A Travis County court issued a ruling to halt the use of future property taxes to subsidize luxury development of 118 acres of land within the South Center Waterfront District.
District Judge Jessica Mangrum last Friday issued a Summary Judgment Final Order in favor of plaintiffs. The lawsuit to stop those subsidies was filed almost exactly a year ago, April 24, 2023. (Taxpayers Against Giveaways, et al, v. City of Austin Mayor Kirk Watson, et al, Cause No. D-1-GN-23-002238.)
The plan approved by the City Council was to divert $354 million in property taxes for infrastructure improvements on that land so that it would develop in the manner the council desires. To that end, the council established Tax Increment Reinvestment Zone No. 19, the SCWF-TIRZ.
Lawyer-lobbyist Richard Suttle of Austin law firm Armbrust & Brown represented developer Endeavor Real Estate Group in gaining City Council approval of the SCWF-TIRZ.
As the Bulldog reported, when at one point it looked like the Council might not approve the TIRZ, Suttle told the Council, “I’ll tell you what: we won’t build the plan if there’s no TIRZ. It just doesn’t work.”
Suttle has not returned a call left with his office this afternoon for comment on the judge’s ruling.
Meghan Riley, the Law Department’s litigation division chief, issued this statement at 5:37pm: “We are disappointed in today’s ruling but very much appreciate the court’s careful consideration of this complex issue. We will review the specific implications of the decision in the coming days. That said, we do not believe this decision impacts the City’s ability to move forward with proposed zoning changes for the South Central Waterfront area.”
Plaintiffs’ attorneys comment
Plaintiff attorneys in the lawsuit were Bill Aleshire, William G. “Bill” Bunch of the Save Our Springs Alliance; and Fred Lewis.
Lewis emailed this statement: “Travis County District Judge Jessica Mangrum held today the City Council violated state law by creating the South Central Waterfront TIRZ and agreeing to transfer $354 million in local property taxes to pay to develop an $8 billion private luxury development on Lady Bird Lake.
“It would be nice if the city learned from this.”
In a telephone interview, Aleshire was more pointed.
“It’s a huge victory for taxpayers that could eventually lead to an end of the abuse of TIRZ throughout the state of Texas.”
Creating a TIRZ “means all the other taxpayers have to make up for the loss of revenue for the general operation of the city, while the TIRZ property owners pay their usual taxes but in this case got 46 percent of their taxes kicked back for the special benefit of their development. That’s not equal and uniform taxation.”
Aleshire said, “Bill Bunch went to City Council meetings several times and warned them that they would be sued if they approved this TIRZ, because that land is not blighted and would develop without this kickback. He presented a letter that promised they would be sued. City Council members should be ashamed for approving this as a matter of policy—especially now that we have shown it is illegal through this summary judgment.”
Summary judgment means there are no material factual issues remaining and the case can be decided as a matter of law.
“City attorneys made even easier for us about how to interpret that section of the tax code,” Aleshire added. “To create TIRZ they must meet the ‘but-for’ test. City attorneys argued the development would occur quicker or better with a TIRZ. That is not in the tax code. The implication of that argument is there would no limit about where a TIRZ is applied. They could always argue that would be better development or it would happen quicker.”
Aleshire added that before the council approved the TIRZ, “I was emailing council members to tell them that instead of creating a TIRZ they should establish a PID (Public Improvement District), in which property owners pay extra to get the extra benefits. That would have been ethical and legal way to do it.”
(Disclosure: Bill Aleshire has twice represented the Bulldog in successful lawsuits against the City of Austin for failure to supply information under the Texas Public Information Act. He also assists the Bulldog in filing public information requests.)
In a statement issued by plaintiffs’ attorneys at 6:10pm today, Bunch stated, “The City is legally required to show that the land is blighted and would not develop without public subsidies. The City failed to present any evidence that public funds were needed for the land to develop.”
Bunch further noted that “Judge Mangrum’s decision means that the $354 million in city property taxes can remain in the city’s general fund and go for real public needs, such as public safety, parks, streets, and other resident needs—and not to subsidize corporate welfare for wealthy, private developers.”
Trust indicators: Ken Martin has been doing investigative reporting in the three-county Austin metro area since 1981. Email [email protected].
Related Bulldog coverage:
Are tax subsidies for luxury development legal? January 8, 2024
Lawsuit seeks to halt tax dollars for luxury development, April 24, 2023
Lame duck council set to vote on 20-year sweetheart tax deal for developer, November 28, 2022
Environmentalists assail plan for lakeside high rises, October 4, 2022
Council revives plan to use ‘blight’ law to subsidize luxury high rises, July 28, 2022
Luxury subsidy deal stalls at council, February 3, 2022
Luxury real estate to get special tax status under ‘blight’ statute, December 21, 2024
Congratulations to Aleshire, Bunch, Lewis and the citizens of Austin. Can someone please clarify this statement, “Summary judgment means there are no material factual issues remaining and the case can be decided as a matter of law.” Does this mean this case will proceed in another proceeding? It’s a tad confusing to this lay person. Thanks, as always, to the Bulldog!
Linda thanks for your comment and question. The issue is settled at the district court. It may be appealed to the Third Court of Appeals and even up to the Texas Supreme Court, but that would be up to the defendant City of Austin to pursue.
Thanks to the Bills and Fred for fighting this tax giveaway to my former employers. This lakefront site is a special place that should have the highest and best use for the citizens of Austin.
“…So that it would develop in the manner the council desires.” When will our city council learn to listen to their constituents and develop things in the manner that WE desire. They seem entirely deaf to constituents (unless they are wealthy developers).
Thanks to all of you that had anything to do with killing this COA TIRZ stupidity at the district court level and others.
Rest assured though that these Democrat-Socialist-Marxists in our City Council that proposed this taxation giveaway and over-reach are not done with this effort yet. And for those of you that might believe that the supposedly freed-up $354 million will be used to better support the Taxpayer and COA Departmental needs, don’t count on it. If COA leadership history has taught us anything it is that there are too many Council and Mayor deemed special interests, needs, wants, groups, projects, and carve-outs that will gobble this money up and more, and once it’s gone, they’ll be back for much more.
Some of this money would be well spent to conduct a full Forensic Financial Audit of the City of Austin and leadership from the top down.
The ONLY thing that will change the way the COA is being run is by accountability leading to prosecution and dismissal.