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No end in sight for Midtown Live loan argument

Tuesday, March 29, 2005 by

The discussion continues over whether a loan proposed to rebuild and expand Midtown Live—or any city-funded economic development program—is appropriate.

On Monday, City Manager Toby Futrell continued to defend her decision to ask the City Council to make the controversial loan to the Eastside night spot that burned to the ground last month while some police officers sent derogatory comments to one another via email. Council Member Brewster McCracken, the lone Council Member publicly opposing the loan, had not changed his position either.

McCracken aide Rich Bailey said prior to the news conference they had received about 300 emails, calls and letters, and one favored the loan. After the owners of the Midtown Live held a press conference Monday, he said, the office had gotten between 10 and 15 messages favoring the loan.

Futrell said, “The bottom line is, I couldn’t separate the issues that were laid on top of one another for the community.” The two issues, of course, were city funding for economic development and racial and inappropriate comments from police officers and dispatchers at the time of the fire. “The whole context was lost.” Futrell said she wanted to talk to the African-American community about the problems Austin has in recruiting and keeping young African-Americans. “If we had just let it sit there in rubble, how much credibility would we have had when we went to the community,” for that conversation?

Futrell said she had a conversation with Jo Baylor, daughter of Midtown Live owner Selena Cash, about what the city could do to help the family rebuild the club and resurrect the other three businesses that suffered various degrees of damage during the fire. In addition to speeding up permits and inspections, Futrell said, “Jo said you can help us close the financial gap,” so the club could be expanded and improved.

In subsequent meetings with Assistant City Manager Mike McDonald, Cash suggested a dollar amount based on her experience with the Department with Housing and Urban Development, Futrell said. Baylor is Director of the Office of Small and Disadvantaged Business Utilization. The amount, Futrell said, is $35,000 per job created and maintained. Baylor told the city the club should get credit for 21 or 22 jobs for a total of $750,000. (Mathematically, 21 jobs would equal $735,000.)

“It’s not ‘Can you get the financing?’” Futrell said, “it’s ‘Can you pay the loan off and stay solvent?’” The area around the club, the St. John’s area, is one of the lowest employment areas of Austin, and is recognized as such for the purpose of awarding the federal Community Development Block Grants, Futrell said.

But all of this year’s CBDG money had already been awarded, so city staff decided to turn to another type of economic development tool, the Chapter 380 agreement. That tool has been used to provide tax incentives to the Domain and Home Depot and would presumably be the vehicle Austin would use to keep the home offices of Freescale Semiconductor from taking off for Chicago. The Austin Business Journal has reported that the city and Travis County are willing to pay the Motorola spinoff $30 million to keep the Fortune 500 company in the Capitol City.

Futrell compared the Midtown Live loan to the loan for the Southwest Key Program, which the Council approved on January 27. Southwest Key will receive up to $624,000 in CDBG funds for the construction of a 32,000-square-foot corporate offices, an alternative school, community computer lab, and business incubator. The loan is expected to produce 20 jobs, most of which would be in the low- to moderate-income category.

The two are fundamentally different, McCracken said, since Southwest Key is a nonprofit agency. “That’s a very legitimate use of public funds to help out non profits that are performing social services in the community. I agree that Midtown Live is an important institution in the community but it’s still a nightclub and I don’t believe we should be using taxpayer dollars to give to wealthy people when the owners already have enough insurance and personal wealth to rebuild it.”

Instead of making the loan, McCracken said, the money could be used to restore some of the $500,000 in social service cuts made to the current budget. “What is our highest priority? I personally place a higher priority on after-school programs for children and keeping libraries open an extra day a week.” In addition, he said, the Midtown Live situation fails another test. CBDG financing rules “only (apply) if that bar would not be built if not for taxpayer dollars. That is the golden rule of incentives,” he said, they should only be given if the jobs would not otherwise be created. “The city has never performed the analysis,” he said.

As far the continuing controversy, he said, “I was hoping that it was going to go away. I think it needs to. The vast majority of folks in all parts of the community do not want this.”

But the owners of Midtown Live don't plan on letting the issue be pushed aside. They held their first public meeting with reporters at the former site of the nightclub on Monday to send out a public call for the Council to place the item back on its agenda. The 60-day delay approved by the Council last week, said club manager Mike Cash, was not acceptable.

"I'm ready to go back to work," he said. "I'm tired of the procrastination of it all. Let's do it." Club owner Selena Cash said her employees, who worked to calm down the crowd the night of the fire, are suffering financially every day the club is closed. "Now they're having to go out and find extra work to do, they have bills…and I'm concerned about that."

Joining the Cash family was architect Craig Overmiller to explain some of the costs behind the proposed reconstruction plans. The Cash's insurance, he said, would cover up to $481,000 for re-building. But he estimated total costs could run between $1.1 and $1.4 million. "The problem here in Austin is that it's just so expensive to build," he said, estimating the cost of reconstructing the building's shell at $665,000. Reconstruction of the club itself could cost $500,000, not counting furnishings and fixtures.

While calls and e-mails to the Council have been running heavily against the loan, club owner Selena Cash predicted there would be an outpouring of community support. "Our people did not e-mail," she said. "Our people did not telephone until they were bombarded by the other side of people telling them 'no, don't use my tax dollars for this,' but you see, we pay taxes also. I pay out of my ears for taxes."

With no Council meeting this week, Cash and her supporters are planning to attend next week's Council meeting to express their concerns. "All we want to happen is one thing: everybody be at the City Council next Thursday, on April 7th, at 6 o'clock," said club manager Mike Cash. "There's no hidden agenda here," said his mother, Selena Cash. "We just want to be treated with respect like we give respect."

Council Member Danny Thomas told the crowd they would have to make their wishes known to the rest of the Council for the issue to be placed back on the agenda before the City Manager's report on the city's cultural attractions for African- Americans. "It's like one, two, three, four" he said, explaining the Council's requirement for a four-vote majority to pass any item. "You need the votes. At the time, she (Futrell) felt she did not have the support, I felt we did not have the votes."

Hyde Park neighbors support demo permit

Former flower shop impossible to save, they say

The Hyde Park Neighborhood Association found itself in the rare position of supporting a demolition permit on a neighborhood property at last night’s Historic Landmark Commission meeting.

Mike and Jeannette Freitag have purchased 4301 Avenue A, the former Brown’s Flower Shop, with the intention of demolishing the business and building a single-family home. While Historic Preservation Officer Steve Sadowsky was willing to open up some research to make sure the structure, built in 1918, had no significance, Stan Kozinsky of the Hyde Park Neighborhood Association told the commission members the neighborhood association was satisfied the structure could not be saved.

“I’m here in an odd position,” admitted Kozinsky, who chairs HPNA’s development review subcommittee. “We appreciate the history of this place, and we appreciate Steve’s interest in further researching it or postponing this, if that’s appropriate, but I personally inspected this along with three other members of our committee, and I just don’t think it could be saved.”

Kozinsky said the building looked far better on the outside than on the inside, saying the inside was gutted and only held together by its green stucco facade. Looking at both the main building and the outdoor greenhouse, Kozinsky said he could see no way the structure could be reused as a business.

Property owners in the area also sent letters of support for the demolition of the property. An engineer’s inspection of the property noted problems with the concrete slab-on-ground foundation and unreinforced pier construction.

“In terms of a historic precedent, there were a lot of little shops and stores scattered through the neighborhood,” Kozinsky said. “It’s with sadness we anticipate seeing it go, but I doubt that it can be saved.”

Karen McGraw of the Hyde Park Planning Team sent an e-mail to commissioners, asking them to try to retain what they could of the Brown’s Flower Shop façade as part of the fabric of small businesses in the community. McGraw’s assumption was that a business might be willing to relocate to the site.

Agent Dallas Grant, however, said the shop would be replaced with a four-square house for the new owners, in keeping with the neighborhood architecture. The lot is zoned for single-family housing and some question was raised about what would happen to that SF-3 zoning if a business had chosen to relocate to the site.

The HLC, however, rarely approves a demolition permit without a thorough review of the history of a structure. At the least, the commission should have a written record of why the structure did not qualify for historic designation, Commissioner Patti Hansen said.

Sadowsky said he was willing to see if Brown’s Flower Shop had any significance, either in horticulture or historic circles. Commissioners agreed to initiate a historic zoning case, with Sadowsky bringing back more information on the property next month.

©2005 In Fact News, Inc. All rights reserved.

Kahn named Austin Energy Deputy General Manager . . . Austin Energy General Manager Juan Garza has announced that Bob Kahn is the utility’s first Deputy General Manager for Administrative Services. Kahn has worked for the utility since 1994, becoming Vice President for Legal Services in 1996. He worked at the firm of Davidson and Troilo from 1987 to 1994, primarily representing cities statewide on utility issues . . . Gilmore joins old friends in firm . . . Henry Gilmore, a city lobbyist and member of the Central Texas Regional Mobility Authority Board, has been named a partner at the law firm of DuBois, Bryant, Campbell & Scwhartz. Gilmore said he had worked with several of the partners at another firm before striking out on his own several years ago. Coincidentally, Gilmore’s new firm includes an associate named Brewster McCracken. Gilmore said he is confident that McCracken can teach him things but added that the Council member will have to recuse himself whenever one of Gilmore’s cases comes before the Council. But Gilmore strives for unanimous approval on all of his cases anyway . . . Slow learner? . . . City Council Place 1 candidate James Paine wanted to drop out of the race, but learned that he had missed the March 15 deadline to do so. Asked why he wanted to withdraw, Paine said, “I found I didn’t have enough information on the issues and such. I figured the best way to learn how to run would be to try.” Having tried once, he said, he will try again next year. . . . Meetings . . . The Zoning and Platting Commission will meet at 6pm in Council Chambers at City Hall . . . Democrats host candidate forums tonight . . . Southwest Austin Democrats will hold a forum and endorsement meeting from 6-8pm at the Manchaca Fire Hall Kitchen, 1310 FM 1626 . . . The North East Travis County Democrats have scheduled an endorsement meeting beginning at 7pm at the Garcia Restaurant in Windermere Center in Pflugerville . . . ABIA activity up . . . Passenger traffic at Austin-Bergstrom International Airport was up 4 percent for the month of February, compared to February 2004. Air cargo, which has been in the dumps, was up 3 percent . . . Commission wants to see permits . . . New city rules may say otherwise, but there were rumblings on the Historic Landmark Commission last night that all permits in a National Register Historic District—demolitions, relocations and additions—should come to the HLC for review. Some commissioners, like Patti Hansen, are opposed to all demolitions in historic districts, whether the buildings are contributing it or not. The task force headed by Betty Baker that rewrote the historic landmark code gave city staff far more discretion to approve permits, especially additions that would have little impact on the historic nature of the neighborhood. City Historic Preservation Officer Steve Sadowsky said permits could be forwarded to the commission, but it would be after the fact. Chair Lisa Laky said seeing the permit list could give commissioners a better idea of what they might want to review in the future.

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