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Council reaches settlement in substandard housing case

Monday, November 13, 2017 by Joseph Caterine

After a years-long battle between the city and apartment complex owner Walter Olenick, City Council voted unanimously last Thursday to approve a settlement that will compensate the city $150,000 and secure affordable units in the future.

As part of the agreement, the city will be dropping property maintenance lawsuits for code violations (totaling in fines just over $800,000) that it first filed against Olenick in 2013 for numerous accounts of disrepair at Orchard Plaza, located at 1127 and 1205 E. 52nd St. Despite the host of issues with the buildings, foundations, stairways and walkways, the apartments were some of the most affordable to low-income households in Austin, with monthly rent prices ranging from $440 to $660, so Council has made it a priority to preserve that affordability as part of the negotiations with Olenick.

On Oct. 12, Council rejected the first proposed settlement, which included the $150,000 payback but no affordable housing provisions. At that meeting, Council Member Greg Casar did not go into detail as to why he would be voting against the settlement, but he did say that he wanted “a better deal for the community.”

In the final settlement, the currently unnamed prospective buyer of the properties has agreed to record restrictive covenants guaranteeing 15 years of affordability for four parcels in the area. Those units will be reserved for applicants who make less than 60 percent of the median family income. “These would only be subject to release after the buyer offered the city the right to purchase the parcels in question,” assistant city attorney Michael Siegel said at the Nov. 9 meeting.

As for the Orchard Plaza properties themselves, five years after purchase the new owner will be able to sell them at market rate, but only after first offering them to the city. Casar told the Austin Monitor that he intends to advocate for squaring away funds so that when the time comes, the city can afford to take over the properties.

Considering the estimated $800,000 owed in fines, $150,000 may seem like a raw deal for the city, but state law has proved an obstacle for enforcement in this case. Chapter 214 of the Texas Local Government Code permits municipal ordinances that require repair of dilapidated housing structures, but on the condition that the building is “unoccupied by its owners.” Olenick and his wife, Rae Nadler-Olenick, claim the property as their homestead and have adamantly defended their property rights in court.

The Olenicks declined to comment for this story.

All in all, Casar told the Austin Monitor that considering the circumstances, he thought that the approved settlement was the best option. “Obviously, the better outcome would have been for the city to hold the Olenicks accountable earlier in the process, so that we would not have had to have displaced people from my district,” he said. Fifteen households were forced to move out of Orchard Plaza, supported by $600,000 in relocation funds Council approved in April.

“Hopefully, the city will learn that we need to be actively enforcing code against properties before they get to the point that the Olenicks got to,” Casar said.

In the near future, Casar said that he plans on proposing a budget amendment that will channel the $150,000 into the Housing Trust Fund.

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