Austin ready to push new tax incentives, grants to preserve ‘precious few’ music venues, iconic businesses

Local band White Denim performs at Cheer Up Charlies in 2017. (Christopher Neely/Community impact Newspaper)
Local band White Denim performs at Cheer Up Charlies in 2017. (Christopher Neely/Community impact Newspaper)

Local band White Denim performs at Cheer Up Charlies in 2017. (Christopher Neely/Community impact Newspaper)

After months of discussion, debate and deliberation by city officials and trying to hang on by music venues and other small businesses, Austin will begin rolling out a handful of programs it hopes will save at least some of its iconic local businesses threatened by the pandemic’s prolonged economic devastation.

Following City Council approval Dec. 3, city staff is preparing to launch two programs, each backed by $5 million from taxpayers, that will send tens of thousands of dollars to music venues and “legacy” small businesses under immediate threat of closure due to the pandemic. The program also offers up to $140,000 over six months for businesses that need it to survive long term. The city has also launched a tax incentive program that will offer music venue landlords property tax rebates in exchange for renegotiating long-term leases with their tenants. At the same meeting, City Council, too, designated $15 million in hotel tax revenue typically allocated for historic preservation to save the city’s most iconic music venues.

Since the end of the summer, conversations around pandemic recovery have centered around city government intervening to save its music venues and legacy small businesses—industries city leaders called crucial to Austin’s brand. However, since the start of those conversations, the same leaders have acknowledged that even the best locally drawn programs could only save a “precious few” businesses, as Mayor Steve Adler said, setting up the city for what Adler called some “horribly difficult choices” around who benefits from the city’s limited dollars.

Businesses that can prove they will close within 30 to 60 days under their current operation may be eligible to receive the emergency $20,000 grant; however, city leaders have long envisioned the program to target the long-term sustainability of the businesses and, thus, their industries. Any music venue or iconic small business—a brick-and-mortar local business that has been open for at least 20 years—that accepts the emergency grant will have to agree, after it receives the money, to undergo a technical assistance evaluation.

That evaluation will be used to determine what the business needs to have the best shot at long-term sustainability. Staff from the Austin Economic Development Department said they were confident In some cases, beyond the $20,000 emergency grant, some businesses might not need cash and instead require accounting expertise, legal assistance or help negotiating with their landlords, which the city would offer through third-party vendors.

In other situations, city staff said businesses might just need cash, in which case they would apply for the larger grant—up to $40,000 per month for up to six months for a total of no more than $140,000.

Which businesses will receive the grant funds remains to be seen, as does how the city will fund the new tax incentive program for music venue landlords. Typically preserved for luring large corporate employers, such as Apple or Samsung, to the city, City Council unanimously approved amendments that would avail its tax incentive program to music venue landlords willing to renegotiate leases with their tenants to situate them long term. However, no funding has been dedicated to the tax reimbursements.

District 4 City Council Member Greg Casar earned some support from other council members for his informal proposal to preemptively appropriate the money from the fiscal year 2021-22 budget and bank on the federal government passing another stimulus bill that would replenish the funds.

“I think we should be expecting [federal] stimulus, but if we wait until the stimulus gets to us, then some businesses might have closed that we wanted to get that money to,” Casar said. “I know it’s pushing it a little bit, but I would hate to wait for the stimulus and then wait a month to develop a program and then take a month worth of applications if we could start providing some relief through the [tax incentives] now and pay for it with the stimulus that comes.”

District 1 City Council Member Natasha Harper-Madison said she wanted to offer help as soon as possible but had some concerns with banking on “the guarantee of stimulus, both by way of the amount and by way of the timing.”

“It doesn’t feel like there is any guarantee, in which case ... if we didn’t get the amount we anticipated in the amount of time we anticipated, what’s our recourse then?” Harper-Madison said. “If we operate expecting to get a thing we don’t have yet, I just worry about the lack of certainty there.”