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Pilot Knob could face yet another lawsuit

Tuesday, November 8, 2016 by Jo Clifton

City Council is poised to move forward once again Thursday on the Pilot Knob/Easton Park planned unit development and affordable housing agreement that Judge Stephen Yelenosky voided in October.

But Council members should know that the same civic activist who recently won a suit over the city’s failure to comply with the Texas Open Meetings Act will sue once more if the deal, which includes more than $69 million in fee waivers, does not change.

Brian Rodgers, a ratepayer and strong supporter of Austin’s water utility, sued the city last summer alleging that the city’s notice to the public was insufficient. He also alleged that the city was violating state law because “the law permitting the water impact fees does not give authority to Austin to impose the fee and spend it on ‘affordable housing’ or, as the mayor told the Council on February 9, 2016, to put it in a pot that the Council could use even for other purposes,” Rodgers’ lawsuit said.

However, because the judge agreed with Rodgers on his Open Meetings claim, there was no ruling on whether the city had violated state law as it relates to use of water impact fees. Yelenosky issued his final judgment against the city on Oct. 28, and the city has not indicated whether it will seek a new trial or appeal the matter.

Rodgers told the Austin Monitor on Monday why he thinks the PUD, with its small amount of affordable housing, is “just not a good deal.” The development includes 650 affordable homes to be built over a 20-year period. “It’s out of town,” he said, not within Austin’s city limits. Doing the math, Rodgers said, “That’s 32 houses a year for their $70 million – that’s all they’re going to get. It doesn’t solve anything. We’ve got 130 to 150 people moving to the area every day, and they’re going to get 32 houses. It’s a pathetic return.”

According to a fiscal note accompanying the PUD agreement, the city will waive 100 percent of capital recovery fees on 5,000 single-family lots and 1,500 condo/town home units. In addition, of 3,000 multifamily units, 25 percent will receive SMART Housing recovery fee waivers. (SMART stands for safe, mixed-income, accessible, reasonably priced and transit-oriented.)

But Rodgers and his attorneys say the 100 percent waivers in return for only 10 percent affordable housing, as opposed to the 20 percent required by state law, “is illegal and beyond their authority. And if they do that, I will sue.”

Attorney Bill Aleshire, who represented Rodgers in his original suit against the city, told the Monitor via email, “The city is well-aware of the claims in Mr. Rodgers’ lawsuit. Perhaps they are confident that they can get away with this in the courts and in the Legislature. Diverting funds from a utility is not only a politically risky thing for the Austin Council, bond buyers probably don’t like it one bit.”

According to the fiscal note posted on the Council website, the city would divert $51.49 million of water utility fees and $17.8 million in fees to the Development Services Department.

That document states, “Over a 20 year buildout schedule, an average $2,574,500 (in) capital recovery fees would be waived each year.” On the other hand, “Austin Water would collect $16,834,000 in capital recovery fees for the nonresidential meters or commercial, civic or recreational properties,” according to the document.

The document also says, “Rate increases associated with the Pilot Knob capital recovery fee waivers would likely be spread out over the first 5-7 years of development when units built per year would grow to an average of 350 per year.”

The city estimates that the total water and wastewater bill impact would be $.96 per month or $11.49 annually per customer. The rate impact in 2017, however, would be minimal.

As the Monitor‘s reporting partner, KUT, reported last month, the judge’s ruling seemed to have little impact on the mayor’s commitment to moving forward with the original agreement. Mayor Steve Adler took the position that the ruling related only to the question of whether the matter was posted correctly, saying, “If we need to do it differently procedurally, then we will. But the judge did nothing to question what it was that we had done or the propriety of what we had done, and I’m encouraged by that.”

The posting on this week’s agenda is certainly far more robust than the one deemed insufficient by the court. Also, city staff has taken the additional step of including significantly more information on other cases, such as the Grove at Shoal Creek.

Photo by Straley made available through a Creative Commons license.

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