Travis County leaders scrutinize Austin Dog's Head development deal ahead of tax financing votes

Travis County leaders are weighing participation in a city-led tax financing plan to support decades of development in the eastern "Dog's Head," following Austin City Council's recent vote to annex the nearly 4-square-mile area.

The big picture

The Dog's Head covers more than 2,600 acres along the Colorado River in East Austin. With city officials' May approval of the annexation, Endeavor Real Estate Group now plans extensive mixed-use development throughout the area.

Austin leaders also signed off on a 45-year agreement that grants broad land-use authority to the Dog's Head developer with adjustments to city building and environmental standards, and includes provisions for some public benefits like affordable housing and parkland.

Recent activity related to the Dog's Head has been generally opposed by community members due to the city's rapid annexation process with limited public notice or initial outreach, potential negative ecological impacts related to new development, and a lack of detail about Endeavor's overall plans.

The Dog's Head is now largely undeveloped after decades of industrial mining activity, and Endeavor representatives have said they intend for environmental remediation alongside new construction. To support that growth, the city and developer also intend on tax-based financing for public infrastructure needed as the area builds out.

Austin council members will consider setting up a tax increment reinvestment zone, or TIRZ, for the Dog's Head in late July. Through the TIRZ, a portion of anticipated tax growth over time will be reserved for the civic improvements.

The Dog's Head's future hinges on the TIRZ; Endeavor may back out of the development agreement and disannex from Austin if the financing mechanism isn't created. Ahead of key votes this summer, Travis County leaders heard from Endeavor as they decide whether to join the city's financing plan.

The details

As proposed, the new TIRZ could end up funding roughly one-third of the Dog's Head's anticipated infrastructure needs like roads, sidewalks, power and water lines, drainage channels, and bridges spanning the Colorado. Austin Financial Services Director Kim Olivares told county commissioners a TIRZ will facilitate a catalytic mixed-use hub and employment center.

“You are truly creating an entire city in this area. So in a situation like that, it would be an automatic requirement that there’s public financing involved for things like this," she said June 24. "By providing that public financing, it also increases the scale of development that can occur that supports our community.”

Today, the city reports the Dog's Head area is assessed at about $17 million. If development and infrastructure plans proceed as intended, Austin's TIRZ modeling suggests that land could jump hundreds of times in value to $26 billion by 2061. Assumptions are based on Endeavor's projections for:

• 12,000 housing units
• 3 million square feet of retail space
• 1 million square feet of industrial space
• 1 million square feet of office space

Final financial figures are still to be determined, but Austin and Travis County's tax revenue throughout the Dog's Head would significantly increase from "nominal" levels today as development takes place, according to the city.

Both entities are projected to generate well over $3 billion in property and sales taxes through 2061 based on Endeavor's framework. The proposed TIRZ would set aside 80% of city tax revenue within the Dog's Head alongside 50% of the county's. All remaining tax funds would represent new public revenue.

Richard Suttle, an attorney representing Endeavor, called the Dog's Head's a chance for the local governments to "grow the pie" while facing tighter financial conditions.

"If the Commissioners Court or the City Council decides that’s not attractive, we’ll figure something else out. But this opportunity seems to be an opportunity that we shouldn’t just dismiss summarily because it could really jump-start the whole area," he said.

If the TIRZ is approved, the Dog's Head developer will pay for area infrastructure and be partially reimbursed by the tax increment funds. If the development deal were ever to fall apart and the Dog's Head disannexed from Austin, the city confirmed any publicly funded projects would then fall under county responsibility unless tied to Austin Energy or Austin Water.

In their own words

County leaders said more details and guarantees of public benefits are needed before making a final decision.

Commissioner Ann Howard called the TIRZ review process rushed, which she said has put county leaders in an "awkward position" without clear answers about the Dog's Head outlook. However, she also signaled general support for a plan that could result in public good and new tax revenue.

As he studies the proposal further, Commissioner Jeff Travillion said he hopes to see clear communication with Endeavor and evidence that planned additions would improve East Travis County and the lives of its residents. And Commissioner Brigid Shea stated reservations with the proposal, which she said were based in part on Tesla's recent noncompliance with a county tax incentive for its Giga Texas project, located nearby on the Colorado.

“This is a whole lot of ‘trust me,’ and I think you can understand why people are uncomfortable. We kind of went through that with Tesla, but we knew what they were building; we just didn’t know what they were going to discharge into the river and put into the air and all of that," she told Endeavor's team. "I think there’s a need for more information about what’s proposed.”

Suttle said the fast-tracked annexation and short TIRZ review timeline are needed to quickly secure the Dog's Head's first major tenant. While not yet identified, a 300-acre project from a Fortune 100 company is planned. Suttle confirmed it's not from Tesla or SpaceX and isn't a data center. The city accepted development plans for the 300-acre "Project Toaster" off Dalton Lane in May.

Shea said she feels commissioners are being asked to rush their vote this summer without a full picture of area plans. She also questioned the difficulty of finding another major tenant if the current target falls through without an accelerated review. In response, Suttle said the fast pace is necessary to advance the project—and maintain outside interest in the Dog's Head going forward.

"What happens when you run one off is the others look at that and say, ‘I’m not so much interested in looking at Austin,'" he told Shea.

What's next

Environmental Commission members and city residents presented extensive criticism of Endeavor, its approach and potential ecological risks during a June briefing about Dog's Head plans. Commissioners will consider a formal recommendation to City Council about environmental considerations in the area July 1.

Austin's draft TIRZ plan could be available soon after the July 4 holiday weekend, Olivares said. County commissioners are then scheduled to review and potentially vote to join the TIRZ on July 14 before City Council considers adopting the plan July 23.