When California Developers Move Into Your Neighborhood

By Kathy Mitchell
July 1991; pages 6-7, 8; Volume 2, No. 7

...You Move Out

On June 20 city council unanimously passed a rezoning ordinance for East 11th Street that will enable Bennett Properties of California to construct a mall (Capital Town Center), a new skyrise office building, an 8 screen theatre, a 400 room luxury hotel, a multistory parking garage and a health spa on property between East 12th street and 8th at IH35. The city council rezoning ordinance created a new district, called a Neighborhood Conservation Combining District (NCCD), and may lead to creation of a Tax Increment Finance District (TIFD), with city council approval. The new NCCD will allow buildings of up to 220 feet near the freeway, and five story commercial development adjacent to homes on 11th and 10th 1/2 Street.

While Bennett claims that the development will bring new jobs and new business to revitalize East 11th from the freeway to Keeling Jr. high, many business owners and renters fear they will soon have to move out to make way for the larger, more expensive business space. Unlike the redevelopment efforts slowly taking place in the surrounding residential neighborhoods, this project might merely bring West Austin residents to a gentrified East side, while pushing East Austin further East.

"I'll have to move farther out." said Willie Smith, leaning over a broken chain saw in his 11th Street lawn mower repair shop. "I won't be able to stay here. This is a seasonal business, and people right now don't have the money. These buildings they're gonna be for small business, but $500 or $600 a month would be out of the question."

Eddie Watson, Smith's brother-in-law, sat in the open door of the shop. "They should take that into consideration after they've planned all this other thing. How much time are they gonna give the person in the area to move out. Because if he don't have no place to go, what's he gonna do with his equipment? He can't store it in his house. He can't put it in his truck."

According to Gary Wardian, representative of Bennett Properties and a Vice President of the East 11th Street Village Association, "viable" businesses on the street will survive the transition. "Businesses on the corridor will be renovated property by property," he said. "If they have a viable business, they will get more customers and that will justify higher rates."

Smith, Watson and other area business owners emphasized that any redevelopment program needs to include a relocation effort, and the new developers need to provide money to help small minority businesses rebuild in some other area. David Hill Jr., proprietor of Mr. David's Hair Salon, has rented his building on East 11th for 21 years and wants to stay on the East Side. "I could have left 15 years ago when things started going bad over here, but I chose the east side because I wanted to. I would relocate in the mall, providing that I get relocation money. If property values go up, and rents, that's why we need relocation money. This is something that needs to be addressed. That would be a concern, whether or not we get priced out. I haven't gotten any assurances at all."

Rev. Freddie Dixon, President of the East 11th Street Village Association, admitted that the organization has not discussed its proposal with all the businesses and renters within the boundaries of the new NCCD. "The people who are there do not own their place of business. They are renting. Therefore they can't say anything because they are only leasees," he said in an interview. "We have not gone door to door or block by block. When you have one major battle you have to focus all of your attentions on that one battle. Our battle has been to get the zoning and we have had to go through 10,000 hoops."

The address listed with the city for the East 11th Street Business Group is 3101 Bee Caves Road #315, in the same west Austin office complex as the listed address of Richard Mathias, architect for the Bennett project, at 3103 Bee Caves #315.

Hill and his landlord, James Hamilton, generally support the Bennett project. "From the onset that 11 acre tract had houses. The church sold to Joseph for the Holiday Inn and then Joseph sold to Bennett. It's been a quick turnover of that land," he said. "This is nothing new. It's been on the drawing boards of some corporation for years, and now I would like to see it become a reality."

According to Hamilton, Bennett had approached him once to sell his house, but had offered less than the real value of the property. The large vacant tract across the street is overgrown with scrub trees and weeds and used as a dumping ground. Homeless people sleep in the ravine near the freeway. Needles litter the ground just off the street. "It's a shame that they leave it in that condition," he said, looking across from his own carefully tended garden. "They can all get some sickles and come out there tomorrow and start cleaning. They don't have to wait for no vote from city council. But that has been one of the strategies of developers in the past. They want to see something deteriorate to where owners will sell for little or nothing, to depreciate the properties and then gobble it up and then package it up and then rezone it and then make a land killing deal off of it. Now with this zoning change, it should increase the value of my property. It gave me a 60' height elevation and I'm entitled to air right space. So I'm selling by the square foot commercial. I'm not selling it as no residence."

When California Developers Move into Your Neighborhood Association...

Neighborhood Conservation Combining Districts, as the name implies, were designed to protect older neighborhoods and place the planning and redevelopment process in the hands of those who live and own property there. The zoning ordinance, drafted in 1985, calls for the NCCD "to preserve and protect older neighborhoods by allowing modifications to the zoning regulations in accordance with a neighborhood plan for development and conservation," and specifies that the "neighborhood plans are intended to enhance the desirability of living in older neighborhoods." The NCCD plan, created entirely by a local neighborhood association, overrules Austin's compatibility requirements within its boundaries, and facilitates development for local land owners by eliminating fees and providing city staff time to the neighborhood association.

Under the ordinance, the neighborhood association responsible for the plan and the district must contact all property owners in writing of its intention to create the NCCD, and further, notify property owners of all association meetings on to the districting proposal. The only NCCD ever before created in Austin, in the Fairview Park area at Riverside and South Congress, strictly limited building heights and commercial densities in order to preserve and foreground the character of the neighborhood. The Fairview neighborhood plan focused primarily on residential needs.

In this case, however, the East 11th Street Village Association has created a "commercial" NCCD, and in the words of one planning department reviewer (8/8/88), "there appears to be a question of the intent of the Ordinance as it relates to a 'NCCD commercial.'" Area neighborhood associations have become concerned about the compatibility waivers, as well as the heights and densities approved by city council.

Although the East 11th Street commercial district traverses the domains of several already constituted local neighborhood associations, none of these groups have participated in the development of the new NCCD. In fact, while the East 11th Street Village Association supports the proposed mail, wrote a plan, and spearheaded the effort to get the zoning change through city council, several surrounding neighborhood associations have protested, including Blackshear, Anderson and Guadalupe. On June 5th the Blackshear Neighborhood Development Corporation filed a Certificate of Resolution protesting the zoning as it related to subdistrict 3, "in order to support the overall quality of life in the neighborhood and of the quality of life of the residents of property owned by the corporation."

Many area residents do not know exact1y who the East 11th Street Village Association represents. One business owner on 11th street, who wished to remain anonymous, had never been contacted by the organization and did not know how the changes would affect his holdings. The Guadalupe neighborhood association, a property owner now in the NCCD, filed a formal list of concerns with the city on May 28, noting that the zoning ordinance requires notification of all property holders of intent to create an NCCD, and notification of all planning meetings. Neither the Guadalupe Area Neighborhood Association, nor the Guadalupe Neighborhood Development Corporation had received notification of any meetings until March 1991, according to the complaint, although both groups own land in the new district and the project had been in the works since 1986.

The East 11th Street Village Association originally called the East 11th Street Business Group, formed to work on a version of the current project in "April or May of 1986," according to Gary Wardian. Land office records show that Bennett properties, under the name Austin Skyline Associates, began to purchase property along IH35 and East 11th in April of 1986. "The East 11th Street Village Association began in 1986 to discuss what to do with that area." said Wardian. "I and the Bennett Co. were part of those initial conversations."

The East 11th Street Village Association is chaired by Freddie Dixon of the Wesley United Methodist Church in central east Austin. According to its "Neighborhood Plan," required by the city before NCCD zoning can be granted, the association has over 50 members including civic and religious groups, property owners, business owners and residents. However, Dixon cannot currently provide membership lists for the Association. Gary Wardian of Bennett Properties is a Vice President, and according to receipts from the city planning office, Wardian as well as other Bennett employees regularly sign for documents as representatives of the East 11th Street Village Association. The address listed with the city for the East 11th Street Business Group is 3101 Bee Caves Road #315, in the same west Austin office complex as the listed address of Richard Mathias, architect for the Bennett project, at 3103 Bee Caves #315.

Under the new zoning, the East 11th Street Village Association will oversee Bennett's minority hiring program for the project. In its plan, Bennett properties estimates that the development will create 3000 permanent jobs, along with 3500 construction jobs. Job creation, for an area with a 13.6 percent unemployment rate (double that of the rest of the city), is undoubtedly one of the most important factors for successful redevelopment. According to 1980 census data, reported in the neighborhood's plan, 32.66 percent of the area's population have incomes below the poverty level, and East 11th itself is the census tract with the lowest median income in the city.

The city planning department recommended that, for the mall to economically improve the area, Bennett should commit itself to minority contracting in the construction phase of the project, and also to minority vender participation and permanent full time hires. The council deleted this condition, indicating that the East 11th Street Village Association would develop a private agreement with Bennett.

Inks and Navasota intersection

In its letter of May 3, (the "Agreement") Bennett agreed to hire minorities for 35 percent of the construction jobs, recruited and trained by Local 790 of the International Laborer's Union of North America, and to contract 15 percent of the total project construction and 15 percent of the professional construction design to competitive Disadvantaged Business Enterprises, prioritizing East Austin residents first, then Austin residents. It also promised to set up a foundation "to promote the stability of the East 11th Street corridor, its business environments and surrounding residential community."

It did not offer any permanent hiring or minority vendor goals in its agreement, however. According to Wardian, such targets would have been premature. "It's important to understand that the Bennett development team will not be the employer. We are creating a shell. It's premature to create permanent hire goals at this time. The agreement we made was already awfully detailed for this stage in the zoning process."

Bennett also agreed that the East 11th Street Village Association, Inc. would coordinate with the project manager during and after construction "to oversee minority involvement in job training, vendor opportunities and employment." Said Wardian, "East 11th Street is the logical group to oversee these contracts. Neither I nor Bennett by any means controls that organization."

Getting into a "TIF" Over Redevelopment

According to Dixon, the next step might be a TIFD. "Certainly tax increment financing will be one of the things we will lay on the table. Bennett will need some kind of tax increment financing in the neighborhood of $50 to $70 million. If you subtract that from a $300 million project it is less than or right at a quarter of the cost."

Early this year, before the council began to look at the NCCD proposal, Bennett supplied the city with preliminary tax revenue information and development projections, asking that the Economic Development staff look at the feasibility of a Tax Increment Finance District (TIFD) "to support a bond issue of $60 million for the construction of a parking facility and other public improvements in conjunction with the proposed mall." In a March 1 letter from the city to Gary Wardian, planning staff noted that debt service obligations would exceed the tax increment collected by the project, using the numbers that Bennett had provided. However, the staff also noted that their numbers were rough, and requested specific site plan information, market studies, anchor tenants and commitments from a mall company, construction schedule and a time table for public improvements, and sources of financing. To date, Bennett has not yet made any of this information available.

Basically, a TIFD most often generates public funds for the redevelopment of "blighted" areas by issuing a bond, to be paid off from the extra tax revenues produced by the development. Creation of a TIFD would freeze the tax revenues for the city, county and the school district at their current levels (the base) within its boundaries. Any increase in property taxes over the base, due to inflation and development, would flow to the TIFD to be reinvested in further development and to pay the note. The TIFD also provides developers with the power of eminent domain to build roads, ramps, parking etc.

While property owners would see their taxes go up with their property values, none of the public entities (including the school district) would see any of that money until the life span of the TIFD (up to 20 years) had expired. In order to provide partial protection for low income and fixed income home owners in areas destined for redevelopment, then Sen. Craig Washington of Houston in 1989 passed an amendment to TIFD law fielding one third of the increment to the construction of low cost housing to partially replace, over 20 years, the units lost due to redevelopment. The TIFD is not required to build the new housing inside its boundaries, however, and the new amendment has yet to protect those pushed out by eminent domain or higher taxes.

Views from Guadalupe Neighborhood Association
Elena Lopez's magnificent view leaves developers dazzled, but the Guadalupe Neighborhood Association fights to keep Guadalupe people from having to move once again.

Currently Austin does not have a single TIFD. Galveston has ten, Houston has three and El Paso has one. Many of these are mired in legal battles, and the effort to create a TIFD to redevelop the predominantly black Fourth Ward in Houston has been met with strong local resistance. A Resolution Opposing a TIFD in the Fourth Ward/North Montrose, written by Houston Common Ground and signed by 30 organizations to date, calls the TIFD "an outrageous land and tax grab" for the benefit of (in this case) two large corporate developers. Supporters of the resolution include Linwood Johnson, representing APV, and Darrell Patterson from Freedman's Town. "We have been fighting this thing for a year and a half," said Jessie Stanford of Common Ground. "People don't realize that it takes money from the city tax base, and every one else pays the difference. The money's got to come from somewhere. Yet it does nothing for housing for minorities, the poor and the homeless."

Turning $622,000 into a Neighborhood Lifeline

The project sponsored by the East 11th Street Village Association affects the redevelopment zones of five neighborhood associations; Robertson Hill, Anderson, Blackshear, Guadalupe, and Prospect Hill. Since the late 70's area residents have joined neighborhood associations and secured block grant funds to facilitate East Austin's recovery from the federally sponsored Urban Renewal projects of the sixties and seventies.

Blackshear, an area named after a prominent black school administrator and bordering the NCCD on the southeast corner, lost large tracts of low income housing during a "slum clearance." Despite complaints from residents unable to successfully relocate their homes and businesses, the Urban Renewal Agency failed to rebuild the area. In the 70s the city tried to start building houses, also without success. "The city, together with the Austin Housing Authority moved a house in there, but it was so shabby that they had to move it out again," said Karen Paup of Texas Low Income Housing, a contractor for area development corporations.

In 1983 the Blackshear Resident's Organization, formed during Urban Renewal, decided that residents would have to rebuild the area themselves. The neighborhood association created a nonprofit development organization, Blackshear Neighborhood Development Corporation (BNDC), and applied for CDBG funding. In 1984 BNDC built five new houses which rent to low income families for $275 per month. Between 1984 and 1986 the organization completed eight more houses and created a "Homestead" for the elderly, a shared house for four residents. Between 1988 and 1989, finished rebuilding the northern end of the neighborhood, and has to date constructed 26 units targeting low income and elderly East Austinites.

Robertson Hill and Anderson have also built new homes and refurbished existing homes between 11th and 12th and north of Keeling junior high in the last ten years. According to Ray Galloway of the Anderson Community Development Corporation, the mall may be an either/or situation for the area's elderly and low income residents. "With a development like that there's no way they are going to build without homeowners and tenants moving out. Its either big commercial development or homeowners, people who live there. One of the two got to give, there's no two ways."

Elena Lopez, still living in the house at 9th Street and IH35, fears that she may be one of the residents forced to relocate. Along with the Guadalupe neighborhood association and the Guadalupe Development Corporation, she and her daughter petitioned the city council to remove their property from the rezoning area. All were turned down on a 6-1 vote, with only Max dissenting. Lopez, who bas lived at 801 E. 9th for 36 years, says that she will not sell or leave her home. "From here I can walk everywhere and especially to the church. I was married in the Guadalupe church and want to stay near the church."

Preserving an Austin "People Belt"

Residents in the Guadalupe area, bounded by IH35, East 10 1/2, the cemetery and East 7th to the south, formed the Guadalupe Area Neighborhood Association in 1980 to fight a park proposed by Jake Pickle, Lady Bird Johnson and the Daughters of the Republic. Known as the French Legation Park, it was boosted "bridge East and West Austin through revitalization." It would have required the removal of eleven frame houses, four of them owner occupied, in order to create a city park around the Legation.

In an Statesman interview in Feb. of 1980, one resident remarked that the Legation, with its brick wall, iron gates and entrance fee, was not part of the community, and no one in the neighborhood had asked them to build the park. Kevin Batt of the River City Tenant Council compared the struggle to that fought by environmentalists intent on saving the Barton Creek greenbelt. "The neighborhood is trying to prevent a greenbelt from displacing a people belt," he told the Austin Light. "In both cases the groups are fighting unwanted development."

The conflict over the Legation ended in a coup, when local residents with the support of then councilmember John Trevino, original sponsor of the proposal, assumed control of the $622,000 CDBG grant that the city had designated for construction of the park. In its first newsletter, the Guadalupe Community Development Project laid out the redevelopment philosophy that would guide its actions for the next ten years. "These people want to take our homes so they can build hotels and shopping centers in their place. The Guadalupe project will fix up homes so people do not have to sell and move out, and it will build new homes to keep the community alive."

Incorporated as the Guadalupe Neighborhood Development Corporation, it put together a neighborhood plan that included housing repair, new low income duplexes, a Barrier Removal Program (ramps for the elderly), and a revolving loan fund. By 1986 the group had purchased most of debilitated rental houses on Inks Avenue near the cemetery, renovated them, and resold them at a low price to families that had been renting them for as long as 30 years. It pressed city council for Capital Improvement Project funds for sidewalks and streetlights, putting walkways on at least one side of every street in the area.

Now freshly painted houses with abundant gardens dominate the neighborhood. A number of historic buildings, renovated by private citizens within the guidelines of the neighborhood association, look as they did in the 1880's. The community deposits money from the rental property in the development account for future projects, and the nearly half million dollars in housing tracts owned by the association provide collateral for future bank loans if necessary.

Lawrence Gomez, born in the neighborhood, now rents an Inks Street duplex from the association. "A lot of people moved out but they have moved back. There's a sense that my roots are here. My kids and grandkids play in the same places I played in."