Council postpones Los Comales rezoning to address legal issues

The owners of East Austin restaurant Los Comales will have to wait at least until May 13 to hear City Council’s decision on their rezoning application. The information city staff gathers on the case in the meantime, and the final decision Council makes on the property, could have far-reaching effects on the city’s rezoning process and the legality and enforceability of business-tied restrictive covenants.

 

Restaurant owners Merced and Graciela Benitez requested a rezoning from general commercial service-mixed-use conditional overlay-neighborhood plan (CS-MU-CO-NP) combining district zoning to commercial liquor sales-mixed use-conditional overlay-neighborhood plan (CS-1-MU-CO-NP) combining district zoning. The difference between the CS and CS-1 zoning has to do with the percentage of revenue an establishment makes off the sale of liquor. In this case, the applicants realized recently that the sale of liquor at Los Comales had surpassed the sale of food, thereby putting the establishment out of compliance with the CS zoning.

 

Applicant’s agent Roger Chan told the Council on Thursday that Benitez is “not asking for a change. It’s not like he’s looking to build a new business or start a new restaurant. He merely wants to keep what he had before.” Unfortunately for the applicant, local neighborhood groups have come out against the change in zoning, fearing that the next establishment that moves onto the site could legally be a bar or cocktail lounge.

 

Both city staff and the Planning Commission agreed with the neighborhood and recommended denying the rezoning.

 

However, Chan told the Council, his client doesn’t want “to change his business model or practice” and is “willing to sign anything that you can put together that would limit it.” That could include, he offered, a restrictive covenant that would switch the zoning on the property back to CS should the owner sell the property.

 

That raises a thorny legal question about the scope and enforceability of restrictive covenants. Covenants are tied to the property, not to a particular business, and therefore the city may have no legal leg to stand on to enforce such a rollback covenant on a new owner.

 

“It’s difficult to draft something that would be enforceable at the point of sale at a later date,” said Mayor Pro Tem Mike Martinez. “How do we come up with (such) a mechanism?” He suggested postponing the vote and asking the law department to see if such a covenant could be drafted.

 

City Attorney David Smith seemed wary. “In the past we’ve had problems with issues like this,” he said, “and I have to admit I have to go back and look at what we’ve done in the past.”

 

Assistant City Attorney Chad Shaw told In Fact Daily that the primary issue is enforceability, whether or not the city would have the authority to make a current or future property owner change zoning at the point of sale.

 

“We’ll be looking to see if such a public covenant is possible,” Shaw said. “ In the past it hasn’t been easy to enforce, which is why staff usually recommends not approving such an agreement.”

 

Martinez said that he doesn’t support CS-1 zoning in residential areas, but he made a motion to approve the request on first reading, “in the hopes that something can be done to address everyone’s concerns, with the big, big caveat that if it can’t, I will reverse my vote on second and third reading.”

 

Council Member Laura Morrison said she would be “uncomfortable” voting in favor of the rezoning, even on first reading, and made a motion to postpone a vote on the case until May 13. City attorneys will spend the intervening time trying to determine if a restrictive covenant with a built-in rollback is legally feasible.

 

Jerry Rusthoven with Planning and Development Review said he was skeptical about the prospects for such a covenant. “It’s probably not going to happen,” he said. “That kind of agreement would only be enforceable to the extent that the owner would be on record as having agreed to the down-zoning. I don’t think there’s any real legal leg to stand on beyond that.”

 

Council members voted 7-0 in favor of the postponement.