Austin mulls backing out of multimillion-dollar tax deal with The Domain developers

The Domain Northside celebrates its one-year anniversary.

The Domain Northside celebrates its one-year anniversary.

One Austin City Council member proposed the city back out of its tax abatement deal with the developers of The Domain to collect more revenue and allow more flexibility in the city budget.

District 7 Council Member Leslie Pool made the proposal during Tuesday’s special called city council budget meeting. Through the current agreement with developer Simon Property Group LP, inked in 2004, the city would pay back $466,000 in property tax and $1.7 million in sales tax in the fiscal year 2018, according to Economic Development Department spokesperson Melissa Alvarado. The Domain deal is the oldest active economic development agreement on the books.

According to city documents, the total incentive gained by Simon Property Group LP through the deal is estimated to be $37.5 million. The city has paid just over $14.7 million so far. The agreement is set to expire in 2028.

Pool said it would not be the first time the city backed out of an economic development agreement early and cited its pact with Home Depot as being the one deal that ended before the contract’s expiration date—which was ended because of noncompliance. After the meeting, Mayor Pro Tem Kathie Tovo also asserted that the city has backed out of more than one deal prematurely in the past.

Mayor Steve Adler did not immediately throw his support behind the proposal. He said it doesn’t look good for the city to make deals and back out of them and that the “city’s credibility” could be on the line.

The discussion was among the long list of budget items council discussed on Tuesday, less than one week before the three budget hearings begin on Monday, Sept. 11.

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Editor's Note: An earlier version of this story incorrectly stated which economic development agreement Council Member Leslie Pool cited as a deal that expired prematurely, and the date the deal with The Domain is scheduled to expire.