No. 8: Lakefront tax exemption makes a splash

They’re some of Austin’s most desired and most expensive addresses, nestled along Lake Austin near Loop 360. Yet they’ve paid nothing in city property taxes. Ever.

That changed after an American-Statesman report in June explaining how a vestige of an annexation agreement in 1891 resulted in a waterfront tax exemption for 400 properties with an average home value of $2.1 million. The argument at the time of the grandfathered provision was that the city was unable to provide emergency services to the area and so it would be unfair to tax those properties the same as other residents.

Others cited fairness in arguing against the exemption. “We have a brilliant opportunity to realign our city’s equity ... to those that have not been so lucky,” Austin City Council Member Natasha Harper-Madison said.

Two weeks after the Statesman report, the City Council voted to repeal the tax exemption, effective in 2021. City officials estimated that taxing the Lake Austin properties will generate $3 million in city revenue each year.

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