Big TAX problem for House Corps

[Texas Sig]

The Univeristy of Texas and the City of Austin worked together to re-zone land where the Greek houses are located. Most tracts are zoned Multi-Family BUT the city applied an "overlay zoning" they call the University Overlay Ordinance. This ordinance allows property to be developed as condos and mixed use up to 120 feet tall.

The Sigma Chi property taxes went from $12,000 to more than $61,000 in a two year period. Obviously we cannot pay these taxes for long.

So, we are faced with 1. selling the property, 2. getting the city to let us opt-out of the overlay or 3. getting the state legislature to step in.

All Greeks everywhere need to wake up and address this strategy ASAP.

The problem is that your county appraiser appriases your land based on its development potential, NOT the use. This could happen anywhere if Austin gets away with it. It is a slick way to push Greeks off of their property and make their location much less pedestrian oriented.

So, we all need to work on this wherever you are.

[Tom Earp]

WOW! This is above and beyond the call of appraisals as I get raised yearly!

I hate to say it, but sounds like a way to grub on property.

I am not sure if there is a way to get a re appraisal on this type of property.

This could be a death knell for may GLOs.

Let us know what is happening here and good luck!!!!!

[EE-BO]

Texas Sig,

PM me if you would like to discuss further, but I am painfully aware of the situation in West Campus as an advisor and Housing Board officer for my chapter.

Just so you know, the UNO is part of a city-wide initiative that will impact all of Austin in the coming years. The rationale, and a wise one I must admit, is that if you re-zone certain areas of the city to allow very dense population then you will make it easier to preserve the integrity and affordability of many in-town neighborhoods.

All over Austin, re-zoning is permitting and encouraging the development of high rise buildings with a residential-commercial mix along major city streets and highways. This not only makes it easier to keep more people close to the city, but it also focuses the concentration of population growth along major roads where rail and other environmentally friendly mass-transit planning can be used to greatest effect.

And to be honest, West Campus is long overdue for re-zoning. And I do not forsee any situation, regardless of the political prowess of the alumni, where a Greek House in West Campus can get an exemption from the UNO going forward. ATO is the only house right now that is in West Campus and outside of the UNO, and I think that is how it is going to be forever.

Personally, I hate it. West Campus as I remember it will never be the same.

But keep in mind that under existing zoning laws, even moderate growth was not possible. What is happening now was inevitable, but the speed with which it is taking place is due to the fact that West Campus was prevented from a more gradual redevelopment for far too long. And many Greek chapters are being caught in this. I just found out today that yet another fraternity is planning to sell their house.

The University has grown the student body in recent years. In addition, massive growth in Austin in general (stronger and more sustainable now than during the tech bubble) has created a lot of competition for housing outside of West Campus.

Areas like Riverside, Far West and Hyde Park that used to be largely populated by students are now unaffordable because there has been a huge influx of professionals competing for that real estate.

And despite UT's student body growth, the University still only provides on-campus housing for a single digit percentage of the student body.

This creates enormous pressure to redevelop West Campus so that more students can live nearby. And the scary reality is that there is so much demand for West Campus housing that even as the number of new complexes and apartments rises dramatically, rents are still going up.

Let me give you an example. In December a newly build complex at 27th and Rio Grande- very close to the Sigma Chi house- was up for sale for $21 million, or just over $360,000 per apartment.

Just 10 blocks away at 35th and Duval another newly built (2003) apartment complex of similar caliber is on the market right now for about $77,000 per apartment.

Property taxes are bad now, but they will get worse. I have seen detailed market reports on many properties in West Campus and in the past 3 years many have had their appraised values double or worse.

Texas might be reducing property tax rates to keep the voters happy, but the downside is that properties are more frequently and aggressively re-appraised to make up for the loss of revenue due to reduced rates. In most areas this does not have an impact, but in West Campus the impact is quite noticeable.

Sigma Chi is somewhat lucky since you guys are in the 75 foot maximum building height zone of the overlay (I think- you might be in the 60 foot zone depending on which tract you have on your block, the map in front of me is not clear on that), but you are also basically across the street from campus. If you were one block away in the 3 block wide belt where zoning is 175 feet, you would be in far worse shape.

But there is no doubt that property taxes and decreasing (now nearly non-existent) availability of existing Greek houses or places to build such a home in the traditional manner are going to threaten the ability of all of us to live as we have in decades prior.

And just so you know, the current going rate for a piece of land in West Campus in a 50-75 foot zone is close to double the appraised value for tax purposes. So chapters in West Campus in those zones would be wise to do their long term housing cost planning with the expectation of property taxes doubling from current rates in the next few years.

[Texas Sig]

It sounds like EE-BO knows quite a lot about what is going on.

Let me add this information:

I have contacted Greg Guernsey at the city to ask his staff to re-evaluate the unintended consequences of the overlay zoning. See below:

"Dear Greg:

Hope you had a wonderful Spring Break.

I sent you a map and addresses of the primary properties affected and an Excel chart showing the amount of tax increase at 2701 Nueces. Did you get these?

Art Cory (Travis County Appraiser) explained that he looks at the restrictions to help determine the value. Unfortunately, the UNO granted rights which we do not need. And when evaluated in the context of the Sorority-Fraternity Houses and I believe conflict with some of the "Top Ten Priorities".

Some conflicts are Items:
2. Historical protection - Sigma Chi Fraternity (2701 Nueces) has been at UT since 1881 and would soon cease to exist due to the taxes
4. Force us further from the campus - doing away with our pedestrian oriented functions. Moving is not an option.
5. Conflict with the buffering of project size. MF-4 zoning is more in scale with single family and town houses.
8. New housing should be of similar scale and massing. However, 75' to 120' tall condos are much taller and more massive than the existing development on the subject tracts.

As I see it, we need some options:
1. Opt-out of the UNO, which would revert us to our underlying zoning.
2. Possibly, create a Restrictive Covenant on each tract.
3. Possibly use the MF-4, CO Club or Lodge classification.
4. Since, the not-for-profit House Corporations hold title to the land, align tax status with the IRS classification 501 (c) 2

Meanwhile we property owners are getting organized so we can improve our communications, etc."

We have also begun conversations at the legislative level with Kirk Watson's office and plan to involve other legislators if we can.

We must take the position that the Greek's property is an asset to campus life. Food services and housing located near enough to campus to actually walk. Selling the property will not make the situation better... The city has also passed a specific ban on Greeks moving to the north campus area. So we cannot move north, east is too remote, south is not pedestrian and west of Lamar is high priced residential.

So, if you sell you have no feasible location to move to.

Some have suggested developing a high rise with a chapter house on the ground floor--this is obviously incompatible with other functions.

A single high rise Greek tower is a possibilty, but who controls the street level. I suppose we could work that out.

Maybe we could develop a Greek Street somewhere, but where? We would need about an acre for each house.

It seems to me we must not sell unless we intend to dramatically shrink into not much more than a campus club that would meet in the Student Union.

This is like WWII, we did not pick this fight, but the anti-Greeks are on a mission to get us off campus. We must get off our butts and wage a smart war to survive.

If all else fails, we may need to take serious legal action. This overlay zoning is essentially a condemnation and the remedy is NOT simply MONEY.

FYI: I am an architect, planner, development consultant, project manager. I have acted as an expert witness on about 20 right of way cases.

[EE-BO]

Originally Posted by Texas Sig

Some have suggested developing a high rise with a chapter house on the ground floor--this is obviously incompatible with other functions.

It seems to me we must not sell unless we intend to dramatically shrink into not much more than a campus club that would meet in the Student Union.

Regarding the first piece of your post that I have quoted above- I think that is the ultimate solution for many chapters down the road. Buy a small piece of land, put in a level or two of parking, have common areas on floor 2 or 3, and then either bedrooms or apartments for 3-4 floors more.

As for the second part- don't sell that house if you can help it. You will never again have a property like that if you do.

The zoning between the Drag and San Antonio and going back to Rio Grande beyond 26th is mostly 60-75 feet max. height. This gives you and 4 of the major sororities the best protection you have against an increase in the speculative and appraised value of your land.

Beyond that zone is pretty much 4 solid blocks of 90-175 foot zones which is being torn up daily to make room for new apartments. So if you sell where you are now, your only shot at another piece of land is to go way to the back of West Campus along Lamar- and even back in there already there are many new high rises.

When it comes to large Greek Houses with big yards like Sigma Chi, I think within 20 years there will be 2-3 such houses left- if that- in West Campus.

It is a hard reality, but we have to fundamentally rethink our long term housing at Texas.

And it's not just about property values- but noise ordinances and privacy. A 2 story fraternity house with a fenced in yard that is surrounded by high rise condos is just going to have trouble existing. Already in the wake of a lot of citations last fall, fraternities (and other campus organizations which have been targeted) are learning that loud music and parties have to happen indoors now.

In the past, West Campus was small and expensive enough that a significant number of the residents- especially right around the fraternity houses- were either Greek or Greek-friendly. With a larger and more diverse population coming in, that is going to change.

Greeks used to essentially rule West Campus. It was our playground. That is just not the case anymore.

[Tom Earp]

Originally Posted by EE-BO

Regarding the first piece of your post that I have quoted above- I think that is the ultimate solution for many chapters down the road. Buy a small piece of land, put in a level or two of parking, have common areas on floor 2 or 3, and then either bedrooms or apartments for 3-4 floors more.

As for the second part- don't sell that house if you can help it. You will never again have a property like that if you do.

The zoning between the Drag and San Antonio and going back to Rio Grande beyond 26th is mostly 60-75 feet max. height. This gives you and 4 of the major sororities the best protection you have against an increase in the speculative and appraised value of your land.

Beyond that zone is pretty much 4 solid blocks of 90-175 foot zones which is being torn up daily to make room for new apartments. So if you sell where you are now, your only shot at another piece of land is to go way to the back of West Campus along Lamar- and even back in there already there are many new high rises.

When it comes to large Greek Houses with big yards like Sigma Chi, I think within 20 years there will be 2-3 such houses left- if that- in West Campus.

It is a hard reality, but we have to fundamentally rethink our long term housing at Texas.

And it's not just about property values- but noise ordinances and privacy. A 2 story fraternity house with a fenced in yard that is surrounded by high rise condos is just going to have trouble existing. Already in the wake of a lot of citations last fall, fraternities (and other campus organizations which have been targeted) are learning that loud music and parties have to happen indoors now.

In the past, West Campus was small and expensive enough that a significant number of the residents- especially right around the fraternity houses- were either Greek or Greek-friendly. With a larger and more diverse population coming in, that is going to change.

Greeks used to essentially rule West Campus. It was our playground. That is just not the case anymore.

From A Poster who knows his stuff, heed and listen!

Land is dirt, well, dirt is getting expensive as I know and EE-OB know only to well!

If your school and many others like mine were built near campus with no problem, but, schools expand and where do they look? Not to upset the local Citizens so, then where next? Greeks!

[ATO_GAMMA_ETA]

I know a bunch of groups (fraternities and sororities) tried to fight the rezoning known as the university neighborhood overlay but were unsuccessful. I believe it was described as postponed.

here is the link. http://media.www.dailytexanonline.co...-2992623.shtml

Talking with friends who are their respective alumni boards they are trying to find out ways around the system. But really when it comes down to it, the best way to not pay as much on the property taxes is to protest them.

I was an ATO at UT and know we protested our property taxes using the same group that KA SIGEP and Acacia used. I think when it was all said and done they saved all those organizations on their property taxes.

I'm not sure if you were familiar with protesting but it doesn't completely eliminate property taxes. It just saved us some money to use on more important things (such as repairs to the house, alumni events and so on).

In regards to the fraternity houses moving, I do not think there is any way. There is no where for them to go. Until something changes with this overlay what fraternities are left need every break they can get. West Campus is probably the only area where the houses can be somewhat tolerated. However, every few years the city makes a push to attack them.

And if kids keep dying or houses making major news stories around the country then property valuations will be the least of our worries.