Big TAX problem for House Corps

[Tom Earp]

Originally Posted by AA1038

... to the whole zoning issue.

How are other not-for-profit organizations dealt with regarding zoning and property taxes? Are the Salvation Army, YMCA, various social/country clubs, with housing units taxed? What about churches?

Fraternal organizations are generally considered not-for-profit groups, and housing is not generally considered something that is not part of the core business of the group (if you had a bookstore or coffee shop, that would be a taxable enterprise, for example). We church leaders face this all the time, as folks want to take our tax exemptions away, or make it cost-prohibitive to build new churches because of greedy zoning rules.

Just a thought...

Art Hebbeler
Chapter Advisor, Phi-Delta Zeta of Lambda Chi Alpha
AA 1038 (Butler '82 -- Go Dawgs!)

Good point, but even as a non-profit organization when it comes to land especially for the expansion of a school that really makes no difference or if for some kind of sity wide expansion, he wiuth the most $$ wins. It may be challenged for appraisal. If you do, then have a certified appraiser to give a true estimate as it is usually much different than the County.

[yalenole]

We own our house and land. As a non-profit organization we do not pay property tax.

[Tom Earp]

That is interesting as most GLOs are counted as NOT for profit Organizations and as to now, the only monies goe only to Educational areas.

There are two bills in commettee, one in RThe Senate and House have one giving donations that are Tax deductable period.

WE need that or one of those Bills passed! One will lead to the other.

If I am in error, please let me know.

[modorney]

Zoning and (property) taxation can vary all over the country. Some places just don't zone property for tax-free uses. For example, Highland Park, Texas, does not have any churches. They are all in Dallas or University Park. Highland Park Methodist actually has its water and sewer hookup in University Park.

YMCA's often get flak from commercial health clubs, since they pay taxes and the YMCA often doesn't. Many times, the YMCA has to do extra community service stuff, to get permission to expand, remodel, etc.

It always helps to separate out the commercial part (like a church bookstore) from the non-commercial part. My college (Rensselaer) had a huge ice skating school, that ran as a tax-exempt for years, until the IRS made them pay income taxes, and the school pay the city for taxable use.

A lot of this stuff boils down to how good a lawyer you have. So, don't skimp. Many cities - Colorado Springs is an example - have lots of non-profit organizations, and the officers of those orgs get tax-free housing. There's about a thousand tax-free houses in Colorado Springs, and this is a serious hit on the city budget.

[bejazd]

Could someone describe the greek housing/neighborhood at U-Texas for me? and the method for determining property taxes? (Never been there, I know nothing about Austin.) Somebody once described the houses there to me as "lodges" but from the few pics I've seen, they look more like traditional houses or modified apt buildings. To me a lodge is a meeting room with a kitchen/bath, an office, and maybe a house dir's room.

[Tom Earp]

That is not UT housing!

No dirt floors either with log siding!

[bejazd]

The person I was talking to must have had the wrong school in Texas. A friend of mine was in a fraternity at Texas Austin, Sigma Nu maybe? but I don't think he lived in the house because he worked for Oakwood Apts and got a free apt. I remember him talking about the shortage of student housing. Are the greek houses all in one neighborhood like a row or spread out around the campus?

I was under the impression that in Texas the method for determining property taxes is very different from California and because of the way taxes are determined, there is a lot of inequality in funding for public school districts from neighborhood to neighborhood. If anybody has any knowledge, I'm just curious.

[yalenole]

Texas has Independent School Districts (ISD). I'm not sure how the boundaries were drawn many years ago. The tax colector is housed in school board officies and may be an employee of the school board. I never asked that when I lived in TX. 100% of property tax goes to the school district. I don't know the formula used to determine tax rate, but I'm sure the state regulates it somehow. But certainly there are inequities as the value of property varies by ISD such as in the Houston area where there are projects in some areas and the neighborhood called River Oaks where George and Barbara Bush use to live before he was elected President. There is an ISD in east TX who had many oil wells which made them so rich they chose not to accept any state/federal money for their schools! I've seen some of the Greek houses at UT Austin and I'm sure they could have a rather heafty property tax bill. I'll see if I can find out about that.

[EE-BO]

Originally Posted by bejazd

Could someone describe the greek housing/neighborhood at U-Texas for me? and the method for determining property taxes? (Never been there, I know nothing about Austin.) Somebody once described the houses there to me as "lodges" but from the few pics I've seen, they look more like traditional houses or modified apt buildings. To me a lodge is a meeting room with a kitchen/bath, an office, and maybe a house dir's room.

Here at Texas there really are not any lodges per se. A couple of chapters have tried something like that but in today's market it does not work out.

Real estate is so expensive here that you have to house as many students as possible since chapter dues cannot possibly pay the costs for a house. Plus as time goes on there is more pressure (and I think this is a good thing) for fraternities to have more of their formally organized social functions offsite since it prevents damage and also- by virtue of a cleaner and less noisy environment- encourages more people to live in the house.

In 2004 a big chunk of West Campus- including most of the major Greek houses- was rezoned to allow for more skyward and dense development. This is a city-wide initiative targeted at several highly desireable areas close to downtown, not just West Campus. And in West Campus in particular it was important since the zoning was so outdated (meaning the # of residents per acre permitted was so low) that it was pretty much not worthwhile to build anything new.

The average Travis County property valuation up until 2004 for a UT fraternity house hovered around $800,000. As of 2006 the average is now just a few thousand dollars shy of $2.0 million. And SAE is the only property that underwent major improvements in that time. This increase is all about land value.

Property tax rates for the West Campus area were 2.5254% last year- so you can do the math from there and see just how bad property taxes are (prior to 2006 they ran around 2.75%.)

The bottom line is that most fraternity houses are located on land which is now zoned for 4-17 story high rise apartment buildings- and the value of the land reflects that potential development, not the fact that the land currently holds a single house making very inefficient use of the space.

In 2006, the most valuable fraternity house at UT was valued at $5.3 million. The lowest was about $663,000, and most fall in the $1.2-2.5 million range. In 2004, the most valuable fraternity house in West Campus came in at $1.26 million. It has changed that much that fast!

The larger chapters can afford this- but it has driven rent costs up strongly- plus it makes it harder for alumni to hold on to a house for future use if a chapter gets suspended or kicked off for a period of time.

Quite frankly, unless things change dramatically in the world of UT student housing- I think there is a good chance that fraternity houses as they exist today will be gone within 20 years. Already there are easily half as many of these houses as there were 15 years ago.

The future is more high-rise type chapter houses with individual apartments and a few common area rooms that can be readily coverted to rental use for the general student population if a chapter has trouble with numbers or probation for any period of time.

The basic costs to run these properties is just too high for alumni to cover the costs for a house to sit partially unoccupied when chapters go through natural low membership numbers at various times.

[bejazd]

Thanks for the background info. So it sounds like this was not a plan to rid the campus of greek housing, but an unintended consequence of re-zoning for higher density residential or mixed use commercial/res that would generate more tax dollars. is that more or less correct?

hmmm. sounds familiar! In Calif, your property tax is based on 1% of the assessed value at the time you purchased it. Prop 13 prevents your property taxes from being increased more than 2% per year, unless you make a major renovation/addition, in which case your property can be re-assessed to include the value of the improvements. But, I'm aware of at least one case where a public university, through its foundation, has been trying to get private property through eminent domain in order to build a hotel/conference center complex and mixed use commercial/residential. It's not necessarily intended to generate tax dollars or get rid of the greek housing (which just happens to be sitting in the area the univ mosts wants) but it would generate income for the university foundation.

so what happened to the fraternity houses at Texas that did close? were they able to sell? were the properties bulldozed for new construction?

[EE-BO]

Originally Posted by bejazd

Thanks for the background info. So it sounds like this was not a plan to rid the campus of greek housing, but an unintended consequence of re-zoning for higher density residential or mixed use commercial/res that would generate more tax dollars. is that more or less correct?

so what happened to the fraternity houses at Texas that did close? were they able to sell? were the properties bulldozed for new construction?

You are correct- it was not any kind of attempt to get rid of the Greeks. The fact is that if a building at UT has a name on it, that person was likely Greek here. So we are given our due accord in the end.

The real problem is that UT houses around 3% of its 50,000+ students on campus. And there has been incredible financial pressure on off-campus housing prices given a general boom in Austin real estate which is driven in the long term by city growth.

The city realized that it is important for West Campus to house a significant number of UT students- and the new zoning was created with the specific hope that the result would be room for 10,000 more students to live there. And West Campus- as defined by the rezoning- is about 9 blocks long and 6 blocks wide.

In the short term there are a lot of brand new complexes being built which are incredibly expensive ($700-800 per bedroom per month), but as those buildings age and more complexes are built the rent will come down.

As the rent comes down, the speculative value of undeveloped land in West Campus will come down- but for now it creates what I see as a 2-3 year squeeze on any fraternity or sorority that is renting or seeking to build a house.

That said, in the long run the land will be much more valuable than before in any market since you have a ready-made set of residents (UT students) and so Greek housing as we know it at UT is destined to change for all but those houses where the average member does not care what it costs to be a member or live in the house.

With respect to sororities- I think 7-8 houses fit that description. For fraternities- the number is closer to 5.

The rest will be in more condo-like settings within 10 years in my view.

Just about every fraternity or sorority house that has sold here in the past 2-3 years has been bulldozed. And right now there is just one in play and it is under contract pending a negotiation for new tenants vs redevelopment.

In case you are interested- the old Gamma Phi Beta house is being torn down right now. Gamma Phi left UT in the late 1980s and Lambda Chi took over that property after a brief hiatus from campus since the mid 1980s when they sold a prime location property next to SAE which is now House of Tutors.

Lambda Chi sold that house in 1992 to a local developer who was a Delta Upsilon at UT and bought his own fraternity house in the 1990s to turn into a dorm (which later became a second house for KA and is now the site of a huge new apartment complex near completion.)

From 1992 until recently the old Gamma Phi house was a women's dorm and when I was in West Campus 2 weeks ago I noticed they were tearing it down- and I assume that land will soon be a new high rise apartment complex.

Greek Life won't die here- but for all but a very few top houses a new reality is coming in how we exist. And I think that new reality is high rise condo-style houses on small plots of land which can be readily converted into rental property at times when a chapter has financial difficulties.

But any way you look at it- the number of traditional WASP Greek organizations living in large houses has dropped and will continue to do so.

[Tom Earp]

From the sounds of it, if the Greeks are going to survive at U Tx, they will have to move farther away from campus. But not knowing the lay out of Austin, I don't really know.

But say if they can, then maybe a bus system for them to and from campus?

Just a thought?

[EE-BO]

Hard to say Tom.

The more alumni I speak to- the more they like the idea of moving further from campus- but in Austin that is very hard.

To the south of campus you have a lot of government offices leading into downtown plus a neighborhood of older homes zoned commercial, plus the ACC campus. So that is out.

To the West is Pemberton which is one of the 4 most expensive neighborhoods in Austin- every bit as pricey as West Campus and not a place where a Greek House would be tolerated.

To the North is a neighborhood growing in value at a very fast rate and where other past attempts by Greeks to move in have been vetoed.

And to the East you have ground zero for the gentrification war over Austin- and a fraternity moving into that area would find itself getting lots of negative publicity very quickly.

Going out further from there you are still in moderately expensive areas and very quickly saving a little money just isn't worth it since you are so far away from campus.

Frankly I think it might be healthy if the number of fraternities went down a bit more. Granted I don't want us to be a casualty, but while Greek Life at UT is running at 11% of students- that is reflective of an explosion in the number and number of members of multi-cultural or race-specific Greek organizations, offset by a pretty strong decline in the number of the more Anglo groups the average person tends to think of when they think "Greek".

I am not saying that to imply anything negative- but rather to further point out how the housing situation manifests itself in this.

A lot of these newer types of Greek organizations have a very different approach to their existence plus they are fairly new, so having that giant house on a hill- while something to strive for- is not an expectation or requirement for rushees. Members who go to those groups don't expect to have that. And so those groups do just fine in West Campus with a very small house holding just a few members, or with no formal house at all.

However, the kinds of organizations that composed virtually all of Greek Life here 10-20+ years ago DO have a history of being in a large house- and house size is a very important factor in rush. Housing costs are killing a lot of these organizations.

Add in the fact that UT admissions have become intensely competitive. Quite frankly, a lot of guys who would have gone Greek here 10-20 years ago in the Greek environment of that time are not so interested now because they are worried about the demands on their time.

The party kids who want to float through college on a 2.0 aren't coming to UT anymore. They can't get in.

They are instead going to Ole Miss, Alabama, Tech and other places (and it is not a coincidence that Risk Management incidents have skyrocketed at those schools while UT has actually become a lot calmer place.)

I see that as a good thing since it will be a good environment for chapters that adapt and take a more balanced approach while still having fun.

But even so, that still leaves the issue of perception versus reality when it comes to housing. I think many of the top fraternities here will keep their properties and prosper for a long time.

Yet I cannot imagine any new giant homes will be built from scratch for Greek use. The SAE rebuilding a few years ago was the last- and it had been decades since that had happened here anyway.

[DeltaBetaBaby]

Here comes a hijack!

I am going to be in Austin from the 6th to the 12th of August. What do I absolutely need to do/see?

/hijack

[EE-BO]

You need to have breakfast tacos at Taco Shack (various locations- Google it.)

You need to have migas (also breakfast) at Bodega Vallarta at the intersection of South Congress and William Cannon (best if you can speak Spanish, but you can get by with English.)

The museum scene here is okay but not jawdropping- walking around the UT campus is more fun. And if you do drop by campus, check out West Campus (just to the west of Campus ) and you will see all the redevelopment we have been talking about here. Campus here is an electric place- really worth the time if you want to wander about a bit.

If you like greasy burgers and milkshakes- check out Players on MLK right by campus.

For finer dining, Chez Nous (traditional country French cuisine) or Mirabelle (more continental and elegant) are must tastes- very unique in the grand scheme of fine dining in the US.

There are lots of local walks and pools that are great to see- but I am not mentioning them because we have had so much freaking rain that most of them are closed right now.

Austin Wine Merchant on 6th street for great wines (Chez Nous and Mirabelle have BYOB as do most top restaurants here.)

Outdoor art festival every weekend at 6th near West right across the street from Katz's Deli.

That is about it off the top of my head. You are off-season for the various festivals and the rain has forced closure of most public recreation areas- but the great food and campus offer some good times.