The following opinion editorial was published in the Austin American-Statesman on Wednesday, October 16, 2013.
At the behest of previous City Councils, the Austin Water Utility has sold its water and wastewater taps to developers at huge losses for the past 15 years — selling far below cost and at a fraction of that charged by surrounding communities. Who picked up those losses? You, the ratepayer.
Another 175,000 people will move into the utility service area over the next 10 years. Are you willing to subsidize them, too?
On Thursday, the Austin City Council will vote on whether to keep selling taps at a loss or to finally begin recouping the full cost as allowed by state law. There are two main options on the table. Option 4i, favored by the Real Estate Council of Austin and the Downtown Austin Alliance, requires ratepayers to subsidize $165 million of future capacity costs. Option 5, recommended by the Water and Wastewater Commission, provides no subsidy; future capacity is paid by future development. Please tell the City Council that you prefer Option 5.
Texas is business-friendly, but even the state recognizes that ratepayers aren’t a bottomless piggy bank to pay for infrastructure required to serve new private development. Hence, in 1987 the Legislature allowed municipalities to recoup the cost of new infrastructure “necessitated by and attributable to new growth” by charging impact fees to future development. Thus growth pays for itself when growth-related capacity in water and sewer plants, major lines and other facilities is paid for by new development.
However, Austin has never charged what the state allows. How bad is it? We currently lose an average of $3,230 for every water/wastewater service unit we sell. (A service unit is the equivalent use of a 5/8-inch meter, or a typical household. Larger meters are charged proportionately more.)
Option 4i will lose $1,140 for every service unit sold in the environmentally sensitive Drinking Water Protection Zone to the west, $3,800 for every service unit sold downtown, and $3,000 in the rest of the city. Overall, losses will total $165 million, which will be added to your water/sewer bill. Under Option 5, we will lose nothing.
Supporters of Option 4i say we need continued subsidies from ratepayers to meet the goals of Imagine Austin for a compact city. They want a 50 percent subsidy for their developments downtown, at the Domain, Mueller and the Riverside corridor. But these areas are on fire right now; developers are tripping over each other trying to build in these areas and don’t need our help. Yes, the impact fees will go up dramatically downtown, where developers previously enjoyed huge ratepayer subsidies. A million-dollar condo at the Austonian paid only $70 for its water tap under the old schedule. A condo at the 360 Condominiums paid only $58. That’s less than the price of a faucet in the guest bathroom. Under the ratepayer-preferred Option 5, the developer would pay $760 and $630 respectively – still a bargain.
Will Option 5 hurt affordable housing? No. Affordable housing is exempt from impact fees. Will Option 5 drive developers into outlying cities? No. The three fastest growing cities in the U.S. — San Marcos, Georgetown and Cedar Park — have been charging two to three times more than Austin with no effect on growth. Will Option 5 bump up homes prices? No. Prices are driven by supply and demand in the current hot market; the 42 percent increase in lot prices over the past three years is far more responsible for soaring home prices than a utility recoupment.
Please tell the council to vote for Option 5. Welcome to Austin, but pay your own way.
Brian Rodgers, an Austin real estate developer, serves on the Impact Fee Advisory Committee and served on the Joint Committee on Austin Water Utility’s Financial Plan.
The question on a lot of people’s minds right now is, “How low can they go?”
Lakes Travis and Buchanan, which supply much of our region’s water, are not natural lakes. They are reservoirs completed in the 1930s and ’40s. At full capacity, they hold 2 million acre-feet. (An acre-foot is enough water for annual needs of about three average Austin homes.)
Today, barring a major rainstorm, they are about to fall to their lowest levels since they were created. In September 1952, the lakes reached 621,000 acre-feet. On Sept. 10, they were at 659,000 acre-feet and dropping by about 1,400 acre-feet per day. Those worried about the water supply are in the perverse position of “praying for hurricanes.”
People living near the lakes, as well as cities facing water shortfalls, have become resentful of the rice farmers in the Colorado River’s lower basin area. It must be remembered that these farms have been cut off from their water supply for the past two years, the first time this has happened in the history of the lakes. It should also be remembered that federal funding for the lakes partially relied on the congressional support of the agrarian region downstream.
And while there is considerably more wealth per gallon generated by cities and industries compared to farms, this wealth will not be especially meaningful without food. In 2011, farmers paid about $28 per acre-foot for raw water to grow enough rice to feed about 1.2 million people annually on a calorie basis. Meanwhile, Austinites were willing to pay $1,600 per acre-foot for treated water to grow their “crop” of grass.
Believe it or not, it can get worse. If you total current use from Austin and other cities, future water contracts to provide for Austin’s growth, industrial use, evaporation from the lakes, and agricultural use, and apply it to current lake levels and drought conditions, the Highland Lakes would be below zero.
It is time to start planning in earnest for the future. There are no longer enough resources to provide for insatiable thirst of all who come here. We will either face huge increases in cost or need to create a water-efficient economy. Conservation of both water and money are key.
Five of the most promising strategies need center attention.
• Full implementation of 2007 conservation plan: In 2007, Austin created an aggressive conservation plan with 19 strategies to save water. Today, many of these ideas are still not implemented or have their effectiveness compromised. Some, such as mandatory plumbing fixtures retrofits, have stalled because they are controversial. Others, such as mandatory irrigation audits, have no method to measure effectiveness.
•Reclaimed water: The use of highly-treated wastewater for non-potable purposes such as irrigation and cooling towers has been employed to great effect in other cities. Austin has invested more than $50 million in its own “purple pipe” system. This has the potential to defray as much as 50 million gallons per day of peak capacity, the same as will be provided by the controversial Water Treatment Plant No. 4. However, Austin’s overly strict hook-up policies, lack of marketing staff, and lack of customer-side financing are constricting the use of this new system.
•Polyethylene utility pipe: Austin is using polyvinyl chloride water pipe as its material of choice. This is extremely toxic to manufacture and is more prone to leaks than polyethylene pipe, which is almost leak-proof and sometimes cheaper to install. Austin needs to replace more than 700 miles of old cast iron pipe that is at the end of its life, and it should be using the best materials.
•No new water projects: When Water Treatment Plant No. 4 comes online, this half-billion-dollar facility will raise Austin’s peak capacity to 335 million gallons per day. This past August, the city barely used half of this amount. This unneeded expenditure, and others like it, directly compete with water conservation funding.
•Relocate water conservation programs: Austin’s water conservation programs are administered by a utility whose main mission is to sell water. This is a blatant conflict of interest. The water conservation programs should be moved to a separate agency unshackled to the water utility.
Conservation is the best option we have right now, and the least expensive. It is past time to make the hard decisions necessary to make it work to its full potential.
Praying for hurricanes is not a drought-management policy.
Robbins is the editor of the Austin Environmental Directory. The new edition is online at environmentaldirectory.info.
We first met our friend, Bill Oakey, back in 2009 when he just showed up to join us in testifying before the Travis County Commissioners Court about the unfair burden of property taxes on Austin residents. A version of this paper was recently printed in the Austin American-Statesman. Many thanks Bill, for all you do for Austin! Linda and Brian, ChangeAustin.org (ps LIKE and SHARE this y’all!)
By Bill Oakey, Austin, Texas
August 16, 2013
Austin is no longer a stepchild to Dallas or Houston. And its closer neighbor, San Antonio, barely registers on the national radar scene compared to Austin. The capital City now boasts F1, the X Games, South By Southwest, and a booming economy that appears unstoppable. But wait, can any City experience too much of a good thing? Could Austin somehow become a victim of its own success? Not only is such a scenario possible, but many observers find it to be frighteningly probable. By reviewing numerous published articles, editorials and data, both local and national, one can find compelling evidence that Austin is becoming so unaffordable so rapidly that we may be headed for another boom and bust cycle.
While that may sound like a strong statement to make, consider this. Austin has risen from the nation’s 17th largest city in 2000, to 11th this year, according to U.S. Census figures. The explosive growth has brought crushing demands on infrastructure and public services, along with a seller’s market for housing. Property taxes have risen 38% since 2003. Rents have risen 49%. The median sales price for a home has increased from $159,000 to $225,000 in the same period. These figures do not take into account that many Central Austin neighborhoods have seen home prices well above $300,000 or higher since the late 90’s. And yet, median income in Austin, adjusted for inflation, has stayed virtually flat since 2000. (Austin American-Statesman, August 10, 2013).
Both Forbes and Bloomberg have named Austin America’s current top boomtown. But boom and bust cycles are all too familiar to anyone who lived in Austin during the 1980’s savings and loan collapse and subsequent real estate crash. Residents who moved into suburban municipal utility districts, or MUD’s as they were called, found themselves in a financial quagmire. These MUD’s were legally chartered taxing entities. During the 1980’s heyday of speculative land-flipping, some lots were bought and sold more than once in the same day.
The savings and loans would lend to almost anybody who came through the door. So, new subdivisions sprang up around Austin like mushrooms after a spring rain. The assumption for the homebuyers was that a large number of newcomers would populate the subdivision, making the individual tax burden sustainable. But once the market crash occurred, it was no longer the land that got flipped. The homebuyers found themselves upside down on their mortgages, meaning their homes were worth much less than their outstanding loans. The solution for multitudes of new residents was to simply march into the loan office and lay their house keys on the table. Then they just walked away. It took until the mid 90’s for Austin to recover.
Fast forward to the Great Recession of 2008. We all know what happened, and we all know that he bankers and brokers learned nothing form the crash of the 1980’s. Today you can go online and do a search for “bogus assignee.” Actual mortgage papers were filed with county clerk’s offices, with forged signatures. In some cases the words “Bogus Assignee” even appear on the documents. The CBS program “60 Minutes” aired a segment where a fictitious person named “Linda Green” signed thousands of mortgage documents in a warehouse. The young students who forged her name were paid by the hour, most likely with incentive quotas.
But all of that is behind us now, right? The economic recovery is well underway. Home values are on the rise for the first time in several years. And no place on earth is riding the real estate boom faster than Austin, Texas. Estimates of the number of new people moving here every single day vary. But the figure of 100 per day marks the low end of the estimation scale, with 158 per day at the high end.
So, what’s not to like about being the fastest growing city in the USA? Wouldn’t any city salivate at the chance to own that crown? Well, yes, it is safe to say that business is booming in Austin. If one phrase could be used to describe the new urbanites in Austin, it would be “young and hip.” While not all of the young professionals work in the high tech industry, they are indeed tech savvy. Austin venture capital firms have spawned the growth of innovative startup companies in a broad range of fields. Generous tax incentives to Apple, Samsung, and even a high-end outdoor shopping complex, The Domain, have lured a steady stream of businesses to town. The shopping center incentives drew loud protests and an unsuccessful ballot initiative to have them repealed. The City then followed up with a healthy round of fee waivers for a downtown convention center hotel. Again, the protestors clamored for an explanation as to why a hotel chain would need an incentive to build in the hottest city in the country. At the same time the Texas Legislature delivered severe cuts to local school districts, then added to the districts’ pain by awarding a basket of school tax exemptions to incoming businesses. Some admire the incentives; others call it “corporate welfare.”
What about the large segments of the population who were here before the big boom happened? In the shadows of the newfound glitz and glamour that has charmed the downtown corridors of Austin are the leftover “regular people.” Retired school teachers and state retirees have not received a cost of living pay increase since 2001. Those people, along with tens of thousands of other low to moderate-income residents face skyrocketing property taxes, escalating tax assessments on their modest homes, and rapidly rising utility bills. Of course, the story of local displacement in a growing, prosperous city is nothing new. Gentrification has happened in San Francisco, Portland and lots of other places. And yet there is something stunning about the rapid pace at which the Austin transition is occurring. The Great Recession may have slowed things down slightly in Austin, but only very slightly. The effort to pay for the growth has pushed both City of Austin and Travis County property tax rates up a full 25% between 2008 and 2012.
The voters of Austin, historically proud of their clean and attractive city’s stellar reputation, have willingly ponied up to support bond propositions for the schools, as well as bonds to pay for City and County capital projects. But a couple of years ago, a new watchword found its way into the local political lexicon. Affordability. A person cannot attend a civic function or a political campaign forum without hearing “affordability” mentioned countless times. The annual budget hearings for the City and County, which once drew large interest groups asking for more money for this and that pet project have all but disappeared. The lineup of speakers these days delivers the same message in multiple-part harmony. “Don’t raise our taxes any higher. We just can’t afford it!”
And so what many predicted would happen fairly soon did happen in the spring of 2013, when two out of four bond propositions for the Austin Independent School District failed at the ballot box. It was the first time that had happened since 1989. Between now and November of 2014, local voters will be asked to approve half a billion dollars for Austin Community College building expansion and renovation, upwards of $343 million for a downtown skyscraper to house Travis County’s civil and family courts, and another $275 million for the first phase of Austin Mayor Lee Leffingwell’s proposed urban rail project.
Here’s the bottom line. The Travis County Budget increased a whopping 93.6% in the 10 years from 2003 to 2013, going from $303.8 million to $588.1 million. The Austin City Budget has skyrocketed 73.7% from 2004 to the proposed 2014 budget, going from $1.9 billion to $3.3 billion. How many friends do you have whose paychecks have gone up by those percentages?
The Austin City Council routinely sets their annual budget target using the maximum property tax increase allowed by law. Then they publicize an additional “budget shortfall” amount to the media. Everyone clamors for them to whittle down the shortfall. But when they do, they have only reduced it back down to where they started – which generates the highest property tax increase they can get. Just close your eyes and try to imagine if our community could sustain another 10 years of budget increases of the same magnitude. Could you sustain it with your paycheck? Or would you just be looking at Austin in your rear view mirror?
Here is an outline of topics and relevant data from newspaper articles and radio and TV websites.
1.“Policy Group Finds Austin Most Expensive City in Texas.” Austin Business Journal, July 10, 2013
2.“Austin Named Most Expensive City for Families.” KVUE-TV News, July 1, 2013
3.“Through the Roof – Cost of Living in Austin Is ‘Out of Reach’ for Most Renters.” Austin Chronicle, March 23, 2012. This article includes an interesting discussion of the displacement of low-income families from a historically affordable neighborhood along East Riverside Drive. A single City zoning change led to a snowball effect that changed the lives of a large number of residents. A valuable segment of Austin’s dwindling supply of affordable housing was wiped out. One can only hope that voters will approve a badly needed program for affordable housing in the fall.
4.“Where Have Austin’s Urban Children Gone?” Austin American-Statesman, April 24, 2011
The “Big Picture” of Austin’s growth reveals a disturbing pattern of outward migration by families with children. Many young families who transfer here to start a new job try to find a home in a Central City neighborhood. But those who locate to a close-in neighborhood find that the convenience of avoiding a long commute comes with a hefty price tag. So much so, that it doesn’t take long for them to join the rapidly increasing migration to the outer reaches of the City or County. This phenomenon depresses the population of children in the inner city schools. The next refrain in that particular song is announced school closings, followed by hollering neighborhood protests.
5.“Austin: Second Fasting Growing City for Suburban Poverty (In the Nation),” KUT News, May 20, 2013. “Poverty Takes Root in Austin’s Suburbs,” Austin American-Statesman, May 19, 2013. “More Than One in Five Austinites Live in Poverty,” Austin American-Statesman, Sept. 22, 2011. “Crime and Homeless Drop in Austin, but Poverty Is on the Rise,” Austin American-Statesman, May 23, 2013
6.“FY 2013-2014 City of Austin Community Needs Assessment,” A comprehensive demographic study of population trends including ethnic breakdowns, age breakdowns, unemployment data, income levels, etc.
7.“Pre-Seniors Are Booming and Austin Leads the Pack,” Austin Business Journal, July 31, 2013. Discussion of a Brookings Institution Report that states Austin has the fastest growing percentage of people ages 55 to 64 in the United States. “Growing Senior Population May Bring Problems to Austin Area,” Community Impact Newspaper, October 25, 2012. These reports led to Austin Mayor Lee Leffingwell’s Task Force on Aging.
8.“5 Must-Do’s As Age Wave Bears Down on USA.” USA Today & The National Council on Aging, August 2, 2013.
9.“Austin Housing Prices A Concern for Employers,” Austin American-Statesman, August 1, 2013.
10.“Austin Property Taxes Jump 38% Over Past Decade,” Editorial Board, Austin American-Statesman, June 23, 2012
11.“Central Texans Deserve Truth About Their Taxes,” Editorial Board, Austin American-Statesman, August 25, 2012
12.“Austin City Council’s Budget Does Not Address Affordability,” Editorial Board, Austin American-Statesman, September 15, 2012
13.“Pull Back Now on Rapid Tax Increases,” Editorial Board, Austin American-Statesman, July 7, 2012
14.“Texas Business Incentives Highest in Nation,” New York Times, December 2, 2012. Discussion of tradeoffs between “business Incentives” vs. “corporate welfare.”
15.“Austin Could Seek $275 Million In Bonds for Initial Urban Rail Line,” Austin American-Statesman, May 22, 2012
16.“Start Now to Make Austin Affordable Again,” Brigid Shea, Austin American-Statesman, October 24, 2012.
17.“Taxpayers May Be Asked to Share $250 Million Cost of Replacing Austin’s Public Hospital,” Austin American-Statesman, Jan. 27, 2012.
18.“Local Entities Join Forces to Sync Myriad Bond, Tax Proposals – Average Homeowner Would See $1,000 Increase In Taxes in Next 5 Years Under Some Scenarios,” Austin American-Statesman, July 11, 2012.
19.“Austin City Council Approves Brand New Vision for Downtown ($350 Million), Austin American-Statesman, Dec. 8, 2011
20.“Travis County’s Downtown Plan Calls for More Than $1 Billion In Spending,” Austin American-Statesman, December 23, 2012
21.“U.T. Gets New Medical School Thanks to Tax Increase,” Houston Chronicle, Nov. 7, 2012. “Central Health Defends Tax Hike of 5 Cents, Or 63%,” Austin American-Statesman, August 18, 2012
22.”As Debt Rises, Travis County Considers New Downtown Office Building,” Austin American-Statesman, April 29, 2013. The County’s non-voter-approved bond debt has tripled since 2005, from $68.8 million to $226 million.
22.“Will New Travis County Civil Courthouse Rise 66 Stories?” Austin American-Statesman, October 11, 2011. “Travis County Commissioners Approve Building Method for New Courthouse ($312 Million),” July 23, 2013
23.”Austin Community College Weighs $499 Million Bond Proposition,” Community Impact Newspaper, July 25, 2013
24.”Big Increase In Next Year’s Proposed (City) Budget,” MyFox Austin, August 1, 2013. New taxes and fees totaling $14.39 per month for the average Austin family. This does not include Travis County, Central Health, ACC, or the school district.
25.”Austin To Tackle Affordability Question in Building Rules,” Austin American-Statesman, August 10, 2013.
26.”How to Keep Up With 158 People Moving to Austin Per Day,” Realty Austin, May 17, 2013
27. “Austin Ranked Best for Everything and Everyone,” Austin Business Journal, June 20, 2012
28.”America’s Fastest Growing Cities,” (Austin is #1, for Third Year In a Row), Forbes Magazine, Jan. 23, 2013.
29.“How Austin Energy’s Rate Increase Will Affect You,“ Austin American-Statesman,” June 16, 2012. “State Report: Austin Energy Rate Increase Too High,” Austin American-Statesman, February 14, 2013. “Austin Energy Wins Round One,” Austin Chronicle, March 8, 2013.
30. “Critics Tie Proposed Plant to Rise In Austin Water Rates,” Austin American-Statesman, August 26, 2010. Rates to rise 35% by 2015. “Higher Water Fees Coming for Austin Customers,” Austin American-Statesman, July 15, 2012. Water conservation leads to lower revenues, so rates must go up.
31.”Cost of Infrastructure to Serve New Residential Development,” Fodor & Associates, Jan. 2011. Austin only collects two of the four types of impact fees allowed under Texas law. Their water and wastewater impact fees only recover 38% of the full cost. The rest is paid by all City ratepayers. Austin’s growth is not paying for itself.
Yes, it is totally true — the City wants to raise your energy, water and property taxes by an average of $265 per year. Sign this petition/letter to the 4 members of the Council up next for reelection — Mayor Leffingwell, and Councilmembers Cole, Martinez and Spelman. They must end unnecessary projects and the practice of the “growth lobby” (aka the big boy developers and the real estate lobby) offloading the costs of growth onto current residents. As we say at ChangeAustin.org, ‘welcome to Austin, but pay your own way’ and growth must pay for itself. Sign here and pass it on, folks, or forever hold your peace on Austin’s affordability.
You can ALSO print out the Petition-No Tax Rate Hikes 2012 City Budget here, take it around and mail it back to us by September 10th, before the City Council votes on September 12.
|Bill Oakey: What Citizens Must Do About the City Budget
Bill is one of the most effective citizen activists in Texas who got the Texas legislature to enact two bills into law. One was the over-65 freeze on school property taxes. The other was a “truth in taxation” law, which reformed the guidelines for public hearing notices on property taxes published by all statewide taxing entities. Currently, Bill is working on plans to address out-of-control property tax and utility rate increases in the Austin area.
Travis County gets 70% of its money from City of Austin taxpayers. But where does the money get spent? Who benefits and where do they live? Brian will present a sneak peak of the new 27 page tax equity study to be unveiled in two weeks.
Brian Rodgers wowed a crowd that gathered at McKinney Roughs Nature Trail on March 19th in Cedar Creek at the “Texas Water Wars: Is there a solution and who decides” conference sponsored by Independent Texans, Environmental Stewardship, Lost Pines Sierra Club and Neighbors for Neighbors. Here’s his 14 minute talk on water and the dangerous plans by the “growth machine” to continue moving precious groundwater to unsustainable (water poor) developments — and make current residents pay for it. You can watch the rest of the videos on the Independent Texans You Tube channel. Make growth pay for itself y’all!
On Monday, September 13th, 2010, the Austin City Council raised water rates and property taxes in the midst of a recession, despite receiving thousands of petitions and phone calls. “Amid declining property values, Austinites will pay higher property taxes and utility bills under the 2010-11 budget the City Council passed Monday.” Austin American-Statesman.
Council member Randi Shade is the only member of the Wasteful 4 that is up for reelection next May.
Sign the voter pledge for the May 2011 election for a new City Council Member who will take our mantra into the next election:
GROWTH MUST PAY FOR ITSELF!
Bill Bunch testifies to the Austin City Council on August 26, 2010 against water rate hikes and against Water Treatment Plant #4.
Desmond D’Souza testifies to the Austin City Council on August 26, 2010 against water rate hikes and against Water Treatment Plant #4.
Brian Rodgers presents his research into the negative impacts of rate hikes for water treatment in Central Texas.