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Wednesday, January 27, 2016 by Jo Clifton

Pilot Knob fee waivers to cost city $50M – $80M

At their last meeting in December, when City Council members approved annexation for the Pilot Knob Planned Unit Development, they agreed to give up $50 million to $80 million in fee waivers for installation of water and wastewater lines over the next 20 years, according to a utility spokesman. The money that the developer would otherwise have paid the utility for installation of those lines will be passed on to the Austin Housing Finance Corporation to fund more affordable housing, under the terms of the ordinance.

However, the utility was not involved in negotiations about the fees and did not know the dollar figures, according to Austin Water spokesman Jason Hill. The utility does not have information on how many single-family units and how many apartments are involved in the project, so it is difficult for it to know the exact number.

Mayor Steve Adler's Chief of Staff John-Michael Cortez and an aide to Council Member Delia Garza conducted the negotiations with the developer's representative, attorney Richard Suttle. The mayor said Tuesday that he thought that the utility had been informed about the amount of the fee waivers. He also thought that his colleagues on Council knew how much the waivers would be under the city's SMART Housing program.

Hill said, "We discussed with city leaders the concept of waiving the fees but not any amount related to specific negotiations with Pilot Knob. ... We weren't talking about that specific project."

Five Council members who voted in favor of the proposal and one who abstained now say that they were also in the dark about the costs when they voted for the item.

Mayor Pro Tem Kathie Tovo explained that she thought the fees would be waived only for the 650 affordable housing units planned for Pilot Knob. However, some late backup that Council received as an email on the morning of Nov. 19, the day it approved the project on second reading, has some small print that says: "Total lots 6500 and Total Fees Waived $51,265,500."

That backup did not make it into the packet for the third and final reading of the item on the Dec. 17 agenda.

Tovo said, "I clearly ought to have asked for clarification. I never dreamed they totaled up to as much as they do." She explained that the figure was brought to her attention by her appointee to the Water and Wastewater Commission. Tovo has been a strong supporter of affordable housing, but she also supports the idea of growth paying for itself. She has said on several occasions that renters and homeowners should not be forced to pay for new growth through their utility bills and has been a strong advocate of developers paying 100 percent of the cost of utility installation.

Tovo said that Suttle has another, similar project, and she believes that Council will scrutinize any proposed fee waivers, including those for affordable housing, much more seriously than it did for Pilot Knob.

Council Member Pio Renteria told the Austin Monitor that he did not know about the fee waivers until he watched the Planning Commission's discussion about SunsetSuncrest Farms, during which Suttle told the commission that the Pilot Knob developers got the waivers to fund affordable housing. Renteria said he was unaware of the amount that the water utility would be expected to waive and that he had serious concerns about the matter.

Council Member Don Zimmerman, who abstained, said he does not remember any discussion about how much the fee waivers would cost other water utility customers. He also said he did not see any information in the agenda backup that would have alerted him to the cost.

Council Member Leslie Pool said that she, too, was unaware of the cost of the fee waivers and thought that Council should discuss the matter. "There was not a lot of discussion at the Council meeting on Dec. 17. … I knew this project had been in the works for months, that they were leading with the residential, the 650 permanently affordable units, a total of 1,000 residential units. ... There was mention of up to $6 million that would go from the developer to (housing finance corporation) for MUD reimbursement to further support affordability."

Pool concluded, "I would like to have a discussion about this and a full report of what all the elements are of the compromise that we were not made aware of, and I would like to give staff an opportunity to weigh in on what they think about this agreement."

Council Member Ellen Troxclair said, "I think that that’s something we probably should have had more of an in-depth conversation about. Council days are really busy. It's really ... difficult for us to turn around and make informed decisions when there's last-minute changes," such as the additional backup on Nov. 19.

Council Member Greg Casar said, "I had not heard that number ($50 million to $80 million) in particular. I understood that the SMART Housing program involved waiving fees," but he did not know how much.

Adler concluded, "It's important, with affordable housing being the issue that it is, that we create more and more opportunities. That’s one of our priorities. I only wish we had started doing this 20 to 25 years ago – we wouldn’t be the most economically segregated city in the country."

Suttle could not be reached for comment prior to publication of this article.

This post has been updated to reflect the correct name of Suncrest Farms. It is Suncrest, not Sunset.

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Key Players & Topics In This Article

Armbrust & Brown: law practice based in Austin. Armbrust & Brown has donated to the Capital of Texas Media Foundation.

Austin City Council: The Austin City Council is the body with legislative purview over the City of Austin. It offers policy direction, while the office of the City Manager implements administrative actions based on those policies. Until 2012, the body contained seven members, including the city's Mayor, all elected at-large. In 2012, City of Austin residents voted to change that system and now 10 members of the Council are elected based on geographic districts. The Mayor continues to be elected at-large.

Austin Water Utility: AWU is the municipal utility that provides water service for the City of Austin.

Municipal Utility Districts: A special-purpose district that provides public utilities. There are different MUDS for different neighborhoods.

SMART housing: Safe, mixed-income, accessible, reasonably-priced, transit-oriented housing.

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