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Austin Officials Are Sued Over South-Central Waterfront Funding Plan

A group of Austin property taxpayers filed a lawsuit against Mayor Kirk Watson, Austin City Council members and Interim City Manager Jesús Garza, saying that the City officials should not be allowed to put tax dollars towards the development of the old Austin American Statesman building. 

In the lawsuit filed in the Travis County District Court, the plaintiffs said that the Austin City Council established the South-Central Waterfront Tax Increment Reinvestment Zone, or SCWF-TIRZ, a tax-increment financing zone that would divert $354 million away from the city’s general fund over 19 years. The Plaintiffs, who include Taxpayers Against Giveaways, Save Our Springs Alliance, former Austin City Councilmember Ora Houston, former state senator Gonzalo Barrientos and Fay Holland, said this action was illegal and should be stopped. 

A TIRZ allows a jurisdiction to finance infrastructure improvements and other projects using a portion of proceeds from property and sales tax within an established boundary – in this case, the South Central Waterfront – per city documents. 

“The South Central Waterfront TIRZ is an enormous waste of taxpayer money, a blatant case of insider developer welfare, and a gross abuse of the TIRZ statute,”  said Laura Cantu Templeton, a board member of Taxpayers Against Giveaways, in a press release. 

“The City used the wrong legal standard for the TIRZ,” said Bill Aleshire, one of the attorneys representing the plaintiffs, “The standard is whether the land would redevelop on its own, not whether it would redevelop in some way different than the city wants. If that was the legal standard, then a TIRZ could be used in every development, to the detriment of the rest of the taxpayers who must pay more taxes to support the general operation of the City.” 

South Central Waterfront TIRZ includes around 118 acres of land on the south side of Lady Bird Lake between south First Street and Bouldin Creek. The plot of land is considered to be some of the most “developable” land in the Austin area because of its desirable location. 

“The issue isn’t whether the [South Central Waterfront] TIRZ development might be a nice addition to the City, but whether the City has complied with the state law’s restrictions, satisfied the mandatory findings of facts and applied the correct legal standards for spending public funds for private development,” wrote the plaintiffs in their lawsuit. “The City clearly has not,” the plaintiffs continued.

The plaintiffs argue that the TIRZ is a “tax kickback scheme,” which would have been legal had the city been able to provide evidence the land in question was blighted.

“But when used in an area like Austin’s highly desirable waterfront property, it’s an illegal tax kickback scheme prohibited by the Tax Code and the Texas Constitution,” the plaintiffs allege. 

“The City believes that Council’s December 2022 action regarding the South-Central Waterfront TIRZ complies with state law requirements,” a spokesperson for the City of Austin said. “As with many policy decisions, there was ample discussion and community feedback on this topic.”

Source : Kxan