First folks, I want to say I’m sorry it took an extra week to get this story to you. I sort of went off into a second spring break. But, also current events kept changing the story.
I started out writing this installment about the current status of Project Connect and the lawsuit against it; a story I had been planning for a while. Project Connect is the transit plan whose core feature is a planned Austin light rail system. The pending lawsuit against it was in part the basis of my story.
Then came the stunning defeat delivered to the Statesman PUD (Planned Unit Development) by Judge Jessica Mangrum on Friday afternoon April 12. That led to Project Connect becoming Part 2 of a series. In fact Project Connect may end up being Part 3, or even Part 4. That’s because the City’s loss in the Statesman PUD case brings to mind both the long string of legal defeats that the City has suffered, as well as some seemingly common characteristics of Councils over the last 10 years.
So let’s dive in on Part 1. The Statesman PUD is shorthand for the planned massive redevelopment of the old Austin American-Statesman property into a luxury enclave by Endeavor Real Estate. The property is on the South Shore of the Lady Bird Lake, just east of the Congress Avenue bridge. The Statesman itself is not involved in the development, but the paper’s former owners, the Cox family, still own the property and are partnering with local developers Endeavor on redevelopment.
The summary judgment by Judge Mangrum was not on the massive PUD itself, but on a related Tax Increment Reinvestment Zone (TIRZ) that was approved along with the PUD. Mangrum ruled completely in favor of the plaintiffs who argued that the property did not meet the criteria necessary to create a TIRZ. The primary issue there was that the state TIRZ law says that a TIRZ can only be created “if the governing body determines that development or redevelopment would not occur solely through private investment in the reasonably foreseeable future.” The plaintiffs argued, successfully, that it is ludicrous to think that an immensely valuable property on the south shore of Lady Bird Lake across from downtown Austin could not be developed without taxpayer assistance.
Judge Mangrum evidently agreed with this reasoning because she issued a one-page summary judgment in favor of the plaintiffs.
The suit was filed in April 2023 by that relentless trio of attorneys: Bill Bunch, Bill Aleshire and Fred Lewis. Aleshire, by the way, is the lead attorney in the Project Connect lawsuit. The TIRZ suit is against the Mayor, City Council and Interim City Manager, in their official capacities. It is styled that way because the suit argues that the Council did not have authority to take the action, legally called “ultra vires,” meaning, “without authority.”
Bill Bunch, Bill Aleshire and Fred Lewis, attorneys for the plaintiffs in the TIRZ case. Thanks to the Austin Bulldog for sharing the photos.
The plaintiffs are former State Senator Gonzalo Barrientos, former Council Member Ora Houston and Allandale resident Faye Holland — all taxpayers in the City of Austin. Also plaintiffs are the Save Our Springs Alliance and Taxpayers Against Giveaways. The latter was the lead group in opposing the Statesman PUD as it went through the City system.
While the lawsuit doesn’t legally affect the PUD or its development approvals, the TIRZ ruling could still ultimately have a major impact on what occurs in the Statesman PUD and could even potentially derail it entirely. The latter seems unlikely. However, as the Austin Bulldog reports, during the December 2022 Council deliberations Endeavor’s lead lobbyist on the case, Richard Suttle, told the Council, ‘“I’ll tell you what: we won’t build the plan if there’s no TIRZ. It just doesn’t work.”’
“I’ll tell you what: we won’t build the plan if there’s no TIRZ. It just doesn’t work.”
Richard suttle, attorney for endeavor, at the December 1, 2022 City council meeting
Also, the developers can, of course, still appeal. So the court battle is not necessarily over. The current Council might even come up with a new way to pump tax dollars into the area to aid development.
Map of the Statesman PUD from Council Backup, Item 83 December 1, 2022. Rendering at the top is also from that backup.
The TIRZ, by the way, actually covers more territory than the Statesman site, stretching from just east of the Statesman, across the whole Statesman property, west to South 1st, with Riverside roughly the southern boundary. The TIRZ would allow a portion of taxes garnered from anticipated tax base growth in the area to be pumped back into infrastructure improvements within the area designated as the TIRZ. Estimates were that the TIRZ would produce roughly $354 million.
Map of the Tax Increment Reinvestment Zone – from Council Backup, Item 10 December 1, 2022
The financing plan listed the following as what the TIRZ would fund: “The proposed public improvements to be financed by the Zone include roadway and drainage improvements, affordable housing, streetscapes, open spaces (parks, trails, plazas), utilities, green infrastructure, and reclaimed water and other miscellaneous and soft costs.” That includes an extension of Barton Springs Road through the Statesman PUD.
Backers of the TIRZ say it would allow an orderly way to fund and build infrastructure in the area of mostly private landowners and that taxpayers would ultimately benefit. Opponents see it as a tax giveaway to wealthy developers building a luxury development; and, as mentioned already, did not believe the property met state requirements for a TIRZ.
Barring a successful appeal those arguments are now moot.
Who Did It?
Let’s divert here briefly to note that it was a Council led by Mayor Steve Adler (Greg Casar had already left for Congress) who approved the Statesman PUD and the accompanying TIRZ. It was also the actions of the Casar-Adler Councils that led to a long series of legal defeats for the City (more on that in a future installment).
The PUD and TIRZ were pushed through right before Christmas, on December 1, 2022. It was one of that Council’s last acts, given that Adler and three Council Members were leaving office the first week in January. The vote was 8-2-1 with Council Members Kathie Tovo and Alison Alter voting no on the PUD and Mackenzie Kelly abstaining.
The vote count on the TIRZ, approved the same day as the Statesman PUD, was slightly different. Kelly joined Alison Alter and Tovo in voting no and Ann Kitchen abstained.
Seven of the 11 members of the current Council were on the dais then; Alison Alter and Kelly, along with yes votes Natasha Harper Madison, Vanessa Fuentes, Chito Vela, Leslie Pool, and Paige Ellis. That means that Mayor Kirk Watson and the three rookie Council Members did not have anything to do with approving the PUD or the TIRZ, although — based on their HOME vote last year and other related policies — all four clearly share the lassiez faire approach to development regulations that was a defining feature of the Casar-Adler Councils. None of the newcomers’ actions, however, have led to an embarrassing legal defeat, with one recent exception when Bunch won a temporary restraining order from Judge Madeleine Connor forcing Watson and the Council to give speakers at Council meetings three minutes to speak (instead of two) and forbidding the practice of making speakers who want to speak on multiple items lump all their comments into a single two minute speech.
A Really Big PUD
Readers may recall that the Statesman PUD is pretty big; or perhaps we should say, planned to be pretty big. The December 2022 Council majority approved 3.6 million square feet for the PUD. As detailed in official Council backup that would be made up of: 1,378 residential units; 1.5 million square feet of office space; 275 hotel rooms; and 150,000 square feet of retail and restaurants spread across six towers.
The six buildings would range in height, according to Council backup at the time of the vote, from 525 feet to 215 feet, with the other four buildings at 445, 375, 365, and 295 feet.
Endeavor has some renderings on their website which captures at least part of their transformational vision for the project.
To some old time Austinites, like me, that’s a lot of development going on the South Shore. In previous decades — back in Austin’s more quaint, bygone times — citizens, including me, won protections for the area that tried to prevent a “canyon effect” along the river and attempted in various ways to protect the publicly opened spaces along the waterfront, and not build a new downtown south of the river. Those efforts were scorned and largely abandoned by recent Councils.
Instead the first Casar-Adler Council oversaw a planning effort for the South Shore/TIRZ area that recommended 2,943,000 square feet of development for the Statesman tract; way over the then current regulations on the site. With the Statesman PUD, the 2022 Council approved a 22% increase over that.
As I alluded to at the top, the verdict on the TIRZ sparked a lot of thinking on my part. That includes a six part list of how I believe the Statesman PUD exemplifies the attitude and governance approach of the Casar-Adler Councils (at least of the majorities on those Councils). That is important not just as historical analysis, but also because the current Council appears to be carrying much of that approach forward; although I think most everyone agrees that Watson does a much better job of running the meetings. There are other examples as well, but all of that will have to wait for an upcoming installment.
For now let’s examine just one point on my six point list of characteristics of the Casar-Adler Council majorities. That one is: skill at winning elections combined with an almost comical incompetence at governing.”
Let’s examine just one point on my six point list of characteristics of the Casar-Adler Council majorities. That one is: skill at winning elections combined with an almost comical incompetence at governing.”
Exhibit A will be former Mayor Steve Adler who won two elections by wide margins, after coming down from the suburbs to show us all “a new way forward.”
As has been noted, the suit revolves around a clause in the state law governing TIRZs which says a TIRZ can be created “if the governing body determines that development or redevelopment would not occur solely through private investment in the reasonably foreseeable future.”
When that became an issue at the December 1, 2022 hearing on the PUD, Adler helpfully explained: “No one is saying that this area wouldn’t develop if we didn’t do this. It’s just not going to develop the way that we would want it to develop.”
Attorneys Bunch, Aleshire, and Lewis put that Adler statement front and center in their suit. The Judge issued a Summary Judgment completely in their favor.
Also, though Adler said what is quoted above, later the same day he signed a document certifying the TIRZ vote which included a “Finding” that read: “Development or redevelopment in the zone would not occur solely through private investment in the reasonably foreseeable future.” As already noted, Bunch, Aleshire and Lewis won a summary judgment throwing out the Council’s approval of the TIRZ.
I earlier called the Judge’s summary judgment a “stunning defeat” for the Statesman PUD. The result, however, might not be very stunning to those who were following the case closely.
Well, that’s all for now folks. Parts 2 and 3 will arrive soon along with other news.
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