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Developer questions whether renewal agencies are obsolete

Wednesday, November 26, 2008 by Kimberly Reeves

It was inevitable someone would eventually raise the question: Have the Urban Renewal Agency and Urban Renewal Board outlived their purpose?

Developer Michael Casias, a sometime opponent of the Austin Revitalization Authority’s plans on East 11th Street, raised the issue at this week’s meeting. Casias is the buyer and developer of Block 19, at the corner of East 11th and Navasota streets. In an overview of his project before the Urban Renewal Board on Monday night, Casias noted that city involvement in redevelopment might be obsolete.

That was not the case in 1996, when the Neighborhood Conservation Combining District was created and the original tri-party agreement was signed, as allowed under local government code. At the time, the area was officially designated as a slum by federal standards: an area of the city detrimental to public safety, health or morals. Under that designation, the city was allowed to buy property, take federal funds and spend money bonds to spur development to revitalize the community.

The intention was to address blight, Casias said. However, it would be hard to argue – even a decade later – that any of the property along East 11th and East 12th streets were blighted. In fact, the only properties that are still blighted are the undeveloped blocks owned by the city, Casias told the URB.

According to the original tri-party agreement, private enterprise was the preferred method for redevelopment of the blocks along the east-side corridors. The involvement of government – or a quasi-government entity – was intended to be a last resort, reserved for an effort that required leveraging assets.

Of course, the NCCD is now surrounded with multiple projects developed by private developers, including nearby Robertson Hill. Most of the properties will rent at market rate. And, at least in the residential sector, local landlords have had no problem finding buyers for various loft and home projects on the East Side.

“If you want to talk about how to improve this system that we have, I don’t think it is going to be improved by subsidy,” Casias told the commission. “Supposedly, this process was supposed to streamline development, but in every case, development has gone forward only after the project controls were removed.”

Casias optioned Block 19 in 2002 and purchased it 5 years later, in 2007. By July of that year, Casias had a site plan approved and began clearing the site for underground infrastructure. While plans for Blocks 16, 17 and 18 have yet to go out to bidders, Casias predicts shell space for his units will be available in March, well ahead of the July 2009 deadline set by the city.

So why have the Urban Renewal Agency at this point in time? Casias asked. The blight is gone. Redevelopment is happening. Casias noted that Block 19 was developed with no assistance from either the Urban Renewal Board or the city.

“We have a lot more flexibility to cut deals with referred buyers,” Casias said of his development efforts. “We’re working with buyers from the neighborhood. We’re working with Art Palace to put in pieces of public art. We’re talking to Education Austin because we think teachers would be ideal buyers for our units.”

And Casias has had no problem selling his units, of which 20 percent were set aside for affordable housing. Of the 18 proposed living units, 9 already have been sold. About half of the commercial space has also been sold, he said.

Since all the property left is owned by the city, the city already holds complete control over the public investment. It can dictate the mix of development and the affordability on various properties without the Urban Renewal Agency.

Commissioners did not address Casias directly during his comments. Margaret Shaw, director of community housing, declined to comment on Casias’ remarks.

Chair Ben Sifuentes, however, said Casias did raise a valid legal question.

“What comes first, the chicken or the egg?” asked Sifuentes. “Our goal has always been to work ourselves out of a job.”

Asked to comment from the perspective of a lawyer, Commissioner Kevin Cole said it would be difficult to rescind an existing legal agreement. The city has taken federal funding to spur development in the corridor. It would be difficult to reverse what has already been set in motion.

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