Only one citizen protests pricetag

The City Council voted 7-0 Thursday to buy back the rights to a key block of downtown property that had originally been transferred to Computer Sciences Corporation (CSC) in the deal to convince the company to locate downtown. (See In Fact Daily No. 188, April 6, 1999.) The lot, known as “Block 21,” is located on the edge of the site for the new City Hall and will likely be used for some civic purpose such as city offices or a new central library.

Council Member Will Wynn laid out the philosophical justification for buying back the land so soon after it had been sold to CSC. The company has already built on two other blocks it acquired from the city, while the third block was slated as its optional “expansion” block. After city officials raised the possibility of reacquiring the land, CSC officials admitted that they had no immediate plans to build on it because of the effects of the economic slowdown. “This is a business-cycle opportunity to get the block back, to pay a fair price for it,” Wynn said. “It’s a lot less expensive for us to buy it than anybody else,” Wynn said. He described the price tag as an excellent deal for the city. “I have a fair amount of experience in commercial real estate downtown . . . I sort of hate saying this, but if I owned the development rights on this block, would I sell them for eight million dollars? No.”

The actual price tag for the transaction is $4 million, and the city will forgive $4 million the company was scheduled to pay the city as part of the lease agreement. While the land deal is commonly referred to as a sale, the company had actually leased the rights to build on the property. But the lease was such a long-term arrangement, Wynn said, that it amounts to ownership. “At 139 years, they in effect own that block. From commercial lenders to real estate subtenants they own that tract. We are taking advantage of a business-cycle opportunity to get that tract back,” he said.

The land has been valued at between $6 and $8 million, but a city staff presentation put the actual net cost to the city at $1.39 million. City Finance Director John Stephens went through a lengthy presentation and even offered supporting testimony from a UT accounting professor to back up the city’s claims. “This is not Enron accounting,” Stephens said. Those numbers from the city finance department factor in the value of incentives the city won’t have to provide to CSC if it doesn’t develop the lot. The $1.39 million will come from city bonds issued in the summer of 2001. Because of interest-rate fluctuations, the city received more money from the sale of the bonds than originally anticipated.

In all, Wynn said, the city would benefit from having the lot developed instead of remaining vacant for the next 14 years. Wynn was not on the Council when the original CSC deal was approved, but took the opportunity to defend the deal as one that spurred downtown development “After CSC spent tens of millions on the other two blocks, and after their investment has spurred tens of millions of dollars of investment on the surrounding blocks . . . block 21 is more valuable today than it was in 1998.” Council Member Daryl Slusher, who was on the Council in 1998, agreed. “The CSC deal became the catalyst for getting development to move downtown,” he said. “We were in a situation of hyper-growth, and trying to steer that growth was in the best interest of the city.”

Those opposed to the original CSC deal also criticized the city’s arrangement to buy back the block. Activist Paul Robbins compared the $4 million price tag to “ransom” for land the city should have kept in the first place. The tech-sector downturn that has prompted the company to sell the land back to the city, Robbins said, was a validation of his original warnings about the deal. “I have been vindicated,” Robbins said. “I could say something disingenuous like ‘I hate to say I told you so,’ but we all know that would be a lie . . . because we all know I’m gloating over it!”

Robbins also took exception to the characterization of the deal as beneficial to the city and said even the city staff’s figure of $1.4 million for the net cost of the buy-back was too much. “The CSC deal was the dumbest thing that you have done in your tenure,” he concluded.

Slusher defended the buy-back, predicting that any disagreement over the cost of the deal would eventually be forgotten. “It’s a little controversial right now,” Slusher said, “But I think that from this day forward, once we get a city facility or civic use on that property people are going to appreciate that and this small controversy that we’re hearing today will just fade away.”

Although much of the discussion focused on the money involved, there is another aspect to the agreement. As part of the buy-back, the city will gain control of all of the parking spaces under the new city hall. If CSC had kept the block, it would have retained access to 247 spaces in the garage. The deal also calls for CSC to relinquish 100 spaces it would have controlled in the parking garage for the Austin Convention Center.

Alvarez questions inconsistent treatment for similar properties

The City Council yesterday postponed consideration of zoning for 21 commercial and industrial tracts that had previously been excluded from the Holly Neighborhood Plan.

Mario J. Flores of the Neighborhood Planning and Zoning staff told the Council that a group of neighborhood planning team members had recently agreed to allow those properties, all in the 5th and 6th Street corridor, to be zoned LI-CO-NP. Flores noted that one property owner had filed a valid petition against rezoning, but had agreed to withdraw it if the property kept its LI zoning under the proposed conditional overlay scheme.

But Council Member Raul Alvarez objected to the zoning changes, because the properties were not being treated in the same manner as other industrially-zoned properties within the neighborhood planning area. In addition, Alvarez was concerned about setting a bad precedent for other eastside plans.

He said, “How we deal with industrial properties in East Austin . . . (affects) not just the Holly Neighborhood plan,” but other East Austin neighborhood plans, particularly Govalle, which contains many industrial properties. “My concern is, however we deal with this will influence the outcomes of that particular planning process.” He noted that in the East Cesar Chavez Neighborhood Plan, all but one industrial property—a tortilla factory—had been downzoned.

He also told Flores, “There’s a difference of opinion about whether this was endorsed by the neighborhood planning team.” Council Member Daryl Slusher, who attended a neighborhood meeting with Alvarez, backed his colleague’s interpretation. Slusher said most of those in attendance were affected property owners. The group at the meeting may have agreed to the proposal, but neither Council member was convinced that the group actually represented the team.

Assistant City Attorney Marty Terry told In Fact Daily the Council had previously carved out of the Neighborhood Plan Combining District (NPCD) the LI properties being considered Thursday. “Today they were asked to bring them within the NPCD neighborhood plan combining district) zoning district and establish the level of site development regulations. There is an additional set of properties that Alvarez wants to treat the same as he’s treating these. They have been zoned,” within the Holly Neighborhood plan district. But Alvarez wanted properties within the Neighborhood Plan to be consistent with one another, and also consistent with Govalle.

When asked how postponing the zoning would affect the East Austin Overlay, Terry said, “Under the Neighborhood Plan provision of the code, those properties that were before us today that were carved out of the zoning district, are going to continue to be subject to the overlay until we bring them back one way or the other.” However, she said the overlay does not apply to the other set of industrial properties within the NPCD. “If there is a desire to have the overlay apply to those, we would have to bring forward an amendment . . . to take them out of the Neighborhood Plan . . . and rezone them again.” Because those properties are within the combining district, they are not subject to the overlay, which requires conditional use permits for most industrial activities. (For more on the East Austin Overlay, see In Fact Daily, Aug. 30, 1999, Sept. 3, 1999 and In Fact Nos. 97, http://www.infactdaily.com/archives/june_1997.html

and No. 193, http://www.infactdaily.com/archives/may_1999.html

Flores told the Council the Govalle plan would probably be ready in September or October. The vote in favor of postponement was 6-0-1, with Slusher off the dais.

Monday holiday reminder . . . All city offices will be closed, as well as the majority of other governmental offices, in honor of Martin Luther King Jr. In Fact Daily will also observe the holiday and return on Tuesday . . . Bear Lake PUD put off . . . The City Council postponed hearing Stratus Properties’ proposed Bear Lake Planned Unit Development until Feb. 14, at the request of neighbors and others . . . Few speakers on single-member districts . . . The City Council held a public hearing on single-member districts last night. The only speaker was Charter Revision Committee member Ricky Byrd, who told Council members he was concerned that single-member districts would not guarantee ethnic diversity on the Council. The majority of the committee has submitted a report to Council endorsing the single-member district concept. Byrd predicts the issue will attract more attention if Council members choose to put it on the ballot in May . . . But will the staff be safe? . . Texas Monthly editor Mike Levy will be one of 21 members of the new “Public Safety Task Force” approved by the Council yesterday. Levy may get to interact face-to-face with some of the city employees he frequently blasts in his numerous e-mails criticizing city government. The group will include representatives of different fire-fighter and police organizations, community groups like LULAC and the NAACP, and government agencies that would be called upon to respond to a terrorist attack. The task force was approved on consent only after Council Member Daryl Slusher issued a call for civil behavior. “I did have a concern about an appointee that sometimes doesn’t treat staff with respect,” Slusher said. “I’m hoping that everyone will behave and conduct themselves in a respectful manner toward everyone else involved.”. . Anyone baking this weekend? . . . The editor inadvertently passed on an urban legend to many of you yesterday. It’s a false story about Neiman Marcus charging $250 for its cookie recipe. I apologized, but several readers only wanted to know, “Is the recipe any good?” I guess there’s only one way to find out. To read more about the urban legend, which has apparently been around for at least 50 years, check out the following site recommended to us by Andy Martin: http://www.snopes2.com

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