The redevelopment of the 19-acre waterfront site at 305 South Congress Avenue formerly home to the headquarters of the Austin American-Statesman by local firm Endeavor Real Estate Group is in a bit of a rough patch, if you haven’t heard. As if recent concerns about the health of the real estate market weren’t enough, a new lawsuit filed by some of the city’s crankiest NIMBYs could prevent the tax increment financing plan approved by City Council last year from moving forward.
Attorneys for the plaintiffs are Bill Bunch, Bill Aleshire and Fred Lewis.
The suit, filed Monday in Travis County District Court, alleges that actions by City Council to create the South Central Waterfront Tax Increment Reinvestment Zone, or TIRZ, were illegal. The area covers 118 acres along the south shore of Lady Bird Lake. According to the suit, the plan “will divert $354 million in property taxes over 19 years from the general revenue to pay for the private infrastructure of a projected $8 billion in luxury development on premier land within the designated zone.”
The plaintiffs argue that “the Council’s action was illegal because Texas Tax Code Chapter 311 restricts creation of such a zone to areas that are ‘unproductive, underdeveloped, or blighted’ and, most importantly, to areas that would not otherwise develop on their own ‘but for’ the redirected taxpayer support. By ignoring the tax code restrictions the Council members exceeded their authority to create such a tax zone. As a result, the redirected tax funds will be illegally spent on the (TIRZ property), while the rest of Austin’s property taxpayers, including plaintiffs, have to pay an equal and uniform share of taxes for the city’s operation.”
Bunch, who is also executive director of the SOS Alliance, said in a news release, “The city is legally required to show that the land is blighted and will not develop without public subsidies. There’s no evidence for that. If there’s any land in the State of Texas that is not blighted and doesn’t need taxpayer handouts, it’s the south shore of Lady Bird Lake.”
There’s a conversation to be had over the appropriateness of applying public subsidies to large-scale private real estate developments that arguably also represent a public good once completed, and in the case of this project the inclusion of roughly six acres of public parkland and additional space reserved for a future rail stop on the Blue Line pushes us towards the affirmative — but the reaction we’ve seen from various smart people around town to this lawsuit is that, while Bill Bunch and his buddies are undeniably obnoxious, they might actually have a case here. If this lawsuit ends up derailing the Endeavor plan as it currently exists, we have a modest proposal for a silver lining: it’s a chance to make the entire development taller.
The great thing about height is it solves all your problems. A lot of early objections to the Endeavor plan revolved around its contribution to affordable housing in the city, with early proposals offering a percentage of on-site units and the final plan settling on a $23.2 million payment into the city’s housing fund — more height and density can subsidize a higher number of affordable units, no matter where you put them. Concerned about the amount of parkland this development provides? Build a taller project and you can free up a larger percentage of green space on the site. If this lawsuit blocks the city from reinvesting tax dollars into the project, building more tall towers could support a higher return on investment for the developer, meaning the funding gap from the loss of tax revenue wouldn’t be so big. Taller, taller, taller.
If the plaintiffs were to win the lawsuit and the TIRZ was eliminated, it would likely cause major changes in how the property was developed. Richard Suttle, attorney for the owners of the property, told the Austin Monitor in 2022 that the developers knew there was a gap in funding for the site, which would be covered by the TIRZ. “They underestimated the deficit and we are willing to absorb some of that underestimation, but someone asked me, what if there’s no TIF or TIRZ … I responded this project doesn’t work,” Suttle said at the time.
There’s already evidence in favor of this, for the record. If you take a peek at some of the other sites within the South Central Waterfront planning area currently proposing development, you’ll note that the new bottom floor for growth in this area is 400 feet or so. 311-315 South Congress? 400 feet. 200 East Riverside? 410 feet. 507 South First? 490 feet, or possibly even 540 feet with an observation deck-friendly zoning change. We are looking at the new normal with these numbers, while the current Endeavor plan appears to only take two of its six total buildings past the 400-foot mark. In other words, it’s already dated, and we can do better by going bigger.
We’re admittedly being cheeky here, but that doesn’t mean it’s not the truth. Austin’s famous for tripping over the consequences of its own success, often acting like a temporarily embarrassed college town and not nearly the 10th largest city in the country. Not building the entire South Central Waterfront area out to a downtown-style height is one of those situations waiting to happen — if we develop most of the region to the 15-floor scale of something like RiverSouth, our kids will look at this area decades from now and think, gosh, did they honestly think this wasn’t downtown?
The only downside of additional height is that more people can see the buildings from their homes, and thinking that’s bad or somehow a compelling argument against construction is a fake idea that should not be taken seriously by anyone. If Mayor Watson’s administration would like to distinguish itself from its predecessors on downtown-adjacent land use, a great place to start would be offering the Statesman site’s developers a few extra hundred feet to really put some teeth in the South Central Waterfront while subsidizing more affordable housing at sites like One Texas Center. The only thing we stand to lose is acres of parking lots.