Proposed amendments to Homestead Exemption report request

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Delia Garza
Posts: 52
Joined: Thu Jan 15, 2015 9:20 am

Proposed amendments to Homestead Exemption report request

Post by Delia Garza »

Here are my proposed amendments to Item 50

These are currently being reviewed by legal. I copied and pasted from a Word document and the underlined changes did not come through. Apparently you can't underline on the message board...the changes start at the 12th Whereas (I noted: Changes start here). I can provide a hard copy tomorrow.

Council Member Garza
Amendment offered on item 50

WHEREAS, over the last decade median single family home prices in the City of Austin have continued to rise at rates that far outpace increases in family incomes; and
WHEREAS, property taxes have risen 38% since 2003 and yet median income, when adjusted for inflation, has remained flat; and
WHEREAS, the City Council has a strong commitment to exploring options for providing relief from soaring property taxes; and
WHEREAS, unlike income taxes, property taxes are not based on cash flow, meaning Austin homeowners have consistently owed more in property taxes in recent years regardless of their ability to pay; and
WHEREAS, other major cities in the State of Texas, including Houston and Dallas, offer homeowners a 20% homestead exemption on city property taxes; and
WHEREAS, a form of relief can be found in providing homeowners with homestead exemptions, better enabling those owners to remain in their homes as home values continue to rise at a rate that outpaces income opportunities; and
WHEREAS, some companies have recently relocated outside of the Austin in part due to the rising cost of living that their employees were facing; and
WHEREAS, in March 2014, the Austin City Council acknowledged the need for property tax relief by voting to raise the property tax exemption for homeowners older than 65 or disabled from $51,000 per year to $70,000 per year; and
WHEREAS, all Austin homeowners are facing rapidly rising property tax bills; and WHEREAS, State law requires a general homestead exemption to be set as a percent of value with a minimum exemption of $5,000; and
WHEREAS, the City of Austin has adopted a homestead exemption allowing for a $5,000 reduction in taxable valuation; and
WHEREAS, many Austin homeowners have urged the City to consider offering a higher general exemption for all homestead properties; and
(Changes start here) WHEREAS, homeownership rates among districts vary widely, with three districts comprised of less than 30% homeowners, and two districts with homeownership rates higher than 55% according to the City of Austin Demographer; and
WHEREAS, Council districts have a significant range in home values, and the Austin Board of Realtors estimates that District 2 has a median family home price of $168,103 and District 10 has a median family home price of $498,426; and
WHEREAS, both homeownership rates and median family home values will have a significant impact on what populations will benefit from a potential homestead exemption, and a district level analysis that includes both of these factors would be useful information for Council and the public to have during deliberation of a potential homestead exemption policy; and
WHEREAS, it is necessary to understand all of the budget implications of offering a homestead exemption in order to make informed policy decisions; and
WHEREAS, for the last five fiscal years, there has been an increase in General Fund requirements of approximately $40 million to keep pace with increases in fuel costs, health insurance premiums, and cost of living adjustments for non-sworn personnel; and to meet the requirements of labor contracts and add additional officers; which, aside from police officers, doesn’t account for any additional funding needed to increase services to meet the growing demands of the community; and
WHEREAS, offering a 20% homestead exemption has been estimated to result in a $36 million reduction in the General Fund, which could be offset by an increase in the property tax rate, a reduction of City services, or a combination of those options; and
WHEREAS, potential changes to the homestead exemption must take into account the majority of Austinites who rent, and an increase to the property tax rate to offset the impact of a homestead exemption could result in higher costs in housing for renters; and
WHEREAS, the City won’t have current fiscal data available that is used during the annual budget forecast until mid or late April; and
WHEREAS, the City Manager proposes a budget annually with recommendations for the tax rate and allocation of resources to City departments which has been released to Council and the public at the end of July in previous years; and
WHEREAS, Council has a deadline of July 1, 2015 to adopt an ordinance that would increase the homestead exemption in order for that increase to be effective for Fiscal Year 2016; and
WHEREAS, Council would benefit from having a menu of recommendations from the City Manager about which services could be reduced, an increase to the tax rate, or some combination of those options to accommodate the reduction of resources in the General Fund that would result from a homestead exemption prior to considering adoption of an increase in the existing homestead exemption by the July 1, 2015 deadline; and
WHEREAS, requesting feedback from the City Manager in May would allow inclusion of the most current fiscal data and provide Council time to deliberate the policy and solicit public input; NOW, THEREFORE,
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF AUSTIN:
The City Manager is directed to analyze the impact on homeowners and the City budget of implementing a 20% Homestead Tax Exemption over the terms of 1 year, 2 years, and 4 years. The analysis shall include a district level analysis, the potential financial impact for renters, and recommendations from the City Manager regarding how any potential funding gap would be addressed through an increase in property taxes, reductions in specific services, or a combination of both.
The City Manager shall present this information to the City Council no later than the May 12, 2015 work session, or as soon as possible.
Mayor Pro Tem, District 2
Delia Garza
Posts: 52
Joined: Thu Jan 15, 2015 9:20 am

Re: Proposed amendments to Homestead Exemption report reques

Post by Delia Garza »

Just an update - the above amendments have been approved by law.
Mayor Pro Tem, District 2
Ellen Troxclair
Posts: 40
Joined: Tue Jan 13, 2015 1:26 pm

Re: Proposed amendments to Homestead Exemption report reques

Post by Ellen Troxclair »

CM Garza, thank you for your work and your input. First, I want to mention that I have made a few wording edits to the original amendment in response to requests from co-sponsors as well as our discussion at work session on Tuesday. I have posted that language below.

In regards to your amendment, I welcome the suggestion to have information provided by district, so that we see the impact in different parts of the city.

However, I am concerned with adding language directing the City Manager to make recommendations about how the potential policy should be implemented. I proposed this resolution as a request for basic information so that we could continue the conversation about a homestead exemption that so many of us discussed during the campaign, specifically to obtain information regarding implementation over a term of 1 years, 2 years, or 4 years. I see the role of making policy decisions about IF and WHEN a homestead exemption is implemented, as well as HOW it is implemented as the role of the Council. By asking the City Manager to make policy recommendations before the Council has the opportunity to review the potential budget impact, we limit the ability for the Council to direct the conversation and also may close the door on possible implementation options that are not specifically recommended.

City staff indicated at the work session that there would be no problem in providing Council with the requested information based on the figures that they currently have by March 24th, and then providing updated information after they receive new numbers in mid-April. Seeing numbers from last year and this year would help us to examine trends and provide more context for our discussion. I see a benefit to maintaining the date currently listed in the resolution, with the addition of providing more information in April, as discussed.

I look forward to hearing your thoughts and having further discussion about this tomorrow.

Thank you,
Ellen Troxclair


Approve a resolution directing the city manager to analyze the impact on homeowners and the City budget of implementing a 20% Homestead Tax Exemption over the terms of 1 year, 2 years, and 4 years and to present this information to the City Council no later than the March 24, 2015 work session, or as soon as possible.

WHEREAS, over the last decade median single family home prices in the City of Austin have continued to rise at rates that far outpace increases in family incomes; and

WHEREAS, property taxes have risen 38% since 2003 and yet median income, when adjusted for inflation, has remained flat.

WHEREAS, the City Council has a strong commitment to exploring options for providing relief from soaring property taxes; and

WHEREAS, unlike income taxes, property taxes are not based on cash flow, meaning Austin homeowners, particularly the elderly, retirees, and others on fixed incomes, have consistently owed more in property taxes in recent years regardless of their ability to pay, in some cases forcing them to move out of homes they’ve lived in for years; and

WHEREAS, other major cities in the State of Texas, including Houston and Dallas, offer homeowners a 20% homestead exemption on city property taxes; and

WHEREAS, Travis County already currently offers homeowners a 20% homestead exemption on county property taxes; and

WHEREAS, a form of relief can be found in providing homeowners with homestead exemptions, better enabling those owners to remain in their homes as home values continue to rise at a rate that outpaces income opportunities; and

WHEREAS, some companies have recently relocated outside of the Austin in part due to the rising cost of living that their employees were facing; and

WHEREAS, in March 2014, the Austin City Council acknowledged the need for property tax relief by voting to raise the property tax exemption for homeowners older than 65 or disabled from $51,000 per year to $70,000 per year; and

WHEREAS, all Austin homeowners are facing rapidly rising property tax bills; and

WHEREAS, State law currently requires a general homestead exemption to be set as a percent of value with a minimum exemption of $5,000; and

WHEREAS, the City of Austin has adopted a homestead exemption allowing for a $5,000 reduction in taxable valuation; and

WHEREAS, many Austin homeowners have urged the City to consider offering a higher general exemption for all homestead properties as on option for addressing rising property taxes and as an option for addressing the general issue of affordability; and

WHEREAS, potential changes to the homestead exemption must take into account the majority of Austinites who rent; and

WHEREAS, it is necessary to understand the budget implications of offering a homestead exemption as well as the impact on the entire population, including the most vulnerable, in order to make informed policy decisions

NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF AUSTIN: That the City Manager is directed to analyze the impact on homeowners and the City budget of implementing a 20% Homestead Tax Exemption over the terms of 1 year, 2 years, and 4 years and to present this information to the City Council no later than the March 24, 2015 work session, or as soon as possible.
Ellen Troxclair
Council Member District 8
Don Zimmerman
Posts: 168
Joined: Fri Jan 09, 2015 11:05 am

Re: Proposed amendments to Homestead Exemption report reques

Post by Don Zimmerman »

Amendment to CM Garza Amendment to CM Troxclair’s Agenda Item #50 regarding 20% Homestead Exemption.

Strike & Replace:

“ The analysis shall include a district level analysis, the potential financial impact for renters, and recommendations from the City Manager regarding how any potential funding gap would be addressed through an increase in property taxes, reductions in specific services, or a combination of both. “

With the following:
“The City Council directs the city manager to identify spending reductions supporting the 20% homestead exemption in a manner that least impacts city services.”
Don Zimmerman
Council Member District 6 (northwest Austin)
Ann Kitchen
Posts: 294
Joined: Fri Jan 09, 2015 4:04 pm

Re: Proposed amendments to Homestead Exemption report reques

Post by Ann Kitchen »

All

I support directing the City Manager to include an analysis that addresses renters and provides information by district. I am concerned about asking the City Manager for recommendations at this point, and would prefer an identification of options.

My thoughts on an amendment to CM Troxclair's resolution, that might reflect everyone's ideas:

BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF AUSTIN:
The City Manager is directed to analyze the impact on homeowners, renters, and the City Budget of implementing a 20% Homestead Tax Exemption over 1 year, 2 years, and 4 years, in the aggregate and by District, and to present this information to the City Council no later than May 12, 2015 work session, or as soon as possible.

The City Manager is also directed to identify options for addressing the 20% homestead exemption in a manner that least impacts city services.
Ann Kitchen
Council Member District 5
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