Rising property taxes making it hard for Austin businesses to stay open

Over the Rainbow toy store closing in Austin on Jan. 31, 2017. (KXAN Photo)
Over the Rainbow toy store closing in Austin on Jan. 31, 2017. (KXAN Photo)

AUSTIN (KXAN) — The price per square foot in Austin continues to set new records. While properties are worth more, landlords are offsetting that cost through higher rent, which is making it hard for some businesses to stay afloat.

Stanley Moore remembers signing a retail lease typed on a typewriter 42 years ago. Things have changed for his Over the Rainbow toy store in Tarrytown, which specializes in toys and children’s books.

“There’s an educational, developmental aspect to many of the toys in the store,” says Moore.

But on Jan. 31, Moore’s lease is up and he’s closing the doors for good. Moore attributes the closure to online retailers and the ever-increasing cost of retail space passed down to him from taxes on the entire shopping center.

“Because of economic factors that are beyond the control really of the shopping center people, they have to raise the rents,” said Moore.

Travis County Taxes (estimate)
AISD: 54%
City of Austin: 20%
Travis County: 17%
Hospital District: 5%
ACC: 4.6%

“Now you have this vicious cycle going on where everything is increasing; the rents, the taxes, the rents, the taxes,” said David Simmonds, president of Retail Solutions.

He says leases in Austin are 30 to 50 percent higher than just five years ago. Not because of maintenance or insurance but due to the sky-high land values and the city and county taxes.

“People feel that 2018 will become a tipping point where these taxes have just become too high,” said Simmonds. “These mom and pops are getting squeezed out. More regional and national companies are going to come in. That will make Austin less authentic, make Austin less Austin.”

Moore says he’s leaving with no regrets. “It’s just been fun for me for all these years you know,” said Moore.

He has only good things to say about the property owners, his staff and his customers. His only goal now is to sell all of his inventory by Jan. 31.

Austin city leaders are currently working on the last draft of the city’s new zoning codes. Advocates hope what’s known as CodeNext, will help make Austin more affordable. But that last draft has been delayed ahead of what’s sure to be a passionate debate at city hall.

Over the Rainbow will join stores like Zingers, the Dog and Duck Pub, Uncommon Objects, and the Flying Saucer that has moved or closed due to leasing costs.


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