Making growth pay for itself!

Category Archives: Fiscal Reform

CAMPO’s $32 Billion Congestion Nightmare — Threat or Menace?

By Roger Baker

Just when we might have imagined that CAMPO’s history of generating developer-centered transportation planning couldn’t possibly produce a result worse than their previous plan, they have managed to pulled it off.

CAMPO has just gotten the results of its latest planning, and it predicts nightmarish peak hour congestion throughout Travis, Williamson, and Hays Counties in 2040, even if we spend $32 billion on roads and transit by then. And now this vision is likely to become Austin’s legally binding growth blueprint. How did this happen?

To review the current planning situation, CAMPO is the regional, federally sanctioned, transportation planning body for Austin and the surrounding six county metropolitan area. Every five years, CAMPO is required to come up with a new long range plan to get federal and state (mostly gas tax) money for regional road and transit projects. The new 2040 Long Range CAMPO Plan now being debated, modified, and must be approved in time to take effect in May 2015, replacing the CAMPO 2035 Long Range plan that is currently in effect.

CAMPO of course outranks the City of Austin in its bureaucratic pecking order, since it is a federally sanctioned planning body that controls the local spending of federal gas tax money. Given Congressional gridlock, and the fact that federal supervision of both the FHWA and the FTA are weak and chronically starved for money. There isn’t much federal planning supervision except that the local MPOs, the federally assigned planning bodies, have to follow the very explicit rules and deadlines in the federal code which govern the allocation of the shrinking federal money. Meanwhile TxDOT, controlled by Rick Perry’s road-centric appointees, is in a strong position to control CAMPO and other MPOs because of their control of the local allocation of Texas fuel tax revenues for roads.

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ChangeAustin.org scorecard for this City Council Election!

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We sparked and helped lead the battle for “10-1”.

We did it for one reason — to give Austin voters a chance to take back our city from the real estate lobby “growth machine” that is driving up the cost of living and continues to offload hundreds of millions of dollars in public infrastructure costs onto the backs of current residents to pay for all the new developments.

They can’t get people to move here fast enough, while we try to figure out how we can afford to stay here.

This ain’t about the bag ban, it’s about sacking those who have made our town just one big real estate play — at our expense!

Here’s how we scored Candidates for Austin Mayor and City Council

If you think it’s worthy, please share it!

Let’s take our city back, once and for all of Austin, y’all!

Why Lack of Affordability Is Killing Austin

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.

Breaking! Tovo & Supporters Save Austin $40M…But who wouldn’t give $40M to get $250M?

Formula One owners have bowed to Austin voters and insurgent candidate Kathie Tovo who are opposed to using public money for the Formula 1 racetrack now under construction in Austin, Texas.  Today, Formula 1 pledged to put up the entire $4 million city match – $40 million over the life of the contract – in order to receive the $25 million per year for ten years from the state of Texas.

Brian Rodgers of ChangeAustin.org, one of the groups leading the fight to stop the public subsidy of F1 said, “This is a great victory for Austin taxpayers and we thank the candidate we endorsed, Kathie Tovo, for standing strong and leading the opposition.   Tovo and our determined wall of community activists blocked this bad deal and forced the hand of the Formula 1 investors which was heading for a majority council rubber stamp approval next week.”

 

Candidates Respond!

Thanks to all the Council candidates for responding.

This election is about 3  incumbents and the cost of growth as City leaders continue to fan the flames of out-of-control growth — with current residents shouldering the increasingly unbearable costs.  The Austin American Statesman just reported Austin property taxes could rise next year.

Who will fight to keep your cost of living down? It’s up to you Austin – take charge before they charge you!

Go here to read, comment and share with your Austin voting friends.