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Developers take concerns over Vested Rights Ordinance to Council

Wednesday, November 20, 2013 by Michael Kanin

Key players in Austin’s development community brought their concerns about the potential outcome of an upcoming Austin City Council vote on a new Vested Rights Ordinance to Tuesday’s Council work session. There, they expressed concerns that fundamental portions of the new set of regulations would not leave enough space for properly considered projects.


“We need development rules to stay static for a minimum of 20 years to ensure that a project can be built at the appropriate time based on our history of cycles and changing market conditions,” offered Endeavor Real Estate’s Andy Pastor. “It takes time and patience to create great spaces.”


Council Member Bill Spelman invited Pastor, along with FourT Realty’s Tom Terkel, and Blake Magee of the Blake Magee Company, as well as representatives of the Real Estate Council of Austin to deliver the presentation.


“As you know, we are going to be considering the Vested Rights Ordinance that’s been prepared by our staff in a couple of weeks, and I wanted the rest of the Council to have had a chance to listen to you and to hear you out before we actually consider that Vested Rights ordinance,” Spelman said.


After the meeting, one development representative – Paul Linehan of Land Strategies– told In Fact Daily that the presentation was designed to bring down heated ongoing discussions over the matter. He said a portion of the group’s suggestions – namely, an extension of the development period from as few as three to as many as 20 years – represent a compromise.


Linehan further suggested that developers could be forced to resort to legal action should the final version of the Vested Rights Ordinance not address the group’s concerns.


The Vested Rights Ordinance is a fresh take on what is colloquially known as grandfathering. Under it, developers would be granted a certain period of time – as proposed, between three and five years – to complete a project under city regulations that applied at the time of the project’s initial approval.


It is a replacement for the former Project Duration Ordinance. That set of rules was an earlier effort to achieve grandfathering in the wake of inadvertent action at the Texas legislature that resulted in the repeal of the state’s grandfathering law.


Texas Attorney General Greg Abbott declared the city’s Project Duration Ordinance unconstitutional last year. Under threat of both legal and legislative action – that some contend could have resulted in the end of the city’s Save Our Springs Ordinance –Council members repealed it, and began a process to replace it.


That process is nearing completion, with Council action expected before the end of the year.


Development interests described for Council members the potential impact of the ordinance, if it is left as written. Terkel spoke about a feared loss of major capital interest. He pointed to Austin’s active legislative history, and noted that a short time frame for development can result in smaller project build-outs.


“That can be, in some circumstances, devastating for the economic performance of the project,” Terkel continued. “In the long term, the debilitating impact of that is that capital sources start to shy away from doing business in Austin.”


Council Member Laura Morrison – a frequent critic of development – noted that she appreciated the presentation. Still, Morrison was not a sudden convert. “I think that (this) sort of captures for me – in a good way – the sort of balance that we need to achieve,” she said. “Because, I think, what I hear from you is that to be feasible, marketwise, you want to be sure that the rules aren’t changing. You want to make sure that the rules…are broad enough so that you can work within the rules and you don’t have to jump outside as an exception.


“On the other hand, what we do when we impose new rules – you may not believe this – it’s not just to make your life miserable, it’s because we are trying to implement protections, we’re trying to move forward in our evolving values as a community,” she continued. “So what we need to do is find that balance…If you set the rules so broadly that everybody can always basically be tying into old rules, we won’t be able to achieve the goals that we have.”


The Vested Rights Ordinance should be before Council members Dec. 12, the final meeting of 2013. Expect much more discussion between now and then.

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