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Move to initiate historic zoning gives Fourth Street preservationists a glimmer of hope

Friday, May 6, 2022 by Kali Bramble

The Historic Landmark Commission hosted a lively public hearing Wednesday with a diverse cast of characters who had gathered to voice their opinions on the controversial redevelopment of Fourth and Colorado.

After compelling testimony from both supporters and those opposed, the landmark commission moved unanimously to initiate historic zoning of all properties within the proposed development. Between rounds of applause, Commissioner Kevin Koch reminded the evening’s victors that the case remained complicated.

“I think this developer came forward in good faith … I just don’t think it should be a done deal. This is a very special place,” said Koch, who put forward the motion. “This does not by any means end the proposal, it just elevates it to a higher level where there are more options to consider and other levers to pull.”

Developer Hanover Company has made headlines with its plans to demolish and reconstruct the swath of Fourth Street that is currently home to gay bars Oilcan Harry’s, Coconut Club and Neon Grotto. The proposed design, which would replace the cluster of warehouses with a 40-floor mixed-use high rise, promises to reconstruct the facades along West Fourth Street with original materials to preserve its character.

Proponents, including staff at the Historic Preservation Office, argued that the project presented a rare opportunity for developers and preservationists to collaborate on a real estate solution that would increase density while maintaining local character. In addition to re-creating the warehouse silhouette, the development will offer Oilcan Harry’s a refurbished home at a subsidized rent for the next 25 years (its current lease is set to expire in eight years).

“We have an opportunity here to be an example of a compassionate and sustainable approach to urban development,” Hanover partner David Ott said.

Other proponents argued that economic pressures had made operating existing businesses virtually impossible, and that tenants Coconut Club and Neon Grotto had been aware of plans for development upon signing their lease agreements.

“Oilcan Harry’s will not be able to stay on Fourth Street if the building is deemed historic,” managing member Scott Neal explained. “We need the leverage of allowing density on our side to ensure we can stay and keep Fourth Street alive.”

“Property tax authorities designated this as a potential high-rise area in early 2017, and began raising the taxes accordingly,” said Michael Girard, who runs Speakeasy on Congress Avenue and is one of the landowners along the proposed development. “This property tax was $75,000 in 2012 and is now $260,000 per year. These massive increases encumber the tenants and will not stop.”

The owners of Coconut Club and Neon Grotto did not testify, but released a statement saying they “feel confident they have sufficient time to plan their next steps” and “are happy to see a vital institution remain in its historic location.”

Still, an outpouring of community testimony ruled the concessions woefully inadequate, arguing the overhaul would be the nail in the coffin for the last stronghold of Austin’s gay district.

“Facades are not buildings,” longtime resident Titus Parks said. “If you spent time in all of these buildings … you know that they are about the insides as well, about the rock walls inside …. Gays love these spaces because they have this history.”

“(Hanover) is really emphasizing the preservation of these spaces, when it’s really just a massive reduction of these spaces,” Austin resident Ryan Meyer said. “I wish we could do more to incorporate other LGBT bars and locations into the project if it must move forward.” (While 5,700 square feet of the proposed design will accommodate Oilcan Harry’s, another 6,000 square feet of retail space remains.)

“The unique and important space that Coconut Club occupies brings a community value that is not going to be defined by law,” said Alyssa Reed, who noted the club’s significance as a haven specifically for queer people of color. “Austin has the opportunity here to set the precedent for the rest of the nation.”

Against staff recommendations, the landmark commission ruled the project an exceptional case warranting higher levels of discussion across city departments. Still, commissioners acknowledged that historic zoning against an owner’s wishes has rarely succeeded at City Council.

The case will return before the commission on June 1, where a supermajority vote to formally recommend historic zoning would move the case along to the Planning Commission and City Council. Commissioners hope that initiating historic zoning will allow for further conversations about alternative measures such as transfer of development rights and changes to taxing structures, which could incentivize preservation while addressing the economic chokehold felt by Fourth Street’s tenants.

“This is just too special of a place, and if it were to end here I don’t think Council would feel the pain being experienced,” Koch said. “This is inevitable for the Red River Cultural District, for West and East Sixth street, South Congress, the Drag … these are special places that make Austin what it is, and with the blanket Central Business District zoning across the center of the city, I think there needs to be a little more thought into preserving what is special about downtown.”

The Austin Monitor’s work is made possible by donations from the community. Though our reporting covers donors from time to time, we are careful to keep business and editorial efforts separate while maintaining transparency. A complete list of donors is available here, and our code of ethics is explained here. This story has been changed since publication to correct the name of the developer, which is Hanover Company, not Hanover Group.

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