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Council agrees to ‘buy-out’ for developer who sold prime tract

Tuesday, October 2, 2012 by Josh Rosenblatt

Austin City Council last week cleared up some longstanding business related to the city’s purchase of 61 environmentally sensitive acres in Southwest Austin, land that one environmentalist has called the “crown jewel” of Barton Springs.

In April 2000, at the urging of several prominent Austin environmental activists, developer Bill Walters agreed to sell the city the Friesenhahn Track, 61 acres of land on the banks of Barton Creek, on the southwest corner of MoPac and 360, across from the Barton Creek Mall. Walters had intended to build two office towers and several commercial buildings on the site. By selling it he allowed the city to complete the Barton Creek Wilderness Preserve, what Hill Country Conservancy Executive Director George Cofer called, “One of the best outcomes ever for an environmental project.”

In return for the land, the city granted Walters 335,000 feet of impervious cover credits that he could use to build other projects in the Desired Development Zone, 160,000 to be used at the Oak Hill Technology Park and 175,000 to be used elsewhere in the zone before April 11, 2015. Since then Walters has used all 160,000 at the Oak Hill site and 25,000 in the zone. However, Walters has not been able to use the last 150,000 feet of those credits because of limitations placed on his use of those credits in the original ordinance, limitations Walters claims were not made clear.

The ordinance states that the credits can be used for watershed impervious cover but not zoning impervious cover, according to Greg Guernsey of the Planning and Development Review Department. Watershed regulations are more generous for developers than zoning restrictions, so areas of watershed impervious cover tend to be outside the city, where it’s much harder to develop commercial properties. On two separate occasions Walters attempted to transfer those impervious cover credits to other developers, but on both occasions, the city said no because the ordinance only dealt with watershed, not zoning. According to Guernsey, Walters was not happy.

“Walters’ contention was that he understood he might be able to use these credits for zoning impervious cover, and in reality he could only use them for watershed impervious cover,” Guernsey told In Fact Daily. “So that was an area of disagreement or misunderstanding. There was a hint of litigation that could occur.”

To ameliorate the situation, Guernsey’s staff got together with the city’s Real Estate Department and came up with an ordinance that would monetize those transfer rights and allow the city to pay Walters for them. Under the terms of the agreement, which Council approved Thursday, the city will pay Walters $887,500 for the remaining credits and grant him $500,000 in development fee waivers, which can be used for review and permit fees for site plans, building permits, mechanical permits, etc.

For Cofer, the agreement is a way to finally do right by a man who was willing to sell a prime piece of undeveloped land for environmental purposes — to, as he told Council, “make him whole and healthy.”

“We’ve just never done the right thing, in my opinion, for Mr. Walters,” Cofer said.

Mayor Lee Leffingwell agreed, saying the ordinance would allow the city to fix a longstanding misunderstanding, maintain its reputation for fairness, and “reinforce the original intent of the agreement.”

“What we’re talking about is integrity and the credibility of Austin when it bargains for things like this going forward,” Leffingwell said. “It becomes a matter of fair play and really fulfilling the expectations of the original agreement to a great extent.”

But Council Member Laura Morrison took issue with the implication that the city had acted in bad faith, and that rectifying the “problem” now was in the best interests of the city.

“The problem I have is the suggestion that we somehow took advantage of Mr. Walters some years ago,” Morrison said. “I have to assume it was a fair deal. When we’re looking at the potential for changing and renegotiating this agreement I have to ask ‘Why is it good for the city?’ People say we gave him a bad deal then. I can’t work from that; I have to work from, ‘Why is this a good deal for the city?’ And I don’t find anything compelling that suggests it’s a good deal for the city.

“I don’t see what it brings to the city, and I do believe we have acted with integrity in negotiating a fair deal in the first place and in actually implementing that deal.”

Unfortunately for Morrison, she could only find one other Council member, Kathie Tovo, to agree with her. Tovo managed to convince her colleagues to amend the ordinance to limit the $500,000 in development waivers Walters would be getting to projects in the Desired Development Zone, so as to further incentivize development outside the Drinking Water Protection Zone.

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