The results of a recent city auditor’s office report on the economic development deal between the city of Austin and The Domain has raised concerns for one City Council member who has proposed the city back out of the deal. District 7 Council Member Leslie Pool, a vocal critic of the deal, told Community Impact Newspaper Tuesday the results of the auditor’s report confirmed her prior sentiments that the city should back out of the 14-year-old economic development deal. The report was initiated by questions Pool raised about the agreement last fall. Economic development deals—also known as Chapter 380 agreements, a reference to the Texas Government Code—allow municipalities to provide loans or grants of public money to encourage economic development. Austin is scheduled to pay property management company Simon Property Group LP $466,000 and $1.7 million in property tax and sales tax rebates in 2018 through a deal scheduled to continue through 2028 that will cost the city a total of $37.5 million. In exchange, The Domain agreed to provide affordable housing, create and sustain jobs and assist local businesses that wanted to operate out of the North Austin outdoor mall’s property. However, Pool said the recently published report shows the process for confirming these commitments has been loose. She said that falls on both the city and the management company.

Meeting expectations

According to the report, the city confirmed compliance of the affordable housing commitment—42 units offered at 65 percent of the area’s median family income— but the city employee conducting the reviews did not collect or document supporting evidence of compliance. The report also points out The Domain has created and sustained the necessary 1,100 permanent jobs. However, there is no information about job types, wage, or turnover, which is not a requirement of the agreement. The report also cites The Domain exceeded a requirement by providing more than $1 million to a fund to assist local businesses to operate out of The Domain. However, the five businesses that received financial assistance have since closed—three of which left before their 10-year leases were up. “I was not surprised with the findings; the city needs to be more robust on the negotiating table,” Pool said. “Frankly, we give away more [building entitlements] than we need to, and on our end, we have no ability to [hold them to their end of the deal].” Pool said the roughly $2.1 million the city was paying to The Domain could be used in a better way, as The Domain has proven economically successful and does not need the city's subsidy. However, Austin Mayor Steve Adler said he sees no reason in the report to support backing out of the deal early. Last fall, Adler said he wanted the city to act in good faith and honor the agreement through its expiration. He said in each instance there is no indication The Domain has fallen short of complying with the terms of the deal. Although the city could have asked for further evidence of compliance, Adler said there is no reason to suggest The Domain would not have provided it. “[The report] does not suggest any measure of noncompliance,” Adler said. “In fact, it suggests the opposite … compliance was found.” Representatives from Simon Property Group LP could not be reached by the time of publication.