Code Section 11.13(n) authorizes the city to 8 establish a percentage-based exemption from ad valorem (property) taxes on the assessed 9 value of residence homesteads.

PART 2. Council previously adopted Ordinance No. 20141120-014 and set a percentage-based exemption from ad valorem (property) taxes of 0.01% of the assessed 12 value of residence homesteads.

PART 3. Council finds that it is in the public interest to increase such a homestead exemption to a total amount of 20% of the assessed value of residence homesteads.

PART 4. Council amends the previously adopted amount set forth in Ordinance No. 20141120-014 and increases the total exemption from ad valorem taxes to 20% of the assessed value of a residence homestead.

PART 5. The exemption adopted pursuant to this ordinance applies to the tax year beginning January 1, 2015.

PART 6. This ordinance takes effect on ________, 2015.
Chief of Staff
Office of Council Member Ellen Troxclair, District 8