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Planning Commissions says no to major changes to Block 18

Thursday, September 25, 2008 by Kimberly Reeves

The Planning Commission supported the recommendation of developer Michael Casias and neighborhood associations for zoning changes on Block 18 in East Austin Tuesday night, but the vote left commissioners vaguely unsettled about which zoning changes were necessary to make the block work from a financial standpoint.


There is no doubt the Austin Revitalization Authority is in a tough financing crunch to get Block 18 done. Gentrification has raised both the price of land in East Austin, and the level of dissatisfaction with ARA’s progress on the redevelopment of East 11th Street. ARA’s interlocking financing agreements, with finished blocks underwriting subsequent projects, has delayed financing packages. ARA laid out its first plan for Block 18 in 2001; construction still has not started seven years later.


And it’s clear that financing affordable housing is going to get tougher, not easier, in light of the financial turmoil that has emerged in the last couple of weeks, a point that Neighborhood Housing and Community Development Director Margaret Shaw zeroed in on in her comments to the Planning Commission. In fact, the application for the zoning changes on Blocks 16 and 18 came from the city, and city staff sided with ARA on its desire for increased density on Block 18, which is the block on which the Victory Grill sits.


Casias, a former member of the Planning Commission and a partner on one of the blocks on East 11th Street, was the point man on the opposition, which included the neighborhood groups and the East End Merchants Association. Casias made a compelling case against the need for additional density on Block 18, noting that ARA had come to City Council in 2001 asking to double the density because of financial needs and now wanted to try the request a second time, doubling it again.


Casias said he had been trained to refrain from discussing the economic feasibility of a deal during a zoning discussion, but feasibility of ARA’s now far more complicated proposal was a major concern for the local business owners, who continue to wait for East 11th Street to live up to its billing.


“My biggest fear, as someone who has lived in the neighborhood, is that things take so long that businesses die, and that they’re not being supported because these undeveloped huge tracts are taking so long to develop,” Casias said. “So, by doubling the size of a development during these economic times, it just makes it so much harder. When you look at all of the things that are being proposed by ARA in doubling what they originally proposed, you’re talking about five different sources of financing. You’re talking about GO bonds, you’re talking about tax credits, you’re talking about all of these things that take a year (to do) by themselves.”


The businesses along the corridor do not have a year – or more – to waste while ARA attempts to put together its financing deal, Casias said.


“As businesses on the corridor, we’re going, ‘Wait a minute. It would just be simpler if we just gave you the money to do 30,000 square feet, and we just got it done,’” Casias said. “Because if you’re going to try to put a 100,000 square-foot deal together right now, in these times, and your argument is that office is great now, and office wasn’t so great in 2002, 2003, 2004, 2005, 2006, then I think we’re going to be a long time in coming.”


Shaw, on the other hand, argued that if ARA intended to put 40 units of affordable housing on the ground, aimed at a median family income of 40 to 60 percent of average, it would require density. That led to a request for additional floor-to-area ratio, which Casias said only complicated the project and led to a block out of scale with every block it faced.


The neighborhood’s recommendations were to lift the cap on the number of residential units but to maintain the current zoning districts on Block 18. Neighbors also wanted to maintain the FAR of Block 17 on Block 18. That would allow the development of 48,000 square feet of space, which Casias said was more than sufficient to create a proper development on Block 18.


Each block on East 11th Street already has four overlays, Casias said. The exceptions for Block 18 would require creating even more block-specific zoning districts. Casias argued that the original zoning district categories were created and placed for a reason. For instance, the back of Block 18 was intended to be residential townhomes because it was intended for those townhomes to face single-family homes.


The specifics of those districts – such as making sure the development on the back of Block 18 would be residential so it would face residential, made sense, Casias said.


The one person who would have been able to shed some light on the financing of Block 18 would be Executive Director Byron Marshall, but Marshall was not at the commission meeting. Instead, the ARA sent staff member Maureen Mercado, who insisted the zoning changes were necessary, but could not provide specifics on financing.


With no compelling arguments presented in favor of the zoning changes, Commissioner Mandy Dealey moved to implement the neighborhood recommendation, which did lift the cap on residential units but did not make major changes to the property proposal, Chair Dave Sullivan noted.


Neighborhood recommendations were passed on Block 18. City staff recommendations were passed on Block 16, the block closest to the freeway on East 11th Street. Sullivan noted that if financing straits were as dire as Shaw implied – she insisted financing was becoming significantly more difficult on affordable housing – then the Planning Commission needed to have an extended discussion about financing affordable housing.


The Planning Commission frequently rules in favor of neighborhoods that want to cut back on density, which Shaw insisted had a direct impact on affordable housing unit production. The commission’s unanimous recommendation will be forwarded to Council, along with the recommendation of the Urban Renewal Board, which also opposed zoning changes on Block 18. Neither decision binds Council.

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