City delays proposed tax incentive program aimed at curbing pandemic impact on Austin small businesses

Pat Smith, owner and executive director of Sweet Briar Child Development Center, said the center is being held up by government subsidies due to the revenue cuts brought on by the pandemic. (Christopher Neely/Community Impact Newspaper)
Pat Smith, owner and executive director of Sweet Briar Child Development Center, said the center is being held up by government subsidies due to the revenue cuts brought on by the pandemic. (Christopher Neely/Community Impact Newspaper)

Pat Smith, owner and executive director of Sweet Briar Child Development Center, said the center is being held up by government subsidies due to the revenue cuts brought on by the pandemic. (Christopher Neely/Community Impact Newspaper)

City staff said they need more time to "refine" a proposed program that would offer tax property tax reimbursements to commercial landlords who renegotiate leases with certain small-business tenants and provide them with an economic life raft through the pandemic and beyond.

After unanimously supporting an effort to preserve and ensure the success of the child care, live music, art, restaurants and/or bar industries—industries city leaders said are especially vulnerable and represent the city’s essence—City Council was prepared to vote on the new program at its Nov. 12 meeting. However, city staff said it needed to extend its deadline in order to fine-tune the program ahead of a final City Council vote. In a Nov. 9 memo to the mayor and City Council, Sylnovia Holt-Raab, acting director of the city's economic development department, said her department would bring the program back for approval by Dec. 3. City Council members initially said they wanted to approve the program no later than Nov. 12.


Although still under development, city staff laid out an initial outline of how the program could work. The proposal would allow the city to offer commercial property tax reimbursements to landlords who renegotiate their leases and offer rent reductions to business tenants. Qualifying businesses will need to be headquartered in Austin, prove revenue drops of at least 25% and employ no more than 75 people. Renegotiated leases must extend for at least 12 months.

According to city documents, the economic development department is wagering the cost of reimbursing property taxes to commercial landlords will be outweighed by the property and sales taxes generated by the saved business, the impact of the establishment on the city’s brand, and the property and sales tax generated by employees of the business staying employed and remaining active consumers.


As City Council worked in October on the creation of the $17.5 million SAVES program, which funded robust assistance for these struggling industries, Austin Mayor Steve Adler said he did not want the city’s efforts to kick the can down the road and only offer financial help on a few months of overdue rent. Adler said he wanted the program to ensure the industries would be better off than they were pre-pandemic.
By Christopher Neely
Christopher Neely is Community Impact's Austin City Hall reporter. A New Jersey native, Christopher moved to Austin in 2016 following years of community reporting along the Jersey Shore. His bylines have appeared in the Los Angeles Times, Baltimore Sun, USA Today and several other local outlets along the east coast.


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