How much is too much? Rising Austin fee waiver amounts unknown to City

Every year, the city waives certain fees in order to attract business. The Defenders uncovered how much money the city is giving away -- and what we get for that money is in question.

It's often said you need money to make money.

Cities operate under that same premise, which is why so many of them give it away in order to attract businesses and events. In fact, the Defenders uncovered the City of Austin has given away more than $36 million over the last three years.

When you play a game, your next move is often dependent on how much money you have in the bank. Running a city is similar. You collect fees in order to keep the game going. Land a good festival, a business or development and many cities, like Austin, waive those fees.

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"What is surprising is how little we know about how these fees are waived,” said Tom “Smitty” Smith, former director of Public Citizen Austin, a non-profit watchdog group.

“One of the basic principles of government is to make sure it is open and transparent and fair to everybody, and without information on who’s getting fees waived and whether there are special favors being done to friends of the council or members of the staff, it’s hard to tell,” said Smith.

He fears the city is playing games with your money.

“When there's thousands of dollars going out the door that isn't being reported in the fee waiver spreadsheets, it's hard to know whether we're going to have enough to pay staff, or whether we're going to have to cover a shortfall,” Smith said.

A recent Audit found the city of Austin isn't sure how many fees are being waived.

“Once we realized that not everyone was reporting, some told us they had incomplete information and some departments told us we waive fees but we don't know how much,” reported the Austin city auditor to council in October 2017. “So I would say the $16 million is a very rough estimate.”

“That's outrageous,” said Smith. “Our government is supposed to be able to account for its budget.”

Fee waivers amounts provided by City departments for three fiscal years

Take Austin's S.M.A.R.T. Housing program. It is designed to increase affordable housing. Developers often get fees waived to bring in more affordable units. But according to the audit, not all of the departments granting fee waivers for the S.M.A.R.T. housing are tracking them.

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“With the S.M.A.R.T. Housing program, we know we waived $3 million in fees, at least, but we don't know whether there were other fees associated with that,” said Mayor Pro Tem Kathie Tovo. “And I am not sure yet how many units those $3 million helped create. We really do need to understand what that total amounts to for a particular development and then assess whether that was, whether we got enough units for that investment, or whether we would have gotten more units if we had invested directly instead of waiving all the fees.”

From affordable housing to convention center events to everyday festivals and parades, the amount of money Austin gives away is rising.

“It's a multi-million dollar problem,” said Smith.

The Defenders uncovered fee waivers have nearly doubled in two years. From $8.9 million in 2014 to $16.2 million in 2016.

“We depend on fees and charges like that in order to support our budget and if we keep giving away the fees, we're not going to have enough to take care of our basic needs, whether it be roads and bridges, sewers, water, all these other things we depend on fees to pay for,” said Smith.

Each council member can waive up to $6,000 a year in fees.

“It’s just a lost revenue opportunity and those don’t amount to much. I think the benefit the community gets from those events is really important and significant and we need to continue,” said Tovo.

In 2016, council members waived more than $43,000 in fees for things like the Martin Luther King Day March and Veteran's Day parade -- even SXSW gets certain fees waived.

“Most of those charges we've been talking about are those associated with barricading the roads, increased safety costs,” said Tovo. “Those aren't based on the SXSW activity itself, but more on the increased activity in that area.”

“Fee waivers in and of themselves aren't a bad idea,” said Smith.

In fact, in most cities they are part of the cost of doing business. But you want people to read what's in the cards.

“To make sure every time a fee waiver is granted, it gets reported into one central database,” said Smith.

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A move the City of Austin has vowed to change so it can stop rolling the dice with your money.

The audit called for major changes in the way fees are tracked.

Efforts are underway to do that and it will be a big project for our new city manager, who starts Feb. 15.

For more information on Austin fee charges and other studies that have been conducted on the fee schedule, click here.