Planning Dept. analysis finds historic tax exemptions came largely west of I-35

More than 90 percent of the city’s historic tax exemptions in 2023 went to property owners west of Interstate 35, with a significant portion concentrated in downtown commercial areas, according to a recent analysis conducted by the city’s Planning Department.

A recent memo to City Council from Lauren Middleton-Pratt, director of the Planning Department, included a look at the use of historic tax incentives, revealing significant geographic and demographic disparities. Those findings prompted recommendations to reform the programs with project-based abatements, income qualifications and measures to prevent displacement, ensuring more equitable distribution of preservation benefits.

The analysis was prompted by a 2023 Council resolution, which called for a reevaluation of preservation incentive programs to better serve historically underserved communities and promote equity. The resolution emphasized the need to reconcile historic preservation efforts with the city’s commitment to equity, particularly for communities east of I-35 that have historically been excluded from economic and cultural benefits.

The analysis of data from 2023 found single-family homes accounted for 40 percent of all exemptions, while multifamily apartments received just 2 percent, and commercial properties claimed the largest share at 52 percent.

The report found owner-occupied single-family homes west of I-35 have a median appraised value of $2.1 million, far exceeding comparable properties in other areas. By comparison, single-family homes east of I-35 received only 6 percent of exemptions, with a median value of $1.6 million.

Commercial landmarks, particularly those downtown, benefited disproportionately in 2023, with exemptions totaling over $4.2 million.

Those gaps and inequities are part of the motivation for the city’s Equity-Based Preservation Plan, which proposes reforms to historic tax incentive programs aimed at creating a more inclusive and equitable distribution of benefits.

That plan is intended to update policies that have remained unchanged since the 1980s, focusing on preserving the histories of underrepresented communities. It was recently recommended for approval by the Tourism Commission, and has been submitted for review by other relevant local boards and commissions.

Recommendations include improving the project-based tax abatement program by freezing property values at pre-rehabilitation levels for the duration of the abatement, and reducing cost thresholds to enable smaller projects to qualify. It is believed those changes would expand the program to include historic landmarks in addition to properties within designated districts.

Another key recommendation is the creation of a new 10-year tax abatement for newly designated historic districts and landmarks. That measure, if enacted, would freeze city property taxes at pre-designation levels, with options for extensions if properties remain under the same ownership or if owners and tenants meet specific income qualifications. A proposed Transfer of Development Rights (TDR) program would further support preservation efforts while addressing equity concerns.

Next steps outlined in the report include conducting a market analysis for the TDR program and engaging stakeholders to refine the proposed incentive changes. A quantitative evaluation will be undertaken before presenting the final package to City Council, with adoption anticipated in Fiscal Year 2026. In the meantime, current historic tax exemptions will remain in place until properties are sold or owners opt into the new programs.

Equity has become a significant factor in city policy in recent years, with the Climate Equity Plan, adopted in 2021, accelerating the city’s net-zero emissions goal to 2040. That plan emphasizes equitable strategies to ensure all communities benefit from climate action, and that climate emergencies such as extreme heat and winter storms don’t have disproportionate impacts on vulnerable communities.

In addition, community groups have advocated for equitable funding levels for minority chambers of commerce, leading to City Council considerations to adjust funding to better support groups that serve racial and social minorities.

Photo made available through a Creative Commons license.

The Austin Monitor’s work is made possible by donations from the community. Though our reporting covers donors from time to time, we are careful to keep business and editorial efforts separate while maintaining transparency. A complete list of donors is available here, and our code of ethics is explained here.