Austin City Council eyes tax incentives in effort to rescue local businesses from pandemic closure

A band performs at the Mohawk on Red River Street. (Christopher Neely/Community Impact Newspaper)
A band performs at the Mohawk on Red River Street. (Christopher Neely/Community Impact Newspaper)

A band performs at the Mohawk on Red River Street. (Christopher Neely/Community Impact Newspaper)

In the ongoing effort to curb the pandemic’s decimation of Austin’s small-business ecosystem, especially those in the live music, arts, child care and restaurant industries, City Council could soon approve an emergency tax incentive program aimed at coaxing landlords into renegotiating commercial leases.

The Austin Economic Development Department is offering the program to City Council for a vote Nov. 12. 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.

The proposal, which offers a lifeline out of the pandemic, comes in response to City Council’s unanimously supported 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, represent the city’s essence and would be hard to revive if shutdown by the coronavirus.

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.

Since March, the pandemic has scorched several legacy local businesses, many of which were already struggling prepandemic with the city’s growing affordability problems. Iconic names such as Threadgill’s, Shady Grove, I Luv Video and Magnolia Café have all shuttered. For the past couple months, City Council has been debating ways to intervene in the market and buoy struggling local businesses.

As City Council worked in October on the creation of a $17.5 million program to infuse money into and assist these struggling industries, Austin Mayor Steve Adler said he did not want the city’s efforts to essentially 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 prepandemic.

City Council will likely discuss the program during its Nov. 10 work session and move toward a vote for its Nov. 12 meeting.
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.


Matthew McConaughey, see, here at SXSW 2019, will be one of this year's virtual SXSW speakers. (Matt Winkelmeyer/Getty Images for SXSW)
SXSW's virtual festival, the PGA Tour returns and more events in Austin this month

From Amplify Austin Day beginning 6 p.m. on March 4 to Bill Gates discussing his new book, "How to Avoid a Climate Disaster," here are eight events happening this month in the Austin area, including both in-person and virtual options.

Ice covered utility lines across Austin. (Iain Oldman/Community Impact Newspaper)
SHARE YOUR STORY: How did you survive the Texas freeze?

We want to hear how the winter storms affected you.

Q2 Stadium
Austin FC preseason scrimmages planned for late March start

Preseason matches for Austin FC will be held in South Austin ahead of the team's inaugural MLS season.

Lawmakers began hearings Feb. 25 to hear from energy executives about what led to dayslong power outages following a Feb. 14 winter storm. (Ali Linan/Community Impact Newspaper)
Austin weekly roundup: The storm is over, but the questions are just beginning

In hearings last week, a state senator from the Houston area called the power and water outages in Texas "the largest trainwreck in the history of degregulated electricity."

Crawfish season,  from mid-January through June, is the busiest time at Shoal Creek Saloon. (Olivia Aldridge/Community Impact Newspaper)
Shoal Creek Saloon brings a piece of New Orleans to Austin

COVID-19 has dealt the Shoal Creek Saloon a blow, but owner Ray Canfield is hanging in there and said he was prepared for a disaster. He just thought it would be another flood, not a virus.

The U.S. Food and Drug Administration’s Vaccines and Related Biological Products Advisory Committee recommended Johnson & Johnson’s one-shot vaccine for emergency authorization use Feb. 26. (Courtesy Adobe Stock)
Johnson & Johnson COVID-19 vaccine recommended for emergency authorization use by FDA

This is the third COVID-19 vaccine that has been approved for emergency authorization use after those produced by pharmaceutical company Pfizer and biotechnology company Moderna.

Josh Frank, owner of Blue Starlite Mini Urban Drive-in for more than a decade, holds up a Blue Starlite-branded mask. (Photo by Olivia Aldridge/Community Impact Newspaper)
Long-time Austin theater Blue-Starlite Mini Urban Drive-In takes on new life in pandemic

Drive-in theater Blue Starlite found itself in a unique position in 2020: After more than 10 years as a small business “just getting by,” demand for drive-in movies exploded, owner Josh Frank said.

The University of Texas Radio-Television-Film department will be offering virtual camps this summer. (Courtesy The University of Texas)
2021 Central Austin summer camp guide: 44 options including virtual and in-person offerings

Our list of camps happening in Austin this summer includes options focusing on academics, arts, sports and language.

Samsung's proposed $17 billion chip-making plant would dwarf other recent megaprojects that sought tax incentives in the region.
Samsung’s request to pay no property tax on $17 billion plant tests Austin’s incentive policy

Samsung is asking for 100% property tax reimbursement over 25 years, which would mark the most aggressive corporate tax break in Austin history.

A new Johnson & Johnson COVID-19 vaccine could help expand vaccination availability in Travis County, according to local health officials. (Courtesy Pexels)
Johnson & Johnson vaccine could mean additional supply, easier distribution rollout in Travis County

If approved, the Johnson & Johnson vaccine will be a valuable weapon against the ongoing pandemic, according to local health officials.

Austin ISD students will begin the 2021-22 school year Tuesday, Aug. 17. (Nicholas Cicale/Community Impact Newspaper)
Take a look at Austin ISD’s newly approved calendar for the 2021-22 school year

Austin ISD trustees have approved the academic calendar for the upcoming 2021-22 school year.