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Thursday, February 11, 2016 by Jo Clifton

Updated: Rodgers sues city to stop Pilot Knob deal

Civic activist Brian Rodgers has filed suit against the city of Austin over the Pilot Knob deal, claiming violations of the Texas Open Meetings Act when City Council voted to approve the agreement on Dec. 17. In the lawsuit, filed Wednesday by attorney Bill Aleshire, Rodgers asks the court to void Council’s adoption of the agreement, which includes provisions – called fee waivers – that would divert up to $106 million from two city departments to the city’s affordable housing trust fund.

In his lawsuit, Rodgers says the public was given insufficient notice of the controversial agreement the city made with developer Carma Easton Inc. for zoning and affordable housing in Southeast Travis County, outside the city. In particular, the lawsuit says, “Giving the public notice that the Council is just approving zoning for a piece of property is not adequate notice that they are going to divert $81 million from the water utility budget.”

In order to finance affordable housing within the development, instead of paying $81 million over a 20- to 30-year period to Austin Water, the deal redirects that money to Austin’s affordable housing trust fund. In addition, another $24 million to $25 million will be diverted from the Development Services Department into the same fund, according to a memo – delivered to Mayor Steve Adler and Council on Monday – based on a review of the matter by the city’s chief financial officer and four assistant city managers.

“The Austin City Council may have the power to give away the farm to developers; they’ve been doing that for years,” the suit says. “But they can’t do it without giving the public advance notice of their intentions, and the more interest the public has in an issue, the more specific the Council meeting notice must be.”

As the suit points out, the notices in the Council meeting agendas for each of the three readings, starting in October, refer to planned unit development zoning for the Pilot Knob tract. They do not refer to diversion of money from Austin Water, although there was discussion on the dais about 650 affordable units to be built in the PUD.

At an earlier reading, Richard Suttle, attorney for the developer, told Council Member Delia Garza that he could get more affordable housing at the development but that the water utility would not like it. That appears to be the only public hint about taking money from AW and putting it into the housing fund prior to January.

At least six Council members have said that they did not understand the details of the deal when they voted on it back in December. There is an item on today’s Council agenda sponsored by Council members Ellen Troxclair, Leslie Pool, Don Zimmerman and Ora Houston directing the city manager to provide a financial analysis and briefing on the utility fee diversions and to reconsider the deal.

The deal was put together by Adler’s chief of staff and an aide to Garza, along with Suttle and members of Neighborhood Housing and Community Development staff. As pointed out repeatedly in the memo, staff from the water utility, the Law Department and the Planning and Zoning Department were not informed of details concerning financing the affordable housing component until after Dec. 17.

The lawsuit also claims that “(t)his whole deal seems to violate Austin laws on SMART Housing ordinances, particularly when the development is not inside the city limits. But, in this case, the city manager didn’t even prepare a fiscal note, as required by the Austin Code, because the agenda item just indicated that it was a zoning case.” That fact came out in the memo in response to a question from Mayor Pro Tem Kathie Tovo.

Rodgers, who was a member of the city’s Impact Fee Advisory Committee for five years and worked on the water utility’s financial plan, sent his own detailed memo to Adler and Council on Monday complaining about the diversion of the impact fees. He noted that the previous Council raised those fees in order to “make growth pay for itself.” One reason for that arrangement was that the utility was and still is under what AW Director Greg Meszaros calls a “negative bond watch.” He told Council at Tuesday’s work session that he would not have recommended taking the money out of the utility at this time.

In his memo, Rodgers wrote, “Unfortunately, the Mayor has ‘discovered’ this income stream and has decided to make it his golden goose to fund affordable housing on the backs of the ratepayers for Pilot Knob and future PUDs.”

Rodgers’ lawsuit, called a mandamus action, asks a Travis County district court “to declare void all actions the Council took regarding the Pilot Knob agenda items and to enjoin the city from giving waivers via a zoning case in the future without including such intentions in its meeting notices for such agenda items.”

Update: When asked about the lawsuit Adler responded by email to the Monitor, saying, “The lawsuit insinuates – falsely- that the developer is getting a sweetheart deal. On the contrary, the developer would still pay all of the fees. In this case, however, the Council just gets greater options to put the developer’s fees into affordable housing if it so chooses.”

Photo by Emmanuel Huybrechts from Laval, Canada [CC BY 2.0], via Wikimedia Commons.

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Key Players & Topics In This Article

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.

Planned Unit Development: A zoning classification designated by the city to allow greater flexibility for projects within its boundaries.

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