Roughly 400 Lake Austin homeowners will begin paying city property taxes for the first time in 33 years after City Council voted June 20 to close a loophole that has kept the properties exempt from the tax rolls since 1986.
The move came in response to a lawsuit filed over a year ago by a property owner in the area who felt residents were treated unfairly because they, unlike their neighbors, had to pay Austin property taxes. After City Council’s unanimous decision, all neighbors will begin paying property taxes in fiscal year 2020-21, and the city estimates it will provide an additional $3 million to the annual tax rolls.
Property owners in the area came to protest the change at the June 20 City Council meeting and pushed back on characterizations that they were rich people simply receiving a tax break. Residents strongly objected to the limited two-week timeframe they were given to raise concerns with council members and painted a more complicated picture of the tax exemption. Several property owners said the area does not receive adequate city services, and some provided deeply personal anecdotes of when that lack of city services resulted in harm and sometimes tragedy.
Diana Johnson, a homeowner in the area, said neither her nor her neighbor’s properties receive garbage pickup or water and wastewater services. She said they only see the Travis County sheriff responding to calls, and lack of fire protection in the area was a crucial factor in her house burning to the ground in the 1980s.
Deanne Breedlove said on Christmas Day in 2011, her son went into cardiac arrest, and because of confusion over whether the Travis County Emergency Services District or the city of Austin should send an ambulance, it took 14 minutes for the emergency responders to arrive and Breedlove’s son died.
Balance between taxes and services
When City Council exempted the properties in 1986, it acknowledged this lack of services to the area. The ordinance said the city failed to “regularly and routinely provide comparable municipal services, such as construction and maintenance of street, water and wastewater facilities or police and fire protection, because of the difficulty in economically providing such services” to the area.
Council Member Jimmy Flannigan, in announcing he and his colleagues’ effort to repeal the loophole last week, said city taxes do not pay for garbage pickup or water and wastewater but mainly libraries, parks and public safety.
Austin police Chief Brian Manley and a representative from the Austin Fire Department said City Council’s vote will not change the level of services provided to the area. They both said the city’s emergency response teams work with regional emergency responders, and oftentimes jurisdictions—such as Lakeway, the county sheriff’s office or the emergency services district—can respond more quickly to an emergency call. Areas in Southeast Austin also benefit from a similar response strategy.
Council Member Greg Casar, who led City Council’s efforts to overturn the exemption, said there are areas all over the city that do not receive adequate city services, but residents there still pay property taxes. He said it is part of being a city, and collecting the Lake Austin property taxes would help the city better serve underserved populations.
“We’re all better off when we all participate in an equal and uniform tax code,” Casar said.
Mayor Steve Adler said he thought it would be “imprudent” for the city to adopt a policy in which property owners do not have to pay property taxes if they do not receive all the services provided by the city. He urged everyone who was not receiving adequate services to push City Council and city staff to provide those services.
Adam Goldman, representing the Austin Property Rights Alliance, railed against City Council for spending more time speaking to the press leading up to the decision than to stakeholders and property owners.
Council Member Alison Alter, whose district surrounds a large majority of the homes in question, said although she knew about the issue for over a year, she did not know her colleagues were preparing to bring a legislation change until she read it in the newspaper. Alter said she wished she had more time to listen to constituent concerns and better strategize ways to address those concerns.
Alter said the situation is more complicated than has been presented, and there were still issues that needed to be worked out. The city’s jurisdictional lines do not align with property lines, and some properties are only partly within the city’s boundaries. Alter said she would ensure those properties only pay city taxes proportional to their position in the city’s boundaries.
Although City Council decided to end the exemption, Alter said she expects the issue to continue in the courts.