State bill no longer targets Austin’s MLS deal

A Senate bill that many felt could endanger the city’s lease deal on a new soccer stadium has been amended in a way that appears to have created an exception for the roughly $250 million structure.

On Thursday, State Sen. Paul Bettencourt amended SB 1771, which sought to give local taxing entities the power to collect property taxes on eligible projects even if the landowner created an exemption. The amendment creates a grandfather clause for development agreements that are already approved prior to Sept. 1, meaning Travis County and the Austin Independent School District will have an uphill legal battle if they attempt to collect taxes on the stadium.

Bettencourt drafted the bill to close a loophole in state law that would make an exemption given by the landowner applicable to other taxing entities eligible for property tax receipts on the same property. Precourt Sports Ventures, the business interest behind the stadium, bargained with the city to avoid paying property taxes on the project and said that feature was a crucial part of its business plan to make the stadium possible.

In August, City Council voted 7-4 to seek a lease agreement with Precourt, with the stadium set to open in 2021 as the home of the Austin FC professional soccer team. The deal eventually agreed upon late last year calls for Precourt to fund the stadium’s construction and turn its ownership over to the city – another key step to avoid property taxes – while paying just over $8 million in rent to the city for 20 years to use the 24 acres of city property in North Austin.

Bettencourt’s bill had a public hearing Tuesday and is currently in the Property Tax Committee.

“The bill prevents future misuse of the property tax code to allow one taxing unit to set abatements for all other taxing jurisdictions in the area,” he said in an emailed statement. “We have separate city councils, board of trustees, county commissioner court, etc… for a reason. They are accountable for the tax dollars they spend directly by the voters that elected them, not someone else.”

Last summer, Travis County commissioners voted to have the county’s legal department investigate options for how to challenge the exemption on the stadium land, with the county forecast to have received $847,000 in tax revenue the first year following the stadium’s completion. Since then the county has taken no further action related to the stadium project.

Through a spokesperson, Precourt Sports Ventures declined comment on the Bettencourt amendment.

Bill Aleshire, a local attorney who has regularly criticized the stadium lease and threatened to legally challenge it, said the city’s decision to grant a property tax exemption could be challenged in court.

“There’s still the question of whether the lease the city manager signed qualifies, because there were things put in there that are not in line with state law concerning tax exemptions,” he said. “It could be the stadium lease that needs to be amended … as it is now only the taxing entities can question the exemption by filing a contest with the county appraisal review board.”

Aleshire said Bettencourt’s bill, if it becomes law, is needed to prevent future land deals he said create large tax abatements at the expense of local schools, health departments and other bodies funded with property taxes.

“This is a long deal that’s spread out over 50 years, with tens of millions of dollars that Mr. Precourt will be able to benefit from because of what is essentially a tax abatement,” he said. “I don’t blame any taxpayer or official who cares about property tax rates from being upset at this exemption.”

Rendering courtesy of Gensler/Precourt Sports Ventures.

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